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EXHIBIT 99.3
ESCROW AGREEMENT
Escrow agreement made as of this _____ day of __________, 2000
by and among Exhaust Technologies, Inc., a Washington corporation
with its principal offices at 230 North Division Street, Spokane,
WA 99202 (the "Company"), Castle Securities Corp., a Nevada
corporation, with its principal offices at 45 Church Street,
Freeport, NY 11520 (the "Underwriter") and HSBC Bank USA, a banking
corporation and trust company organized and existing under the laws
of the State of New York having offices at 140 Broadway, New York,
NY 10005-1180, (the "Escrow Agent");
WHEREAS, the Escrow Agent has been advised that the Company is
organized under the laws of the State of Washington; and
WHEREAS, the Escrow Agent has been advised that the Company is
authorized to issue 100,000,000 shares of common stock; and
WHEREAS, the Escrow Agent has been advised that the Company
has filed with the Securities and Exchange Commission (the "SEC"),
a registration statement on Form SB-2, pursuant to the Securities
Act of 1933 as amended (the "Act"), covering a proposed public
offering (the "Offering") of up to 550,000 Units; and
WHEREAS, the Escrow Agent has been advised that the
Underwriter proposes to offer the Units as agent for the Company on
a "best efforts" basis with respect to the 550,000 Units with a
minimum of 1 Unit up to a maximum of 550,000 Units; and
WHEREAS, in compliance with Rule 15c2-4 of the Securities
Exchange Act of 1934 as amended, the Company and the Underwriter
propose to establish an escrow fund with the Escrow Agent; and
WHEREAS, the Escrow Agent is willing to establish an escrow
account on the terms and subject to the conditions hereinafter set
forth.
NOW, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Establishment of Escrow Account. Prior to the date that
the Registration Statement is declared effective by the SEC, or as
soon as possible thereafter the parties hereto shall establish, and
by execution of this Agreement agree to establish, a non-interest
bearing escrow account with a designated branch of the Escrow
Agent, which escrow account shall be entitled, "HSBC Bank USA,
Escrow Agent for Subscribers to Units of Exhaust Technologies,
Inc." (the "Escrow Account").
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2. Deposits into the Escrow Account. The Underwriter shall
promptly deposit all monies received from the prospective
purchasers of the Units (the "Fund") in the Escrow Account.
Simultaneously with each such deposit, the Underwriter shall inform
the Escrow Agent, by confirmation slip or other writing, of the
name and address of each prospective purchaser and of the number of
Units subscribed for by such purchaser. In this regard, the
Escrow Agent shall have the right to rely fully on the confirmation
slips or other writing so furnished it by the Underwriter.
Promptly after the SEC shall declare the Registration Effective,
the Company shall advise the Escrow Agent in writing of the
Effective Date.
3. Disbursement from the Escrow Account. The Fund shall be
disbursed as follows:
(a) Upon termination of the offering within 90 days of the
Effective Date (which period may be extended for an additional 90
days as determined by mutual agreement of the Company and the
Underwriter, upon the furnishing of written notice thereof to the
Escrow Agent signed by the Company and the Underwriter (the
"Termination Date"). However, it is agreed that closing may take
place not later than fourteen (14) days after the Termination Date
to permit collection of funds that ar deposited but not collected
as of the Termination Date. This period shall be known hereafter
as the "Collection Period". No deposits shall be received by the
Escrow Agent after the Termination Date. Notwithstanding the
foregoing the Company and the Underwriter shall have the right to
terminate the offering, prior to the Termination Date, upon the
furnishing of written notice thereof to the Escrow Agent signed by
the Company and the Underwriter and no deposits shall be received
by the Escrow Agent after receipt of such notice. The Escrow Agent
shall hold such monies in escrow until such funds have cleared and
until the Escrow Agent shall be given instructions in writing by
the Company and the Underwriter as to the disposition of the Fund
and such other documents as may be necessary in the opinion of the
Escrow Agent.
(b) In the event that any subscription is rejected, in whole
or in part, by the Company and/or the Underwriter, the Escrow
Agent, upon the furnishing of written notice thereof by the Company
and the Underwriter, the Escrow Agent shall refund to such
purchaser the amount actually received from such purchaser
representing the rejected subscription, without interest thereon or
deduction therefrom.
(c) Upon the disbursement of the Fund pursuant to this
paragraph 3, the Escrow Agent will be under no further
responsibility with respect to this Agreement. In this regard it
is expressly agreed and understood that in no event shall the
aggregate amount of payments made by the Escrow Agent exceed the
amount of the Fund.
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4. Rights, Duties and Responsibilities of the Escrow Agent. It
is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature. It is further agreed that:
a. The Escrow Agent shall not be required to enforce any of
the terms and conditions of the underwriting agreement or any other
agreement between the Underwriter and the Company, nor shall the
Escrow Agent be responsible for the performance by the Underwriter
or the Company of their respective obligations under this
Agreement;
b. The Escrow Agent shall not be required to accept from the
Underwriter any confirmation slips or other writings issued to
prospective purchasers hereunder unless the same are accompanied by
cash, checks, drafts or other instruments for the payment of money,
nor shall the Escrow Agent be required to keep records of any
information on checks, drafts, or other instruments received or
collected by the Escrow Agent from the Underwriter except as to the
amount of same; however, the Escrow Agent shall notify the
Underwriter within a reasonable time, by fax, wire or otherwise, of
any discrepancy between the amount set forth on any such
confirmation slip or other writing, and the sum or sums delivered
to the Escrow Agent by the Underwriter therewith;
c. The Escrow Agent shall be under no duty or responsibility
to enforce collection of any check, draft or other instrument for
the payment of money delivered to it hereunder, but the Escrow
Agent, within a reasonable time, shall return to the Underwriter
any check, draft or other instrument received from the Underwriter
which is dishonored, together with the confirmation slip or other
writing, if any, which accompanies such check, draft or other
instrument;
d. The Escrow Agent shall have the right to act in reliance
upon any document, instrument or signature believed by it to be
genuine and to assume that any person purporting to give any notice
or instructions in accordance with this Agreement or in connection
with any transaction to which this Agreement relates has been duly
authorized to do so. The Escrow Agent shall not be obligated to
make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or
instructions;
e. In the event the Escrow Agent shall be uncertain as to
its duties or rights hereunder or shall receive instructions with
respect to the Fund, which, in its sole opinion, are in conflict
with either other instructions received by it or any provision of
this Agreement, it shall be entitled to hold the Fund, or a portion
thereof, in the Escrow Account pending the resolution of such
uncertainty to the Escrow Agent's sole satisfaction, by final
judgment of a court or courts of competent jurisdiction or
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otherwise; or the Escrow Agent, at its option, may deposit the Fund
with the clerk of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined.
f. The Escrow Agent shall not be liable for any action taken
or omitted hereunder except in the case of its gross negligence or
willful misconduct, nor shall it be liable for the default or
misconduct of any employee, agent or attorney appointed by it. The
Escrow Agent shall be entitled to consult with counsel of its
choosing and shall not be liable for any action taken, suffered or
omitted by it in accordance with the advice of such counsel; and
g. The Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security exists in the Fund or any
part hereof or to file any financing statement under the Uniform
Commercial Code with respect to the Fund or any part thereof.
h. The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Escrow
Agreement and the Escrow Agent shall not be liable except for the
performance of such duties and obligations as are specifically set
out in this Escrow Agreement. The Escrow Agent shall not be
required to inquire as to the performance or observation of any
obligation, term or condition under any agreement or arrangement by
the Company or the Underwriter. The Escrow Agent is not a party
to, and is not bound by, any agreement or other document out of
which this Escrow Agreement may arise. The Escrow Agent shall be
under no liability to any party hereto by reason of any failure on
the part of any party herto or any maker, guarantor, endorser or
other signatory of any document or any other person to perform such
person's obligations under any such document or any other person to
perform such person's obligations under any such document. The
Escrow Agent shall not be bound by any waiver, modificatin,
termination or rescission of this Escrow Agreement or any of the
terms hereof, unless evidenced by a writing delivered to the Escrow
Agent signed by the proper party or parties adn, if the duties or
rights of the Escrow Agent are affected, unless it shall give its
prior written consent thereto. This Escrow Agreement shall not be
deemed to create a fiduciary relationship between the parties
hereto under state or federal law.
i. The Escrow Agent shall not be responsible in any manner
for the validity or sufficiency of this Escrow Agreement or of any
property delivered hereunder, or for the value or collectibility of
any note, check or other instrument, if any, so delivered, or for
any representations made or obligations assumed by any party other
than the Escrow Agent. Nothing herein contained shall be deemed to
obligate the Escrow Agent to deliver any cash, instruments,
documents or any other property referred to herein, unless the same
shall have first been received by the Escrow Agent pursuant to this
Escrow Agreement.
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5. Amendment; Resignation. This Agreement and/or the terms
of the Offering may be altered or amended only with the written
consent of the Company, the Underwriter and the Escrow Agent.
Should the Company and/or the Underwriter attempt to change the
Agreement and/or the terms of the Offering in a manner which, in
the Escrow Agent's sole opinion, is undesirable, the Escrow Agent
may resign as Escrow Agent upon 2 days written notice to the
Company and the Underwriter; otherwise, it may resign as Escrow
Agent at any time upon 3 days written notice to the Company and the
Underwriter. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement
or otherwise dispose of or adjust the Fund, but its only duty shall
be to hold the fund for a period of not more than five (5)
business days until a successor escrow agent shall be appointed and
written notice thereof (including the name and address of the such
successor escrow agent) shall be given to the resigning Escrow
Agent by the Company, the Underwriter and such successor escrow
agent. At such time, the resigning Escrow Agent's only duty shall
be to pay over to the successor escrow agent the Fund, less any
portion thereof previously paid out in accordance with this
Agreement. If at the end of the period of five (5) business days
the resigning Escrow Agent shall not have received written notice
signed by the Company, the Underwriter and a successor escrow
agent, then the resigning Escrow Agent shall promptly refund to
each prospective investor the amount actually received from such
prospective investor, without interest thereon or deduction
therefrom, and the resigning Escrow Agent shall notify the Company
and the Underwriter in writing of its liquidation and distribution
of the Fund, whereupon the Escrow Agent shall be relieved of all
further obligations under this Agreement. Without limiting
paragraph 7 hereof, the resigning Escrow Agent shall be entitled to
be reimbursed by the Company and the Underwriter for any expenses
incurred in connection with its resignation, transfer of the Fund
to a successor escrow agent or distribution of the Fund.
6. Warranties. The Company and the Underwriter warrant to
and agree with the Escrow Agent that, unless otherwise expressly
set forth in this Agreement:
a. No party other than the parties hereto and the
prospective purchasers have, or shall have, any lien, claim or
security interest in the Fund or any part thereof;
b. No financing statement under the Uniform Commercial Code
is on file in any jurisdiction claiming a security interest in or
describing (whether specifically or generally) the Fund or any part
thereof.
7. Fees and Expenses. The Escrow Agent shall be entitled to
a fee determined in accordance with, and payable as specified in
Schedule 1 annexed hereto and incorporated herein by reference.
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The Escrow Agent also shall be reimbursed by the Company and the
Underwriter for any reasonable expenses incurred in connection with
this Agreement, including, but not limited to, reasonable counsel
fees.
8. Indemnification. The Company and the Underwriter jointly
and severally shall indemnify, defend and save harmless the Escrow
Agent from all loss, liability or expense, including reasonable
attorneys' fees, arising out of or in connection with (1) its
execution and performance of this Agreement, except to the extent
that such loss, liability or expense is due to the gross negligence
or willful misconduct of the Escrow Agent, or (2) its following any
instructions or other directions from the Company and/or the
Underwriter, except to the extent that its following any such
instructions or direction is expressly forbidden by the terms
hereof. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Escrow Agent has been advised of the likelihood of such loss or
damage regardless of the form of action. The parties acknowledge
that the foregoing indemnities shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement.
9. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State
of New York and shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that any
assignment or transfer by any party of its rights under this
Agreement or with respect to the Fund shall be void as against the
Escrow Agent unless:
a. written notice thereof shall be given to the Escrow
Agent, and;
b. the Escrow agent shall have consented to such assignment
or transfer.
10. Notices. All notices required to be given in connection
with this Agreement shall be sent by registered or certified mail,
return receipt requested, or by fax, or by overnight delivery
service as follows:
To the Company at: Exhaust Technologies, Inc.
230 North Division Street
Spokane, WA 99202
Att: Robert E. Sterling, Pres.
Fax No.
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To the Underwriter at: Castle Securities Corp.
45 Church Street
Freeport, NY 11520
Att: Michael T. Studer, Pres.
Fax No. (516) 379-0400
To the Escrow Agent at: HSBC Bank USA
HSBC Issuer Services
140 Broadway, 12th floor
New York, NY 10005-1180
Fax No. (212) 658-6425
11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be
determined to be invalid or unenforceable, the remaining provisions
of the Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid or
unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
12. Execution in Counterparts. This Agreement may be
effective in several counterparts or by separate instruments and
all of such counterparts and instruments shall constitute one
agreement, binding on all of the parties hereto.
13. Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or
plural as the context may require.
14. Captions. All captions are for convenience only and
shall not limit or define the text hereof.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and supercedes all prior agreements and
understandings, written or oral, of the parties in connection
herewith.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first written above.
HSBC BANK USA, as Escrow Agent
by: ______________________________
EXHAUST TECHNOLOGIES, INC.
by: ______________________________
CASTLE SECURITIES CORP.
by: _____________________________
MICHAEL T. STUDER, President
