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FUND ESCROW AGREEMENT
THIS AGREEMENT made and entered into this _____________________ , by and
between ________________________________________________________ , whose
address is _______________________________________________________ and whose
statutory office is located at _______________________________________ (the
"Company") and Southwest Escrow Company, whose address is 401 North Buffalo
Drive, Suite 205, Las Vegas, Nevada 89145 ("Escrow Agent").
WHEREAS, the Company desires to make an interstate public offering (the
"Offering") of its securities consisting of ________________ shares under an
arrangement whereby the securities are to be offered to investors through the
Company at the offering price of $ _____________ cents per share; and
WHEREAS, the Offering is to be made in accordance with Regulation SB in
accordance with Section 8(a) of the Securities Act of 1933 (the "Act") in
accordance with Regulation D, Rule 504 and Sections 3(b) and/or 4(2) of the
Act and the offering will be registered in the State of Nevada on
__________________________ ; and
WHEREAS, the company intends to sell securities as the Company's agent on
a best-efforts basis; and
WHEREAS, the parties wish to make provision to impound the gross proceeds
from the sale of _____________ shared in the Offering in escrow, which
proceeds are to be released to the Company only in the event of the sale of
____________________ shares, within the time set forth herein and otherwise
the escrowed proceeds are to be returned by the Escrow Agent in accordance
with the terms and conditions set forth herein.
WHEREAS, the company desires to establish an escrow account in which
funds received from subscribers will be deposited pending completion of the
escrow period. Southwest Escrow Company agrees to serve as escrow agent in
accordance with the terms and conditions set forth herein.
WHEREAS, the Company and the Escrow Agent desire to enter into an
agreement with respect to the above described escrow.
NOW THEREFORE, in consideration of the foregoing and mutual promises and
covenants contained herein, it has been and IT IS HEREBY AGREED as follows:
1. Establishment of Escrow Account. On or prior to the date of the
commencement of the offering, the parties shall establish a non-
interest bearing escrow account with the Escrow Agent, which shall
be entitled ___________________________ Escrow Account and shall
be located at Southwest Escrow Company shall be returned to the
investor who submitted the check.
2. Accounting for Escrow Funds. The Company agrees that it shall
promptly deliver all monies received from subscribers for the
payment of the Securities to the Escrow Agent for deposit in the
Escrow Account together with a written account of each sale, which
account shall set forth, among other things, the subscriber's name
and address, the number of securities purchased, the amount paid
therefore and whether the consideration received was in the form
of a check, draft, money order or wire. All monies so deposited
in the Escrow Account are hereinafter referred to as the "Escrow
3. Deposits into the Escrow Account. All proceeds delivered to the
Escrow Agent pursuant hereto shall be deposited immediately by
the Escrow Agent in the Escrow Account. The Escrow Account shall
be created and maintained subject to the customary rules and
regulations of the Escrow Agent pertaining to such accounts.
4. Rights of the Escrow Funds. During the Escrow Period (hereinafter
defined) in the company is aware and understands that all
proceeds deposited in the Escrow Account shall not become
property of the Company or other entity, or be subject to the
debts of the Company or any other entity. Except as expressly
provided herein with respect to payments be the Escrow Agent to
the Company, the Escrow Agent shall make or permit no
disbursements from the Escrow Account.
5. The Escrow Period. The Escrow Period shall begins with the
effective date of the Offering (the "Effective Date") and shall
terminate on the following dates:
a. The Company notifies the Escrow Agent that the offering has
b. The Company provides Escrow with notice and evidence that the
companies post-effective amendment has been cleared by the
c. The Company informs Escrow that a merger candidate has not
been found and the original registration has been in effect
for 180 days.
6(A) Disbursement from the Escrow Account. Upon obtaining the
occurrence of the events set forth in Paragraph above this
escrow will terminate and 10% of the proceeds on deposit shall
be delivered to or on behalf of the Company as directed by the
company's counsel or designated principal officer. In no event
shall the Escrow Agent release to the Company funds held in
Escrow until $ 20,000 in collected funds are in Escrow. For
purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared
normal banking channels and are in the form of cash.
6(B) Disbursement from the Escrow Account. Upon obtaining the
occurance of the events set forth in Paragraphs 5B and 5C above
this escrow Agreement will terminate the remaining funds on deposit
shall be dekivered to or on behalf of the Company as directed
by the company's counsel or designated principal officer. In no
event shall the Escrow Agent release to the Company funds held
in Escrow until $ 20,000 in collected funds are in Escrow. For
purposes of this Agreement,the term "collected funds" shall mean
all funds received by the Escrow Agent which have cleared normal
banking channels and are in the form of cash.
In the event the Escrow Period terminates because ______________ shares
are not sold on or before the date specified in paragraph 5B above, the
Escrow Agent shall within ten days of receipt of its mailing fee as described
in paragraph 10, return to each of the subscribers of the Company's
securities the amounts paid in by them, without any deductions and without
any interest earned or expenses to the subscriber, and the Escrow Agent shall
notify the Company its distribution of the funds. Each amount paid or payable
to each subscriber pursuant to this paragraph shall be deemed to be the
property of the subscriber, free and clear of any or all claims of the
Company or any of its creditors and the respective agreements to purchase the
Company's securities made and entered into the Offering shall thereupon be
deemed ipso facto, to be canceled without further liability of said
subscribers to pay for the securities purchased. At such times as the Escrow
Agent shall have made all the payments and remittances provided for in this
paragraph, the Escrow Agent shall be completely discharged and released of
any and al further liabilities and responsibilities hereunder.
If at any time prior to the termination of this Escrow the Escrow Agent
is advised by the Nevada Securities Administrator that a stop order has been
issued with respect to the registration Statement, the Escrow Agent shall,
upon receipt of its mailing fee described in paragraph 10, thereon returned
all funds to the respective subscribers.
7. Discretion of Escrow Agent. The Escrow Agent, in its actions pursuant
to this Agreement, shall be fully protected in every reasonable exercise of
its discretion and shall have no obligations hereunder either to the Company
or to any other party, except as expressly set forth herein.
It is understood and agreed that the duties of the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Company and
holding and disbursing such monies in accordance with this Agreement.
8. Investment of Escrow Amount. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify by written notice. The Company
may only specify investment in (1) Federal Deposit Investment Corporation
insured bank accounts, (2) bank money-market accounts, (3) short-term
certificates of deposit issued by a bank, or (4) short term securities issued
or guaranteed by the U.S. government. The Escrow Agent shall keep accurate
records of such funds, and upon request, provide the Company, the Securities
and Exchange Commission or any State Securities Administrator, an account
with respect thereto.
9. Collection Procedure. The Escrow Agent is hereby authorized to forward
each check for collection and upon collection of the proceeds of each check,
deposit the collected proceeds in the Escrow Account. As an alternative, the
Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
investor that submitted the check. In such cases, the Escrow Agent will
promptly notify the company of such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check
to the rejected subscriber. If the Company rejects any subscription for which
the Escrow Agent has not yet collected funds but has submitted the
subscriber's check for collection, the Escrow Agent shall promptly issue a
check in the amount of the subscriber's check to the rejected subscriber
after the Escrow Agent has cleared such funds. If the Escrow Agent has not
yet submitted a rejected subscriber's check for collection, the Escrow Agent
shall promptly remit the subscriber's check directly to the subscriber.
10. Escrow Fees. The fee of the Escrow Agent is a minimum of $ 750.00;
receipt of which is hereby acknowledged. In addition, if the minimum
offering amount of $ _____________ is not received in escrow within the
escrow period and the Escrow Agent is required to return the funds to the
investors as provided in paragraph 6, or Escrow Agent receives a stop order
as provided in Paragraph 6, the Escrow Agent shall receive a fee of $10.00
per check for such service, which fee shall be paid in advance of any refund
mailing by Escrow Agent. The fee agreed upon for services rendered hereunder
is intended as full compensation for the Escrow Agent's services as
contemplated by this Agreement; however, in the event the conditions of this
Agreement are not fulfilled, or the Escrow Agent performs any material
service not contemplated by this agreement, or there is any assignment of
interest in the subject matter of this Agreement, or any material
modification thereof or if any assignment of interest in the subject matter
of this Agreement, or any material modification thereof, or if any material
controversy arises hereunder, or the Escrow Agent is made party to or
justifiably intervenes in any litigation pertaining to this Agreement, or the
subject matter hereof, the Escrow Agent shall be fully reimbursed for all
such extraordinary expenses, including reasonable attorney's fees, and all
extraordinary expenses shall be paid by the Company.
11. Expenses of Escrow Agent. If it is necessary for the Escrow Agent to
return funds to the purchasers of the Securities, the Company shall pay to
the Escrow Agent an amount sufficient to reimburse it for its actual cost in
disbursing such funds. However, no such fee, reimbursement for costs and
expenses indemnification for any damages incurred by the Escrow Agent, or any
monies whatsoever shall be paid out of, or be chargeable to, the funds on
deposit in the Escrow Account.
12. Limitation of Liability of Escrow Agent. In performing any of its
duties hereunder, the Escrow Agent shall not incur any liability to anyone
for any damages, losses or expenses, except for willful default or
negligence, and it shall accordingly, not incur any such liability with
respect to (i) any action taken or omitted in good faith upon advice of its
counsel or counsel for the Company given with respect to any questions
relating to the duties and responsibilities of the Escrow Agent under this
Agreement.; or (ii) any action taken or omitted in reliance upon any
instrument, including the written advice provided for herein, not only as to
its due execution and the validity and effectiveness of its provisions, but
also as the truth and accuracy of any information contained therein, which
the Escrow Agent shall in good faith believe to be genuine, to have been
signed or presented by a proper person or persons, and to conform with the
provisions of this Agreement.
13. Indemnity of Escrow Agent. The Company hereby agrees to indemnify
and hold harmless the Escrow agent against any and all losses, claims,
damages, liabilities and expenses, including and litigation arising from this
Agreement or involving the subject matter hereof.
14. Disputes. In the event that a dispute arises as to the terms of this
agreement, the Escrow Agent shall be entitled to deposit, in the nature of
any interpleader action, any documents or proceeds then held by such Escrow
Agent with any court of competent jurisdiction within the State of Nevada.
15. Entire Agreement. This is the entire Agreement of the parties. Any
other agreement of any nature whether oral or written not contained herein
are expressly made null and void.
16. Governing Law This Agreement shall be governed by the laws of the
State of Nevada.
IN WITTNESS WHEREOF the Company, and the Escrow Agent have executed this Fund
Escrow Agreement on the day and year first above written.
SOUTHWEST ESCROW AGREEMENT
Dale E. Puhl, President