SECURITY ESCROW AGREEMENT
THIS ESCROW AGREEMENT made and entered into this _____ day of __________________, ______,
among the persons and parties who have signed this Agreement as security holders (hereinafter
collectively referred to as the "Security Holders”), the Issuer, _________________________________
the Escrow Agent, _______________________________________, and the Director of the New Mexico
Securities Division (hereinafter “the Director”).
Each of the Security Holders is the owner of the number of shares of common stock of the Issuer
or possesses conversion rights, warrants or options to acquire shares of stock of the Issuer listed
opposite his or her name on the Exhibit A attached hereto.
The Issuer has applied to the Director for registration of __________ shares of _____________
stock (warrants) (options) (units) for sale to the residents of New Mexico, and elsewhere. As a condition
of registration the Security Holders, the Escrow Agent, the Issuer and the Director agree to be bound by
this Agreement and the applicable Rules of the Director pertaining to such agreements.
Each of the Security Holders has deposited the securities listed opposite his or her name or
documents evidencing the right to acquire the securities on Exhibit A with the Escrow Agent, and the
Escrow Agent hereby acknowledges receipt thereof. The securities are herein collectively referred to as
"Escrowed Stock" or "Shares".
NOW THEREFORE, the persons and parties hereto agree as follows:
DEPOSIT OF CERTIFICATES.
Simultaneously with the execution of this Agreement, the
Security Holder is depositing with the Escrow Agent and the Escrow Agent hereby acknowledges receipt
of the certificates and documents listed on Exhibit A, representing, convertible into, exercisable for,
_________ Shares of stock of the Issuer. At the written request of the Issuer, the Escrow Agent shall
make available to the Issuer and any affected Security Holder, such documents as are necessary to
exercise the foregoing rights.
TERM. The term of this Agreement and of the escrow provided herein shall commence on the
date that the offering is declared effective by the Director. The certificates evidencing the securities are to
be deposited with the Escrow Agent and are to be held pursuant hereto, for a period of three years,
unless released earlier in accordance with the terms of this Agreement.
RELEASE OF SHARES. One hundred (100%) percent of the shares shall be released from
escrow to Security Holders at the earliest of the following:
The issuer’s aggregate revenues are $500,000 or more, provided that neither the
auditor’s report nor any foot notes to the issuer’s latest audited financial statement
contains an opinion or statement regarding the ability of the issuer to continue as a going
concern. Beginning one year from the date the offering is declared effective, two and
one-half (2½%) percent of promotional shares may be released per quarter pro rata
among the Security Holders. All remaining promotional shares shall be released from
escrow on the second anniversary from the date the offering is declared effective; or,
The issuer’s aggregate revenues are $500,000 or less. Beginning two years from the
date the offering is declared effective, two and one-half (2½%) percent of promotional
shares held in escrow may be released each quarter pro rata among the Security