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Escrow Agreement

This is an actual contract by CAN Cal Resources.

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Sectors: Metals and Mining
Effective Date: January 01, 2001
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CAN-CAL RESOURCES, LTD.


MAY DAVIS GROUP, INC.


ESCROW AGREEMENT


WITH


FIRST UNION NATIONAL BANK


This Agreement is made and entered into as of October __, 2001 by and among CAN-CAL RESOURCES, LTD. (the "Company"), a Nevada corporation, MAY DAVIS GROUP, INC. (the "Placement Agent"), a Maryland corporation, and FIRST UNION NATIONAL BANK, a national banking association with a principal New York corporate trust office at First Union National Bank, Corporate Trust Group, 21 South Street, 3rd Floor, Morristown, New Jersey 07960 (the "Escrow Agent").


WHEREAS, the Company proposes to offer for sale to several investors through the Placement Agent up to $8,000,000 of the Common Stock of the Company. The Common Stock is being offered through the Placement Agent pursuant to the terms of an Investment Agreement (the "Investment Agreement") being entered into between the Company and one or more investors.


WHEREAS, all such investments will be made in reliance upon registration under the Securities Act of 1933, as may be amended.


WHEREAS, the offering of Common Stock under the Investment Agreement will terminate at the close of business thirty-six (36) calendar months after the date the registration statement covering the Common Stock is declared effective (the "Termination Date").


WHEREAS, with respect to all investment payments for the Common Stock received from investors, the Company proposes to establish a single escrow account with the Escrow Agent at the office of its Corporate Trust Department, Corporate Trust Group, 21 South Street, 3rd Floor, Morristown, New Jersey 07960.


WHEREAS, the Company and the Placement Agent desire to establish an escrow account ("Escrow Fund Account") in which those funds received from investors of the Common Stock (the "Subscribers") will be deposited pending receipt of the number of shares of Common Stock being purchased. The Escrow Agent agrees to serve as escrow agent in accordance with the terms and conditions set forth herein.


NOW THEREFORE, the parties hereto agree as follows:


1. The Escrow Agent shall hold the Escrow Fund Account subject to the terms of this Escrow Agreement and shall act in accordance with the instructions contained in this Escrow Agreement.


2. Upon the written instructions of the Placement Agent and the Company, the Escrow Agent shall deliver all or a part of the funds in the Escrow Fund Account and any Common Stock it may receive as Escrow Agent, at such times and in such manner as shall be set forth in such written instructions.


137


3. Unless otherwise instructed by the Placement Agent, any cash balances held under this Escrow Agreement shall be invested in the Evergreen Cash Management Treasury Money Market Fund # 765. All income earned from the Escrow Fund Account shall be retained by the Escrow Agent and disbursed for any fees, expenses or other amounts due to the Escrow Agent.


4. This Escrow Agreement shall terminate upon the final distribution of all amounts in the Escrow Account and any income earned thereon, unless terminated sooner by the written instructions of the Company and Placement Agent.


5. (a) The Escrow Agent shall not in any way be bound or affected by any notice of modification or cancellation of this Escrow Agreement unless in writing signed by the Company and the Placement Agent, nor shall the Escrow Agent be bound by any modification hereof unless the same shall be satisfactory to it. The Escrow Agent shall be entitled to rely upon any notice, certification, demand or other writing delivered to it hereunder by the Company and/or the Placement Agent without being required to determine the authenticity or the correctness of any facts stated therein, the propriety or validity of the service thereof, or the jurisdiction of the court issuing any judgment.


(b) The Escrow Agent may act in reliance upon any signature believed by it to be genuine, and may assume that any person purporting to give any notice or receipt, or make any statements in connection with the provisions hereof has been duly authorized to do so.


(c) The Escrow Agent may act relative hereto in reliance upon advice of counsel in reference to any matter connected herewith, and shall not be liable for any mistake of fact or error or judgment, or for any acts or omissions of any kind, unless caused by its willful misconduct or gross negligence.


(d) The Escrow Agent may resign and be dischar
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