EX-10.i.3

                                ESCROW AGREEMENT

      AGREEMENT   made  this                day of       , 2002,  by  and  among
American  Family Cookies,  Inc., a Delaware  corporation  (the "Issuer"),  whose
address  appears on the  Information  Sheet (as defined below)  attached to this
Agreement, and Continental Stock Transfer & Trust Company with a principal place
of business at 17 Battery Place, New York, New York 10004 (the "Escrow Agent").

                                   WITNESSETH:

      WHEREAS,  the Issuer has filed with the Securities and Exchange Commission
(the  "Commission")  a  registration  statement on Form SB-2 covering a proposed
public  offering of its  securities as described on the  Information  Sheet (the
"Registration Statement");

      WHEREAS,  the  Issuer  proposes  to offer the  Securities  for sale to the
public on a "best  efforts,  all or none"  basis  with  respect  to the  Minimum
Securities Amount and Minimum Dollar Amount and at the price per share set forth
on the Information Sheet;

      WHEREAS,  the Issuer  proposes to establish an escrow account (the "Escrow
Account")  to which  subscription  monies which are received by the Escrow Agent
from the Issuer in  connection  with such  offering are to be credited,  and the
Escrow Agent is willing to establish the Escrow Account on the terms AND subject
to the conditions hereinafter set forth; and

      WHEREAS,  the Escrow Agent has an agreement  with J.P.  Morgan Chase Bank,
N.A.  ("Chase  Bank") to establish a special  bank account (the "Bank  Account")
into which the  subscription  monies  received  by the Escrow  Account  from the
Issuer and credited to the Escrow Account, are to be deposited;

      NOW,  THEREFORE,  in  consideration  of the premises and mutual  covenants
herein contained, the parties agree as follows:

      1. INFORMATION  SHEET. Each capitalized term not otherwise defined in this
Agreement  shall  have the  meaning  set forth for such term on the  information
sheet attached to this Agreement and incorporated by reference herein and made a
part hereof (the "Information Sheet").

      2. ESTABLISHMENT OF THE BANK ACCOUNT.

      2.1. The Escrow Agent shall establish a non-interest-bearing  bank account
at the branch of J.P.Morgan  Chase Bank, N.A.  selected by the Escrow Agent, and
bearing the designation set forth on the Information Sheet (the "Bank Account").
The  purpose of the Bank  Account is for:  (a) the  deposit of all  subscription
monies (checks,  cash or wire transfers) which are received by the Issuer and/or
a participating  broker-dealer from prospective purchasers of the Securities and
arc delivered by the Issuer and/or a participating  broker-dealer  to the Escrow
Agent; (b) the holding of of subscription  monies collected  through the banking
system; and (c) the disbursement of collected funds, all as described herein.

<PAGE>

      2.2.  On or before the date of the  initial  deposit  in the Bank  Account
pursuant to this Agreement,  the Issuer shall notify the Escrow Agent in writing
of the date the  Registration  Statement is declared  effective (the  "Effective
Date"),  and the Escrow  Agent  shall not accept any  amounts  for credit to the
Escrow  Account or for deposit in the Bank Account  prior to its receipt of such
notification.

      2.3.  The  offering  period,  which  shall be  deemed to  commence  on the
Effective  Date,  shall  consist of the number of calendar days or business days
set forth on the Information  Sheet. The offering period shall be extended by an
extension  period only if the Escrow Agent shall have  received  written  notice
thereof at least five (5) business days prior to the  expiration of the offering
period,  The  extension  period,  which  shall be deemed to commence on the next
calendar day following the expiration of the offering  period,  shall consist of
the number of calendar days or business days set forth on the Information Sheet.
The last day of the offering period, or the last day of the extension period (if
the Escrow Agent has received  written notice thereof as herein above  provided)
is referred to herein as the  "Termination  Date." Except as provided in Section
4.3 hereof,  after the Termination  Date the, Issuer shall not deposit,  and the
Escrow Agent shall not accept, any additional amounts  representing  payments by
the prospective purchasers.

      3.  DEPOSITS TO THE BANK ACCOUNT.

      3.1.  The  Issuer  and/or a  participating  broker-dealer  shall  promptly
deliver  to the Escrow  Agent all  monies  which it  receives  from  prospective
purchasers of the Securities, which monies shall be in the form of checks, cash,
or wire transfers. Upon the Escrow Agent's receipt of such monies, they shall be
credited to the Escrow Account.  All checks  delivered to the Escrow Agent shall
be made  payable  to  "CONTINENTAL  STOCK  TRANSFER  & TRUST  COMPANY  AS ESCROW
AGENT-AMERICAN FAMILY COOKIES,  INC." Any check payable other than to the Escrow
Agent as required hereby shall be returned to the prospective  purchaser,  or if
the Escrow  Agent has  insufficient  information  to do so,  then to the Issuers
(together with any Subscription Information, as defined below or other documents
delivered  therewith) by noon of the next business day following receipt of such
check by the  Escrow  Agent,  and such  check  shall be deemed  not to have been
delivered to the Escrow Agent pursuant to the terms of this Agreement.

      3.2. Promptly after receiving  subscription monies as described in Section
3.1, the Escrow Agent shall deposit the same into the Bank  Account.  Amounts of
monies so deposited are hereinafter  referred to as "Escrow Amounts." The Escrow
Agent  shall cause Chase  Bank.  to process  all Escrow  Amounts for  collection
through  the  banking  system.  Simultaneously  with each  deposit to the Escrow
Account,  the Issuer  shall  inform the Escrow  Agent in writing of the name and
address of the prospective purchaser, the amount of Securities subscribed for by
such  purchaser,   and  the  aggregate   dollar  amount  of  such   subscription
(collectively, the "Subscription Information"),

      3.3.  The Escrow  Agent  shall not be required to accept for credit to the
Escrow  Account  or for  deposit  into the Bank  Account  checks  which  are not
accompanied by the appropriate Subscription Information.  Wire transfer and cash
representing payments by

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<PAGE>

prospective purchasers shall not be deemed deposited in the Escrow Account until
the Escrow Agent has received in writing the Subscription  Information  required
with respect to such payments,

      3.4.  The  Escrow  Agent  shall not be  required  to accept in the  Escrow
Account any amounts representing payments by prospective purchasers,  whether by
check, cash or wire, except during the Escrow Agent's regular business hours.

      3.5.  Only those  Escrow  Amounts,  which have been  deposited in the Bank
Account and which have cleared the banking system and have been collected by the
Escrow Agent, are herein referred to as the "Fund."

      3.6. If the proposed  offering is terminated  before the Termination Date,
the Escrow Agent shall refund any portion off the Fund prior to  disbursement of
the Fund in  accordance  with  Article 4 hereof,  upon  instructions  in writing
signed by the Issuer.

      4.    DISBURSEMENT FROM THE BANK ACCOUNT.

      4.1.  Subject to Section  4.3  below,  if by the close of regular  banking
hours on the  Termination  Date, the Escrow Agent  determines that the amount in
the Fund is less  than the  Minimum  Dollar  Amount  or the  Minimum  Securities
Amount,  as indicated by the  Subscription  Information  submitted to the Escrow
Agent,  then in either such case, the Escrow Agent shall promptly refund to each
prospective  purchaser the amount of payment  received from such purchaser which
is then held in the Fund or which thereafter clears the banking system,  without
interest thereon or deduction  therefrom,  by drawing checks on the Bank Account
for the amounts of such payments and  transmitting  them to the  purchasers.  In
such  event,  the  Escrow  Agent  shall  promptly  notify  the  Issuer  of  such
distribution from the Fund.

      4.2.  Subject  to  Section  4.3  below,  if at any time up to the close of
regular banking hours on the Termination  Date, the Escrow Agent determines that
the  amount  in the Fund is at least  equal to the  Minimum  Dollar  Amount  and
represents the sale of not less than the Minimum  Securities  Amount, the Escrow
Agent shall promptly notify the Issuer of such fact in writing. The Escrow Agent
shall promptly after it receives such instructions, disburse the Fund by drawing
checks on the Bank  Account in  accordance  with written  instructions  from the
Issuer.

      4.3.  If the  Escrow  Agent  or the  Issuer  has on hand at the  close  of
business on the Termination  Date any uncollected  amounts which,  when added to
the Fund,  would raise the amount in the Fund to the Minimum Dollar Amount,  and
result in the Fund representing the sale of the Minimum  Securities  Amount, the
Collection  period  (consisting  of the number of business days set forth on the
Information Sheet) shall be utilized to allow such uncollected  amounts to clear
the banking system.  During the collection period, the Issuer shall not deposit,
and the  Escrow  Agent  shall not  accept,  any  additional  amounts;  provided,
however, that such amounts as were received by the Issuer and/or a participating
broker-dealer  by the close of business on the Termination Date may be deposited
with the Escrow Agent by noon of the next business day following the Termination
Date. If, at the close of business on the last day of the Collection  Period, an
amount  sufficient to raise the amount in the Fund to the Minimum  Dollar Amount
and  which  would  result  in the  Fund  representing  the  sale of the  Minimum
Securities

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<PAGE>

Amount  shall not have  cleared  the  banking  system,  the Escrow  Agent  shall
promptly  notify the Issuer of such fact and shall  promptly  return all amounts
then in the Fund, and any amounts which thereafter clear the banking system,  to
the prospective purchasers as provided in Section 4.2 hereof

      4.4. Upon  disbursement  of the Fund pursuant to the terms of this Article
4, the Escrow  Agent shall be relieved of all further  obligations  and released
from all liability under this Agreement.  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.

      5.   RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT .

      It is understood and agreed that the duties of the Escrow Agent are purely
ministerial in nature, and that:

      5.1. The Escrow Agent shall  notify the Issuer,  on a daily basis,  of the
Escrow Amounts which have been deposited in the Bank Account and of the amounts,
constituting  the Fund,  which have  cleared  the  banking  system and have been
collected by the Escrow Agent

      5.2.  The Escrow Agent shall be  responsible  for the  performance  by the
Issuer of their respective obligations under this Agreement.

      5.3.  The Escrow Agent shall not be required to accept from the Issuer any
Subscription  Information  pertaining  to  prospective  purchasers  unless  such
Subscription  Information  is  accompanied  by  checks,  cash or wire  transfers
meeting the  requirements of Section 3.1, nor shall the Escrow Agent be required
to keep records of any  information  with  respect to payments  deposited by the
Issuer except as to the amount of such payments; however, the Escrow Agent shall
notify the Issuer within a reasonable time of any discrepancy between the amount
set forth in any Subscription Information and the amount delivered to the Escrow
Agent  therewith.  Such amount  need not be  accepted  for deposit in the Escrow
Account until such discrepancy has been resolved

      5.4. The Escrow Agent shall be under no duty or  responsibility to enforce
collection of any check  delivered to it hereunder.  The Escrow Agent,  within a
reasonable  time,  shall  return to the  Issuer any check  which is  dishonored,
together with the  Subscription  information,  if any,  which  accompanied  such
check.

      5.5. The Escrow Agent shall be, entitled to rely upon the accuracy, act in
reliance  upon  the  contents,   and  assume  the  genuineness  of  any  notice,
instruction, certificate, signature, instrument or other document which is given
to the Escrow  Agent  pursuant to this  Agreement  without the  necessity of the
Escrow Agent verifying the truth or accuracy thereof. 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 or to
execute any such certificate, instrument or other document.

      5.6. If the Escrow Agent is uncertain as to its duties or rights hereunder
or shall  receive  instructions  with  respect to the Bank  Account,  the Escrow
Amounts or the Fund which,

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<PAGE>


in its sole  determination,  are in  conflict  either  with  other  instructions
received by it or with any provision of this Agreement,  it shall be entitled to
hold the Escrow  Amounts,  the Fund, or a portion  thereof,  in the Bank 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 otherwise; or the Escrow Agent, at its sole option, may deposit the Fund (and
any other Escrow Amounts that thereafter become part of the Fund) with the Clerk
of a court of competent  jurisdiction  in a  proceeding  to which all parties in
interest  are joined.  Upon the deposit by the Escrow Agent of the Fund with the
Clerk  of any  court,  the  Escrow  Agent  shall  be  relieved  of  all  further
obligations and released from all liability hereunder.

      5.7.  The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it,  except in the case of willful  misconduct or gross  negligence.  The Escrow
Agent shall be entitled to consult  with  counsel of its own  choosing and shall
not be liable for any action taken, suffered or omitted by it in accordance with
the advice of such counsel.

      5.8.  The  Escrow  Agent  shall  have  no  responsibility  at any  time to
ascertain whether or not any security interest exists in the Escrow Amounts, the
Fund or any part thereof or to file any  financing  statement  under the Uniform
Commercial Code with respect to the Fund or any part thereof.

      6.  AMENDMENT;  RESIGNATION  This Agreement may be altered or amended only
with the written  consent of the Issuer and the Escrow  Agent.  The Escrow Agent
may resign for any reason upon (3) business  days' written notice to the Issuer.
Should the Escrow  Agent  resign as herein  provided it shall not be required to
accept any deposit,  make any  disbursement  or otherwise  dispose of the Escrow
Amounts or the Fund but its only duty shall be to hold the Escrow  Amounts until
they  clear the  banking  system and Fund for a period of not more than five (5)
business days following the effective date of such  resignation,  at which time:
(a) if a successor  escrow agent shall have been  appointed  and written  notice
thereof  (including the name and address of such  successor  escrow agent) shall
have been given to the  resigning  Escrow  Agent by the  Issuer and a  successor
escrow agent,  then the  resigning  Escrow Agent shall pay over to the successor
escrow agent the Fund less any portion thereof previously paid out in accordance
with  this  Agreement;  or (b) if the  resigning  Escrow  Agent  shall  not have
received written notice signed by the Issuer and a successor escrow agent,  then
the resigning  Escrow Agent shall promptly refund the amount in the Fund to each
prospective purchaser,  without interest thereon or deduction therefrom, and the
resigning  Escrow  Agent  shall  promptly  notify  the  Issuer in writing of its
liquidation and distribution of the Fund; whereupon,  in either case, the Escrow
Agent  shall be  relieved  of all  further  obligations  and  released  from all
liability  under this  Agreement.  Without  limiting the provisions of Section 8
hereof,  the  resigning  Escrow Agent shall be entitled to be  reimbursed by the
Issuer for any expenses incurred in connection with its resignation, transfer of
the Fund to a successor  escrow agent or  distribution  of the Fund  pursuant to
this Section 6.

      7.  REPRESENTATIONS  AND  WARRANTIES.  The Issuer  hereby  represents  and
warrants to the Escrow Agent that:

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<PAGE>

      7.1.  No  Party  other  than  the  parties  hereto  and the  prospective
purchasers  have, or shall have, any lien,  claim or security  interest in the
Escrow Amounts or the Fund or any part thereof

      7.2. 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 Escrow Amounts or the Fund or any part thereof.

      7.3. The  Subscription  Information  submitted with each deposit shall, at
the time of the submission and at the time of the  disbursement  of the Fund, be
deemed a  representation  and warranty that such deposit  represents a bona fide
payment by the  purchaser  described  therein for the amount of  Securities  set
forth in such Subscription Information.

      7.4. All of the information  contained in the  Information  Sheet is, as
of the date hereof,  and will be, at the time of any disbursement of the Fund,
true and correct,

      8. FEES AND  EXPENSE.  The Escrow  Agent  shall be  entitled to the Escrow
Agent  Fees set  forth on the  Information  Sheet,  payable  as and when  stated
therein.  In addition,  the Issuer  agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement,  including,  but
not limited to,  reasonable  counsel  fees.  Upon receipt of the Minimum  Dollar
Amount,  the Escrow  Agent  shall have a lien upon the Fund to the extent of its
fees for services as Escrow Agent.

      9 .   INDEMNIFICATION AND CONTRIBUTION .

      9.1.  The Issuer  agrees to indemnify  the Escrow Agent and its  officers,
directors,  employees,  agents and shareholders (collectively referred to as the
"Indemnitees")  against,  and hold them  harmless  of and from any and all loss,
liability,  cost, damage and expense,  including without limitation,  reasonable
counsel fees, which the Indemnitees may suffer or incur by reason of any action,
claim or proceeding  brought against the Indemnitees  arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates,
unless such action,  claim or proceeding is the result of the willful misconduct
or gross negligence of the Indemnitees.

      9.2. If the indemnification provided for in Section 9.1 is applicable, but
for any reason is held to be  unavailable,  the  Issuer  shall  contribute  such
amounts as are just and equitable to pay, or to reimburse the  Indemnitees  for,
the aggregate of any and all losses,  liabilities,  costs, damages and expenses,
including  counsel fees,  actually incurred by the Indemnitees as a result of or
in connection  with, and any amount paid in settlement of, any action,  claim or
proceeding  arising out of or relating in any way to any actions or omissions of
the Indemnitors.

      9.3. The  provisions  of this Article 9 shall survive any  termination  of
this Agreement,  whether by disbursement of the Fund,  resignation of the Escrow
Agent or otherwise.

       10.  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

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<PAGE>

hereto and their  respective  successors  and assigns,  provided,  however,  any
assignment  or transfer by any party of its rights under this  Agreement or with
respect  to the Escrow  Amounts or 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  in writing to such  assignment  or
transfer.

       11.  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 hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office or other  recognized  overnight
courier, and addressed,  if to the Issuer, at its respective addresses set forth
on the Information  Sheet,  and if to the Escrow Agent, at its address set forth
above, to the attention of the Trust Department.

       12.  SEVERABILITY.  If any provision of this Agreement or the application
thereof  to any  person or  circumstance  shall be  determined  to be invalid or
unenforceable,  the remaining provisions of this 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 effected  thereby and shall be valid and
enforceable to the fullest extent permitted by law.

       13. COUNTERPARTS.  This Agreement may be executed 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.

       14. ENTIRE  AGREEMENT.  This Agreement  constitutes the entire  agreement
between  the  parties  hereto  with  respect to the  subject  matter  hereof and
supersedes  all prior  agreements  and  understandings  (written or oral) of the
parties in connection therewith,

       IN WITNESS  WHEREOF,  the undersigned  have executed this Agreement as of
the day and year first above written,

AMERICAN FAMILY COOKIES, INC.

By:
   -------------------------
   Robert Gregory, President


CONTINENTAL STOCK
TRANSFER & TRUST COMPANY

BY:
   -------------------------


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<PAGE>

                       ESCROW AGREEMENT INFORMATION SHEET

            1. THE ISSUER

            Name: American Family Cookies, Inc.
            Address: 112 Wheeler Street, LaVergne, TN 37080
            State of incorporation of organization: Delaware

            2. THE SECURITIES

            Description  of the  securities  to be  offered  : Common  Stock;  A
            minimum of 600,000 shares and a maximum of 750,000 shares, par value
            $.001 per share. 3

            3.  MINIMUM AMOUNTS REQUIRED FOR DISBURSEMENT OF THE ESCROW ACCOUNT

            Aggregate dollar amount which must be collected before the Escrow
            Account may be disbursed to the Issuer ( "Minimum Dollar
            Amount"): $1,200,000

            Total amount of securities  which must be subscribed  for before the
            Escrow  Account may be disbursed to the  Issuer("Minimum  Securities
            Amount") 600,000 shares

            4. PLAN OF DISTRIBUTION OF SECURITIES

                                Offering Period 90 days
                                Extension Period, if any:30 days
                                Collection Period, if any: 10 business days

            5.  TITLE OF ESCROW ACCOUNT:  Continental Stock Transfer & Trust
                Company, Escrow American Family Cookies, Inc.

            6.  ESCROW AGENT FEES

                Amount due on execution of the Escrow  Agreement:$1,000;
                Amount due upon upon  completion  of the escrow,  $1,000
                (Includes one closing);  $500 for each additional closing.
                Fee for each check disbursed pursuant to the terms of the Escrow
                Agreement $10;
                Feefor each  check  returned pursuant to the terms of the Escrow
                Agreement $10