ex10-5.htm


    
      

      

    

    
      Exhibit
10.5


      ESCROW
AGREEMENT

      


      


           AGREEMENT
made this 18th day of
July, 2008 by and between INNERLIGHT HOLDINGS, INC., 867 East 2260 South, Provo
UT 84606 (the “Issuer”), and William J. Reilly, Esq., 401 Broadway, Suite 912,
New York, NY 10013 (the "Escrow Agent").

      


      W
I T N E S S E T H :

      


           WHEREAS,
the Issuer has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") covering a
proposed public offering of its Securities (collectively, the "Securities", and
individually, a "Unit") as described on the Registration Statement;
and

      


           WHEREAS,
the Issuer proposes to offer the Securities, for sale to the public on a "best
efforts, all or none basis" directly by its Officers and Directors, at the price
per Unit all as set forth in the Registration Statement; and

      


           WHEREAS,
the Issuer proposes to establish an escrow account with the Escrow Agent in
connection with such public offering and the Escrow Agent is willing to
establish such escrow account on the terms and subject to the conditions
hereinafter set forth;

      


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

      


           1. 
   Registration Statement. Each capitalized term not otherwise
defined in this Agreement shall have the meaning set forth for such term on the
Registration Statement which is attached to this Agreement and is incorporated
by reference herein and made a part hereof (the "Registration
Statement").

      


           2.   
 Establishment of Escrow Account.

      


           2.1  
The Escrow Agent shall establish a non- interest-bearing, FDIC-Insured Escrow
account at Sovereign Bank, New York, NY, and bearing the designation, set forth
on the Registration Statement (the "Escrow Account").

      


           2.2   The
Issuer shall notify the Escrow Agent in writing of the effective date of the
Registration Statement (the "Effective Date") and the Escrow Agent shall not be
required to accept any amount for deposit in the Escrow 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
Registration Statement. 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
the 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 hereinabove provided), is
referred to herein as the "Termination Date." After the Termination Date, the
Issuer shall not deposit, and the Escrow Agent shall not accept, any additional
amounts representing payments by prospective purchasers.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


           3.  
 Deposits in the Escrow Account.

      


           3.1  Upon
receipt, the Issuer shall promptly deposit all monies received from investors to
the Escrow Agent. All of these deposited proceeds (the "Deposited Proceeds")
shall be in the form of checks or money orders. All checks or money orders
deposited into the Escrow Account shall be made payable to "William J. Reilly,
Esq., as Escrow Agent." Any check or money order 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 Issuer
(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.
The Deposited Proceeds and interest or dividends thereon, if any, shall be held
for the sole benefit of the purchasers of the securities.

      


           3.2  The
Deposited Proceeds shall be invested in either

      


              (a)
an obligation that constitutes a "deposit" as that term is defined in Section
(3)(1) of the Federal Deposit Insurance Act;

      


              (b)
securities of any open-end investment company registered under the Investment
Company Act of 1940 that holds itself out as a money market fund meeting the
conditions of paragraphs (c)(2), (c) (3), and (c)(4) of Rule 2a-7 under the
Investment Company Act; or

      


              (c)
securities that are direct obligations of, or obligations guaranteed as to
principal or interest by, the United States.

      


           3.3  Simultaneously
with each deposit into the Escrow Account, the Issuer shall inform the Escrow
Agent by confirmation slip or other writing of the name and address of the
prospective purchaser, the number of Securities subscribed for by such
purchaser, and the aggregate dollar amount of such subscription (collectively,
the "Subscription Information").

      


           3.4  The
Escrow Agent shall not be required to accept for deposit into the Escrow Account
checks which are not accompanied by the appropriate Subscription Information.
Checks and money orders representing payments by 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.

      


           3.5  The
Escrow Agent shall be required to accept any amounts representing payments by
prospective purchasers, whether by check or money order, and to deposit same
into the Escrow Account not later than the second business day following
receipt.

      


           3.6  Interest
or dividends earned on the Deposited Proceeds, if any, shall be held in the
Escrow Account until the Deposited Proceeds are released in accordance with the
provisions of Section 4 of the Escrow Agreement. If the Deposited Proceeds are
released to a purchaser of the securities, the purchaser shall receive interest
or dividends earned, if any, on such Deposited Proceeds up to the date of
release. If the Deposited Proceeds held in the Escrow Account are released to
the Company, any interest or dividends earned on such funds up to the date of
release may be released to the Company.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


           3.7  The
Issuer shall deposit the Securities directly into the Escrow Account promptly
upon issuance (the "Deposited Securities"). The identity of the purchaser of the
Securities shall be included on the Common Stock and Warrant
certificates.

      


           3.8  The
Deposited Securities shall be held for the sole benefit of the purchasers. No
transfer or other disposition of Securities held in the Escrow Account or any
interest related to such Securities shall be permitted other than by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title I of
the Employee Retirement Income Security Act, or the rules
thereunder.

      


           3.9  The
Escrow Agent shall refund any portion of the Deposited Proceeds prior to
disbursement of the Deposited Proceeds in accordance with Section 4 hereof upon
instructions in writing signed by the Issuer.

      


           4. 
  Disbursement from the Escrow Account.

       

           4.1  The
Deposited Proceeds may be released to the Company and the Securities delivered
to the purchaser or other registered holder only at the same time as or
after:

      


              (a)
the Escrow Agent has received a signed representation from the Company, together
with an opinion of counsel that the following events have already occurred and
the following requirements have already been met:

      


             (i)
Discloses the results of the initial offering, including but not limited
to:

      


           (A) 
The gross offering proceeds received to date, specifying the amounts paid for
underwriter commissions, underwriting expenses and dealer allowances, if any,
amounts disbursed to the Company, and amounts remaining in the Escrow Account;
and

      


           (B) 
The specific amount, use and application of funds disbursed to the Company to
date, including, but not limited to, the amounts paid to officers, directors,
promoters, controlling Unitholders or affiliates, either directly or indirectly
specifying the amounts and purposes of such payments; and

      


        
   (iii) Discloses the terms of the offering as described
pursuant to Section 4 of this Escrow Agreement.

      


                (2)
The terms of the offering provided, and the Company satisfied, the following
conditions:

      


         (i)
Within five business days after the effective date of the post-effective
amendment(s), the Company shall send by first class mail or other equally prompt
means, to each purchaser of securities held in escrow, a copy of the prospectus
contained in the post-effective amendment and any amendment or supplement
thereto;

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


         (ii)
Each purchaser shall have no fewer than 20 business days and no more than 45
business days from the effective date of the post-effective amendment to notify
the Company in writing that the purchaser elects to remain an investor. If the
Company has not received such written notification by the 45th business day
following the effective date of the post-effective amendment, funds and interest
or dividends, if any, held in the Escrow Account shall be sent by first class
mail or other equally prompt means to the purchaser within five business
days;

      


         (iii)
The acquisition(s) meeting the criteria set forth in paragraph (a) (1) of this
Section 4 will be consummated if a sufficient number of purchasers confirm their
investments; and

      


         (iv)
If a consummated acquisition(s) meeting the requirements of this section has not
occurred by a date 18 months after the Effective Date, the Deposited Funds shall
be returned by first class mail or equally prompt means to the purchaser within
five business days following that date.

      


         (b)
Funds held in the Escrow Account may be released to the Company and securities
may be delivered to the purchaser or other registered holder identified on the
deposited securities only at the same time as or after consummation of an
acquisition(s) meeting the requirements set forth in Section 4.1(a)(1)(iii) of
this Escrow Agreement.

      


           4.2  In
the event that at the close of regular banking hours on the Termination Date
less than all of the Units have been sold, the Escrow Agent shall promptly
refund to each prospective purchaser the amount of payment received from such
purchaser held in Escrow without interest thereon or deduction therefrom, and
the Escrow Agent shall notify the Issuer of its distribution of the Deposited
Proceeds.

      


           4.3  In
the event that at any time up to the close of banking hours on the Termination
Date all of the Units have been sold, the Escrow Agent shall notify the Issuer
of such fact in writing within a reasonable time thereafter. The Escrow Agent
shall hold the Deposited Proceeds until the events described in Section 4.1 of
this Escrow Agreement take place.

      


           4.4  Upon
disbursement of the Deposited Proceeds pursuant to the terms of this Section 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 Deposited Proceeds.

      


           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 not be responsible for the performance by the Issuer of its
obligations under this Agreement.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


           5.2  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 or money orders representing the payment of
money, 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 delivered to the Escrow Agent
therewith. Such amount need not be accepted for deposit in the Escrow Account
until such discrepancy has been resolved.

      


           5.3  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 received which is dishonored, together with
the Subscription Information, if any, which accompanied such check.

      


           5.4  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. The Escrow Agent must, however,
determine for itself whether the conditions permitting the release of the funds
in the Escrow Account have been met.

      


           5.5  In
the event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions with respect to the Escrow Account or
the Deposited Proceeds which, in its sole determination, are in conflict either
with other instructions received by it or with any provision of this Agreement,
the Escrow Agent, at its sole option, may deposit the Deposited Proceeds (and
any other amounts that thereafter become part of the Deposited Proceeds) with
the registry 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
Deposited Proceeds with the registry of any court, the Escrow Agent shall be
relieved of all further obligations and released from all liability
hereunder.

      


           5.6  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. 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.

      


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

      


           5.8  The
Escrow Agent shall determine whether or not the Offering has been successful,
and if it determines that less than all of the Securities being offered have
been sold, thus rendering the Offering unsuccessful, the Escrow Agent shall
return the proceeds of the Offering to the investors on a pro-rata
basis.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


           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 seven (7) 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 Deposited
Proceeds, but its only duty shall be to hold the Deposited Proceeds for a period
of not more than ten (10) 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 such successor escrow agent, the resigning Escrow Agent shall pay
over to the successor escrow agent the Deposited Proceeds, 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 Deposited Proceeds to each prospective
purchaser without interest thereon or deduction therefrom, and the resigning
Escrow Agent shall notify the Issuer in writing of its liquidation and
distribution of the Deposited Proceeds; 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 Deposited Proceeds to a successor Escrow Agent or distribution of the
Deposited Proceeds pursuant to this Section 6.

      


           7. 
  Representations and Warranties. The Issuer hereby represents and
warrants to the Escrow Agent that:

      


           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 Deposited Proceeds 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 Deposited Proceeds or any part thereof.

      


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

      


           7.4  All
of the information contained in the Registration Statement is, as of the date
hereof and will be, at the time of any disbursement of the Deposited Proceeds,
true and correct.

      


           8.  
 Fees and Expenses. The Escrow Agent shall be entitled to the Escrow Agent
Fee set forth in the Registration Statement, payable upon execution of this
Agreement. 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, but not including the review of this
Agreement.

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


           9.
   Indemnification and Contribution.

      


           9.1  The
Issuer (referred to as the "Indemnitor") agrees to indemnify the Escrow Agent
and its officers, directors, employees, agents and Unitholders (jointly and
severally 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 of the Indemnitees.

      


           9.2  If
the indemnification provided for in this Section 9 is applicable, but for any
reasons held to be unavailable, the Indemnitor 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 Indemnitor.

      


           9.3  Any
Indemnitee which proposes to assert the right to be indemnified under this
Section 9, promptly after receipt of notice of commencement of any action, suit
or proceeding against such Indemnitee in respect of which a claim is to be made
against the Indemnitor under this Section 9, will notify the Indemnitor of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served, but the omission so to notify the Indemnitor of any such action, suit or
proceeding shall not relieve the Indemnitor from any liability which they may
have to any Indemnitee otherwise than under this Section 9. In case any such
action, suit or proceeding shall be brought against any Indemnitee and it shall
notify the Indemnitor of the commencement thereof, the Indemnitor shall be
entitled to participate in and, to the extent that they shall wish, to assume
the defense thereof, with counsel satisfactory to such Indemnitee. The
Indemnitee shall have the right to employ its counsel in any such action, but
the fees and expenses of such counsel shall be at the expense of such Indemnitee
unless (i)the employment of counsel by such Indemnitee has been authorized by
the Indemnitor, (ii) the Indemnitee shall have concluded reasonably that there
may be a conflict of interest among the Indemnitor and the Indemnitee in the
conduct of the defense of such action (in which case the Indemnitor shall not
have the right to direct the defense of such action on behalf of the Indemnitee)
or (iii) the Indemnitor in fact shall not have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
shall be borne by the Indemnitor.

      


           9.4  The
Indemnitor agrees to provide the Indemnitees with copies of all registration
statements pre- and post-effective amendments to such registration statements
including exhibits, whether filed with the SEC prior to or subsequent to the
disbursement of the Deposited Proceeds.

      


           9.5  The
provisions of this Section 9 shall survive any termination of this Agreement,
whether by disbursement of the Deposited Proceeds, 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 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 Deposited Proceeds 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, and addressed, if to the Issue, at its address set forth on
the Registration Statement, and if to the Escrow Agent, to its office address
set forth above.

      


           12.  Severability.
If any provision of this Agreement or the application thereof to any person or
circumstance shall be determined to be unpaid 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 affected thereby and shall be valid and enforceable to the fullest
extent permitted by law.

      


           13.  Closing.
The closing shall take place in accordance with the Terms of The Offering set
forth in the Registration Statement.

      


           14.  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.

      


           15.  Captions.
All captions are for convenience only and shall not limit or define the term
thereof.

      


           16.  Execution
in Several 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 herein.

      


           17.  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
herewith.

      


      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


      


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

      


      
        	 
      	
                THE
      ISSUER: INNERLIGHT HOLDINGS, INC.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                By:__/S/ Kevin P.
      Brogan__________

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                ESCROW
      AGENT: WILLIAM J. REILLY, ESQ.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                By: /S/ William J.
      Reilly_____       
      ___