SECURITIES PROCEEDS ESCROW AGREEMENT
This Agreement is made and entered into this date by and between
CarPartsOnSale.com, Inc. ("Company") and First American Stock Transfer ("Escrow
Agent").
WHEREAS, the Company will be offering a minimum of 400,000 shares its common
stock to certain purchasers; and
WHEREAS, the Company is desirous that all proceeds from their sale be held in an
escrow until receipt by the Escrow Agent of funds as described in Section 4
below.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. FUNDS TO BE PLACED IN ESCROW.
All funds received from the sale of the stock subject to this Escrow Agreement
on or after the datehereof shall be paid to the Escrow Agent and deposited by
Escrow Agent in an escrow account. During the term of this Escrow Agreement, the
Company shall cause all checks received by it in payment for the Stock to be
either payable to the Escrow Agent or endorsed forthwith to such Escrow Agent.
The Escrow Agent shall place the funds in a non-interest bearing account at a
federally chartered bank. In this fashion there will be no need for accounting
of accumulated interest to the Company nor to Subscribers.
2. IDENTITY OF SUBSCRIBERS. The Company shall cause to be delivered to the
Escrow Agent a signed counterpart of each Subscription Agreement which shall
contain, among other things, the name and address of each subscriber thereto,
the date and amount subscribed, and the amount paid, or, in the alternative,
shall furnish to the Escrow Agent with each deposit of funds in the escrow a
list of the persons who have subscribed, showing the name, address, social
security number, date and amount of subscription and amount of money paid. All
funds so deposited shall remain the property of the subscriber and shall not be
subject to any liens or charges by the Escrow Agent, or judgments or creditors'
claims against the Company until released to said Company.
3. DUTY OF THE ESCROW AGENT. The sole duty of the Escrow Agent, other than
as hereinafter specified, shall be to receive said funds and hold them subject
to release, in accordance with these instructions, and the Escrow Agent shall be
under no duty to make certain that the Company is complying with requirements of
any securities laws in tendering to the Escrow Agent said proceeds of the sale
of said Stock.
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4. RELEASE OF FUNDS. Upon receipt by the Escrow Agent of a minimum of
$2,200,000 in cash from the sale of the Company's Stock, the Escrow Agent shall
pay over to the Company all funds received by the Escrow Agent on the Company's
behalf, together with any interest but less any fees due the Escrow Agent by the
Company.
In the event that the $2,200,000 is not received by the Escrow Agent pursuant to
this Agreement before the termination of this Agreement as set forth in Section
5 below, the Escrow Agent shall refund to each subscriber, at the address
appearing on the Subscription Agreement or the list of subscribers, or at such
other address as shall be provided the Escrow Agent by the subscriber in
writing, all sums paid by the subscriber and received by the Escrow Agent,
together with any accrued interest. Unless otherwise notified in writing, the
Escrow Agent may conclusively consider the address appearing on the Subscription
Agreement or list of subscribers as the correct address of each subscriber.
5. DURATION AND TERMINATION. This Escrow Agreement shall terminate on June
30, 2001 unless extended by the consent of the Escrow Agent, the Company and all
subscribers hereunder for whom the Escrow Agent is at that time holding funds
and who do not desire the return of their investment. The consent of the
subscribers to such an extension shall be in writing and in a form acceptable to
the Escrow Agent and the Company.
This Escrow Agreement shall also terminate upon written notice to the Escrow
Agent that the registration for the sale of the Company's securities has been
revoked by the U.S. Securities and Exchange Commission or upon notice to the
Escrow Agent of the bankruptcy or dissolution of the Company.
6. CONTROVERSY. If any controversy arises between the parties hereto or
with any third person, the Escrow Agent shall not be required to determine the
same or to take any action, but may await the settlement of any such controversy
by final appropriate legal proceedings, or otherwise as the Escrow Agent may
require, or the Escrow Agent may, in its discretion, institute such appropriate
interpleader or other proceedings in connection therewith as it may deem proper,
notwithstanding anything in this Agreement to the contrary. In any such event,
the Escrow Agent shall not be liable for interest or damages to the Company or
the subscribers.
7. ESCROW AGENTS LIABILITY. The Escrow Agent's obligations and duties in
connection herewith are confined to those specifically enumerated in this
Agreement. The Escrow Agent shall not be in any manner liable or responsible for
the sufficiency, correctness, genuineness or validity of any instruments
deposited with it or with reference to the form of execution thereof, or the
identity, authority or rights of any person executing or depositing same, and
the Escrow Agent shall not be liable for any loss that may occur by reason of
forgery, false representation or the exercise of its discretion in any
particular manner or for any other reason, except for its own negligence or
willful misconduct.
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8. ESCROW AGENTS FEE. The Escrow Agent's fee is set forth in Exhibit A,
attached hereto. The receipt of the opening fee as listed in Exhibit A by the
Escrow Agent is hereby acknowledged. 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 that the conditions of
this Escrow Agreement are not fulfilled, or the Escrow Agent renders any
material service not contemplated in this Agreement, or there is any assignment
of interest in the subject matter of this Escrow Agreement, or any material
modification hereof, or if any material controversy arises hereunder, or the
Escrow Agent is made a party to or justifiably intervenes in any litigation
pertaining to this Escrow Agreement, or the subject matter hereof, the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney fees
occasioned by any delay, controversy, litigation or event, and the same may be
recoverable from the Company only.
9. BINDING AGREEMENT AND SUBSTITUTION OF ESCROW AGENT. The terms and
conditions of this Agreement shall be binding on the heirs,, executors and
assign, creditors or transferees, or successors in interest, whether by
operation of law or otherwise, of the parties hereto. If, for any reason, the
Escrow Agent named herein should be unable or unwilling to continue as such
Escrow Agent, then the Company may substitute, with the consent of all of the
subscribers hereto for whom the Escrow Agent is at that time holding funds,
another person to serve as Escrow Agent. Any apportionment of the fees provided
for in Section 8 will be subject to agreement of the parties.
10. LAW GOVERNING. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties have hereunto severally caused this Agreement to
be executed as of the day and year first above written.
Date: November 17th 2000
CarPartsOnSale.com, Inc.
By:/s/SCOTT E. HUDSON
-----------------------
Scott E. Hudson, President
First American Stock Transfer
By:/s/PHILIP M. YOUNG
--------------------------
Philip M. Young, President
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EXHIBIT A
First American Stock Transfer, Inc. will charge a fee of $500 payable at the
time of signing.
All designated expenses will be forwarded to the Company for payment.
A complete accounting of all funds received and expended will be furnished at
the close of Escrow.
