EXHIBIT 10.3
FORM OF RULE 419 ESCROW AGREEMENT
Letter of Escrow Instructions
To:
Corporate Trust/Agency Administration
Win or Lose Acquisition Corporation - Rule 419 escrow,
__________________ Bank Escrow No. ___________
This Letter of Escrow Instructions to ___________ Bank, hereinafter
called Escrow Agent, shall become immediately and automatically become operative
and effective upon the successful completion of a public offering of certain
securities of Win or Lose Acquisition Corporation (the "Company") which is
described more fully in the Company's Form S-1 Registration Statement under the
Securities Act of 1933 (Registration No. 333-___________). The Company and the
Escrow Agent have previously entered into a Letter of Escrow Instructions dated
_________________, 2001 which relates to the creation, operation and termination
of the Win or Lose Acquisition Corporation - Subscription Escrow, _________ Bank
Escrow No. ___________ (the "Subscription Escrow"). The terms and conditions of
the Subscription Escrow are incorporated herein by this reference.
1. ESCROW PURPOSE:
1.1 This escrow is a single party holding escrow established by Win or Lose
Acquisition Corporation, of Clearwater, Florida, (the "Company"). There
are no other parties to this escrow.
1.2 The purpose of this escrow is to receive, hold and ultimately
distribute, in accordance with the terms of this agreement:
o The cash proceeds ("Offering Proceeds") of the Company's
registered public offering of securities; and
o The stock certificates representing beneficial ownership of
the securities that will be sold to the public and issued as
compensation as a result of the Company's registered public
offering of securities.
1.3 This escrow agreement constitutes an essential element of the Company's
proposed public offering of securities and is required by Securities
and Exchange Commission Rule 419. The parties to this Agreement shall,
at all times, conduct all of their activities relating to the Rule 419
escrow created hereby in strict compliance with the letter and the
spirit of Rule 419. In the event of any inconsistency between the terms
of this Agreement and the requirements of Rule 419, the requirements of
Rule 419 shall have priority.
2. ESCROW DEPOSITS:
2.1 Upon successful completion of the Company's offering, the escrow agent
for the Subscription Escrow, will
(a) Prepare a detailed schedule that identifies each person who
has purchased shares of the Company's Common Stock, states the
number of shares purchased by each subscriber, and otherwise
complies with the requirements of 12 CFR 330.1 of the
Regulations of the Federal Deposit Insurance Corporation.; and
(b) Directly transfer to the Rule 419 escrow created by this
agreement all funds then on deposit in the Subscription
Escrow, including any interest previously earned thereon.
2.2 As soon as practicable after the successful completion of the Company's
offering, the Company will deliver, or cause to be delivered, to the
Escrow Agent, Stock Certificates representing the ownership of the
500,000 shares of common stock that have been sold to the public in
connection with the Company's public offering of securities. All stock
certificates delivered to the Escrow Agent shall be registered in the
name of the owner thereof and contain such other information as the
Company and the Escrow Agent deem necessary or desirable to comply with
the requirements of Securities and Exchange Commission Rule 419 and the
Regulations of the Federal Deposit Insurance Corporation, or otherwise
provide for the efficient performance of the Escrow Agent's duties
hereunder.
2.3 When the Escrow Agent has received the subscription funds specified in
Section 2.1 and the stock certificates specified in Section 2.2, it
shall examine the stock certificates delivered by the Company to
confirm that the information on the stock certificates agrees in all
particulars with the information in the detailed schedule prepared by
the subscription escrow agent. In the event of any discrepancy between
the records of the subscription escrow agent and the records of the
Company, the records of the subscription escrow agent shall have
priority.
2.4 When the Escrow Agent has confirmed the receipt of $125,000 in cash
subscription proceeds, together with any interest previously earned
thereon, and confirmed that the stock certificates delivered by the
Company agree in all particulars with the information in the detailed
schedule prepared by the subscription escrow agent, the Escrow Agent
shall promptly disburse the sum of Twelve Thousand Five Hundred Dollars
($12,500) to the Company. All remaining subscription funds shall be
deposited in the Rule 419 escrow and be treated for all purposes of
this agreement as the "Escrow Funds."
2.5 When the Company's board of directors decides to issue all or any part
of the 500,000 compensation shares that have been included in its
registration statement, all Stock Certificates representing the
ownership of such shares shall be delivered to the Escrow Agent and
become subject to the provisions of this agreement. All certificates
for compensation shares delivered to the Escrow Agent shall be
registered in the name of the owner thereof and contain such other
information as the Company and the Escrow Agent deem necessary or
desirable to comply with the requirements of Securities and Exchange
Commission Rule 419, or otherwise provide for the efficient performance
of the Escrow Agent's duties hereunder.
2.6 The Escrow Funds and all stock certificates delivered to the Escrow
Agent pursuant to Sections 2.2 and 2.5 shall be held and disposed of by
Escrow Agent in accordance with the following instructions and upon the
terms and conditions hereinafter set forth.
3. INVESTMENT OF ESCROW FUNDS:
3.1 The Escrow Funds may only be invested in (i) an obligation that
constitutes a "deposit" as that term is defined in section 3(1) of the
Federal Deposit Insurance Act, (ii) securities of an open-end
investment company registered under the Investment Company Act of 1940
that holds itself our 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 (iii) securities that are direct obligations of, or
obligations guaranteed as to principal or interest by, the United
States.
3.2 All interest earned with respect to the Escrow Funds shall be added to
the principal thereof and treated as Escrow Funds for all purposes of
this Agreement.
3.3 The Escrow Agent, in consultation with the Company, shall allocated the
Escrow Funds in such a manner as will, in the judgment of the Escrow
Agent, maximize the annual return on the Escrow Funds, maximize the
amount that is insured by the United States and/or guaranteed as to
principal and interest by the United States, and minimize the potential
for loss of principal through market fluctuations.
3.4 The Escrow Funds, shall not be invested in any securities that have a
scheduled maturity of more than six months from the date of
acquisition.
4. TERMINATION AND DISBURSEMENTS:
4.1 If the Company has not negotiated a business combination, filed a
post-effective amendment to its registration statement, completed a
reconfirmation offering meeting the requirements of Rule 419 and closed
on the business combination agreement on or before ___________________
("Termination Date") the Escrow Agent shall:
(a) Promptly forward a refund check to each person who purchased
shares of the Company's common stock for cash in connection
with the original offering. Notwithstanding any other
provision of this agreement, the owners of the compensation
shares referred to in Section 2.5 shall not be entitled to
participate in any cash distributions. For purposes of this
Agreement, all refunds shall be allocated among the purchasers
of the Company's common stock on a per share basis and the
Escrow Agent shall not be obligated to separately account for
interest earned on the subscription escrow. Instead, the
Escrow Agent is specifically authorized to determine the
available balance in the Escrow Account and divide such
balance by 500,000 shares to calculate the amount of cash per
share to be distributed to the purchasers. Refund checks shall
be rounded up to the nearest whole cent and any overpayment
resulting from such rounding shall be payable in cash by the
Company.
(b) Promptly return all stock certificates to the Company for
cancellation.
When all stock certificates and all Escrow Funds deposited with the
Escrow Agent have been disbursed in accordance with the provisions of
this Section 4.1, the Rule 419 escrow will terminate.
4.2 If the Company negotiates a business combination, files a
post-effective amendment to its registration statement, completes a
reconfirmation offering meeting the requirements of Rule 419 and closes
on the business combination agreement on or before the Termination
Date, the Company shall promptly deliver, or cause to be delivered, to
the Escrow Agent:
(a) A copy of the definitive prospectus included in its
post-effective amendment and used in connection with the
reconfirmation offering;
(b) A schedule setting forth the identity of each person who
purchased shares of the Company's common stock for cash in
connection with the original offering;
(c) A schedule setting forth the identity of each person who
received shares of the Company's common stock as compensation
in connection with the original offering;
(d) A copy of each subscription reconfirmation agreement received
from a person who purchased shares of the Company's common
stock for cash in connection with the original offering;
(e) A copy of each subscription reconfirmation agreement received
from a person who received shares of the Company's common
stock as compensation in connection with the original
offering;
(f) A schedule setting forth the identity of each person who
refused or otherwise failed to execute a reconfirmation
agreement within the time limits specified in Rule 419 and the
definitive prospectus; and
(g) A Certificate signed by the President and Secretary of the
Company that all conditions precedent to the termination of
the Rule 419 escrow have been satisfied.
4.3 Upon receipt of the notice and documentation specified in Section 4.2,
the Escrow Agent shall:
(a) Promptly forward a refund check to each person who purchased
shares of the Company's common stock for cash in connection
with the original offering and subsequently refused or
otherwise failed to execute a reconfirmation agreement within
the time limits specified in Rule 419 and the definitive
prospectus. For purposes of this Agreement, all refund checks
shall be rounded up to the nearest cent and any overpayment
resulting from such rounding shall be deducted from the amount
payable to the Company;
(b) Promptly forward a stock certificate to each person who
purchased shares of the Company's common stock for cash in
connection with the original offering and subsequently
executed a reconfirmation agreement;
(c) Promptly forward a stock certificate to each person who
received shares of the Company's common stock as compensation
in connection with the original offering and subsequently
executed a reconfirmation agreement;
(d) Promptly return all remaining stock certificates to the
Company for cancellation; and
(e) Promptly forward all remaining Escrow Funds to the Company
When all stock certificates and all Escrow Funds deposited with the
Escrow Agent have been disbursed in accordance with the provisions of
this Section 4.3, the Rule 419 escrow will terminate.
4.4 In the Company conducts a reconfirmation offering and the terms of such
offering are not accepted by the holders of the number of shares
specified in the definitive prospectus included in the Company's
post-effective amendment, the Escrow Agent shall:
(a) Promptly forward a refund check to each person who purchased
shares of the Company's common stock for cash in connection
with the original offering. For purposes of this Agreement,
all refund checks shall be rounded up to the nearest cent and
any overpayment resulting from such rounding shall be deducted
from the amount payable to the Company.
(b) Promptly return all stock certificates to the Company for
cancellation.
When all stock certificates and all Escrow Funds deposited with the
Escrow Agent have been disbursed in accordance with the provisions of
this Section 4.4, the Rule 419 escrow will terminate.
5. NO MODIFICATION:
5.1 After the deposit of the Escrow Funds, these instructions shall not be
modified, rescinded or amended.
6. GENERAL PROVISIONS:
6.1 All parties understand and agree that Escrow Agent is not a principal,
participant, or beneficiary of the underlying transaction that
necessitates this Agreement. The Escrow Agent shall be obligated only
for the performance of such duties as are specifically set forth herein
and may rely and shall be protected in acting or refraining from acting
on any instrument believed by it to be genuine and to have been signed
or presented by the proper party or parties, their officers,
representatives or agents. The Escrow Agent shall not be liable for any
action taken or omitted by it in good faith and believed by it to be
authorized hereby, nor for action taken or omitted by it in accordance
with the advice of its counsel. Escrow Agent shall be responsible for
holding, investing and disbursing the Escrowed Assets pursuant to the
Agreement, but in no event shall be liable for any exemplary or
consequential damages in excess of Escrow Agent's fee hereunder.
6.2 Unless otherwise provided herein, the Escrow Agent shall accept the
Escrowed Assets pursuant to the Agreement and invest such assets at the
written request of the parties hereto specifying with particularity or
by accompanying schedule the type and identity of the assets to be
deposited. Acceptance of the Escrowed Assets shall be communicated by
Escrow Agent to parties by account statement or otherwise in writing as
soon as practicable after receipt, and any discrepancies shall be noted
to Escrow Agent by the parties in writing within forty five (45) days
of receiving such communication. Failure to note any discrepancies
shall be deemed confirmation of the description of Escrowed Assets
listed on the report regardless of any variations from the original
schedule. Any request to invest assets shall be in writing or facsimile
and specify the type of investment to be made, the maturity date, and
the principal amount to be invested. The Escrow Agent shall not be
liable for delay or failure to invest funds without written
instructions or for losses on any investments made by it pursuant to
and in compliance with such instructions.
6.3 Should any controversy arise between the undersigned with respect to
this Escrow Agreement or with respect to the right to receive the
Escrowed Assets, Escrow Agent shall have the right to consult counsel
and/or to institute a bill of interpleader in any court of competent
jurisdiction to determine the rights of the parties. In the event it is
a party to any dispute, Escrow Agent shall have the additional right to
refer such controversy to binding arbitration. Should such actions be
necessary, or should Escrow Agent become involved in litigation in any
manner whatsoever on account of this Escrow Agreement of the Escrowed
Assets made hereunder, the undersigned hereby bind and obligate
themselves, their heirs and legal representatives to pay Escrow Agent,
in addition to any charge made hereunder for acting as Escrow Agent,
reasonable attorney's fees incurred by Escrow Agent, and any other
disbursements, expenses, losses, costs and damages in connection with
and resulting from such actions.
6.4 The Escrow Agent shall have no liability under, or duty to inquire
beyond the terms and provisions of the Agreement, and it is agreed that
its duties are purely ministerial in nature, and that the Escrow Agent
shall incur no liability whatsoever except for willful misconduct or
gross negligence so long as it has acted in good faith. The Escrow
Agent shall not be bound by any modification, amendment, termination,
cancellation, rescission or supersession of this Escrow Agreement
unless the same shall be in writing and signed by all of the other
parties hereto and, if its duties as Escrow Agent hereunder are
affected thereby, unless it shall have given prior written consent
thereto.
6.5 The Escrow Agent may at any time resign hereunder by giving written
notice of its resignation to the other parties hereto, at their address
set forth herein, at least ten (10) days prior to the date specified
for such resignation to take effect, and upon the effective date of
such resignation, the Escrowed Assets hereunder shall be delivered to
such person as may be designated in writing by the appropriate parties
executing this Escrow Agreement, whereupon all the Escrow Agent's
obligations hereunder shall cease and terminate. The Escrow Agent's
sole responsibility until such termination shall be to keep safely all
Escrowed Assets and to deliver the same to a person designated by the
appropriate parties executing this Escrow Agreement or in accordance
with the directions of a final order or judgment of a court of
competent jurisdiction.
6.6 The parties agree to indemnify, defend and hold the Escrow Agent
harmless from and against any and all loss, damage, tax, liability and
expense that may be incurred by the Escrow Agent arising out of or in
connection with its acceptance or appointments as Escrow Agent
hereunder, including costs and expenses of defending itself against any
claim or liability in connection with its performance hereunder.
6.7 The parties jointly and severally agree to pay to the Escrow Agent its
fees for the services rendered pursuant to the provisions of this
Escrow Agreement and will reimburse the Escrow Agent for reasonable
expenses, including reasonable attorney's fees incurred in connection
with the negotiations, drafting and performance of such services.
Except as otherwise noted, this fee covers account acceptance, set up
and termination expenses; plus usual and customary related
administrative services such as safekeeping, investment and payment of
funds specified herein or in the exhibits attached. Activities
requiring excessive administrator time or out-of-pocket expenses such
as optional substitution of collateral or securities shall be deemed
extraordinary expenses for which related costs, transaction charges,
and additional fees will be billed at Escrow Agent's standard charges
for such items. A fee schedule has been provided to all parties to this
Escrow.
6.8 Escrow Agent is hereby given a lien on all Escrowed Assets for all
indebtedness that may become owing to Escrow Agent hereunder, which
lien may be enforced by Escrow Agent by setoff or appropriate
foreclosure proceedings.
6.9 The parties warrant to the Escrow Agent that there are no Federal,
State or local tax liability or filing requirements whatsoever
concerning the Escrow Agent's actions contemplated hereunder and
warrant and represent to the Escrow Agent that the Escrow Agent has no
duty to withhold or file any report of any tax liability under any
Federal of State income tax, local or State property tax, local or
State sales or use taxes, or any other tax by any taxing authority. The
parties hereto agree to jointly and severally indemnify the Escrow
Agent fully for any tax liability, penalties or interest incurred by
the Escrow Agent arising hereunder and agree to pay in full any such
tax liability together with penalty and interest if any tax liability
is ultimately assessed against the Escrow Agent for any reason as a
result of its action hereunder (except for the Escrow Agent's
individual income tax liability arising from its income fees).
6.10 The Escrow Agent shall have no liability for loss arising from any
cause beyond its control, including, but not limited to, the following:
(a) the act, failure or neglect of any agent or correspondent selected
by the Escrow Agent or the parties hereto; (b) any delay, error,
omission or default connected with the remittance of funds; (c) any
delay, error, omission or default of any mail, telegraph, cable or
wireless agency or operator; (d) the acts or edicts of any government
or governmental agency or other group or entity exercising governmental
powers.
6.11 This Escrow Agreement shall be governed by and construed in accordance
with the laws of the State of Florida. The parties hereto expressly
waive such duties and liabilities, it being their intent to create
solely an agency relationship and hold the Escrow Agent liable only in
the event of its gross negligence or willful misconduct in order to
obtain the lower fee schedule rates as specifically negotiated with the
Escrow Agent.
7. NOTICES:
7.1 All notices, demands, requests or payments provided for or given
pursuant to this Escrow must be in writing or facsimile. All such
notices shall be deemed to have been properly given or served by
personal delivery or by depositing the same in the United States mail
addressed to the person entitled to receive such notice at the address
set forth below.
To the Company Capital Corporation
Sally A. Fonner, President
Win or Lose Acquisition Corporation
1612 North Osceola
Clearwater, Florida 33755
To ___________________
___________ Bank, N.A.
Corporate Trust/Agency Administration
7.2 All notices shall be effective when received.
Approved and accepted by the Parties this ________ day of December, 2000.
Win or Lose Acquisition Corporation _________________ Bank, N.A.
By: By:
---------------------------- -----------------------------
Sally A. Fonner, President (Name and Title of Signatory)
