1
Exhibit 99(b)
AMENDED AND RESTATED ESCROW AGREEMENT
FOR FANZ ENTERPRISES, INC. PUBLIC OFFERING FUNDS
This Amended and Restated Escrow Agreement For FanZ Enterprises, Inc.
Public Offering Funds (this "Amended and Restated Agreement"), dated July 19,
2001 is by and between FANZ ENTERPRISES, INC., a Delaware corporation,
(hereinafter referred to as the "Company") and FIRSTAR BANK, N.A., Corporate
Trust Department, Milwaukee, Wisconsin (hereinafter referred to as the "Escrow
Agent"), or its successor, represent and agree as follows:
WHEREAS, the Company is offering up to 2,500,000 shares of its common
stock par value $.01 per share (hereinafter referred to as "Shares") in a public
offering made pursuant to a Registration Statement on Form SB-2 and Prospectus
filed with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended (hereinafter referred to as the "Public
Offering") and the Company has filed applications to register securities with
the applicable authorities of states in which the Public Offering will be made;
WHEREAS, the Company desires to meet the requirements of the Securities
Act of 1933 and the various state regulatory statutes and regulations, and
desires to protect the investors in the Public Offering by providing, under the
terms and conditions herein set forth, for the return to subscribers of the
money which they may pay on account of subscriptions of Shares in the Public
Offering if the Minimum Escrow Deposit (as hereinafter defined) is not deposited
with the Escrow Agent or if the Minimum Equity Investment Level (as hereinafter
defined) is not achieved by the Company;
WHEREAS, the Company and the Escrow Agent entered into an Escrow
Agreement for FanZ Enterprises, Inc. Public Offering Funds, dated February 15,
2001 (the "Agreement");
WHEREAS, the Company and the Escrow Agent entered into the First
Amendment to the Escrow Agent entered into an Escrow Agreement for FanZ
Enterprises, Inc. Public Offering Funds, dated June 11, 2001 (the "Amendment");
WHEREAS, the Company has been requested by the National Association of
Security Dealers to further revise the Agreement as a pre-condition to approval
of the Company's Public Offering; and
WHEREAS, the Company and the Escrow Agent desire that the Agreement and
the First Amendment shall be replaced with this Amended and Restated Agreement,
and that, as of the date of execution of this Amended and Restated Agreement,
the Agreement and First Amendment shall be terminated and of no effect.
NOW, THEREFORE, in consideration of the recitals and the mutual
promises and covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Until the Initial Closing has been held, all proceeds from offers or
sales of Shares in the Public Offering shall be delivered to the Escrow Agent by
noon of the next business day following receipt of such money by the Company and
any broker/dealers working on behalf of
2
the Company, endorsed (if appropriate) to the order of the Escrow Agent,
together with an appropriate written statement setting forth the name, address
and social security number of each person subscribing Shares, the number of
Shares subscribed, and the amount paid by each such subscriber.
2. To the extent any such proceeds are deposited with the Escrow Agent
in accordance with Section 1 in the form of uncollected checks, the Escrow Agent
promptly shall present the checks for collection through customary banking and
clearing house facilities. The Escrow Agent shall invest all cash or collected
funds deposited with it as soon after receipt as is reasonable in an account
(sometimes hereinafter referred to as the "Escrow Account") and shall reinvest
said funds, principal and interest, in a money market account which invests
exclusively in short-term U.S. Treasury obligations, such as the Firstar U.S.
Treasury Money Market Fund, or upon the sale or maturity of any securities or
assets purchased hereunder, all such investments or reinvestments to be as
directed by the Company and only in short-term government obligations,
securities issued or guaranteed by government agencies, money market accounts
investing only in government obligations or government agency securities, and
time or demand deposits in commercial banks. The Escrow Agent shall, upon
written request therefor, provide the Company with a list of the securities and
assets then on hand, their identification, location and maturity date, together
with a complete accounting of the total cash income earned by such securities or
others previously purchased, sold or matured, as interest or otherwise. The
Escrow Account shall be created and maintained subject to the customary rules
and regulations of the Escrow Agent pertaining to such accounts.
3. Unless and until the amounts so deposited in the Escrow Account
shall equal at least the Minimum Escrow Deposit (as hereinafter defined), all
amounts so deposited in the Escrow Account shall not become the property of the
Company, or be subject to the debts of the Company, or any other person.
Notwithstanding the previous sentence, unless and until the Company has provided
the Escrow Agent with satisfactory evidence, in the form of an executed
acknowledgement from the Company, of achieving the Minimum Equity Investment
Level (as hereinafter defined), all amounts so deposited in the Escrow Account
in excess of the Equity Deposit Threshold shall not become the property of the
Company, or be subject to the debts of the Company, or any other person.
4. The Escrow Agent shall send a written notice to the Company every
seven days acknowledging the receipt of and the amount of the deposited funds
from the Company, along with a cumulative total to date of all deposited funds
received from the Company. The Escrow Agent shall give the Company prompt
written notice when funds deposited in the Escrow Account total the Minimum
Escrow Deposit and when they total the Equity Deposit Threshold. No certificate
of deposit, stock certificates or any other instrument or document representing
any interest in the deposited funds shall be issued by the Escrow Agent.
5. (a) The Escrow Agent shall compute the amount of interest earned on
funds deposited with the Escrow Agent upon request by the Company, until both
(i) the attainment of the Minimum Escrow Deposit and (ii) the Escrow Agent
receives satisfactory evidence that the Company has achieved the Minimum Equity
Investment Level.
(b) In the event the Minimum Escrow Deposit is not reached prior to
the termination of this Agreement, the Escrow Agent shall compute the amount of
interest earned on
2
3
the funds deposited with the Escrow Agent for each subscriber for Shares based
pro rata on the average daily rate for the number of days that funds received
from such subscriber are held in the Escrow. At the time funds are paid by the
Escrow Agent to the Company as provided in Section 8, the Escrow Agent shall
report to the Company the amount of interest computed with respect to all of the
escrowed funds. The interest shall be paid to the Company, together with the
payment of funds to the Company, at all disbursements to the Company as provided
in Section 8.
(c) If the funds held in the Escrow Account are returned to the
subscribers as provided in Section 9, the Escrow Agent shall pay to each of the
subscribers the amount of interest earned on the funds of each subscriber,
computed as provided in the foregoing paragraph.
6. The Escrow Period is the period beginning on the date of this
Agreement and ending on the earlier of (i) the date the escrow funds are
completely disbursed pursuant to Sections 8 or 9 of this Agreement or (ii) the
Termination Date. The Termination Date is the date nine (9) months after the
date of effectiveness of the Registration Statement, unless the Termination Date
is extended. The Company may extend the Termination Date for a period not to
exceed ninety (90) days.
7. Until termination of the Escrow Period as described in Section 6, or
until payment of the Escrow Account proceeds of the Public Offering over to the
Company, subscribers in the Public Offering whose funds are held in the Escrow
Account will be deemed to be only subscribers for Shares, in view of the fact
that no Shares will be issued and distributed to such subscribers until such
Escrow Account proceeds are paid over to the Company at closings held for that
purpose.
8. The deposited funds shall only be released to the Company in one of
the following manners:
(a) Upon receiving written approval from the Company during the
Escrow Period, the Escrow Agent shall disburse all the funds on deposit to the
Company on its demand, if at the time of the demand the aggregate amount
deposited in the Escrow Account shall equal or exceed Ten Million Dollars
($10,000,000) in subscription proceeds (exclusive of interest, hereafter
"Minimum Escrow Deposit") but not exceed Fifteen Million Six Hundred Thousand
Dollars ($15,600,000) (the "Equity Deposit Threshold"). Any amounts deposited
with the Escrow Agent subsequent to receipt of the Company's demand under this
section shall be disbursed by the Escrow Agent to the Company on its written
demand, provided however that if the aggregate deposited funds exceeds the
Equity Deposit Threshold at any time, the funds deposited with the Escrow Agent
subsequent to receipt of the Company's demand shall be returned to the
subscriber as provided for under Section 9(b). Upon the making of the
disbursement of all deposited funds, plus interest, the Escrow Agent shall be
completely discharged and released of any and all further responsibilities
hereunder.
(b) Upon receiving written approval during the Escrow Period from
the Company stating which subscriptions shall be accepted, the Escrow Agent
shall disburse to the Company on its demand only the deposited funds
corresponding to the list of subscribers provided by the Company up to and
including the Equity Deposit Threshold amount, if at the time of the demand the
aggregate amount deposited in the Escrow Account shall exceed the
3
4
Equity Deposit Threshold and the Company has not delivered to the Escrow Agent
satisfactory evidence of receiving an additional capital contribution in an
amount at least equal to Two Hundred Thirty-Five Thousand Dollars ($235,000)
from Jackson Roscoe Motorsports L.L.C. (the "Minimum Equity Investment Level").
If the Company has not delivered satisfactory evidence of reaching the Minimum
Equity Investment Level at the time of delivering its demand as provided for in
this section, the Escrow Agent shall return all deposited funds in excess of the
Equity Deposit Threshold to the subscribers in the manner provided for under
Section 9(b). Any amounts deposited with the Escrow Agent subsequent to receipt
of the Company's demand under this section shall also be returned by the Escrow
Agent to the subscriber as provided for under Section 9(b). Upon the making of
the disbursement of all deposited funds, plus interest, the Escrow Agent shall
be completely discharged and released of any and all further responsibilities
hereunder.
(c) At the time (and in the event) that, during the Escrow Period,
both the aggregate amount deposited in the Escrow Account shall exceed the
Minimum Escrow Deposit and the Company has delivered satisfactory evidence of
receiving the Minimum Equity Investment Level, the Escrow Agent shall, after
receiving written approval form the Company, disburse all the funds on deposit
to the Company on its demand. Any amounts deposited with the Escrow Agent
subsequent to attainment of the preceding two conditions shall be disbursed by
the Escrow Agent, after receiving written approval of the Company, to the
Company on its demand. Upon the making of the disbursement of all deposited
funds, plus interest, the Escrow Agent shall be completely discharged and
released of any and all further responsibilities hereunder.
9. (a) If the Escrow Period has ended and the Minimum Escrow Deposit
has not been attained, the Escrow Agent shall return to each of the subscribers
of the Shares in the Public Offering, as promptly as possible after such
termination of the Escrow Period and on the basis of its records pertaining to
the Escrow Account, the sum each subscriber initially paid on account of
subscriptions of the Shares in the Public Offering and shall also distribute
interest as provided in Section 6 hereof.
(b) If the Escrow Period has ended and the Minimum Escrow Deposit
has been attained but the Company has not provided satisfactory evidence of
achieving the Minimum Equity Investment Level, the Escrow Agent shall return to
each of the subscribers of the Shares in the Public Offering whose subscription
caused the deposited funds to exceed the Equity Deposit Threshold in the
aggregate, as promptly as possible after such termination of the Escrow Period
and on the basis of its record pertaining to the Escrow Account, the sum each
such subscriber initially paid on account of the subscriptions of the Shares in
the Public Offering and shall also distribute interest as provided in Section
5(c) hereof.
(c) Each amount paid or payable to each subscriber pursuant to this
section shall be deemed to be the property of each such subscriber free and
clear of any and all claims of the Company, any agents employed by the Company,
or any other person or of any creditors of the Company, any such agents, or such
other persons; and the respective subscriptions of the Shares made and entered
into in the Public Offering shall thereupon be deemed, IPSO FACTO, to be
canceled without any further liability of the subscribers or any of them to pay
for the Shares subscribed. At such time as the Escrow Agent shall have made the
payments and remittances,
4
5
and given all notices provided for in this section, the Escrow Agent shall be
completely discharged and released of any and all further liability and
responsibilities hereunder.
10. The Company will deliver a copy of the Prospectus to the Escrow
Agent within two weeks of the effective date of the Registration Agreement. The
Escrow Agent will have no responsibility to examine the Prospectus with regard
to the Escrow Account or otherwise.
11. The Escrow Agent shall be compensated as set forth on EXHIBIT A
hereof. The Escrow Agent shall not receive compensation with respect to
subscribers whose funds are paid directly to the Company after both the Minimum
Escrow Deposit and the Minimum Equity Investment Level are reached. It is
understood and agreed that the Escrow Agent and/or Firstar Investment Research
and Management Company, an affiliate of the Escrow Agent, will receive fees from
the First U.S. Treasury Money Market Fund, if that fund is used by the Escrow
Agent, for their services as investment advisor, custodian, transfer agent and
fund accountant and that the Escrow Agent will share in a portion of these fees.
12. The Company does hereby agree to indemnify and hold the Escrow
Agent harmless against any and all losses, claims, damages, liabilities and
expenses, including reasonable costs of investigation and counsel fees, which
may be imposed upon the Escrow Agent in connection with its acceptance or
appointment hereunder for the performance of its duties, including any
litigation arising from this Amended and Restated Agreement or involving the
subject matter hereof. This Amended and Restated Agreement to indemnify and hold
harmless, however, shall not absolve the Escrow Agent in the event of any
damages, losses, claims, liabilities or expenses as herein contemplated in the
event they are the result of the Escrow Agent's own negligence or willful
default.
13. Any notices provided for herein, or which any party hereto may
desire to give to any other party, may be given by registered or certified mail,
return receipt requested, postage prepaid, or orally or by telephone if
confirmed in writing, to the respective parties at the respective addresses
stated below:
TO THE COMPANY: FanZ Enterprises, Inc.
3020-I Prosperity Church Road, Suite 293
Charlotte, NC 28269-7197
Attention: J. Roe Hitchcock, Chief Executive Officer
Telephone: (317) 815-1128
TO THE ESCROW AGENT: Firstar Bank, N.A.
Corporate Trust Department
1555 North River Center Dr., Suite 301
Milwaukee, Wisconsin 53212
Attention: Mike Herberger, Vice President
Telephone: (414) 905-5008
Notices given my mail shall be deemed to have been given when mailed in
accordance herewith.
5
6
14. The validity, interpretation and construction of this Amended and
Restated Agreement and of each part hereof shall be governed by the laws of the
State of Delaware.
15. The proceeds deposited with the Escrow Agent are not subject to
claims of the creditors of the Company, affiliates, associates or selling agents
until the proceeds have been released to the Company pursuant to the terms of
this Amended and Restated Agreement.
16. The administrators of the states securities agencies participating
in the Coordinated Equity Review program shall have the right to inspect and
make copies of the records of the Escrow Agent at any reasonable time wherever
records are located.
17. The Escrow Agent will notify the following parties in writing when
the proceeds are released from the Escrow Account, through a signed affidavit
executed by the Escrow Agent accompanied by a copy of the written approval from
the Company requesting disbursement:
Thomas E. Alberts Scott A. Rugen
Director of Registrations Securities Analyst
State of Iowa Delaware Department of Justice
Iowa Securities Bureau Division of Securities
340 Maple St. 820 North French St., 5th Floor
Des Moines, Iowa 50319-0066 Wilmington, Delaware 19801
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
6
7
IN WITNESS WHEREOF, the parties hereto have hereunto affixed their
signatures as of this 19th day of July, 2001.
FANZ ENTERPRISES, INC.
By: /s/ Frederick L. Mcdonald, II
-------------------------------------
Frederick L. McDonald, II
President
FIRSTAR BANK, N.A., CORPORATE TRUST
DEPARTMENT, MILWAUKEE WISCONSIN
By: /s/ Steven J. Peterson
-------------------------------------
Name: Steven J. Peterson
----------------------------
Title: Trust Officer
--------------------------
8
EXHIBIT A
---------
TO
--
FANZ ENTERPRISES, INC. AMENDED AND RESTATED ESCROW AGREEMENT
------------------------------------------------------------
Initial one-time fee for appointment $3,000
- includes initial document review and account set-up
through final funds disbursement once funding levels
are met
- does not include reimbursable expenses such as postage
Fed-X or wire transfer charges should they be incurred
by Firstar on your behalf
Checks issued back to the investors $30.00 per check