ESCROW AGREEMENT
This agreement dated May , 2000 is between SouthTrust Bank, N.A. (the
"Escrow Agent") and CoffeeAM.com, Inc., a Georgia corporation (the "Company").
The Company proposes to offer directly for sale to investors (the "Offering") up
to 150,000 shares of its Common Stock (the "Shares") at a price of $7.00 per
share (the "Proceeds") as described in its Prospectus. The Company desires to
establish an escrow account in which funds received from investors will be
deposited pending completion of the escrow period. SouthTrust Bank, N.A. agrees
to serve as Escrow Agent in accordance with the terms and conditions of this
agreement, including attached Exhibit A, and certifies that it is not affiliated
with the Company.
1. Establishment of Escrow Account. Effective as of the date of the
commencement of the Offering, the Company establishes an interest bearing escrow
account with the Escrow Agent, entitled "SouthTrust Bank, N.A., Escrow Agent u/a
CoffeeAM.com, Inc. Escrow Account No. ____________" or some similar designation
(the "Escrow Account").
2. Escrow Period. The Escrow Period shall begin with the commencement of
the Offering and shall terminate upon the earlier to occur of: (a) the date upon
which the Escrow Agent has received in the Escrow Account gross proceeds of
$525,000 in deposited funds (the "Minimum"), (b) _______, 2000, or (c) the date
upon which a determination is made by the Company to terminate the offering
prior to the sale of the Minimum.
3. Deposits into the Escrow Account. The Company agrees that it shall
properly deliver, within 48 hours of its receipt, all monies received from
investors for the payment of the Shares to the Escrow Agent for deposit in the
Escrow Account, accompanied with a copy of the attached form of "Share Purchase
Order," which shall include the name, address and tax identification number of
each investor and the date and amount of each order, executed by the Company and
the investor. Checks payable to the Company shall be endorsed by the Company for
deposit to the Escrow Account. If checks are delivered to the Escrow Agent
unendorsed, the Escrow Agent may supply the Company's endorsement and deposit
them into the Escrow Account. All payments to the Company by reason of credit
card purchases of the Shares shall be forwarded into the Escrow Account. The
Company shall date and number-stamp each Share Purchase Order and provide the
Escrow Agent with, and maintain for its own records, a copy of each Share
Purchase Order.
4. Disbursements from the Escrow Account.
A. In the event the Escrow Agent does not receive the Minimum deposits
totaling $525,000 prior to the termination of the Escrow Period, the Escrow
Agent shall promptly refund to each investor, in accordance with paragraph 6,
the amount received from such investor, with interest and without deduction,
penalty or expense to such investor, and the Escrow Agent shall notify the
Company of such distribution. The purchase money returned to each investor shall
be free and clear of any and all claims of the Company or any of its creditors.
B. In the event the Escrow Agent receives the Minimum prior to the
termination of the Escrow Period, the funds in the Escrow Account which are
collected funds will be released to the Company upon receipt by the Escrow Agent
of written direction from the Company. For purposes of this Agreement, the term
"collected funds" shall mean all funds received by the Escrow Agent which have
cleared normal banking channels and are in the form of cash, plus any interest
accrued on such funds. The Minimum may be met by funds that are deposited from
the effective date of the offering up to and including the date on which the
Minimum must be received. The Minimum may not include any amounts shown as
chargebacks to the Company on credit card purchases of the shares. SouthTrust
Merchant Services shall furnish the Escrow Agent with a notice of such
chargeback amounts included in collected funds, prior to any release of funds to
the Company.
C. Upon the return or release of funds in the Escrow Account, the
Escrow Agent shall notify _____________________ (the Administrator.) The
Administrator has the right to inspect and make copies of the records of the
Escrow Agent at any reasonable time wherever the records are located.
5. Collection Procedure. The Company agrees that if a deposited check is
returned unpaid for any reason, the Escrow Agent may charge the Escrow Account
for the amount of the check. However, the Escrow Agent may represent a returned
check for payment to the financial institution on which it is drawn, but the
Escrow Agent is not required to do so. The Escrow Agent may represent the check
without notifying the Company that it is doing so or that the check was not
paid. Any check returned unpaid to the Escrow Agent a second time shall be
returned
Exhibit 99.2
to the Company. All payments forwarded by the Company by reason of credit card
purchases of the Shares, as to which there is any nonpayment by the cardholder,
shall nevertheless remain in escrow until disbursed in accordance with paragraph
4.
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6. Investment of and Interest on Funds in Escrow Account. Pending
disposition of the funds in the Escrow Account, the Escrow Agent shall invest
those funds in direct obligations of the United States government which may be
liquidated, in whole or in part, at any time. In the absence of investment
instructions, the Escrow Agent shall invest those funds in SouthTrust Treasury
Obligations Money Market Fund. Refunds to investors pursuant to paragraph 4A
shall include each investor's pro-rata share of any interest earned while the
investor's funds were on deposit.
7. Records to be Maintained by the Escrow Agent. Records and accounts of
the transactions kept by the Escrow Agent shall include records of all
transactions in the Escrow Account and copies of all Share Purchase Orders. The
Company shall maintain the original Share Purchase Orders and copies of all
checks, along with any other records of transactions for a period of five years
after the termination of the Escrow Period.
8. Compensation of Escrow Agent. The Company shall pay the Escrow Agent
fees for its escrow services as set forth in Exhibit B.
9. Protection of the Escrow Agent from Liability. The sole duty of the
Escrow Agent, other than specified in this Agreement, shall be to establish and
maintain the Escrow Account and receive and hold the funds deposited by the
Company. The Company acknowledges that the Escrow Agent is performing the
limited function of Escrow Agent and that this fact in no way means the Escrow
Agent has passed in any way upon the merits or qualifications of, or has
recommended, or given approval to, any person, security or transaction. The
Escrow Agent may conclusively rely on, and shall be protected, when it acts in
good faith upon, a writing signed by Brian J. Lunsford, Chief Executive Officer
of the Company. Provided it uses due care, the Escrow Agent shall have no duty
or liability to verify any such statement, certificate, notice, request,
consent, order or other document and its sole responsibility shall be to act
only as expressly set forth in this Agreement. The Escrow Agent shall be under
no obligation to institute or defend any action, suit or proceeding in
connection with the Agreement unless it is indemnified to its satisfaction. The
Escrow Agent may consult counsel in respect of any questions arising under this
Agreement and the Escrow Agent shall not be liable for any action taken, or
omitted, in good faith upon advice of such counsel.
10. Indemnification of the Escrow Agent. The Company hereby agrees to
defend, indemnify, and to hold the Escrow Agent harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
the part of Escrow Agent arising out of or in connection with its entering into
this Agreement and carrying out its duties hereunder, including the cost and
expense of defending itself against any claim or liability.
11. Direction by Court. In the event the Escrow Agent shall be uncertain as
to its duties or rights hereunder or it shall receive instructions, claims or
demands from any of the parties hereto or from third parties with respect to the
property held hereunder, which, in its opinion, are in conflict with any
provision of this Agreement, it shall be entitled to refrain from taking any
action (other than to keep safely the funds in the Escrow Account) until it
shall be directed to act by order or judgment of a court of competent
jurisdiction.
12. Escrow Funds not Subject to Claims. During the Escrow Period, the
Company is aware and understands that it is not entitled to any funds received
into the Escrow Account, such funds are not assets of the Company and no amounts
deposited in the Escrow Account shall become property of the Company or any
other entity, or be subject to the debts of the Company or any other entity. The
funds in the Escrow Account are not subject to claims by creditors of the
Company, or any of its affiliates, associates or underwriters until the funds
have been released to the Company pursuant to the terms of this Agreement.
13. Binding upon Successors. This Agreement shall be binding upon, and
inure to, the benefit of the parties hereto, their heirs, successors and
assigns.
14. Termination of Agreement. This agreement shall terminate in its
entirety when all funds in the Escrow Account have been distributed as provided
in paragraph 4., above.
15. Notices. All statements and other notices produced by the Escrow Agent
related to the Escrow Account shall be made via United States Postal Service
regular mail or facsimile transmission to the Company at:
3588 Pierce Drive
Chamblee, Georgia 30341 Facsimile: 770.454.0366
Attn: Brian J. Lunsford, President
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Except for deposits, all notices and other communications from the Company
shall be made via United States Postal Service regular mail or facsimile
transmission to the Escrow Agent at:
SouthTrust Bank, N.A.
79 Paces Ferry Road, N.W.
Atlanta, Georgia 30305 Facsimile: 404.841.4766
Attn: Virginia Petty, Corporate Trust Department
The Escrow Agent shall be entitled to rely on all notices and instructions
received from Brian J. Lunsford, President of the Company.
16. Governing Law. This Agreement shall be governed by Georgia law and
any action or proceeding, including arbitration, arising in connection with this
Agreement shall be brought and held in Georgia.
17. Resignation of the Escrow Agent. Escrow Agent or any successor may
resign its position and be discharged of its duties or obligations hereunder by
giving thirty (30) days written notice to the parties hereto. Such resignation
shall take effect at the earliest to occur of the end of such thirty (30) days,
provided the escrow funds have been tendered into the registry or custody of any
court of competent jurisdiction or the appointment by the Company of, and
delivery of the escrow funds to, a successor. From and after the effective date
of such resignation or appointment of a successor, Escrow Agent shall not be
obligated to perform any of the duties of Escrow Agent hereunder, other than
prompt transfer of the escrow funds to a successor, or if no successor is
appointed, the registry or custody of any court of competent jurisdiction, and
will not be liable for any nonperformance thereof nor for any act or failure to
act whatsoever on the part of any successor Escrow Agent.
18. Amendment. No modification or amendment to this Escrow Agreement shall
be valid unless produced in writing and signed by the parties hereto.
SouthTrust Bank, N.A. CoffeeAM.com, Inc.
By: By:
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______________ Brian J. Lunsford
______________ President
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