As filed with the Securities and Exchange Commission on May 12, 1999
CIK: 0001107266
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CoffeeAM.com
(Name of small business issuer in its charter)
Georgia 2095 58-2179311
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
3588 Pierce Drive
Chamblee, Georgia 30341
770.454.1185
(Address and telephone number of principal executive
offices and principal place of business)
Brian J. Lunsford, President
CoffeeAM.com
3588 Pierce Drive
Chamblee, Georgia 30341
770.454.1185
(Name, address and telephone of agent for service)
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Copies to:
Drew Field
534 Pacific Avenue
San Francisco, CA 94133
415.296.9795
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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<TABLE>
CALCULATION OF REGISTRATION FEE
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Title of each Dollar Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate offering Amount of
to be registered registered per share/certificate price registration fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value $1,050,000 $ 7.00 $1,050,000 $ 277
Total $ 277
</TABLE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following: X
<PAGE>
COFFEEAM.COM
Cross-reference Sheet Showing Location in Prospectus of:
<TABLE>
PART I -- INFORMATION REQUIRED IN PROSPECTUS
<CAPTION>
Form SB-2 Item Number and Caption Caption in Prospectus
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<S> <C>
1. Front of Registration Statement and
Outside Front Cover of Prospectus......... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus....................... Inside Front Cover Page of Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds............................. Use of Proceeds
5. Determination of Offering Price............. Plan of Distribution -- Determination of Offering Price
6. Dilution.................................... Dilution
7. Selling Security Holders.................... Not applicable
8. Plan of Distribution........................ Plan of Distribution
9. Legal Proceedings........................... Business -- Legal Proceedings
10. Directors, Executive Officers, Promoters
and Control Persons....................... Management
11. Security Ownership of Certain Beneficial
Owners and Management..................... Principal Shareholders
12. Description of Securities................... Description of Securities
13. Interest of Named Experts and Counsel Not applicable
14. Disclosure of Commission Position on Management -- Indemnification of
Indemnification for Securities Act ....... Officers and Directors
15. Organization Within Last Five Years......... Organization of the Company
16. Description of Business..................... Prospectus Summary; Risk Factors;
Business; Certain Transactions
17. Management's Discussion and Analysis
or Plan of Operation..................... Management's Plan of Operations
18. Description of Property.................... Business - Properties/Facilities
19. Certain Relationships and Related
Transactions.............................. Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters Risk Factors; Shares Eligible
for Future Resale
21. Executive Compensation...................... Management: Executive Compensation
22. Financial Statements........................ Index to Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and
Financial Disclosure...................... None
</TABLE>
<PAGE>
150,000 SHARES
coffeeAM.com LOGO
COMMON STOCK
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CoffeeAM.com. is offering these 150,000 shares of common stock directly to
investors.
Our common stock is not listed on any national securities exchange or the
Nasdaq Stock Market.
Until a minimum of 75,000 shares have been purchased, all payments for
shares will be deposited into an escrow account at SouthTrust Bank. If the
minimum is not purchased within five months after the date of this prospectus,
all payments deposited in the escrow account will be promptly refunded in full,
with interest and without any deduction for expenses. This offering will end
when all the shares have been purchased or earlier, if we decide to close the
offering.
---------
This offering involves a high degree of risk. See "Risk Factors" beginning
on page 4.
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Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved of the shares or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
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Public Broker-dealer
Offering Discounts and Proceeds to
Price Commissions
- --------------------------------------------------------------------------------
Per Share $ 7.00 None $ 7.00
- --------------------------------------------------------------------------------
Total $1,050,000 None $1,050,000
================================================================================
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The date of this Prospectus is___________, 2000
<PAGE>
We have not authorized anyone to give you any information or make any
representation that is not in this prospectus. The information in this
prospectus is current and correct only as of the date of this prospectus,
regardless of the time of its delivery or of any sale of the shares. We are
offering to sell, and seeking offers to buy the shares only in jurisdictions
where offers and sales are permitted.
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<TABLE>
TABLE OF CONTENTS
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Page Page
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<S> <C> <C> <C>
Prospectus summary................................... 3 Certain transactions...................... 13
Risk factors......................................... 4 Principal shareowners..................... 14
Use of proceeds ..................................... 5 Description of securities................. 14
Dilution............................................. 5 Future resale of securities............... 15
Management's discussion and analysis of financial Plan of distribution...................... 15
condition and results of operations.................. 6 Experts................................... 16
Business............................................. 8 Available Information..................... 16
Management........................................... 12 Index to financial statements............. 16
</TABLE>
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<PAGE>
Prospectus summary
This is a brief overview of the key aspects of this offering. We encourage
you to read the entire prospectus.
CoffeeAM.com
CoffeeAM.com is an Internet retailer of gourmet coffees, teas, and related
products to businesses and consumers. We offer our fresh roasted coffees to
coffee shops, restaurants, gift shops, and consumers at prices of 20-30% less
than non-Internet purveyors. Our website will also be developed to offer auction
capability, start-up information, office coffee purchases and virtual consulting
services to our business customers. CoffeeAM.com has the largest selection of
fresh roasted gourmet coffees and related products available online, based upon
our continuous review of competitors' websites up to the date of this
prospectus.
CoffeeAM.com had more unique visitors to its site in March 2000 than any other
coffee company, including Starbucks, as reported independently by Yahoo! and
PCdataonline.com.
CoffeeAM.com launched its Web presence in March of 1999. Before that, we sold
coffee wholesale, through telephone and mail order, under the name
Caffeinnation, earning $205,535 pre-tax in 1998. We had a loss in 1999 of
$39,916, after the costs of our website business development. We currently
generate revenues from:
o The sale of gourmet coffee and tea products online
o Our continuing mail-order and telephone-based operation
o The sale of coffee equipment, both online and offline
Our Objectives
We plan to use our early-to-market strategy to capture as much market share as
possible, and to continue to grow with the growth of the Internet as a whole.
Our early-stage goals are:
o Create the largest and most complete digital marketplace in the coffee
and tea business-to-business arena
o Create the best online coffee and tea venue for consumers
o Become the largest franchiser of coffee delivery and services to
offices
How To Buy Shares
Shares are to be sold "first come - first served," based on when we receive your
share purchase order. The offering will end when either all of the shares have
been sold or we terminate the offering. To buy shares, you may either:
Complete the share purchase order, including your credit card data, on the
secure website link, or Complete the share purchase order in printed form and
mail it to us, with your check or credit card data.
Notice of accepted share purchase orders will be sent by email or regular mail.
All payments will be deposited in a bank escrow account until the minimum number
of shares has been sold. When the offering is completed, you will receive a
certificate for your shares. If the minimum is not sold within five months of
the date of this prospectus, you will receive a check for your payment, with
interest and without any deduction for expenses.
How you can communicate with us
Our office is at 3588 Pierce Drive, Chamblee, Georgia 30341. Our shareowner
relations telephone numbers are (770) 517-1115 and (800) 894-9015. Our fax
number is (770) 454-0366. You are invited to call or write Brian Lunsford, our
President. The email address is [email protected].
<PAGE>
Risk factors
You should carefully consider the following risks and the rest of this
prospectus before deciding whether and how much to invest in our shares. If
these or other risks occur, you may lose all or part of your investment.
Your payment for shares will be kept in escrow until the minimum amount has been
sold.
If we have not received at least $525,000 from the sale of shares within
five months of the date of this prospectus, all monies deposited in the escrow
account will be refunded to the purchasers, with interest and without deduction
for any expenses. Until then, or the earlier date when we have received the
minimum amount, purchasers will be subscribers and not shareowners of
CoffeeAM.com. During this escrow period, purchasers will have no right to a
return of their payment.
Only a part of the shares may be sold, which could lower our growth rate and
future income.
Our shares are being sold on a best efforts basis. That means that we will
use our best efforts to locate investors. No individual or company is
guaranteeing to invest any specific amount of money. There is no way for us to
predict how much will be purchased, beyond the minimum required to make the
offering effective. To the degree that we are unsuccessful in selling more than
the minimum, our fixed expenses will be a larger part of our income and we will
have to limit spending for the purpose of attracting new business.
No public trading market exists for the shares.
Because this initial offering is only for up to $1,050,000, there may be no
public trading market for our shares right after it is completed. CoffeeAM.com
realizes the need for the development of a trading market for its shares and
will explore avenues to make this a reality. We will do our best to arrange with
a registered broker-dealer to provide an order matching service for persons
wishing to buy or sell shares after this offering is complete. If that does not
happen, shareholders will have to find a prospective buyer and negotiate a price
and terms of sale, until a trading market or order matching service exists.
No dividends are presently intended.
We presently intend to retain any earnings and pay no dividends. Future
dividends, if any, will depend on our profitability, financial condition,
capital requirements and other considerations determined by our directors.
Additional capital may be required in order for CoffeeAM.com to carry out its
plans.
The proceeds of this offering are intended to help us achieve certain
objectives. To aid with these objectives, we will also be using any positive
cash flow from our business operations. More capital will be required to meet
our objectives and we expect to have one or more further public offerings of
shares. This brings with it the risk that additional funds may not be available
when needed. Selling more shares may also dilute the existing shareowners. Debt
financing would require additional interest expense, reducing our earning
potential.
Our growth strategy is expected to generate losses in the near future.
We were profitable in each of our first five years of incorporation.
However, we had a loss in 1999 and anticipate having losses in the upcoming
quarters as we increase our expenditures for business expansion. The "Use of
Proceeds and "Business" sections of this prospectus describe these expenditures
and our objectives.
We are risking our existing business, in order to build an electronic commerce
business.
Our past performance is only a limited guide to future results. You must
consider our prospects in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as online
commerce. We cannot assure you that we will be successful in addressing these
risks and our failure could cause the business and our shares to be of little or
no value.
If we lose the services of our officers, or if we cannot recruit and train
additional skilled people, our business may suffer. Our two officers, Brian
Lunsford and Maranda Lunsford, have been sole owners of CoffeeAM.com shares
since the end of 1998 and have been working full time to plan and meet our
objectives. We do not have an employment agreement with them and we are not
beneficiaries of any key person life insurance covering them. We are seeking
additional people to train, so that we can continue to grow and to decrease our
dependence upon our two officers.
<PAGE>
Use of proceeds
The net proceeds to CoffeeAM.com from this offering are estimated to be
approximately $950,000. We expect to use the net proceeds over the 12-month
period commencing from the date that the minimum escrowed proceeds are released,
for the purposes outlined below. If more than the minimum, but less than the
maximum offering is raised, we intend to allocate proceeds in excess of the
minimum in the same proportions as if the maximum were raised.
Minimum Maximum
(75,000 shares) (150,000 shares)
------------------- ------------------
1. Facility expansion .......... $ 30,000 7% $ 40,000 4%
2. Advertising initiatives...... 100,000 23% 205,000 22%
3. Marketing franchises......... 50,000 12% 200,000 21%
4. Repayment of debt............ 50,000 12% 200,000 21%
5. Capital equipment............ 120,000 28% 165,000 17%
6. Internet development......... 45,000 11% 80,000 9%
7. Working capital.............. 30,000 7% 60,000 6%
----------------- -----------------
$ 425,000 100% $ 950,000 100%
================= =================
Description of Use of Net Proceeds
1. Facility expansion. CoffeeAM.com has recently signed a lease for a
15,500 sq. ft. facility located in Woodstock, in the Suburbs of
Atlanta. CoffeeAM.com is obligated under an existing lease for a 6,000
sq. ft. facility in Chamblee, also a Suburb of Atlanta. Based on
CoffeeAM.com's research, the Chamblee facility should be easily
sub-leased for the remaining 3 year portion of the agreement. The
monies allocated to Facility Expansion will allow CoffeeAM to relocate
our roastery into our new facilities and cover costs related to leasing
our Chamblee facility.
2. Advertising initiatives. We plan to conservatively develop our brand
through websites and portals, and such offline media as direct mail,
print advertising, and public relations.
3. Franchise initiative. CoffeeAM.com will be launching a franchise
program in which its franchisees will service Office Buildings and
restaurants requiring delivery and service for their coffee needs.
Management of CoffeeAM.com has significant experience in franchising
and will use this means to further increase CoffeeAM.com's brand
exposure.
4. Repayment of Debt. CoffeeAM.com will use a portion of the proceeds of
this offering to repay loans to its President, Brian J. Lunsford.
5. Capital goods. Based on increased volume we will need to buy additional
equipment for the roasting, processing, and shipment of our products.
6. Internet development. CoffeeAM.com will use the proceeds on
improvements of its web site, to increase efficiency, increase
usability, and allow for the expected increase in scale.
7. Working capital. As our business grows, we will need additional capital
to finance larger inventories of coffee beans, tea and our other
products.
We do not anticipate changes in the proposed allocation of estimated net
proceeds of this offering. However, events may require changes and we reserve
the right to make changes, if we believe they are in the best interests of
CoffeeAM.com.
Dilution
The public offering price per share is substantially higher than the
net tangible book value per share of our common stock. Purchasers of shares in
this offering will experience immediate and substantial dilution in the pro
forma net tangible book value per share. The issuance of additional equity
securities could also cause substantial dilution of the ownership interest of
purchasers of the shares offered by this prospectus.
On December 31, 1999, and giving effect to the April 30, 2000 dividend of
$200,000, CoffeeAM.com had a negative net tangible book value of ($321,798) or
($0.09) per share. The net tangible book value per share is equal
<PAGE>
to our total tangible assets, less total liabilities and divided by total number
of shares of common stock outstanding. After giving effect to the sale of the
minimum and maximum number of shares being offered, at the $7.00 per share
public offering price, and the application of the estimated net proceeds, our
pro forma net tangible book value as of December 31, 1999 would have been
$103,202 after sale of the minimum and $628,202 after sale of the maximum number
of shares, or $0.03 per share and $0.16 per share. This represents an immediate
increase in net tangible book value to present owners of $0.12 per share at the
minimum and $0.25 per share at the maximum. It represents an immediate dilution
to new investors purchasing shares in this offering of $6.97, or 99%, per share
at the minimum and $6.84, or 98%, per share at the maximum.
<TABLE>
The following table shows, on a pro forma basis as of December 31, 1999,
the difference between existing shareowners and new shareowners in this
offering, with respect to the number of shares purchased, the total
consideration paid and the average price paid per share:
<CAPTION>
Minimum Maximum
(75,000 shares) (150,000 shares)
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<S> <C> <C> <C> <C>
Public offering price per share........ $7.00 $7.00
Net tangible book value per share
On December 31, 1999.......................... ($0.09) ($0.09)
Increase in net tangible book value per share
to present owners............................. $0.12 $0.25
Pro forma net tangible book value per share
after this offering............................. $0.08 $0.22
Net tangible book value dilution per share
to new investors................................ $6.97 $6.84
====== =====
</TABLE>
This table shows what the present owners paid for their ownership of the
business in 1998, net of the dividend paid April 30, 2000, compared to the price
of shares in this offering, assuming that the minimum number of shares are sold
in this offering:
Shares owned Percent Amounts paid Percent Price/share
------------ ------- ------------ ------- -----------
Present owners 3,687,500 98% $ 50,000 9% $0.001
New investors 75,000 2% $525,000 91% $7.00
The following table shows the same information, assuming that the maximum number
of shares are sold in this offering:
Shares owned Percent Amounts paid Percent Price/share
------------ ------- ------------ ------- -----------
Present owners 3,687,500 96% $ 50,000 5% $0.001
New investors 150,000 4% $1,050,000 95% $7.00
Management's Discussion and Analysis of
Financial Condition and Results of Operations
This discussion should be read together with the financial statements, and their
notes, and other information in this prospectus..
Overview
CoffeeAM.com sells specialty beverage products (principally gourmet coffee) to
retail coffee businesses and to consumers. Both business-to-business and
business-to-consumer sales are made primarily through our Internet site
<PAGE>
located on the World Wide Web at www.CoffeeAM.com . We produce (blend or roast)
some of our products and we distribute some for other manufacturers.
From its beginning in 1993 through the change in its ownership in December 1998,
CoffeeAM.com derived most of its revenue from telephone and catalog sales to
coffeehouses and restaurants. In March 1999, we launched our Internet presence
and have focused on developing the premiere Internet specialty beverage site.
This repositioning of the company allows us to sell our products as easily to a
large wholesale customer as to a person who orders a pound or two of coffee a
month. We use the same roastery for both client bases and simply use larger
packaging for wholesale customers.
Results of operations for 1999 compared to 1998
Management's decision to launch our CoffeeAM.com website, along with recruiting
the staff needed to grow our business, resulted in a loss of ($39,916) in 1999
compared to net income of $205,535 for the prior year. Gross profit, before
operating expenses, was $795,105 in 1999, up from $538,396 in 1998. Most of this
difference in operating expenses is from increased salaries as a result of our
expansion from four full-time employees in 1998 to an average of seven in 1999.
We incurred costs related to the development of our website, the initial
marketing of the website and other expenses related to our site's launch. As
e-commerce is a new business method, we had to implement new systems and
procedures for fulfillment of orders and customer service situations.
We also began to incur an additional expense item in 1999 through our "Free
Shipping" policy. We began shipping 95% of our packages via UPS, and paying the
cost of shipping for all goods purchased through our web site. We do not have
plans to change this policy in the future, as it has been useful in increasing
our customer base.
In 1999 we were able to continue to grow revenues, while virtually remaking
ourselves into an Internet enterprise. Gross margins improved to 62.0% of
revenue in 1999 versus 53.6% in 1998. This significant improvement in margins
was due to improved pricing, expansion into the direct consumer market and
favorable coffee commodity prices. As revenue numbers continue to grow, we
expect to be able to improve our gross margins through better purchase prices on
increased quantities.
Financial condition at December 31, 1999 compared to December 31, 1998
There were no accounts receivable when the business was purchased by its present
owners, in mid-December 1998. The year-end balance results from approximately
two weeks of sales. The balance at the end of 1999 reflects a full year's
operations by present management. We have become more restrictive on the
issuance of credit terms to wholesale customers. This new policy has in
management estimation had little impact on sales growth, but should allow the
company to reduce exposure to bad debt expenses.
We have managed our inventory levels much more adeptly in 1999. By increasing
our turns, we have been able to reduce our year-end inventory 37.1% vs. 1998.
While sales increased 27.7% in the same period. WE credit better staffing and
more timely ordering for this improvement.
The note receivable from shareholder has since been paid in full.
Both accounts payable and accrued expenses were at zero when ownership changed
during December 1998, the year-end balances result form approximately two weeks'
operations. The 1999 year-end amounts are more reflective of current practices.
Liquidity and Capital Resources
CoffeeAM.com has traditionally financed it growth through cash from operations.
It has debt payable to its former owners and as the result of a loan from its
current owner made on April 30, 2000, to fund a dividend of the same date. We
plan to issue equity and debt instruments in the future as necessary to fund the
retirement of debt and the planned growth.
We buy products on trade terms from our suppliers while collecting the majority
of our receivables on a cash or cash-similar (credit card, C.O.D) basis. We do
not currently have a line of credit with any financial institution. We have no
long-term debt other than the notes payable to the previous owner, described in
note 5 of the notes to financial statements.
<PAGE>
Inflation and commodity prices
We do not believe inflation will have a material impact on our future
operations. We are very much affected by fluctuations in the price of coffee on
the world market, which results primarily from weather conditions.
Forward-Looking Statements
This section and other forward-looking statements in this prospectus are based
on our current expectations. Our actual results could differ materially from
those anticipated in these forward-looking statements, as a result of various
factors, including the risks described in this prospectus.
Capital Requirements. The company's growth plans call for significant
investments in its website infrastructure and the mass marketing of it site to
retailers and direct-consumers. The inability to raise those funds would
adversely affect CoffeeAM and its growth strategy.
Acquisition Strategy. We have no plans to acquire other businesses at this
time. We will, however, be open to possibilities that we believe would increase
our customer base and revenues.
Advertising Strategy. We plan to spend extensively on advertising in 2000. This
spending will be done in both targeted and broadcast media and will include both
online and offline advertising.
Web Design. We plan major improvements for our website during 2000. These
improvements will be in the user experience, the content offerings and
back-office processing. Improvements on our website will be an ongoing process,
as the e-commerce industry continues to develop. Our website will include more
information on coffee, teas, and other products that the company markets. We
also plan to expand the information we provide for those who wish to add gourmet
beverages to their existing businesses.
Seasonality
Specialty food sales are inherently seasonal, with highest volumes during the
fourth quarter holiday season. Additionally, our business has a large
gift-giving component. Our wholesale business is less seasonal. Approximately
32% of our 1999 sales were realized in the fourth quarter. The 1998 amount was
28%. We expect fourth quarter sales to continue to represent a disproportionate
amount of annual sales in the future.
Year 2000 Issues
We have upgraded all of our internal computer and software systems as well as
communications equipment to Y2K compliant standards. We have sought and received
assurances in writing from our major Internet service providers of their
compliance with Y2K requirements. Our costs for preparations for Year 2000 have
been minimal.
Business
CoffeeAM.com is an electronic commerce company focused on the sale of gourmet
and specialty coffees and teas over the Internet to the retail, corporate gift
and wholesale markets. We roast over 45 high-quality Arabica coffees and offer
over 150 flavored coffees, organic coffees, select estate coffees, gourmet teas
and giftbaskets, as well as commercial and home coffee equipment. Our website
combines merchandise and related content. We operate a warehouse and our
customers' orders are fulfilled directly by us. We do have some equipment
drop-shipped to our customers.
The majority of our revenue comes from the wholesale customer accounts which we
had serviced prior to taking on our Internet initiative. These wholesale
customers resell the coffee in whole bean or ground form for home consumption.
Many of them also brew and sell coffee beverages at their place of business.
We were incorporated in August 1993 and launched our online retail store in
March 1999. Since the present owners purchased the business, in December 1998,
we have focused on expanding our product offerings, building our brand name
through advertising and promotional campaigns, pursuing online shopping
initiatives, recruiting personnel, developing business-to-business services and
exploring strategic electronic commerce opportunities. In December 1999, we
launched a wholesale program enabling consumers to purchase coffee and tea in
bulk at wholesale prices. Currently our retail and wholesale customers pay for
orders by credit card while we pay our
<PAGE>
suppliers on trade terms. As a result, we are able to increase our working
capital between the time we receive payment for orders and the time we are
required to pay suppliers.
We reported a loss of ($39,916) in the year ended December 31, 1999, after
pretax income of $205,535 in 1998. We expect to incur losses in the next few
quarters, from these kinds of expenditures:
- - advertising and promotional expenditures to build our brand name and
attract customers,
- - the continued development of our website,
- - expanding our product offerings,
- - developing relationships with strategic business partners,
- - attracting, retaining and motivating qualified employees,
- - developing an "extranet" system to electronically link us to our
suppliers to improve order processing,
- - continuing to develop our order processing technology, and
- - continuing to increase our production capacity.
Our products and operations
The products we sell are known as "gourmet and specialty beverage," defined as
distinctive beverages of high quality. This includes our gourmet coffees, teas,
and related products.
CoffeeAM.com is committed to providing the highest quality Arabica coffees
available from around the world. To achieve this goal, we work closely with our
coffee brokers and estate owners to carefully select the coffee beans and then
perfectly roast the coffees to maximize their taste and flavor differences.
We roast our coffee in small batches to ensure consistency. We vary the roast
time and temperature, to maximize a particular coffee's taste characteristics.
We use state-of-the-art roasting technology, which enables more exact specific
roasts, so that we may offer consistent taste profiles. We use gas heated cast
iron drum roasters, which we believe offer a higher degree of flexibility than
the typical commercially roasting machines. We have developed specific roasting
formulas for each coffee type to establish a coffeeAM.com recipe for each coffee
type, which we call our perfect roast. The Company believes that this roasting
process distinguishes it from many other specialty coffee companies and has
resulted in strong customer loyalty.
CoffeeAM, also offers flavored coffees, unlike some of its competitors. We
flavor our coffee during the production process, to provide our customers with a
higher taste consistency.
We package our coffee with one-way valve bag packaging technology, which
provides an extended shelf life for our coffees. This technology enables us to
expand our geographic distribution while maintaining our high standards for
quality and freshness.
CoffeeAM.com provides online retail and wholesale customers a broad selection of
high quality specialty coffees, teas, and related products which can be ordered
at any time and promptly delivered. We aim to generate repeat business by
providing a positive ordering experience for our customers, offering informed
content, and offering extremely competitive pricing on the products we market.
Our plans call for the development of a office gourmet coffee delivery and
service business. We intend on expanding our brand nationally by launching
office delivery franchises in the US and world-wide. By utilizing this
franchiser model, CoffeeAM.com will be able to penetrate the accounts which
require delivery and service.
Our business-to-business market
Our business-to-business market includes sales to specialty food retailers, gift
shops, caterers, restaurants and other resellers of specialty beverage products.
Forrester Research estimates that business-to-business electronic commerce will
grow from $17 billion in 1997 to $327 billion in 2002.
Suppliers of specialty beverage products have traditionally distributed their
products either by using a food broker to sell to retailers at wholesale prices,
or by attempting to sell their products direct to retailers. Many suppliers have
been ineffective at direct selling and the assortment of specialized food
brokers and distributors that currently supports the industry is highly
fragmented. As a result, many retail outlets for specialty beverage products are
underserved or have limited access to the products they would like to carry.
Even more scarce than availability of
<PAGE>
quality products is the industry information and product information that these
specialized retailers need to operate their businesses effectively. CoffeeAM.com
intends to bridge this gap by offering the widest range of products, and by also
offering `online-consulting' to those in the business and those looking to enter
the business. This relationship could allow coffeeAM.com to maintain a large and
consistent amount of traffic to its site and to offer ancillary products to
these customers.
CoffeeAM believes that these resellers of specialty beverage products are
interested in buying online and that shipping costs are often a deterrent. We
have offered free shipping, on most items, to all continental US locations via
UPS. This shipping expense is costly, but we believe the benefit of customer
attraction has offset the related expense. This program is constantly being
reviewed, to see whether it will be part of our long-term strategy.
Our business-to-business market may be affected by the unfamiliarity of certain
retailers with the Internet in general and, more specifically, as a means for
conducting commerce. Many industries are embracing the digital marketplace for
goods on a daily basis, and we believe it is becoming quite apparent that many
if not all industries will follow suit. We have staked our claim to the digital
marketplace for specialty beverages and more precisely gourmet coffee and tea.
For this goal we are also in the process of implementing a new order processing
system, which should enable us to offer online auctioning of equipment and other
improvements related to the information we provide for those in the coffee
business. We are also working to increase our site's familiarity among specialty
food retailers.
We require credit card payment from our wholesale purchasers, rather than the
more typical weekly or monthly trade credit terms. Due to the high turnover rate
in the coffeehouse and restaurant business, CoffeeAM is very restrictive at
extending terms. By limiting the amount of terms we grant and requiring most
transactions to be paid in advance via card, we have been able to keep bad debt
losses very low.
We believe that the wholesale marketplace we have created will significantly
influence and improve the specialty beverage shopping experience and selection.
The following highlights CoffeeAM.com's strategy:
- the specialty coffee market is highly fragmented with only a single
dominant retailer, Starbucks. We estimate there are at least 10,000
independent coffeehouses throughout the United States;
- we have an "early-to-market" digital market place for the coffee and
tea industry;
- we have the ability to increase our product offerings with very little
incremental costs;
- we have the ability to offer specialized content, for high and
consistent traffic levels;
- small businesses are increasingly familiar with the Internet,
especially as a means to procure goods;
- manufacturers are increasingly dependent on online relationships for
the distribution of their goods;
- our history has focused on helping customers establish coffee and tea
businesses and we are now seeing many non-traditional businesses
looking to add gourmet beverages to their offerings; and
- as we build the digital marketplace, more specialty beverage companies
and those who have products for this market will see the necessity of
selling there.
Our plans for the CoffeeAM.com office delivery and service franchise
CoffeeAM.com plans to establish a franchise system to serve market segments that
are not expected to rely on Internet purchasing. Many restaurants, and almost
all offices use a coffee delivery service which delivers coffee, provides
equipment, and replenishes other coffee related supplies. This type of service
is not feasible for CoffeeAM.com to perform directly. We intend to establish a
network of independent CoffeeAM.com franchisees that will deliver gourmet coffee
and tea to office customers. We believe these franchisees could allow us to
increase volumes, and strengthen our brand.
Franchising involves different legal and management structures from the business
that we are currently operating. We believe that our management has the required
ability to build this new operation.
Our consumer market
All of our sales directly to consumers are made online, through our website on
the Internet. While we are not aware of any statistical estimates of the amount
of online sales of gourmet and specialty beverage products, we believe that the
market size and growth rate will follow the estimates for all online food sales.
Forrester Research estimates that total online food sales for 1998 were
approximately $234 million and that total online food sales are expected to
reach $1.1
<PAGE>
billion in 2000 and $10.8 billion by 2003, representing a compounded annual
growth rate of 115%. Market research firm International Data Corporation
estimates that worldwide business to consumer commerce over the Internet will
grow from $12 billion in 1997 to $425 billion in 2002.
As of March 21, 2000, 59.22% of our business had come from repeat customers.
Also as of that date, CoffeeAM.com had provided products to 6,558 customers.
We believe that our method of selling products direct to the consumer will
become the preferred way for people to receive their gourmet coffees & teas. The
following highlights CoffeeAM.com's opportunity:
- gourmet coffee's major sales growth over the past decade has created a
more knowledgeable consumer;
- we are the first company to aggressively focus on `Roastery-Direct'
gourmet coffees online;
- we can increase our product offerings with very little incremental
costs;
- we will offer specialized information on our website that is not in
stores or shops;
- we have the ability to sell unique, hard to find items not easily
obtainable at a local supermarket;
- we have none of the costs of physical retail locations in the thousands
of markets which we service;
- we receive orders and allow consumers to shop 24 hours a day/7 days a
week;
- our products are delivered direct to the consumer's front door;
- we establish `recurring-shipments' so that the consumer need not worry
about running out of product;
- our product is a consumable, and customers reorder when they `use-up'
our product; and
- we roast to order and do not incur product spoilage or the even worse
option - selling stale coffee.
Our Competition
An Internet search will show that many small competitors exist at any one time,
but only a few large ones have product offerings similar to CoffeeAM. We are
very small, compared to industry leaders in the overall coffee roasting and
marketing industry. We are not aware of any large business that is dedicated
exclusively to the Internet coffee or the Internet specialty beverage industry.
If one or more of the industry giants shifts its focus toward an online venture,
our business could be adversely affected by strong competitive tactics, or
positively affected by the resulting increase in market awareness of Internet
shopping for gourmet coffees and teas.
We are not aware of any digital marketplace that exists for the gourmet coffee
and tea business sector.
We do not anticipate any significant competition in the sale of franchises for
our office delivery system. However, our franchisees will have to complete with
many national companies that have significantly more resources than CoffeeAM.com
or its franchisees.
Employees
The company currently has nine employees, all full time. We intend to hire
employees as sales continue to increase, and are actively recruiting for many
positions. We expect to have 18 employees by the end of 2000.
Facilities
CoffeeAM will be moving into expanded facilities in May, 2000. Our new
seven-year lease is for 15,500 square feet, at 100 Londonderry Court Suite 112,
Woodstock, Georgia. Our lease will be for seven years and payments will be
$7,500 per month, triple net.
We have been leasing 6,000 square feet, at 3588 Pierce Drive, Chamblee, Georgia
30341. Our current rate is $2,500 per month, triple net, and would increase each
year, to $2,760 per month in the year before its May 2003 expiration. We believe
that this rate is below market for similar property in metro-Atlanta and we are
making efforts to sub-lease this space. If we do not, we believe we can buy it
out from the landlord without a major cost.
Intellectual property, research and development
We adopted our business name as our corporate name, CoffeeAM.com, Inc. We have
no other patents, trademarks, licenses or other intellectual property protection
and we do not believe that any further protection is useful. We have not spent a
material amount on research and development activities in the last two years. We
have considered our web site development to be part of our operating costs.
<PAGE>
Government regulations, environmental laws
No government approval is necessary for our principal products and services and
we do not believe that any existing or probable governmental regulations will
have a material effect on our business. Our coffee roasting and other operations
have not incurred any material costs of compliance with environmental laws.
Legal Proceedings
CoffeeAM.com is not a party to any pending legal proceeding.
Management
CoffeeAM.com 's board of directors is responsible for our policies and the
selection and oversight of management. The board is elected annually by the
shareowners. The present terms for all directors will conclude at the annual
meeting of shareowners in 2001.
Directors and Officers
Name, residence address Age Responsibility
- ----------------------- --- --------------
Brian J. Lunsford 26 President, Director and Chief
490 Bottesford Drive Executive Officer
Kennesaw, GA 30144
Maranda E. Lunsford 24 Vice President, Director
490 Bottesford Drive
Kennesaw, GA 30144
David R. Blech 44 Vice President of Finance, Director
4525 Dorset Lane
Suwanee, GA 30024
Juel Veach 45 Director
1329 Spalding Drive
Atlanta, GA 30350
Howe D. Whitman 57 Director
4102 Whitewater Creek Rd.
Atlanta, Georgia
Background information
Brian J. Lunsford was the founder of Alligator Renovator, an Atlanta-based
commercial services company which he sold in 1997. From 1993 to 1996, he was
vice president of Professional Carpet systems, one of the largest commercial
carpet service companies in the United States. He became president of
CoffeeAM.com in December 1998.
Maranda E. Lunsford became vice president of CoffeeAM.com in December 1998, with
responsibilities particularly in online strategy, product quality and user
experience. Before joining CoffeeAM.com, she was completing her degree at
Kennesaw State University.
David R. Blech became controller of CoffeeAM.com in December 1998 and was
recently made vice president of finance. From 1995 to 1998, he was vice
president and an owner of PAWE, which was merged into the largest car wash
company in the United States. During 1988 to 1995, he was vice president of
finance for Knight Energy Services, a Florida real estate developer and operator
of service stations and car washes.
<PAGE>
Juel Veach joined our board of directors in March 2000. He has owned and
operated a commercial service in Atlanta since 1989. From 1982 to 1989, he was
the controller and system analyst for a division of Standard Coffee Company of
New Orleans.
Howe D. Whitman became a director in March 2000. He has worked in the real
estate industry for over 35 years. In addition to serving on the board of
advisors for Colony Homes of Woodstock, Georgia, Mr. Whitman is also on the
Board of Directors for the Lakeland, Florida development council. Since 1973,
Mr. Whitman has served as President of Heritage Equities.
Committees
Audit Committee. The board has established an audit committee of the two
independent directors, Juel Veach and Howe Whitman. The audit committee will
make recommendations concerning the engagement of independent public
accountants, review their independence, the services they provide and the
results of the audit engagement. The audit committee will also consider the
range of audit and non-audit fees and review the adequacy of our internal
accounting controls.
Meetings and compensation of directors
The directors meet quarterly. The audit committee meets at least once annually.
Beginning in 2000, Directors receive $200 plus options to buy 100 shares with a
strike price set at the day of the board meeting, for each board and committee
meeting they attend. We reimburse them for travel expenses to attend meetings.
Executive compensation
CoffeeAM has no employment agreements. No one was paid $100,000 or more in 1999.
Our chief executive officer, Brian Lunsford, was paid $44,308 in 1999.
Stock incentive compensation plan
CoffeeAM has reserved a total of 132,500 shares of its common stock for grant to
employees and consultants. Options were granted February 1, 1999 for 130,000
shares, of which 40,000 shares each were to our Controller, Dave R. Blech and
our Roastmaster, C. Shawn Dunaway, and 50,000 to our consultant, Joseph R.
Lunsford, who is the father of Brian J. Lunsford, President of CoffeeAM.com.
Each option is exercisable for five years after the date it vests, at the same
$0.08 per share price paid for all the shares on December 17, 1998. The option
to Joseph Lunsford vested on the date of grant. The options to Mr. Blech and Mr.
Dunaway vest as to 10,000 shares each of the next four anniversaries of the
grant. 2,500 shares remain available for grant.
Indemnification of directors and officers and limitation of their liability
Officers or directors are not liable to CoffeeAM.com or its shareowners, under
Georgia law, if they acted in a manner they believed in good faith to be in or
not opposed to CoffeeAM.com's best interests. They are not liable in any
criminal proceeding if they had no reasonable cause to believe their conduct was
unlawful. As permitted by Georgia law, CoffeeAM.com will indemnify its officers
and directors against liability and their defense costs in any proceeding in
which they have been successful or where the directors who are not involved
determines that the applicable standard of conduct has been met. CoffeeAM.com
will pay reasonable expenses, including attorneys' fees, incurred by directors
or officers in advance of the final disposition of a proceeding, if they furnish
written affirmation of good faith belief that they have met the applicable
standard of conduct, together with a written promise to repay any advances if it
is determined they are not entitled to indemnification. We have been informed
that, in the opinion of the Securities and Exchange Commission, any
indemnification for liabilities arising under the federal Securities Act of 1933
is unenforceable, as against public policy expressed in that Act.
We do not presently carry any insurance against the liability of CoffeeAM.com 's
officers and directors.
Certain transactions
All of the outstanding shareownership of CoffeeAM.com, Inc. was purchased in
December 1998 by Marandar Marketing, Inc., which is wholly owned by Brian
Lunsford and Maranda Lunsford. The total purchase price was $562,706, of which
$250,000 was paid by Marandar. Of the balance, $232,706 was paid from
CoffeeAM.com's assets. CoffeeAM.com also issued a note payable to the former
owners for $80,000.
<PAGE>
CoffeeAM.com advanced funds to Marandar during 1999 and had a note receivable at
December 31, 1999 for $12,187. This amount has been repaid and there are
currently no advances outstanding. All future material affiliated transactions
and loans will be made or entered into on terms that are no less favorable to
CoffeeAM.com than those that can be obtained from unaffiliated third parties and
must be approved by a majority of CoffeeAM.com's independent directors who do
not have an interest in the transactions and who had access, at CoffeeAM.com's
expense, to CoffeeAM.com's or independent legal counsel.
CoffeeAM.com declared a $200,000 dividend to Marandar on April 30, 2000. At the
same time, Brian J. Lunsford, Marandar's owner and CoffeeAM.com's president,
loaned CoffeeAM.com $200,000. The loan is due on April 30, 2001, with an 8%
annual interest rate. Proceeds of this offering would be used to repay that
loan.
The lease of our new facilities commences June 1, 2000. The landlord is a group
of individuals doing business as "Cherokee Venture II," The group is affiliated
with Howe D. Whitman, who became a CoffeeAM.com director on March 24, 2000. On
May 5, 2000, Mr. Whitman also purchased 30,000 shares of CoffeeAM's common
stock, at $3.50 per share. Payment for the shares was $57,000 in cash and
$48,000 in reduced rentals over the first three years of the lease.
Principal shareowners
The following table shows the beneficial ownership of CoffeeAM.com's common
stock immediately prior to this offering, giving effect to the stock dividend
effected May 4, 2000 and as adjusted to reflect the sale of the shares being
offered, for shares owned by:
(i) each of CoffeeAM.com's directors and executive officers,
(ii) each shareowner we know to own beneficially 5% or more of the outstanding
shares of our common stock and
(iii) all directors and officers as a group.
<TABLE>
We believe that the beneficial owners of the common stock listed below, based on
information they furnished, have sole investment and voting power over their
shares, subject to community property laws where applicable.
<CAPTION>
Name of Beneficial Owner Number of Percentage of Total Common Stock Beneficially Owned
Shares
Beneficially
Owned Before Offering After Offering
<S> <C> <C> <C>
Brian J. Lunsford 1,843,750 49.6% 47.7%
Maranda E. Lunsford 1,843,750 49.6% 47.7%
Howe D. Whitman 30,000 0.8% 0.7%
All directors and
executive officers
as a group (5 Persons) 3,717,500 100% 96.1%
</TABLE>
Description of securities
Our articles of incorporation and the Georgia Business Corporation Code
authorize us to issue up to 10,000,000 shares of common stock. We may also issue
securities for borrowings. Before sales in this offering, CoffeeAM.com had
3,717,200 shares of common stock outstanding, held by three shareowners. This
includes shares issued in the May 4, 2000 stock dividend of 1,676 shares of
common stock for each share owned on that date. No shares of preferred stock
have ever been issued.
Common stock
The owners of common stock elect all the members of CoffeeAM.com's board of
directors. Each share owned is entitled to one vote on all matters to be voted
on by shareowners. A majority of the shares issued is a quorum. The shareowners
are entitled to receive dividends when, as and if declared by the board of
directors out of funds legally available. In the event of liquidation,
dissolution or winding up of the corporation, the shareowners are entitled to
share ratably in all assets remaining which are available for distribution to
them after payment of
<PAGE>
liabilities. Shareowners, as such, have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
common stock. All of the outstanding shares of common stock, and the shares
issued in this offering, will be fully paid and nonassessable. The transfer
agent and registrar for our common stock is American Stock Transfer.
Future resales of securities
The shares sold in this offering will be freely tradable, without restriction or
registration under federal securities laws. Sales of shares to residents of
certain states or jurisdictions may require registration or an applicable
exemption from registration provisions of the shares in those states or
jurisdictions.
Order-matching service
The shares have been not been approved for listing on any registered national
securities exchange or on the Nasdaq stock market. After completion of this
offering, we expect to arrange for a registered securities broker-dealer to
provide an order-matching service for persons wishing to sell or buy shares
after this offering is over. However, it is possible that this service may not
become or remain available. In that case, anyone wishing to sell shares would
have to find a buyer and make arrangements for the price, payment and transfer
of the shares.
Restricted shares
The 3,717,200 shares of common stock issued before this offering are "restricted
securities" and may not be sold in a public distribution except in compliance
with the federal Securities Act of 1933 or an applicable exemption under the
Securities Act, including its Rule 144. Rule 144(k) provides that a person who
is not an officer, director or principal shareowner of CoffeeAM.com and who has
owned shares for at least a year could offer and sell those shares through any
trading market, if reporting and other requirements were met.
The three present shareholders have entered into a "lock-in agreement" with
CoffeeAM.com, further restricting the sale or other transfer of their shares for
a period of 2 years after the completion of this offering. All of the 3,717,200
shares of common stock now outstanding are subject to this agreement. None of
these shares can be transferred during the first year after completion of this
offering. During the second year after completion of this offering, an aggregate
of 2 1/2% of these shares may be sold or transferred during each calendar
quarter.
Tax effects of selling "Small Business Stock"
Individuals buying shares in this offering, and holding them for at least five
years, would pay a maximum 14% effective tax rate on any gain from their sale,
under existing tax laws. Or, no tax at all would be payable on the sales
proceeds "rolled over" into the purchase of other "small business stock," within
60 days of the sale. This favorable tax treatment could be changed. Various
conditions and limitations apply. You will want to consult your own tax advisor
if this tax effect is important in your investment decision.
Plan of distribution
CoffeeAM.com is offering shares and certificates directly to the public through
Brian Lunsford, its Chief Executive Officer, who will not receive any
commissions or other compensation based on transactions in securities. His
activities are intended to be within Rule 3a4-1 of the federal Securities
Exchange Act of 1934 and he will comply with securities regulations of the
states in which the offering is to be registered. CoffeeAM.com will communicate
announcements of the offering and offer copies of this prospectus, as permitted
by federal and state securities regulations. We plan to offer shares to
residents of the states of Alaska, California, Colorado, Connecticut, Delaware,
Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Michigan, New Jersey, New
York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina,
Texas, Virginia, Washington and Wyoming. We have applied to register this
offering in those states, and to license Brian Lunsford as our sales agent, as
required by their securities laws. If our shares are not registered, or exempt
from registration in a state, or we do not have a required licensed agent there,
we will not offer shares to its residents.
Determination of offering price
Because there has been no market for our common stock, the public offering price
has been determined by our board of directors. Among the factors considered were
CoffeeAM.com's results of operations, its current financial
<PAGE>
condition, its future prospects, the state of the markets for its products and
services, the experience of management and the economics of the industry segment
in general.
Escrow of minimum proceeds
We are making this offering on a best efforts minimum/maximum basis subject to
subscription and payment for not less than the minimum 75,000 shares and not
more than the maximum 150,000 shares. All subscription payments will be
deposited into an escrow account at SouthTrust Bank, N.A. No securities dealer
is buying all of the shares in this offering, so less than the maximum amount
may be raised. If the minimum is not sold in this offering by the termination
date, all proceeds deposited in the escrow account will be promptly refunded in
full, with interest, but without any deduction for expenses.
During the escrow period, all subscription payments for shares must be delivered
with a completed share purchase order to the escrow agent. CoffeeAM.com will
mail a copy of the share purchase order to each purchaser within fifteen
business days of acceptance by us. Stock certificates will not be issued to
subscribers until the minimum has been sold. Until then, purchasers will be
subscribers and not security holders of CoffeeAM.com. During the escrow period,
subscribers will have no right to a return of their payment.
After the minimum has been fully subscribed, we will continue to offer the
shares, not subject to payment for any further minimum amount, but not for more
than a total of 150,000 shares. This offering will end upon the earlier of the
following: the sale of the maximum amount, five months after the date of this
prospectus or the date on which we decide to close the offering. We reserve the
right to reject any subscription or share purchase agreement in full or in part
and to terminate the offering at any time prior to the sale of all the shares
being offered.
Experts
The financial statements of CoffeeAM.com as of and for the periods ended
December 31, 1998 and December 31, 1999 have been included in this prospectus in
reliance on the report of Cherry, Baekart & Holland, certified public
accountants.
Available Information
This prospectus is part of a registration statement on Form SB-2 filed under the
Securities Act of 1933. This prospectus does not contain all of the information
in the registration statement and its exhibits. Statements in this prospectus
about any contract or other document are just summaries. You may be able to read
the complete document as an exhibit to the registration statement.
CoffeeAM.com will have to file reports under the Securities Exchange Act of
1934. You may read and copy the registration statement and our reports at the
Securities and Exchange Commission's public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549, Seven World Trade Center, 13th Floor, New York,
New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. You may telephone the Commission's Public Reference Branch at
800-SEC-0330. Our registration statement and reports are also available on the
Commission's Internet site at http://www.sec.gov.
We intend to furnish our shareowners with annual reports containing audited
financial statements after the end of each fiscal year.
Index to financial statements
Independent Auditors' Report F-1
Balance Sheets F-2
Statements of Income F-3
Statements of Changes in Stockholders' equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Coffeeam.com, Inc.
formerly known as
Arabica International, Inc.
Chamblee, Georgia
We have audited the accompanying balance sheets of Coffeeam.com, Inc. formerly
known as Arabica International, Inc. (wholly owned subsidiary of Marandar
Marketing, Inc.) as of December 31, 1999 and 1998 and the related statements of
income, changes in stockholders' equity, and cash flows for the periods then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Arabica International, Inc. as
of December 31, 1999 and 1998 and the results of their operations and their cash
flows for the periods then ended in conformity with generally accepted
accounting principles.
Cherry, Bekaert & Holland, L.L.P.
Certified Public Accountants
Atlanta, Georgia
March 3, 2000, except for Note 11, as to
which the date is May 5, 2000
F-1
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Balance Sheets
December 31, 1999 and 1998
Assets
December 31, December 31,
1999 1998
-------- --------
Current assets
Cash $ 40,663 $ 29,318
Accounts receivable
Trade, net of allowance for uncollectible
accounts of $6,000 for 1999 and
$-0- for 1998 62,683 16,771
Inventories 81,975 139,999
Prepaid expenses 3,603 --
-------- --------
Total current assets 188,924 186,088
-------- --------
Net property and equipment 175,709 161,819
-------- --------
Other assets
Note receivable shareholder 12,187 --
Goodwill, net of accumulated
amortization of $23,298 for 1999 and
$-0- for 1998 326,179 349,477
-------- --------
Total other assets 326,179 349,477
-------- --------
Total assets $702,999 $697,384
======== ========
See notes to financial statements.
F-2
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Balance Sheets
December 31, 1999 and 1998
(continued)
Liabilities and Stockholders' Equity
December 31, December 31,
1999 1998
--------- ---------
Current liabilities
Accounts payable $ 101,103 $ 29,686
Accrued expenses 22,260 23,401
Current maturities of long-term debt 52,156 24,743
--------- ---------
Total current liabilities 175,519 77,830
--------- ---------
Long-term debt, net of current maturities 323,099 375,257
--------- ---------
Total liabilities 498,618 453,087
--------- ---------
Stockholders' equity
Common stock, authorized 10,000,000
shares, 3,687,500 shares issued and
outstanding,
200 200
Paid-in capital 250,000 250,000
Accumulated deficit (45,819) (5,903)
--------- ---------
Total stockholders' equity 204,381 244,297
--------- ---------
Total liabilities and
stockholders' equity $ 702,999 $ 697,384
========= =========
See notes to financial statements.
F-3
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Statements of Income
Years ended December 31, 1999 and 1998
December 31, December 31,
1999 1998
----------- -----------
Revenue
Sales $ 1,282,714 $ 1,004,106
Less cost of sales 487,609 465,710
----------- -----------
Gross profit 795,105 538,396
Selling, general and administrative expenses 821,380 332,861
----------- -----------
Income (loss) from operations 205,535
(26,275)
----------- -----------
Other income (expense)
Interest expense --
13,641
----------- -----------
Net income (loss) $ (39,916) $ 205,535
=========== ===========
Pro forma data (unaudited)
Net income (loss) as reported $ (39,916) $ 205,535
Pro forma income tax expense -- 70,400
----------- -----------
Pro forma net income loss $ (39,916) $ 135,135
=========== ===========
Basic and diluted income (loss) per common
share* $ (0.01) $ 0.04
=========== ===========
Weighted average number of common
shares outstanding 3,687,000 3,687,000
=========== ===========
* Adjusted to reflect the stock dividend declared on May 4, 2000.
See notes to financial statements.
F-4
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
<TABLE>
Statements of Changes in Stockholders' Equity
Years ended December 31, 1999 and 1998
<CAPTION>
Retained
Common Earnings/
Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Balance (Deficit)
December 31, 1997 2,200 $ 200 $ $ (79,726) $ (79,526)
Net income 211,438 211,438
Effect of acquisition by
Marandar Marketing, Inc. 250,000 (131,712) 118,288
----------- ----------- ----------- ---------- ----------
Balance as of
December 17, 1998 2,200 200 250,000 250,200
Net loss from acquisition to
December 31, 1998 (5,903) (5,903)
----------- ----------- ----------- ---------- ----------
Balance as of
December 31, 1998 2,200 200 250,000 (5,903) 244,297
Stock dividend * 3,685,300
Net loss (39,916) (39,916)
----------- ----------- ----------- ---------- ----------
Balance as of
December 31, 1999 3,687,500 $ 200 $ 250,000 $ (45,819) $ 204,381
=========== =========== =========== ========== ==========
<FN>
* Adjusted to reflect the stock dividend approved on May 4, 2000.
See notes to financial statements.
</FN>
</TABLE>
F-5
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Statements of Cash Flows
Years ended December 31, 1999 and 1998
December 31, December 31,
1999 1998
--------- ---------
Cash flows from operating activities
Reconciliation of net income to net cash
used in operating activities
Net income (loss) $ (39,916) $ 205,535
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation 31,821 31,566
Amortization 23,297 2,324
Changes in assets and liabilities, net
of acquisitions
(Increase) decrease in accounts
receivable (45,912) 7,811
(Increase) decrease in inventories 58,024 (56,533)
(Increase) decrease in prepaid assets (3,603) --
Increase (decrease) in accounts payable 71,417 (13,922)
Increase (decrease) in accrued
expenses (1,141) (29,659)
--------- ---------
Net cash provided by operating
activities 93,987 147,122
--------- ---------
Cash flows from investing activities
Capital expenditures (45,710) (25,669)
--------- ---------
Cash flows from financing activities
Principal payments on notes payable (24,745) (64,731)
Loan to stockholder (12,187) --
Payments to former owners related
to acquisition -- (151,932)
--------- ---------
Net cash used for financing activities (36,932) (216,663)
--------- ---------
Net increase (decrease) in cash 11,345 (95,210)
Cash and cash equivalents - beginning
of year 29,318 124,528
--------- ---------
Cash and cash equivalents - end of year $ 40,663 $ 29,318
========= =========
See notes to financial statements.
F-6
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements
December 31, 1999 and 1998
Note 1 - Summary of Significant Accounting Policies
Business Activity
COFFEEAM.COM, Inc. formerly known as Arabica International, Inc. (the
"Company") is a Georgia corporation, incorporated on February 9,
1996. On December 17, 1998, the Company was acquired in a stock
purchase by Marandar Marketing, Inc. The Company engages in the
roasting and sale of gourmet coffee beans. Sales are generally to
coffee houses, restaurants and individuals via the internet. No
customer represents more than 10% of annual sales.
Inventories
Inventories are valued using the first-in, first-out (FIFO) method.
All inventories are stated at the lower of cost or market.
Property and Equipment
Property and equipment are recorded at cost less accumulated
depreciation. Depreciation is computed using the straight-line and
accelerated methods over the estimated useful lives of assets of 5 to
10 years.
Intangible and Long-lived Assets
Intangible assets subject to amortization includes goodwill related
to the acquisition by Marandar Marketing, Inc.. Amortization is on a
straight-line basis over 15 years.
The Company evaluates the impairment of intangible and long-lived
assets on an ongoing basis in relation to the undiscounted cash flows
of the related asset.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, disclosures of contingent assets and liabilities at the
date of the financial statements, and reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-7
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 1 - Summary of Significant Accounting Policies (continued)
Cash and Cash Equivalents
The Company considers instruments with a maturity of three months or
less to be cash equivalents for purposes of the statements of cash
flows.
Fair Value of Financial Instruments
The estimated fair value of the Company's cash, accounts receivable
and payable, and notes payable approximated their carrying value at
year end.
Basic Earnings per Common Share
Basic earnings per common share equals the total of net earnings
divided by the weighted average number of common shares outstanding.
Advertising
The Company expenses advertising costs as they are incurred.
Advertising costs were $53,501 and $13,015 for the periods ended
December 31, 1999 and 1998, respectively.
Income Taxes
The Company has elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, the financial
statements do not include a provision for income taxes because the
Company does not incur federal or state income taxes. Instead, its
earnings and losses are included in the stockholders' personal income
tax returns and are taxed based on personal tax strategies.
Impact of New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued the
following accounting pronouncement which the Company will be required
to adopt in future periods:
F-8
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 1 - Summary of Significant Accounting Policies (continued)
FASB Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities" requires that derivative instruments such as
options, forward contracts and swaps be recorded as assets and
liabilities at fair value and provides guidance for recognition of
changes in fair value depending on the reason for holding the
derivative. The Company does not presently have transactions
involving derivative instruments, but may do so in the future. The
Company is required to adopt Statement No. 133 for all fiscal
quarters of all fiscal years beginning after June 15, 2000.
Note 2 - Acquisition
On December 17, 1998, all the Company's outstanding stock was
purchased by Marandar Marketing, Inc. A summary of the transaction is
as follows:
Cash and receivables paid by Marandar
Marketing, Inc. $ 250,000
Cash and receivables paid by Arabica
International, Inc. 232,706
Note payable to former owner 80,000
--------------------
Total purchase price $ 562,706
====================
Fair value of net assets acquired $ 213,229
====================
Goodwill $ 349,477
====================
The financial statements reflect the allocation of Marandar's
purchase price to the fair values of the assets acquired and
liabilities assumed, effective as of December 17, 1998, the purchase
date. Accordingly, the results of operations for substantially all of
1998 reflect the Company's historical cost basis in assets and
liabilities, and the Company's financial position as of December 31,
1999 and 1998, and the results of operations for the year ended
December 31, 1999, reflect the effects of the purchase price
allocation.
F-9
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 3 - Inventories
Inventories consisted of the following at December 31:
1999 1998
-------- --------
Coffee $ 33,719 $ 93,934
Accessories, flavoring and equipment 48,256 46,065
-------- --------
$ 81,975 $139,999
======== ========
Note 4 - Property and Equipment
Property and equipment consisted of the following at December 31:
1999 1998
--------- ---------
Furniture and office equipment $ 37,157 $ 25,959
Equipment 144,337 110,860
Leasehold improvements 26,036 25,000
--------- ---------
207,530 161,819
Less: Accumulated depreciation (31,821) --
--------- ---------
$ 175,709 $ 161,817
========= =========
Depreciation expense was $36,473 for the year ending December 31,
1999 and $31,566 for the year ended December 31, 1998.
F-10
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 5 - Long-term Debt
Long-term debt consists of the following:
December 31, December 31,
1999 1998
--------- ---------
6.08% note payable to former owner with monthly
payments of $5,118 until December 2005 $ 300,204 $ 320,000
--------- ---------
6.08% acquisition note payable to former owner with
monthly payments of $1,280 until December 2005 75,051 80,000
--------- ---------
375,255 400,000
Less: Current maturities (52,156) (24,743)
--------- ---------
$ 323,099 $ 375,257
========= =========
The above notes payable are secured by all the assets of the Company
and are personally guaranteed by the parent's stockholder. The notes
arose from the acquisition of the Company by Marandar Marketing, Inc.
as discussed in Note 4.
Maturities of long-term debt are as follows:
3
2000 $ 52,156
2001 55,928
2002 59,971
2003 64,305
2004 68,955
Thereafter 73,940
F-11
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 6 - Operating Leases
The Company leases a buildings and office space under an operating
lease. The lease expires at various dates through 2003. Rental
expense under the lease was $28,992 and $28,811 for 1999 and 1998,
respectively. The following is a schedule by years of minimum rentals
under the above lease agreement as of December 31, 1999.
2000 $ 30,700
2001 31,760
2002 32,720
2003 13,800
2004 -
Note 7 - Supplemental Cash Flow Information
Interest paid totaled $13,641 and $-0- for the periods ended December
31, 1999 and 1998, respectively.
Note 8 - Concentration of Credit Risk
The Company operates from one location in Atlanta to manufacture and
sell its product. The Company extends credit to its customers
substantially without collateral. Sales are generally throughout the
entire United States. The business operations are influenced by the
general economic conditions of the U. S.
Note 9 - Commitments
The Company has an agreement with a consulting firm for services
relating to a direct public offering of its stock. The agreement
calls for $2,500 monthly payments until June 15, 2000. The total fee
for the agreement is $33,200.
As part of the purchase agreement, $50,000 was paid to the former
owners for consulting services during the year ended December 31,
1999.
F-12
5
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 10 - Pro Forma Financial Information (Unaudited)
The results of operations for the year ended December 31, 1998, had
the acquisition of the Company by Marandar Marketing, Inc. occurred
as of January 1, 1998 are as follows:
Historical Proforma Proforma
Amounts Adjustments Amounts
---------- ---------- ----------
Sales $1,004,106 $ -- $1,004,106
Cost of sales 465,710 -- 465,710
---------- ---------- ----------
Gross profit 538,396 -- 538,396
Selling, general and
administrative expenses 332,861 25,376 358,237
---------- ---------- ----------
Net income $ 205,535 $ 25,376 $ 180,159
========== ========== ==========
The former owners filed a final tax filing for the Company as of
December 17, 1998. Federal and state income tax liability up to
December 17, 1998 is the responsibility of the former owners.
As described in Note 2, the Company has elected to be taxed as an S
corporation under the provisions of the Internal Revenue Code.
Assuming the completion of the offering, the Company will terminate
its S corporation election and will accordingly become subject to
federal and state income taxes. Upon termination of the S corporation
election, deferred income taxes reflecting the tax effect to
temporary differences between the Company's financial statement and
tax bases of certain assets and liabilities will become a net
liability or asset of the Company and will be reflected on the
balance sheet with a corresponding nonrecurring tax expense or
benefit in the statement of operations for the first calendar quarter
following the offering. Deferred taxes relate primarily to accounts
receivable allowances and capitalization of start up costs. The
amount of such net deferred tax assets approximates $45,000 and
$6,000 at December 31, 1999 and 1998, respectively.
F-13
6
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 10 - Pro Forma Financial Information (Unaudited) (continued)
The pro forma data in the statement of income provides information as
if the Company had been treated as a C corporation for income tax
purposes for all periods presented. The following unaudited pro forma
information reflects the reconciliation between the statutory
provision for income taxes and the actual provision relating to the
incremental income tax expense that the Company would have incurred
if it had been subject to federal and state income taxes.
1999 1998
-------- --------
Income taxes at federal statutory rate $(11,975) $ 58,800
State taxes, net of federal benefit (2,400) 11,600
Portion applicable to former owners -- --
Reserve for realization of deferred tax benefit (14,375) --
-------- --------
Pro forma income taxes $ -0- $ 70,400
======== ========
Note 11 - Subsequent Events
Name Change
Effective April 26, 2000, the Company changed its name from Arabica
International, inc. to COFFEEAM.COM, Inc.
Dividend
A dividend of $200,000 was made on April 30, 2000 to the sole
shareholder of the corporation, Marandar Marketing, Inc.
Loan from Officer
On April 30, 2000, the Company received $200,000 as a loan from its
President, Brian J. Lunsford. The loans is due in one year with
interest due at 8% per annum.
F-14
7
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 11 - Subsequent Events (continued)
Revocation of S Election
On May 1, 2000, the Company resolved to revoke its status as an S
corporation for federal income tax purposes.
Stock Dividend
On May 4, 2000, the Company increased it authorized number of
shares to 10,000,000. In addition, the Company declared a share
dividend of 3,685,000 shares to be included in a replacement share
certificate in addition to the 2,200 shares surrendered to the
Company by the sole owner, Marandar Marketing, Inc. The new share
certificate was issued for a total of 3,687,500 shares.
Stock Option Plan
<TABLE>
On May 4, 2000, the Company adopted a stock option plan for the
benefit of certain employees and consultants. The options will be
accounted for under the intrinsic value method under the provisions
of APB Opinion No. 25. The plan reserves 132,500 shares for the
eventual issuance of the following options:
<CAPTION>
Option Number Exercise Expiration
Name Price of Shares Date Date
----------------------------- ---------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Joseph R. Lunsford $0.08 per share 50,000 05/04/2000 02/01/2004
David R. Blech $0.08 per share 10,000 05/05/2000 02/01/2004
David R. Blech $0.08 per share 10,000 01/01/2001 02/01/2005
David R. Blech $0.08 per share 10,000 01/01/2002 02/01/2006
David R. Blech $0.08 per share 10,000 01/01/2003 02/01/2007
C. Shawn Dunaway $0.08 per share 10,000 05/05/2000 02/01/2004
C. Shawn Dunaway $0.08 per share 10,000 01/01/2001 02/01/2005
C. Shawn Dunaway $0.08 per share 10,000 01/01/2002 02/01/2006
C. Shawn Dunaway $0.08 per share 10,000 01/01/2003 02/01/2007
---------------
Total 130,000
===============
</TABLE>
F-15
8
<PAGE>
COFFEEAM.COM, INC.
formerly known as
ARABICA INTERNATIONAL, INC.
(WHOLLY OWNED SUBSIDIARY OF MARANDAR MARKETING, INC.)
Notes to Financial Statements (continued)
December 31, 1999 and 1998
Note 11 - Subsequent Events (continued)
Stock Issuance
On May 5, 2000, the Company issued 30,000 shares to an individual
in exchange for $57,000 and the execution and delivery of a
contract relating to the rental of new office and warehouse space.
The stock was valued at $3.50 per share based on the cash received
and the fair market value of the rent concession.
F-16
9
<PAGE>
[Outside Back Cover Page]
Until ______________, 2000 (90 days after the date of this prospectus) all
dealers effecting transactions in these shares, whether or not participating in
this distribution, may be required to deliver a prospectus. This is in addition
to the obligation of dealers to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
10
<PAGE>
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation, Article 6, provide that the
personal liability of a director to the Registrant or its shareholders for
monetary damages for breach of duty of care or other duty as a director shall be
limited to the amount of the director's compensation for services as a director
during the twelve month period immediately preceding the breach. The exceptions
to this limitation are a director's liability for (i) any appropriation, in
violation of the director's duties, of any business opportunity of the
Registrant's, (ii) acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of law, (iii) liability as
required by the Georgia Business Corporation Code and (iv) any transaction from
which the director derived an improper personal benefit.
The Registrant's Bylaws, Article Ten, require the Registrant to indemnify
officers or directors who are made or threatened to be made a party to any
proceeding because they were officers or directors, to the extent that they have
been successful in their defense. The indemnification is subject to a
determination that the officers or directors acted in the manner they reasonably
believed to be in or not opposed to the best interests of the Registrant and,
with respect to any criminal proceeding, had no reasonable cause to believe
their conduct was unlawful. This determination is to be made by a majority vote
of a quorum of disinterested directors, or a firm of independent legal counsel
or an affirmative vote of a majority of the Registrant's shares. If any
indemnification is paid otherwise than by a court order, action by the
shareowners or by the issuer's insurance carrier, information about the payment
is to be mailed to each shareowner. The Registrant may advance expenses incurred
by an officer or director in defending a civil or criminal action. The officer
or director must repay the advances if it is determined that indemnification is
not authorized.
These provisions in the Registrant's articles and bylaws may permit
indemnification to directors, officers or persons controlling the Registrant for
liabilities arising under the Securities Act of 1933. The Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 25. Other Expenses of Issuance and Distribution.
All expenses of the offering are estimated to be:
Securities and Exchange Commission filing fee...... $ 264 (a)
Blue sky fees and expenses......................... 10,740(b)
Accountant's fees and expenses..................... 20,200 (c)
Special Counsel's fees and expenses................ 45,000(d)
General Counsel's fees and expenses................ 3,000 (e)
Printing........................................... 1,200 (f)
Postage............................................ 4,000(g)
Marketing expenses................................. 40,000(h)
Miscellaneous...................................... 496 (i)
------------
Total......................................... $ 125,000
============
No securities are registered for sale by security holders. No premium is to be
paid on any policy to insure or indemnify directors or officers against any
liabilities they may incur in the registration, offering or sale of these
securities.
Item 26. Recent Sales of Unregistered Securities.
(a) The only securities that the Registrant sold within the past three years
without registering the securities under the Securities Act were 30,000
shares of common stock, on May 5, 2000.
(b) No underwriters were used. There was one purchaser, Howe D. Whitman, who is
an accredited investor as defined in Section 2(15)(ii) of the Securities
Act of 1933 and Rules 215(d) and (e) and 501(a)(4) and (5). He is a
sophisticated person as described in Rule 506(b)(2)(ii).
(c) All shares were sold for cash and reduced rentals over the first three
years of a lease. The total offering price of the securities sold was
$105,000. No underwriting discounts or commissions were paid.
11
<PAGE>
(d) The Registrant claims exemption from registration under Rule 701 of the
General rules and Regulations under the Securities Act of 1933. The facts
relied upon to make the exemption available are that the sale was to one
person, who is a director of the Registrant, who is an affiliate of the
Registrant's landlord and who had access to all the information about the
Registrant necessary to make an informed investment decision. The shares
were issued under a written compensation contract. For the participation of
Mr. Whitman as a director.
Item 27. Exhibits
Exhibits listed below are filed as part of this Registration Statement
pursuant to Item 601 of Regulation S-B.
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Articles of Incorporation of the
Registrant
3.2 Amended and Restated By-laws of the Registrant
4.1 Articles 8 and 9, page 6 of the Amended and Restated Articles
of Incorporation and Article Two of the Amended and Restated
By-laws (Reference is made to Exhibits 3.1 and 3.2)
4.2 Description of common stock certificate
5* Opinion and consent of counsel with respect to the legality of
the shares
10.1 Lease between Registrant and Cherokee Venture II
23.1 Consent of Cherry, Bekaert & Holland, L.L.P., Certified Public
Accountants
23.2 Consent of Counsel (reference is made to Exhibit 5)
#24 Power of Attorney
99.1 Share Purchase order
99.2 Escrow Agreement with SouthTrust Bank
99.3 Lock-in Agreement
- ----------------------------------
* To be filed by amendment
# As filed in Part II of this Registration Statement
Item 28. Undertakings.
(a) The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(d) The registrant has been advised that, in the opinion of the Securities and
Exchange Commission, indemnification to directors, officers and controlling
persons of the registrant for liabilities arising under the Securities Act
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorizes this Registration
Statement to be signed on its behalf by the undersigned, in Chamblee, Georgia,
on May 10, 2000.
COFFEEAM.COM, INC. (Issuer)
By ____________________________________
Brian J. Lunsford, Chief Executive Officer
Each person whose signature appears below appoints Brian J. Lunsford his or
her attorney-in-fact, with full power of substitution and resubstitution, to
sign any and all amendments (including post-effective amendments) to this
registration statement on Form SB-2 of CoffeeAM.com, Inc. and to file them, with
all their exhibits and other related documents, with the Securities and Exchange
Commission, ratifying and confirming all that their attorney-in-fact and agent
or his or her substitute or substitutes may lawfully do or cause to be done by
virtue of this appointment.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
--------- ----- ----
President, Director and May 10, 2000
- ------------------------ Chief Executive Officer
Brian J. Lunsford
Vice President of Finance, May 10, 2000
- ------------------------ Director (Principal financial
David R. Blech and accounting officer)
Vice President, Director May 10, 2000
- ------------------------
Maranda E. Lunsford
Director May 10, 2000
- ------------------------
Juel Veach
Director May 10, 2000
- ------------------------
Howe D. Whitman
13
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
COFFEEAM.COM, INC.
(FORMERLY KNOWN AS ARABICA INTERNATIONAL, INC.)
Pursuant to O.C.G.A.ss.14-2-1006 of the Georgia Business Corporation Code, the
Shareholders of Arabica International, Inc., a corporation organized and
existing under the laws of the State of Georgia, did, on the _____________ day
of ____________, 2000, consent to an Amended and Restated the Articles of
Incorporation of said Corporation in the following terms:
1.
The name of the corporation shall be changed to, and the Corporation
shall henceforth be known as, CoffeeAM.com, Inc.
2.
The corporation shall have perpetual duration.
3.
The corporation is organized pursuant to the applicable provisions of
the Georgia Business Corporation Code and for the following purposes: to
acquire, lease, develop, operate, sell, convey, and deal in real and personal
property, tangible and intangible, of every kind and description, or any
interest therein; and without limiting the generality of the above, to engage in
the business of the sale of coffee and coffee related products and any and all
matters, operations, and interests related thereto. The corporation shall have
the power to conduct any and all other businesses and engage in any other
activities not specifically prohibited to corporations for profit under the laws
of the State of Georgia, and the corporation shall have all powers necessary to
conduct such businesses and engage in such activities, including, but not
limited to the powers enumerated in the Georgia Business Corporation Code or any
amendment thereto.
4.
The corporation shall have authority to issue not more than 10,000,000
shares of common stock of $1.00 par value. The issuance of preferred stock or
multiple classes of common stock is not authorized.
5.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
Exhibit 3.1
14
<PAGE>
(a) To fix, determine, and vary from time to time the amount to be
maintained as surplus and the amount or amounts to be set apart as working
capital.
(b) To set apart out of any of the funds of the corporation legally
available for dividends a reserve or reserves for any proper purposes or to
abolish any such reserve or reserves in the manner in which created.
(c) To make, amend, alter, change, add to, or repeal By-Laws of the
corporation, without any action on the part of the shareholders. The By-Laws
made by the directors may be amended, altered, changed, added to, or repealed by
a majority or a quorum of the shareholders.
(d) To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon the real or personal property of the
corporation.
(e) From time to time to determine whether and to what extent, at what
time and place, and under what conditions and regulations the accounts and books
of the corporation, or any of them, shall be open to the inspection of any
shareholder; and no shareholder shall have any right to inspect any account or
book or document of the corporation except as conferred by statute or By-Laws or
as authorized by resolution of the shareholders or Board of Directors.
(f) To authorize the payment of compensation to the directors for
services to the corporation, including fees and expenses for attendance at
meetings of the Board of Directors, the executive committee, and other
committees and salaries for serving as such directors or committee members, and
to determine the amount of such compensation.
(g) From time to time to formulate, establish, promote, and carry out,
and to amend, alter, change, revise, recall, repeal, or abolish a plan or plans
for the participation by all or any of the employees, including directors and
officers, of the corporation, or of any corporation, company, association,
trust, or organization in which or in the welfare of which the corporation has
any interest, and those actively engaged in the conduct of the corporation's
business, in the profits, gains, or business of the corporation or of any branch
or division thereof, as part of the corporation's legitimate expenses and for
the furnishing to such employees, directors, officers, or persons, or any of
them, at the corporation's expense, of medical services, insurance against
accident, sickness or death, pensions during old age, disability or
unemployment, education, housing, social services, recreation, or other similar
aids for their relief or general welfare, in such manner and upon such terms and
conditions as the Board of Directors shall determine.
(h) From time to time to formulate, establish, and carry out, and to
amend, alter, change, revise,
15
<PAGE>
recall, repeal, or abolish, a plan or plans providing for the purchase of shares
of stock of the corporation by, or for the granting of options or other rights
to purchase shares of stock of the corporation, to all or any of the officers
and other employees of the corporation upon such terms and conditions and for
such consideration as the Board of Directors may determine in good faith to be
fair and reasonable.
6.
The personal liability of a director of the corporation to the
corporation or its shareholders for monetary damages for breach of duty of care
or other duty as a director shall be limited to an amount not exceeding said
director's compensation for services as a director during the twelve (12) month
period immediately preceding such breach, except that a director's liability
shall not be so limited for:
(i) any appropriation, in violation of director's duties, of any
business opportunity of the corporation;
(ii) acts or omissions not in good faith or which involved intentional
misconduct or a knowing violation of law;
(iii) liability under Section 14-2-832 of the Georgia Business
Corporation Code; and
(iv) any transaction from which the director derived an improper
personal benefit. For purposes of this Article 6, a director's compensation for
serving as a director shall not include amounts received as reimbursement for
expenses, or for services as an officer, employee or agent.
7.
The corporation shall indemnify, to the full extent that it shall have
power under applicable law to do so and in the manner permitted by such law, any
person made or threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the corporation. The corporation may indemnify, to the full extent it shall have
power under applicable law to do so and in a manner permitted by such law, any
person made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was an employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of, or participant in, another corporation,
partnership, joint venture, trust or other enterprise. The indemnification
provided by this paragraph shall not be deemed exclusive of any other rights to
any person seeking indemnification who may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action
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in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be such director,
officer, employee, agent or participant and shall inure to the benefit of the
heirs, executors and administrators of such a person.
8.
None of the holders of shares of common stock shall be entitled as a
matter of right to purchase, subscribe for or otherwise acquire any new or
additional shares of stock of the corporation of any class, or any options or
warrants to purchase, subscribe for or otherwise acquire any such new or
additional shares, or any shares, evidences of indebtedness or other securities
convertible into or carrying options or warrants to purchase, subscribe for or
otherwise acquire any such new or additional shares.
9.
Any action which may be taken at a meeting of the shareholders may be
taken without a meeting if a written approval and consent, setting forth the
action authorized, shall be signed by such of the shareholders who would be
entitled to vote at a meeting those shares having voting power to cast not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote were present and
voted, and upon the filing of such approval and consent with the officer of the
corporation having custody of its books and records. Such approval and consent
so filed shall have the same effect as a unanimous vote of the shareholders at a
special meeting called for the purpose of considering the action authorized;
provided, the Secretary shall provide written notice within ten (10) days of
such action to those shareholders on the record date whose shares were not
represented on the written consent.
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AMENDED AND RESTATED
BY LAWS OF
COFFEEAM.COM, INC.
ARTICLE ONE
Offices
1.1 Registered Office and Agent. The Corporation shall maintain a registered
office and shall have a registered agent whose business office is identical with
such registered office.
1.2 Other Offices. The Corporation may have offices at such place or places,
within or without the State of Georgia, as the Board of Directors may from time
to time appoint or the business of the corporation may require or make
desirable.
ARTICLE TWO
Shareholder's Meetings
2.1 Place of Meetings. Meetings of the shareholders may be held at any place
within or without the State of Georgia as set forth in the notice thereof or in
the event of a meeting held pursuant to waiver of notice, as may be set forth in
the waiver, or if no place is so specified, at the registered office of the
Corporation.
2.2 Annual Meetings. The annual meeting of the shareholders shall be held each
year upon a call by the President of the Corporation for the purpose of electing
directors and transacting any and all business that may properly come before the
meeting.
2.3 Substitute Annual Meeting. If the annual meeting is not held on the day
designated in Section 2.2, any business, including election of directors, which
might properly have been acted upon at that meeting may be acted upon at any
subsequent shareholders' meeting held pursuant to these By-Laws or to a court
order requiring a substitute annual meeting.
2.4 Special Meetings. Special meetings of the shareholders may be called at any
time by the Chairman of the Board of Directors, the President, the Board of
Directors, or by the holders of ten (10%) percent or more of all the shares
entitled to vote.
2.5 Notice of Meetings. Unless waived as contemplated in Section 6.2 or by
attendance at the meeting for any purpose other than to object to the
transaction of business, a written or printed notice of each shareholders'
meeting, stating the place, day and hour of the meeting shall be delivered not
less than ten (10) days nor more than fifty (50) days before the date thereof,
either personally or by mail, by or at the direction of the Chairman of the
Board of Directors, the President or Secretary or other person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, the notice shall be sent by first class mail, postage prepaid to each
shareholder at his address as it appears on the stock transfer books of the
Corporation. In the case of an annual or substitute meeting, the notice of the
meeting need not state the purpose or purposes of the meeting unless the purpose
or purposes of the meeting constitute a matter which the Georgia Business
Corporation Code requires to be stated in the notice of the meeting. In the case
of a special meeting, the notice of meeting shall state the purpose or purposes
for which the meeting is called.
2.6 Voting List. For each meeting of shareholders the Corporation will cause to
be prepared a complete alphabetical list of shareholders entitled to vote at
such meeting, with the address of and the number of shares held by each. This
list shall be produced and kept open at the time and place of the meeting and
shall be subject to inspection by any shareholder during the whole time of the
meeting. The foregoing list shall not have to be prepared where the record of
shareholders is presented and shows in alphabetical order or by alphabetical
index, and by classes or series, if any, the names of the shareholders entitled
to vote, with the address of and the number of shares held by each.
Exhibit 3.2
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2.7 Quorum. At the meetings of the shareholders the presence, in person or by
proxy, of the holders of more than one-half of the shares outstanding and
entitled to vote shall constitute a quorum. If a quorum is present, a majority
of the shares outstanding and entitled to vote which are represented at any
meeting shall determine any matter coming before the meeting unless a different
vote is required by statute, by the articles of incorporation or by these
By-Laws. The shareholders at a meeting at which a quorum is present may continue
to transact business until adjournment notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
2.8 Voting of Shares. Each outstanding share having voting rights shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. Voting on all matters shall be by voice vote or by show of hands
unless any qualified voter, prior to the voting on any matter, demands vote by
ballot, in which case each ballot shall state the name of the shareholder voting
and the number of shares voted by him, and if such ballot be cast by proxy, it
shall also state the name of such proxy.
2.9 Proxies. A shareholder entitled to vote pursuant to Section 2.8 may vote in
person or by proxy executed in writing by the shareholder or by his attorney in
fact. A proxy shall not be valid after eleven (11) months from the date of its
execution, unless a longer period is expressly stated therein. If the validity
of any proxy is questioned, it must be submitted to the Secretary of the
shareholders' meeting for examination or to the proxy officer or committee
appointed by the person presiding at the meeting. The Secretary of the meeting
or, if appointed, the proxy officer of committee, shall determine the validity
or invalidity of any proxy submitted, and reference of a proxy shall be received
as prima facie evidence of the facts stated for the purpose of establishing the
presence of a quorum at such meeting and for all other purposes.
2.10 Presiding Officer. The Chairman of the Board of Directors, or in his
absence, the President, shall serve as a Chairman of every shareholders' meeting
unless some other person is elected to serve as Chairman by a majority vote of
the shares represented at the meeting. The Chairman shall appoint such persons
as he deems required to assist with the meeting.
2.11 Adjournments. Any meeting of the shareholders, whether or not a quorum is
present, may be adjourned by the holders of a majority of the voting shares
represented by the meeting to reconvene at a specific time and place. It shall
not be necessary to give any notice of the reconvened meeting or of the business
to be transacted, if the time and place of the reconvened meeting are announced
at the meeting which was adjourned. At any such reconvened meeting at which a
quorum is represented or present, any business may be transacted which could
have been transacted at the meeting which was adjourned.
2.12 Action of Shareholders Without a Meeting. Any action which may be taken at
a meeting of the shareholders may be taken without a meeting if a written
approval and consent, setting forth the action authorized, shall be signed by
such of the shareholders who would be entitled to vote at a meeting those shares
having voting power to cast not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote were present and voted, and upon the filing of such approval
and consent with the officer of the Corporation having custody of its books and
records. Such approval and consent so filed shall have the same effect as a
unanimous vote of the shareholders at a special meeting called for the purpose
of considering the action authorized; provided, the Secretary shall provide
written notice within ten (10) days of such action to those shareholders on the
record date whose shares were not represented on the written consent.
ARTICLE THREE
The Board of Directors
3.1 General Powers. The business and affairs of the Corporation shall be managed
by the Board of Directors or by such Executive Committees as may be established
pursuant to these By-Laws. In addition to the powers and authority expressly
conferred upon it by these By-Laws, the Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
law, by any legal agreement among shareholders, by the articles of incorporation
or by these By-Laws directed or required to be exercised or done by the
shareholders.
3.2 Number, Election and Term of Office. The number of directors of the
Corporation shall be not less than one nor more than ten unless changed by
resolution of the shareholders from time to time; provided, however, the
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number of directors shall at all times be in compliance with O.C.G.A. Section
14-2-803, as it may be amended. The number of directors may be fixed or changed
from time to time, within the minimum and the maximum, by the Board of
Directors. Except as provided in Section 3.4, the directors shall be elected by
the affirmative vote of a majority of the stock represented at the annual
meeting. Each director, except in case of death, resignation, retirement,
disqualification, or removal, shall serve until the next succeeding annual
meeting and thereafter until his successor shall have been elected and
qualified.
3.3 Removal. Any director may be removed from office with or without cause by
the affirmative vote of the holders of a majority of the shares entitled to vote
at an election of directors. Removal action may be taken at any shareholders'
meeting with respect to which notice of such purpose has been given, and a
removed director's successor may be elected at the same meeting to serve the
unexpired term.
3.4 Vacancies. A vacancy occurring in the Board of Directors, except by reason
of removal of a director, may be filled for the unexpired term, and until the
shareholders shall have elected a successor, by affirmative vote of a majority
of the directors remaining in office though less than a quorum of the Board of
Directors.
3.5 Chairman of the Board and Vice Chairman of the Board. There may be both a
Chairman and a Vice Chairman of the Board of Directors elected by the Board of
Directors. The Chairman or, in his absence, the Vice Chairman, shall preside at
all meetings of the Board of Directors and perform such other duties as may be
directed by the Board.
3.6 Compensation. Directors may receive such compensation for their services as
directors as may from time to time be fixed by vote of the shareholders. A
director may also serve the corporation in a capacity other than that of
director and receive compensation, as determined by the Board of Directors for
services rendered in that other capacity.
ARTICLE FOUR
Meetings of the Board of Directors
4.1 Regular Meetings. Regular meetings of the Board of Directors shall be held
immediately after the annual meeting of shareholders or any meeting held in lieu
thereof. In addition, the Board of Directors may schedule other meetings to
occur at regular intervals throughout the year.
4.2 Special Meetings. Special meetings of the Board of Directors may be called
by or at the request of the Chairman, or in his absence by the Secretary of the
Corporation, or by any two directors in office at that time.
4.3 Place of Meetings. Directors may hold their meetings at any place within or
without the State of Georgia as the Board of Directors may from time to time
establish for regular meetings or as is set forth in the notice of special
meetings, or, in the event of a meeting held pursuant to waiver of notice, as
may be set forth in the waiver.
4.4 Notice of Meetings. No notice shall be required for any regularly scheduled
meeting of the directors of the Corporation. Unless waived as contemplated in
Section 6.2, the Chairman or Secretary of the Corporation or any director
thereof shall give notice to each director of each special meeting stating the
time, place and purposes of the meeting. Such notice shall be given by mailing a
notice of the meeting at least five (5) days before the date of the meeting, or
by telephone or telegram at least three (3) days before the date of the meeting.
Attendance by a director at a meeting shall constitute waiver of notice of such
meeting, except where a director attends a meeting for the express purpose of
objecting to the transaction of business because the meeting is not lawfully
called.
4.5 Quorum. At meetings of the Board of Directors, more than one-half of the
directors then in office shall be necessary to constitute a quorum for the
transaction of business. In no case shall less than one-third of the total
number of directors constitute a quorum.
4.6 Vote Required for Action. Except as otherwise provided in this section or by
law, the act of a majority of the directors present at a meeting at which a
quorum is present at the time shall be the act of the Board of Directors. The
vote of a majority of the number of directors fixed pursuant to these By-Laws
shall be required to adopt a resolution constituting an Executive Committee. The
vote of two-thirds of the directors is required to adopt a resolution dissolving
the Corporation without action by the shareholders. Adoption, amendment and
repeal of a
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By-Law is provided for in Article Twelve of these By-Laws. Vacancies in the
Board of Directors may be filled as provided in Section 3.4 of these By-Laws.
4.7 Action by Directors Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto shall be signed by
all the directors or members of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or
committee. Such consent shall have the same force and effect as a unanimous vote
of the Board or committee.
4.8 Adjournments. A meeting of the Board of Directors, whether or not a quorum
is present, may be adjourned by a majority of the directors present to reconvene
at a specific time and place. It shall not be necessary to give notice of the
reconvened meeting or of the business to be transacted, other than by
announcement at the meeting which was adjourned. At any such reconvened meeting
at which a quorum is present, any business may be transacted which could have
been transacted at the meeting which was adjourned.
ARTICLE FIVE
Committees
5.1 Appointment of Executive Committee. The Board of Directors may by resolution
adopted by a majority of the full Board of Directors appoint an Executive
Committee of not less than three (3) directors, which Executive Committee shall
to the extent provided in such resolution have all of the powers and authority
of the Board of Directors, except as otherwise provided by law. Such Executive
committee shall not have the power to amend or repeal any resolution of the
Board of Directors which by its terms is not subject to amendment or repeal by
the Executive Committee.
5.2 Procedures of Executive Committee. The Executive Committee shall meet from
time to time on call of the President or of any two or more members of the
Executive Committee. Meeting of the Executive Committee may be held at such
place or places as the Executive Committee shall determine or as may be
specified or fixed in the respective notices or waivers of such meetings. The
Executive Committee may fix its own rules of procedure, including provision for
notice of its meetings. It shall keep a record of its proceedings and shall
report these proceedings to the Board of Directors at the meeting thereof held
next after they have been taken, and all such proceedings shall be subject to
revision or alteration by the Board of Directors except to the extent that
action shall have been taken pursuant to or in reliance upon such proceedings
prior to any such revision or alteration.
5.3 Other Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate one or more additional
committees, each committee to consist of two (2) or more directors of the
Corporation, which shall have such name or names and shall have and may exercise
such powers of the Board of Directors in the management of the business and
affairs of the Corporation, except as otherwise provided by law, as may be
determined from time to time by resolution of the Board of Directors. Each of
such committees shall call and hold meetings, adopt rules of procedure, maintain
records, and report to the Board of Directors in the manner provided for the
Executive Committee in Section 5.2.
5.4 Action by Committees. The Executive Committee and any other committees
designated by the Board of Directors shall act by a majority vote of their
members.
5.5 Alternative Members. The Board of Directors, by resolution adopted in
accordance with Section 5.1, may designate one or more directors as alternate
members of any such committee, who may act in the place of any absent member or
members at any meeting of such committee.
ARTICLE SIX
Notice and Waiver
6.1 Procedure. Except as otherwise specifically provided in these By-Laws,
whenever under the provisions of these By-Laws notice is required to be given to
any shareholder or director, it shall not be construed to mean personal notice,
but such notice may be given by personal delivery, by radio, telegraph or
telegram, or by mail by
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depositing the same in a post office or letter box, in a postage prepaid sealed
envelope addressed to the shareholder or director at such address as appears on
the books of the Corporation, and such notice shall be deemed to be given at the
time when the same shall be transmitted or mailed.
6.2 Waiver. Whenever any notice is required to be given to any shareholder or
director by law, by the articles of incorporation or by these By-Laws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before, at or after the meeting to which the waiver pertains, shall be
deemed equivalent thereto.
ARTICLE SEVEN
Officers
7.1 Number. The officers of the Corporation may consist of a President, a
Secretary and a Treasurer, and may consist of one or more Vice Presidents (as
determined and designated by the Board of Directors). The Board of Directors
shall from time to time create and establish the duties of such other officers
or assistant officers as they deem necessary for the efficient management of the
Corporation.
7.2 Election and Term. All elected officers shall be elected by the Board of
Directors and shall serve at the will of the Board of Directors and until their
successors have been elected or appointed and have qualified or until their
earlier death, resignation, removal, retirement or disqualification.
7.3 Compensation. The compensation of all elected officers of the Corporation
shall be fixed by the Board of Directors.
7.4 Removal. Any officer or agent elected or appointed by the Board of Directors
may be removed by a majority vote of the entire Board of Directors whenever in
its judgment the best interests of the Corporation and it will be served
thereby.
7.5 Vacancies. In the event of a vacancy in any elected office, however
occurring, the senior officer shall call a meeting of the Board of Directors who
shall elect a successor.
7.6 President. The President shall be the chief executive officer of the
Corporation and shall have general supervision of the business of the
Corporation. He may execute, with any other proper officer, certificates for
shares, deeds, mortgages, bonds, contracts or other instruments which may be
lawfully executed on behalf of the Corporation. He or his designee shall see
that all orders and resolutions of the Board of Directors are carried into
effect, and shall perform such other duties as may from time to time be
delegated to him by the Board of Directors.
7.7 Executive Vice President and Vice Presidents. The Executive Vice President
shall, in the absence or disability of the President, or at the direction of the
Chairman of the Board of Directors or the President, perform the duties and
exercise the powers of the Chairman of the Board or the President, including the
execution of contracts and agreements. Vice Presidents shall perform whatever
duties and have whatever powers the Board of Directors may from time to time
assign.
7.8 Secretary. The Secretary shall keep accurate records of the acts and
proceedings of all meetings of shareholders, directors and committees of
directors. He shall have authority to give all notices required by law or these
By-Laws. He shall be custodian of the corporate books, records, contracts and
other documents. The Secretary may affix the corporate seal to any lawfully
executed documents requiring it and shall sign such instruments as may require
his signature. The Secretary shall perform whatever additional duties and have
whatever additional powers the Board of Directors may from time to time assign
him.
7.9 Treasurer. The Treasurer shall have custody of all funds and securities
belonging to the Corporation and shall receive, deposit or disburse the same
under the direction of the Board of Directors. The Treasurer shall keep full and
true accounts of all receipts and disbursements and shall make such reports of
the same to the Board of Directors and President upon request. The Treasurer
shall perform all duties as may be assigned to him from time to time by the
Board of Directors.
7.10 Assistant Secretary and Treasurer. The Assistant Secretary and Assistant
Treasurer shall, in the absence or disability of the Secretary or the Treasurer,
respectively, perform the duties and exercise the powers of those
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offices, and they shall, in general, perform such other duties as shall be
assigned to them by the Board of Directors. Specifically, the Assistant
Secretary may affix the corporate seal to all necessary documents and attest the
signature of any officer of the Corporation.
7.11 Bonds. The Board of Directors may by resolution require any or all of the
officers, agents or employees of the Corporation to give bonds to the
Corporation, with sufficient surety or sureties, conditioned on the faithful
performance of the duties of their respective offices or positions, and to
comply with such other conditions as may from time to time be required by the
Board of Directors.
ARTICLE EIGHT
Dividends
8.1 Time and Conditions of Declaration. Dividends upon the outstanding shares of
the Corporation may be declared by the Board of Directors at any regular or
special meeting and paid in cash or property, only out of the unreserved and
unrestricted earned surplus of the Corporation, or out of the unreserved and
unrestricted net earnings of the current fiscal year or the next preceding
fiscal year.
8.2 Reserves. Before the payment of any dividend or the making of any
distribution of profit, there shall be set aside out of the earned surplus or
current net earnings of the Corporation such sums as the Board of Directors from
time to time in its absolute discretion deems proper as a reserve fund to meet
contingencies, to pay and discharge indebtedness, or to fulfill other purposes
which the Board of Directors shall deem to be in the best interest of the
Corporation.
8.3 Share Dividends-Treasury Shares. Dividends may be declared by the Board of
Directors and paid in the shares of the Corporation out of any treasury shares
that have been reacquired out of the surplus of the Corporation.
8.4 Share Dividends-Unissued Shares. Dividends may be declared by the Board of
Directors and paid in the authorized but unissued shares of the Corporation out
of any unreserved and unrestricted surplus of the Corporation provided that such
shares shall be issued at not less than the par value thereof, and there shall
be transferred to stated capital at the time such dividend is paid an amount of
surplus at least equal to the aggregate par value of the shares to be issued as
a dividend.
8.5 Share Splits. A split or division of the issued shares of any class into a
greater number of shares of the same class without increasing the stated capital
of the Corporation shall not be construed to be a share dividend within the
meaning of this Article.
ARTICLE NINE
Shares
9.1 Authorization and Issuance of Shares. The par value and the maximum number
of shares of any class of the Corporation which may be issued and outstanding
shall be as set forth from time to time in the articles of incorporation of the
Corporation. The Board of Directors may authorize the increase or decrease of
the number of issued and outstanding shares of the Corporation within the
maximum authorized by the articles of incorporation and the minimum requirements
of Georgia Law.
9.2 Share Certificates. Interest of each shareholder shall be evidenced by a
certificate or certificates representing shares of the Corporation which shall
be in such form as the Board of Directors may from time to time adopt in
accordance with Georgia law. Share certificates shall be consecutively numbered,
shall be in registered form, and shall indicate the date of issue and all such
information shall be entered on the Corporation's books. Each certificate shall
be signed by the President and the Secretary or any Assistant Secretary and
shall be sealed with the seal of the Corporation or a facsimile thereof;
provided, however, that where such certificate is signed by a transfer agent, or
registered by a registrar, the signature of any such officer may be facsimile.
In case any officer or officers who shall have signed or whose facsimile
signature shall have been placed upon a share certificate shall have ceased for
any reason to be such officer or officers of the Corporation before such
certificate is
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issued, such certificate may be issued by the Corporation with the same effect
as if the person or persons who signed such certificate or who facsimile
signature shall have been used thereon had not ceased to be such officer of
officers.
9.3 Rights of Corporation with Respect to Registered Owners. Prior to due
presentation for registration of its shares, the Corporation may treat the
registered owner of the shares as the person exclusively entitled to vote such
shares, to receive any dividend or other distribution with respect to such
shares, and for all other purposes; and the Corporation shall not be bound to
recognize any equitable or other claim to or interest in such shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
9.4 Transfers of Shares. Transfers of shares shall be made upon the transfer
books of the Corporation, kept at the office of the transfer agent designated to
transfer the shares, only upon direction of the person named in the certificate,
or by an attorney lawfully constituted in writing; and before a new certificate
is issued, the old certificate shall be surrendered for cancellation or, in the
case of a certificate alleged to have been lost, stolen, or destroyed, the
provisions of Section 9.6 of these By-Laws shall have been complied with.
9.5 Duty of Corporation to Register Transfer. Notwithstanding any of the
provisions of Section 9.4 of these By-Laws, the Corporation is under a duty to
register the transfer of its shares only if:
(a) the share certificate is endorsed by the appropriate person or
persons; and
(b) reasonable assurance is given that these endorsements are genuine
and effective; and
(c) the issuer has no duty to inquire into adverse claims or has
discharged any such duty; and
(d) any applicable law relating to the collection of taxes has been
complied with; and
(e) the transfer is in fact rightful or is to a bona fide purchaser.
9.6 Lost, Stolen or Destroyed Certificates. Any person claiming a share
certificate to be lost, stolen or destroyed shall make an affidavit or
affirmation of the fact in such manner as the Board of Directors may require and
shall, if the Board of Directors so requires, give the Corporation and/or the
transfer agent and registrar of such share certificate a bond of indemnity in
form and amount, and with one or more sureties satisfactory to the Board of
Directors, as the Board of Directors may require, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.
9.7 Closing of Stock Transfer Books. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors shall have the power to close the stock transfer books of the
Corporation for a stated period not exceeding fifty (50) days. If the stock
transfer books are closed for the purpose of determining shareholders entitled
to notice of or to vote at a meeting of shareholders, such books shall be closed
for at least ten (10) days immediately preceding such meeting.
9.8 Fixing of Record Date. In lieu of closing the stock transfer books, as
provided in Section 9.7 of these By-Laws, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date to be not more than fifty (50) days (and, in the case of a
shareholders meeting, not less than ten (10) days) prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken.
9.9 Record Date if None Fixed. If the stock transfer books are not closed and no
record date is fixed, as provided in Sections 9.7 and 9.8 of these By-Laws, then
the record date for any determination of shareholders which may be proper or
required by law, shall be the date on which notice is mailed, in the case of a
shareholders meeting; the date on which the Board of Directors approves a
resolution declaring a dividend, in the case of a payment of a dividend; and the
date on which any other action, the consummation of which requires a
determination of shareholders is to be taken.
ARTICLE TEN
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Indemnification
10.1 Actions Not By or In the Right of the Corporation. Under the circumstances
prescribed in Sections 10.3 and 10.4 of these By-Laws, the Corporation shall
indemnify and hold harmless any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in the manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, and reasonable cause to believe that his conduct was unlawful.
10.2 Actions By or In the Right of the Corporation. Under the circumstances
prescribed in Sections 10.3 and 10.4 of these By-Laws, the Corporation shall
indemnify and hold harmless any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually or reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
10.3 Indemnification Where Director or Officer Successfully Defends Action. To
the extent that a director or officer of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 10.1 and 10.2 of these By-Laws, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually or reasonably incurred by him in connection therewith.
10.4 Determinations Required Prior to Indemnifying. Except as provided in
Section 10.3 of these By-Laws and except as may be ordered by a court, any
indemnification under Sections 10.1 and 10.2 of these By-Laws shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Sections 10.1
and 10.2, as the case may be. Such determination shall be made (a) by the Board
of Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by a firm of independent legal counsel in a written opinion, or (c) by
the affirmative vote of a majority of the shares entitled to vote thereon.
10.5 Advances. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the Board of Directors in
the specific case upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation as authorized in these By-Laws.
10.6 General. The indemnification provided by these By-Laws shall not be deemed
exclusive of any other rights to which the persons shall become entitled; and
the indemnification rights created by these By-Laws or otherwise shall continue
as to a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
10.7 Insurance. The Corporation may purchase and maintain insurance on behalf of
any person who was or is
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a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would be obligated to or would have the
power to indemnify him against such liability under the provisions of these
By-Laws.
10.8 Notice to Shareholders. If any expenses or other amounts are paid by way of
indemnification, otherwise than by a court order, action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the Corporation, the
Corporation shall, not later than the next annual meeting of shareholders unless
such meeting is held within three months from the date of such payment, and, in
any event, within fifteen (15) months from the date of such payment, send by
first class mail to its shareholders of record at the time entitled to vote for
the election of directors, a statement specifying the persons paid, the amounts
paid, and the nature and status at the time of such payment of the litigation or
threatened litigation.
ARTICLE ELEVEN
Miscellaneous
11.1 Inspection of Books and Records. The Board of Directors shall have power to
determine which accounts, books and records of the Corporation shall be opened
to the inspection of shareholders, except such as may by law be specifically
open to inspection, and shall have power to fix reasonable rules and regulations
not in conflict with the applicable law for the inspection of accounts, books
and records which by law or by determination of the Board of Directors shall be
open to inspection.
11.2 Fiscal Year. Unless otherwise determined by the Board of Directors, the
fiscal year of the corporation shall be from December 31.
11.3 Seal. The corporate seal shall be in such form as the Board of Directors
may from time to time determine.
11.4 Annual Statements. Not later than four months after the close of each
fiscal year, and in any case prior to the next annual meeting of shareholders,
the Corporation shall prepare (a) a balance sheet showing in reasonable detail
the financial condition of the Corporation as of the close of its fiscal year,
and (b) a profit and loss statement showing the results of its operations during
its fiscal year. Upon receipt of written request, the Corporation promptly shall
mail to any shareholder of record a copy of the most recent such balance sheet
and profit and loss statement.
ARTICLE TWELVE
Amendments
12.1 Power to Amend By-Laws. The Board of Directors shall have the power to
alter, amend or repeal these By-Laws or adopt new By-Laws, but any By-Laws
adopted by the Board of Directors may be altered, amended or repealed, and new
By-Laws adopted by the shareholders. The shareholders may prescribe that any
By-Law or By-Laws adopted by them shall not be altered, amended or repealed by
the Board of Directors.
12.2 Conditions. Action taken by the shareholders with respect to By-Laws shall
be taken by an affirmative vote or a majority of all shares entitled to elect
directors, and action by the directors with respect to By-Laws shall be taken by
affirmative vote of a majority of all directors then holding office.
26
Text and description of graphic and image material appearing on the
form of certificate for shares of the common stock of
CoffeeAM.com
Exhibit 4.2 to Registration Statement on Form SB-2
The borders around the edge of the certificate and around the space for
certificate number and number of shares are standard printer's forms, with no
text. The Company's corporate seal is reproduced at the bottom center of the
front. The Company's logo (consisting of [words that describe the logo you want
to have on your stock certificate]) appear centered near the top. Facsimile
signatures of the chairman and secretary of the Company are at the bottom left
and right, and the name and space for authorized signature of the transfer agent
are on the lower right side of the certificate face.
On the reverse side of the certificate, before the language and spaces for use
in effecting a transfer of the shares represented by the certificate, are these
words:
A statement of the rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes or series of shares of stock
of the Corporation, and upon the holders thereof as established by the Articles
of Incorporation or by any certificate of determination of preferences, and the
number of shares constituting each series or class and the designations thereof,
may be obtained by any shareholder of the Corporation upon request and without
charge from the Secretary of the Corporation at the principal office of the
Corporation.
Exhibit 4.2
27
Lease Agreement
STATE OF GEORGIA COUNTY OF CHEROKEE
This Lease Agreement, made and entered into by and between Thomas L.
Bradbury, Vicki B. Whitman, & Paige W. Merkle d/b/a Cherokee Venture II,
hereinafter referred to as "Landlord," and CoffeeAM.com, hereinafter referred to
as "Tenant";
W I T N E S S E T H :
1. Premises and Term. In consideration of the obligation of Tenant to pay
rent as herein provided, and in consideration of the other terms, provisions and
covenants hereof, Landlord hereby demises and leases to Tenant, and Tenant
hereby takes from Landlord certain premises situated within the County of
Cherokee, City of Woodstock, State of Georgia, more particularly described as
follows:
Office/warehouse space being Suite 112, containing approximately 15,500
square, located in a building having a footprint of 39,000 square feet and
more commonly known as 100 Londonderry Court, Woodstock (Cherokee County),
Georgia feet (hereinafter referred to as the "Premises") and further
described by the attached Site Plan - Exhibit A, Floor Plan by Samples
Construction S.E. dated 3/15/2000 (by reference only) - Exhibit B, General
Specifications - Exhibit C, and Sign Criteria - Exhibit D ( said building
being hereinafter referred to as "Building Two- Cobblestone Business Park
"),
together with all rights, privileges, easements, appurtenances and immunities
belonging to or in any way pertaining to the said Premises and together with the
buildings and other improvements erected upon the real property, (the said real
property and the buildings and improvements thereon being hereinafter referred
to as the "Center").
To Have and to Hold the same for a term commencing on the date on which
Landlord delivers the Premises to Tenant as Ready For Occupancy (hereinafter
referred to as the "Commencement Date" ) and ending on the last day of the
eighty forth (84th) full calendar month after the Commencement Date. The first
Lease Year shall be defined to be twelve full calendar months plus any portion
of a month if the Commencement date falls on any day other than the first day of
the month. Each Lease Year thereafter shall be the next successive twelve full
calendar months following the end of the first Lease Year. For purposes hereof,
the Premises shall be considered Ready For Occupancy when the Premises has been
substantially completed in accordance with the General Specifications and upon
receipt of a Certificate of Occupancy from the appropriate officials of the City
of Woodstock and Cherokee County Georgia. If this Lease is executed before the
Premises becomes vacant or otherwise available and Ready for Occupancy, or if
any present tenant or occupant of the Premises holds over, and Landlord cannot
acquire possession of the Premises prior to the date above recited as the
Commencement Date of this Lease, Landlord shall not be deemed to be in default
hereunder, and Tenant agrees to accept possession of the Premises at such time
as Landlord is able to tender the same; and Landlord hereby waives payment of
rent covering any period prior to the tendering of possession to Tenant
hereunder.
2. Rent. Tenant agrees to pay to Landlord for the Premises, without deduction or
set off, during the entire term of this Lease, rent at the rate as set out in
Paragraph 30A of the Special Stipulations hereto . In addition, Tenant agrees to
deposit with Landlord on the date hereof the sum of Two Thousand & No/100
Dollars ($2,000.00), which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this Lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any event of default by Tenant,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use such fund to the extent necessary to make good
any arrears of rent and any other damage, injury, expense or liability caused by
such event of default; and Tenant shall pay to Landlord on demand the amount so
applied in order to restore the security deposit to its original amount. If
Tenant is not then in default hereunder, any remaining balance of such deposit
shall be returned by Landlord to Tenant upon termination of this Lease.
3. Use. The demised Premises shall be used only for the purpose of offices for
sales and administration, production, roasting and packaging, and warehousing of
coffees, teas and related items and for all business related activities, and for
such other lawful purposes as may be incidental thereto and any other business
expressly agreed
Exhibit 10.1
28
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to by Landlord. Tenant shall at its own cost and expense obtain any and all
licenses and permits necessary for any such use as well as pay for for all
additional costs specifically required by any governmental codes as a result of
Tenants specific use of the Premises. Tenant shall comply with all governmental
laws, ordinances and regulations applicable to the use of the Premises, and
shall promptly comply with all governmental orders and directives for the
correction, prevention and abatement of nuisances in, upon, or connected with
the Premises, all at Tenant's sole expense. Without Landlord's prior written
consent, Tenant shall not receive, store or otherwise handle any product,
material or merchandise which is explosive or highly flammable. Tenant will not
permit the Premises to be used for any purpose which would render the insurance
thereon void or the insurance risk more hazardous, or cause the insurance
premiums to increase. Notwithstanding any other provision in this Lease to the
contrary, Tenant shall specifically be responsible for any increase in insurance
premiums relative to the Center as a result of any actions or inactions of
Tenant, or as a result of the operations of Tenant.
4. Real Estate Taxes:
Tenant's Participation in Real Estate Taxes:
Base tax year: 2000
a) Tenant's Taxes:
Tenant covenants and agrees to pay promptly when due all taxes imposed upon its
business operations and its Personal property situated in the Premises.
b) Tenant's Participation in Real Estate Taxes:
Landlord will pay in the first instance all real property taxes, including
extraordinary and/or special assessments (and all costs and fees incurred in
contesting the same), hereinafter collectively referred to as Real Estate Taxes,
which may be levied or assessed by the lawful tax authorities against the land,
building, and all other improvements in the Center.
Tenant, for each Lease Year or Partial Lease Year, during the term of this Lease
or any renewal thereof, shall pay to Landlord its proportionate share, as
hereinafter defined, of the amount by which the annual Real Estate Taxes
assessed or levied against the land and building of the Center exceed the Real
Estate Taxes for the Base Tax Year specified above. Tenant's proportionate share
for said Real Estate Taxes for each Lease Year or Partial Lease Year of the term
of this Lease or any renewal thereof shall by determined by dividing the total
number of square feet in the Premises by the total number of square feet of all
leaseable building space within the Center. Notwithstanding the foregoing, if
the building of which the Premises is a part is taxed separately, then Tenants
proportionate share for said Real Estate Taxes for each Lease Year or Partial
Lease Year of the term of this Lease or any renewal thereof shall by determined
by dividing the total number of square feet in the Premises by the total number
of square feet of the building of which the Premises is a part. Any payments due
by Tenant hereunder shall be made during each Lease Year or Partial Lease Year
of the term of the Lease or any renewal thereof within thirty (30) days after
Tenant's receipt of Landlord's written certification of the amount due. Tenant's
share shall be prorated in the event Tenant is required to make such payment of
a Partial Lease Year. In addition, should the taxing authorities include in such
Real Estate Taxes the value of any improvements made by Tenant, or include
machinery, equipment, fixtures, inventory or other personal property or assets
of the Tenant, then Tenant shall also pay 100% of the Personal Property Taxes
and Real Estate Taxes for such items.
If the Lease expires during a Partial Lease Year, Landlord shall bill Tenant,
not more than sixty (60) days prior to the expiration date of the Lease, for its
estimated pro-rata share of Real Estate Taxes for the Partial Lease Year. Tenant
shall remit full payment to Landlord within seven (7) days of such bill. If
Tenant fails to remit such full payment to Landlord, Landlord in its sole
discretion, may deduct the amount due from Tenant's security deposit and be
entitled to all other rights and remedies thereunder for Tenant's default.
Should any governmental taxing authority, acting under any present or future
law, ordinance or regulation, levy, assess or impose a tax, excise and/or
assessment (other than income or franchise tax) upon or against or in any way
related to the land and buildings comprising the Center either by way of
substitution or in addition to any existing tax on land and buildings or
otherwise, Tenant shall be responsible for and shall pay to Landlord its
proportionate share as set forth above of such tax, excise and/or assessment.
5. Landlord's Repairs. Landlord shall construct and deliver the Premises to
Tenant in compliance with all applicable building codes and with utilities
available including the provision of water, sewer, gas, and electric utilities
to serve the Premises. In addition, Landlord shall at his expense maintain only
the fire sprinkler system, roof, the foundation and the structural soundness of
the exterior walls of the building in good repair, reasonable wear and tear
excepted. To the extent that it is the property owners responsibility (instead
of the applicable utility provider), to maintain said utilities to, but not
within, the Premises. Tenant shall repair and pay for any damage
29
<PAGE>
caused by the negligence of Tenant, or Tenant's employees, agents or invitees,
or caused by Tenant's default hereunder. The term "walls" as used herein shall
not include windows, glass or plate glass, doors or special storefronts. Tenant
shall immediately give Landlord written notice of defect or need for repairs,
after which Landlord shall have reasonable opportunity to repair same or cure
such defect. Landlord's liability hereunder shall be limited to the cost of such
repairs or curing such defect. Landlord shall not be liable for any business
interruption.
6. Tenant's Repairs. Tenant shall at its own cost and expense keep all
other parts of the Premises, including but not limited to, plumbing, electrical
and mechanical systems, windows, glass and plate glass, doors, any special store
front, interior walls and finish work, floors and floor covering, and all other
items not specifically not set out above under Landlord's Repairs; and shall
take good care of the Premises and its fixtures and suffer no waste. Tenant will
provide it's own janitorial service and keep the whole of the Premises in a
clean and sanitary condition. Tenant shall not be obligated to repair any damage
caused by fire, tornado or other casualty covered by items set forth under the
extended coverage provisions of Landlord's fire insurance policy.
7. Alterations. Tenant shall not make any alterations, additions or
improvements to the Premises without the prior written consent of Landlord.
Tenant may, without the consent of Landlord, but at its own cost and expense and
in a good workmanlike manner make such minor alterations, additions or
improvements or erect, remove or alter such partitions, or erect such shelves,
bins, machinery and trade fixtures as it may deem advisable, without altering
the basic character of the building or improvements and without overloading or
damaging such building or improvements, and in each case complying with all
applicable governmental laws, ordinances, regulations, and other requirements.
At the termination of this Lease, Tenant shall, if Landlord so elects, remove
all alterations, additions, improvements and partitions erected by Tenant and
restore the Premises to their original condition; otherwise, and only with
Landlords prior written approval, such improvements shall be delivered up to the
Landlord with the Premises. All shelves, bins, machinery and trade fixtures
installed by Tenant shall be removed by Tenant at the termination of this Lease
unless landlord specifically waives this requirement in writing. All such
removals and restoration shall be accomplished in a good workmanlike manner so
as not to damage the primary structure or structural qualities of the buildings
and other improvements situated on the Premises.
8. Signs. Tenant shall have the right to install signs upon the exterior
glass and doors of said buildings only when first approved in writing by
Landlord and subject to any applicable governmental laws, ordinances,
regulations and other requirements. In addition, Tenant shall be allowed to
erect a primary identification sign on the front fascia of the building in
accordance with the Sign Criteria - Exhibit D and subject to any applicable
governmental laws, ordinances, regulations and other requirements. Tenant shall
remove all such signs at the termination of this Lease. Such installations and
removals shall be made in such manner as to avoid injury or defacement of the
building and other improvements.
9. Inspection. Landlord and Landlord's agents and representatives shall
have the right to enter and inspect the Premises at any time during reasonable
business hours, for the purpose of ascertaining the condition of the Premises or
in order to make sure repairs as may be required to be made by Landlord under
the terms of this Lease. During the period that is six (6) months prior to the
end of term hereof, Landlord and Landlord's agents and representatives shall
have the right to enter the Premises at any time during reasonable business
hours for the purpose of showing the Premises and shall have the right to erect
on the Premises a suitable sign indicating the Premises are available.
10. Utilities. Landlord agrees to provide at its cost water, electricity,
gas and telephone service connections to the Premises; but Tenant shall pay all
charges incurred for any utility services used on or from the Premises and any
maintenance charges for utilities. Landlord shall in no event be liable for any
interruption or failure of utility services on the Premises. Landlord may elect
to provide, but shall not be required to provide, any such utility services; in
which event Tenant shall pay Landlord as billed by Landlord for such utility
services so long as the rates charged by Landlord do not exceed those rates
available to Tenant from other available utility sources.
11. Assignment and Subletting. Tenant shall not have the right to assign
this Lease or to sublet the whole or any part of the Premises without the prior
written consent of Landlord which consent shall not be unreasonably withheld;
notwithstanding any approved assignment or subletting, Tenant shall at all times
remain fully responsible and liable for the payment of the rent herein specified
and for compliance with all of its other obligations under the terms, provisions
and covenants of this Lease. Upon the occurrence of an "event of default" as
hereinafter defined, if the Premises or any part thereof are then assigned or
sublet, Landlord, in addition to any other remedies herein provided, or provided
by law, may at its option collect directly from such assignee or subtenant all
rents becoming due to Tenant under such assignment or sublease and apply such
rent against any sums due to it by Tenant hereunder, and no such collection
shall be construed to constitute a novation or a release of Tenant from the
further performance of its obligations hereunder. Landlord shall have the right
to assign any of its rights under this Lease.
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<PAGE>
12. Fire and Casualty Damage.
A. If the buildings situated on the Premises should be damaged or destroyed
by fire, tornado, or other casualty, Tenant shall give immediate written notice
thereof to Landlord at the address set out herein or such other address or
telephone number as designated from time to time by Landlord.
B. If the buildings situated on the Premises should be totally destroyed by
fire, tornado or other casualty, or if they should be so damaged that rebuilding
or repairs cannot be completed within two hundred (200) days after the date upon
which Landlord is notified by Tenant of such damage, this Lease shall terminate
and the rent shall be abated during the unexpired portion of this Lease,
effective upon the date of the occurrence of such damage.
C. If the buildings situated on the Premises should be damaged by fire,
tornado or other casualty, but only to such extent that rebuilding or repairs
can be completed within two hundred (200) days after the date upon which
Landlord is notified by Tenant of such damage, this Lease shall not terminate,
but Landlord shall at its sole cost and expense proceed with reasonable
diligence to rebuild and repair such buildings, to substantially the condition
in which they existed prior to such damage, except that Landlord shall not be
required to rebuild, repair or replace any part of the partitions, fixtures and
other improvements which may have been placed on the Premises by Tenant. If the
Premises are untenantable in whole or in part following such damage, the rent
payable hereunder during the period in which they are untenantable shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. In the event that Landlord should fail to complete such repairs
and rebuilding within two hundred (200) days after the date upon which Landlord
is notified by Tenant of such damage, Tenant may at its option terminate this
Lease by delivering written notice of termination to Landlord as Tenant's
exclusive remedy, whereupon all rights and obligations hereunder shall cease and
determine.
D. Notwithstanding anything herein to the contrary, in the event the holder
of any indebtedness secured by a mortgage or deed of trust covering the Premises
requires that the insurance proceeds be applied to such indebtedness, then
Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant, whereupon all rights and obligations between
the parties hereunder shall cease with respect to this Lease.
E. Any insurance which may be carried by Landlord or Tenant against loss or
damage to the buildings and other improvements situated on the Premises shall be
for the sole benefit of the party carrying such insurance and under its sole
control except as specifically set out hereinafter.
F. Each of Landlord and Tenant hereby releases the other from any and all
liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any of the extended coverage casualties covered by the
insurance maintained hereunder, even if such fire or other casualty shall have
been caused by the fault or negligence of the other party, or anyone for whom
such party may be responsible; provided, however, that this release shall be
applicable and in force and effect only with respect to loss or damage occurring
during such times as the releasor's policies shall contain a clause or
endorsement to the effect that any release shall not adversely affect or impair
said policies or prejudice the right of the releasor to recover thereunder. Each
of Landlord and Tenant agrees that it will request its insurance carriers to
include in its policies such a clause or endorsement. If extra cost shall be
charged therefor, each party shall advise the other thereof and of the amount of
the extra cost, and the other party, at its election, may pay the same, but
shall not be obligated to do so.
G. Landlord covenants and agrees to maintain standard fire and extended
coverage insurance covering the building on the Premises in an amount not less
than eighty percent (80%) of the replacement cost thereof. If during the second
full Lease year after the Commencement Date of this Lease, or during any
subsequent year of the primary term or any renewal or extension, the premiums
for insurance insuring the Center for fire, casualty and extended coverage and
general liability carried by Landlord shall exceed the premium for such
insurance for the first full Lease year of the term hereof, Tenant shall pay to
Landlord on demand Tenant's proportionate share for said insurance premium. Said
proportionate share shall by determined by dividing the total number of square
feet in the Premises by the total number of square feet of all leaseable
building space within the Center. the amount of such additional insurance
premium; and the failure to pay such additional premium upon demand shall be
treated in the same manner as a default in the payment or rent hereunder when
due.
13. Liability. Landlord shall not be liable to Tenant or Tenant's
employees, agents, patrons or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the Premises, caused by
the negligence or misconduct of Tenant, its agents, servants or employees, or of
any other person entering upon the Premises under express or implied invitation
of Tenant, or caused by the buildings and improvements located on the Premises
becoming out of repair, or caused by leakage of gas, oil, water or steam or by
electricity emanating from the Premises, or due to any cause whatsoever, and
Tenant agrees to indemnify Landlord and hold it harmless
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from any loss, expense or claims, including attorneys' fees, arising out of any
such damage or injury; except that any injury to person or damage to property
caused by the negligence of Landlord or by the failure of Landlord to repair and
maintain that part of the Premises which Landlord is obligated to repair and
maintain after the receipt of written notice from Tenant of needed repairs or of
defects shall be the liability of Landlord and not of Tenant, and Landlord
agrees to indemnify Tenant and hold it harmless from any and all loss, expense
or claims, including attorneys' fees, arising out of such damage or injury.
Tenant shall procure and maintain throughout the term of this Lease a policy or
policies of insurance, at its sole cost and expense, insuring both Landlord and
Tenant against all claims, demands or actions arising out of or in connection
with Tenant's use or occupancy of the Premises, or by the condition of the
Premises, the limits of such policy or policies to be in an amount not less than
$100,000 in respect of injuries to or death of any one person, and in an amount
not less than $300,000 in respect of any one accident or disaster, and in an
amount not less than $50,000 in respect of property damaged or destroyed, and to
be written by insurance companies qualified to do business in the state in which
the Premises are located. Such policies or duly executed certificates of
insurance shall be promptly delivered to Landlord and renewals thereof as
required shall be delivered to Landlord at least ten (10) days prior to the
expiration of the respective policy terms.
14. Condemnation.
A. If the whole or any substantial part of the Premises should be taken for
any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain, or by private purchase in lieu thereof, this
Lease shall terminate and the rent shall be abated during the unexpired portion
of this Lease, effective when the physical taking of said Premises shall occur.
B. If less than a substantial part of the Premises shall be taken for any
public or quasi-public use under any governmental law, ordinance or regulation,
or by right of eminent domain, or by private purchase in lieu thereof, this
Lease shall not terminate, but the rent payable hereunder during the unexpired
portion of this Lease shall be reduced to such extent as may be fair and
reasonable under all of the circumstances.
C. In the event of any such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive and retain such separate
awards and/or portion of lump sum awards as may be allocated to their respective
interests in any condemnation proceedings.
15. Holding Over. Should Tenant, or any of its successors in interest, hold
over the Premises, or any part thereof, after the expiration of the term of this
Lease, unless otherwise agreed in writing, such holding over shall constitute
and be construed as tenancy from month to month only, at a rental equal to the
rental payable for the last month of the term of this Lease plus fifty percent
(50%) of such amount. The inclusion of the preceding sentence shall not be
construed as Landlord's permission for Tenant to hold over.
16. Quiet Enjoyment. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the Premises, good title to the Premises, free
and clear of all liens and encumbrances, excepting only the lien for current
taxes not yet due, such mortgage or mortgages as are permitted by the terms of
this Lease, zoning ordinances and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions and other conditions of record. In the event this Lease is a
sublease, then Tenant agrees to take the Premises subject to the provisions of
the prior leases. Landlord represents and warrants that it has full right and
authority to enter into this Lease and that Tenant, upon paying the rental
herein set forth and performing its other covenants and agreements herein set
forth, shall peaceably and quietly have, hold and enjoy the Premises for the
term hereof without hindrance or molestation from Landlord subject to the terms
and provisions of this Lease.
17. Events of Default. The following events shall be deemed to be events of
default by Tenant under this Lease:
(a) Tenant shall fail to pay any installment of the rent hereby
reserved when due, and such failure shall continue for a period of five (5)
days from the date such installment was due.
(b) Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors.
(c) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of
the United States or any State thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceedings filed against Tenant thereunder.
(d) A receiver or trustee shall be appointed for all or substantially
all of the assets of Tenant.
(e) Tenant shall desert or vacate any substantial portion of the
Premises.
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(f) Tenant shall fail to comply with any term, provision or covenant of
this Lease (other than the foregoing in this Paragraph 17), and shall not
cure such failure within ten (10) days after written notice thereof to
Tenant
(g) Tenant shall be prohibited from recording Lease.
18. Remedies. Upon the occurrence of any of such events of default in
Paragraph 17 hereof, Landlord shall have the option to pursue any one or more of
the following remedies without any notice or demand whatsoever:
(a) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails so to do, Landlord
may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the
Premises and expel or remove Tenant and any other person who may be
occupying such Premises or any part thereof, by force if necessary,
without being liable for prosecution or any claim of damages therefor; and
Tenant agrees to pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of such termination, whether
through inability to relet the Premises on satisfactory terms or
otherwise.
(b) Enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying such Premises or any part
thereof, by force if necessary, without being liable for prosecution or
any claim for damages therefor, and relet the Premises and receive the
rent therefor; and Tenant agrees to pay to the Landlord on demand any
deficiency that may arise by reason of such reletting.
(c) Enter upon the Premises by force if necessary without being liable
for prosecution or any claim for damages therefor, and do whatever Tenant
is obligated to do under the terms of this Lease; and Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur in
thus effecting compliance with Tenant's obligations under this Lease, and
Tenant further agrees that Landlord shall not be liable for any damages
resulting to the Tenant from such action, whether caused by the negligence
of Landlord or otherwise.
In the event Tenant fails to pay any installment of rent hereunder as and
when such installment is due, Tenant shall pay to Landlord on demand a late
charge as provided in Paragraph 28. herein; and the failure to pay such amount
within ten (10) days after the due date of that installment of rent shall be an
additional event of default hereunder. The provision for such late charge shall
be in addition to all of Landlord's other rights and remedies hereunder or at
law and shall not be construed as liquidated damages or as limiting Landlord's
remedies in any manner.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damages accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions and covenants herein contained. Landlord's acceptance of the payment
of rental or other payments hereunder after the occurrence of an event of
default shall not be construed as a waiver of such default, unless Landlord so
notifies Tenant in writing. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default. If, on account of any breach
or default by Tenant in Tenant's obligations under the terms and conditions of
this Lease, it shall become necessary or appropriate for Landlord to employ or
consult with an attorney concerning or to enforce or defend any of Landlord's
rights or remedies hereunder, Tenant agrees to pay any reasonable attorney's
fees. No act or thing done by the Landlord or its agents during the term hereby
granted shall be deemed an acceptance of the surrender of the Premises, and no
agreement to accept a surrender of said Premises shall be valid unless in
writing signed by Landlord. The receipt by Landlord of rent with knowledge of
the breach of any covenant or other provision contained in this Lease shall not
be deemed or construed to constitute a waiver of any other violation or breach
of any of the terms, provisions and covenants contained herein.
19. Landlord's Lien. In addition to any statutory lien for rent in
Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a
continuing security interest in all rentals and other sums of money becoming due
hereunder from Tenant, upon all goods, wares, equipment, fixtures, furniture,
inventory, accounts, contract rights, chattel paper and other personal property
of Tenant situated on the Premises; and such property shall not be removed
therefrom without the consent of Landlord until all arrearages in rent as well
as any and all other sums of money then due to Landlord hereunder shall first
have been paid and discharged. In the event of a default under this Lease,
Landlord shall have in addition to any other remedies herein or by law, all
rights and remedies under the Uniform Commercial Code, including without
limitation the right to sell the property described in this
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Paragraph 19 at public or private sale upon five (5) days' notice to Tenant.
Tenant hereby agrees to execute such financing statements and other instruments
necessary or desirable in Landlord's discretion to perfect the security interest
hereby created. Any statutory lien for rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
Notwithstanding the foregoing, Landlord is put on notice and acknowledges that
certain assets of the business currently have a UCC filing that is primary.
20. Mortgages. This Lease shall be superior to any mortgage, deed to secure
debt or similar security instrument hereafter executed by Landlord and
constituting a lien or charge upon the Premises or the improvements situated
thereon; provided, however, that if any mortgagee or holder of any such security
instrument shall so require, Tenant will, at any time hereafter, on demand
execute and deliver any instruments, releases or other documents which may be
required by any mortgagee or security instrument holder for the purpose of
subjecting and subordinating this Lease to the lien and/or security title of any
such mortgage, deed to secure debt or similar security instrument.
21. Landlord's Default. In the event Landlord should become in default in
any payments due on any such mortgage described in Paragraph 20 hereof or in the
payment of taxes or any other items which might become a lien upon the Premises
and which Tenant is not obligated to pay under the terms and provisions of this
Lease, Tenant is authorized and empowered after giving Landlord ten (10) days'
prior written notice of such default and Landlord fails to cure such default, to
pay any such items for and on behalf of Landlord, and the amount of any item so
paid by Tenant for or on behalf of Landlord, together with any interest or
penalty required to be paid in connection therewith, shall be payable on demand
by Landlord to Tenant; provided, however, that Tenant shall not be authorized
and empowered to make any payment under the terms of this Paragraph 21, unless
the item paid shall be superior to Tenant's interest hereunder. In the event
Tenant pays any mortgage debt in full, in accordance with this paragraph, it
shall, at its election, be entitled to the mortgage security by assignment or
subrogation.
22. Mechanic's Liens. Tenant shall have no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs, and each such claim shall affect and each such
lien shall attach to, if at all, only the leasehold interest granted to Tenant
by this instrument. Tenant covenants and agrees that it will pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Premises on
which any lien is or can be validly and legally asserted against its leasehold
interest in the Premises or the improvements thereon and that it will save and
hold Landlord harmless from any and all loss, cost or expense based on or
arising out of asserted claims or liens against the leasehold estate or against
the rights, titles and interest of the Landlord in the Premises or under the
terms of this Lease.
23. Notices. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by Landlord to Tenant or with reference to the sending, mailing or delivery of
any notice or the making of any payment by Tenant to Landlord shall be deemed to
be complied with when and if the following steps are taken:
A. All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address hereinbelow
set forth or at such other address as Landlord may specify from time to
time by written notice delivered in accordance herewith.
B. All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address hereinbelow set forth, or at
such other address within the continental United States as Tenant may
specify from time to time by written notice delivered in accordance
herewith.
C. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received
or not when deposited in the United States Mail, postage prepaid,
Certified or Registered Mail, addressed to the parties hereto at the
respective addresses set out opposite their names below, or at such
other address as they have theretofore specified by written notice
delivered in accordance herewith:
Landlord: THOMAS L. BRADBURY, VICKI B. WHITMAN, & PAIGE W. MERKLE
DBA CHEROKEE VENTURE II
110 LONDONDERRY CT. SUITE 136
WOODSTOCK, GEORGIA 30188
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Tenant: BRIAN J. LUNSFORD
COFFEEAM.COM
100 LONDONDERRY CT. SUITE 112
WOODSTOCK, GEORGIA 30188
If and when included within the term "Landlord," as used in this instrument,
there are more than one person, firm or corporation, all shall jointly arrange
among themselves for their joint execution of such a notice specifying some
individual at some specified address for the receipt of notices and payments to
Landlord; if and when included within the term "Tenant," as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address within the continental
United States for the receipt of notices and payments to Tenant. All parties
included within the terms "Landlord" and "Tenant," respectively, shall be bound
by notices given in accordance with the provisions of this paragraph to the same
effect as if each had received such notice.
24. Miscellaneous.
A. Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless context otherwise requires.
B. The terms, provisions and covenants and conditions contained in this
Lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors and
permitted assigns, except as otherwise herein expressly provided.
C. The captions are inserted in this Lease for convenience only and in no
way define, limit, or describe the scope or intent of this Lease, or any
provision hereof, nor in any way affect the interpretation of this Lease.
D. Tenant agrees, within ten (10) days after request of Landlord, to
deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, the date to which rent has been
paid, the unexpired term of this Lease and such other matters pertaining to this
Lease as may be reasonably requested by Landlord.
E. This Lease may not be altered, changed or amended except by an
instrument in writing signed by Landlord and Tenant.
25. Insurance:
a) Tenant, at its sole cost and expense, shall, during the term of this
Lease, cause all improvements at any time located in the Premises
(other than the building standard tenant improvements) and all
equipment, machinery and fixtures from time to time used or intended
to be used in connection with the operation and maintenance of the
Premises, to be insured for the mutual benefit of Landlord and
Tenant against loss or damage by fire and against loss or damage by
other risks now or hereafter included in the standard form of
all-risk insurance policy, in an amount equal to the full insurable
value thereof. All proceeds from such insurance shall be used for
the repair and replacement of such improvements, equipment and
fixtures.
b) Notwithstanding any other provisions of this Lease, Tenant, at its
own expense, shall maintain the following insurance coverage. All
coverage shall be primary and non-contributory over any insurance
the Landlord may elect to provide on its behalf. At the commencement
of the Lease Term, and upon renewal of such coverage, Tenant shall
deliver to the Landlord an original certificate of such insurance
from the insurer providing a minimum of thirty (30) day prior
written notice of cancellation. All policies of insurance required
to be carried by Tenant under this paragraph shall be in a form
satisfactory to Landlord, shall be issued by responsible insurance
companies which are licensed to do business in the State of Georgia,
have Best's rating of at least "A", and have been approved in
writing by Landlord.
1) Worker's Compensation. Tenant shall maintain Worker's
Compensation insurance to comply with all state and/or federal
laws which may be applicable.
2) Comprehensive General Liability. Tenant shall maintain a
comprehensive general liability policy including all those
coverage normally provided by the extended liability
endorsement. Such policies shall specifically name the
Landlord as additional insured. Landlord may, at its
discretion, request evidence of products insurance.
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The minimum limits of liability acceptable are:
i. One million dollars ($1,000,000.00) for property damage, and
ii. Three million dollars ($3,000,000.00) per occurrence for
personal injuries or deaths of persons in or about the
Premises.
26. Principal(s) in Transaction: Howe D. Whitman and Thomas L. Bradbury are
licensed Georgia Real Estate Brokers acting as a principals in this
transaction.
27. Extrinsic Evidence: It is expressly agreed by Tenant, as a material
consideration for the execution of this Lease Agreement, that this
Lease with the specific references to written extrinsic documents, is
the entire agreement of the parties; that there are, and were, no
verbal representations, understanding, stipulations, agreements or
promises pertaining to this Lease Agreement or the expressly mentioned
written extrinsic documents not incorporated in writing in this Lease
Agreement. It is likewise agreed that this Lease may not be altered,
waived amended or extended except by an instrument in writing, signed
by both Landlord and Tenant.
28. Late Charges: Other remedies for nonpayment of rental notwithstanding,
time is of the essence of this Lease and if Landlord elects to accept
rent on or after the tenth (10th) day of the month, a late charge equal
to the greater of five percent (5%) of the monthly rent or Two Hundred
Dollars ($200.00), whichever is greater, will be due as additional
rent. Tenant agrees to tender all late rents by cashier's check,
certified check, or money order. In the event Tenant's rent check is
dishonored by the bank, Tenant agrees to pay Landlord $25.00 as a
handling charge and, if applicable, the late charge, and Tenant shall
deliver said monies to Landlord as specified in Paragraph 3. Dishonored
checks must be replaced by cashier's check, certified check or money
order. In the event more than one check is dishonored, Tenant agrees to
pay all future rents and charges in the form of cashier's check,
certified check, or money order. Any other amounts payable to Landlord
under this Lease, with the exception of rent, shall be considered past
due 30 days from Landlord's billing date and Tenant shall pay a monthly
service charge of 5% of the amount past due for that and each
subsequent month that the amount remains past due. The parties agree
that such charges represent a fair and reasonable estimate of the costs
the Landlord will incur by reason of such late payment and/or returned
check.
29. Common Area Maintenance Charges: Beginning as of the thirty seventh
full month of the term hereof, Tenant shall pay to Landlord as
additional Rent, a common area maintenance charge equal to fifty cents
per square foot of finished area of Tenant's Premises. The charge
required hereunder shall be paid one twelfth each month along with
monthly payments of rent. Included in the common area maintenance
charge shall be the cost of maintaining the landscaping, grounds,
walks, parking areas, irregation system (Including water), and all
common areas.
30. Special Provisions.
See special stipulations attached hereto and made a part hereof.
EXECUTED the 21st day of March, 2000. LANDLORD:
CHEROKEE VENTURE II
By:
- -------------------------------------- -----------------------------
Witness
TENANT:
CoffeeAM.com
By: S/Brian J. Lunsford
- -------------------------------------- -----------------------------
Witness Brian J. Lunsford, President
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This Lease Agreement and all terms, provisions and obligations of the Tenant are
personally guaranteed by Brian J. Lunsford.
S/Brian J. Lunsford
- -------------------------------------- -----------------------------
Witness Brian J. Lunsford
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(These Special Stipulations prevail if there is any conflict with the printed
form).
SPECIAL STIPULATIONS
30A. Rent is payable to: CHEROKEE VENTURE II
110 Londonderry Ct. Suite 136
Woodstock, GA 30188
Rent due hereunder shall be as follows:
First Lease Year rent shall be Ninety Thousand and no/100 Dollars ($90,000.00)
plus a pro rata rent for any partial month if the first Lease Year is more than
twelve full calendar months, payable in monthly installments of Seventy Five
Hundred and no/100 Dollars ($7,500.00). Second Lease Year rent shall be One
Hundred Two Thousand and no/100 Dollars ($102,000.00), payable in monthly
installments of Eighty Five Hundred and no/100 Dollars ($8,500.00). Rent for
each succeeding Lease Year shall increase by Forty Six Hundred Fifty and no/100
Dollars ($4,650.00) per Annum (0.30 per square foot ) over the rent for the
preceding Lease Year. One such monthly installment of rent shall be due and
payable on the Commencement Date recited above, and a like monthly installment
shall be due and payable without demand on or before the same day of each
succeeding month during the term hereof; provided that if the said Commencement
Date should be a date other than the first day of a calendar month, there shall
be due and payable on the said Commencement Date as rent for the balance of the
calendar month during which the said Commencement Date shall fall a sum equal to
that proportion of the rent for a full month as herein provided which the number
of days from the said Commencement Date to the end of the calendar month during
which the said Commencement Date shall fall bears to the total number of days in
such month, and all succeeding installments of rent shall be payable on or
before the first day of each succeeding calendar month during the term hereof as
first above provided.
30B. The building, at the expense of the Landlord, will be finished per the
attached:
<TABLE>
<CAPTION>
<S> <C>
Site Plan - Exhibit A General Specifications - Exhibit C
Floor Plan - Exhibit B (by reference only) Sign Criteria - Exhibit D
Rules and Regulations - Exhibit E
</TABLE>
30C. Landlord will pay the base fire and extended coverage insurance premium
on the Premises. Any additional insurance premium due to interior
construction of improvements for Tenant shall be paid by Tenant. In
addition, Tenant will pay its prorated share of any increase in
insurance premiums over said premium for the Base tax year provided
that the premiums charged for set insurance are competitive by industry
standards. For the purposes of this paragraph, Tenant's prorated share
shall be deemed to be forty percent (40%) percent.
30D. Tenant agrees to execute any reasonable estoppel certificates relating
to the status of the Lease.
30E. The following items are specifically not the responsibility of
Landlord. Tenant shall supply all labor and materials including all
indirect costs such as permit fees, if any, and the like.
a. Movable partitions, work stations or any other furnishings or
trade fixtures.
b. The installation and/or wiring of any movable partitions, work
stations, furniture or trade fixtures of Tenant.
c. Telephone equipment and telephone wiring.
d. Computer equipment, computer cabling or computer installation.
Landlord shall provide 110 volt electrical wiring for computers
only as shown on the Plans and Specifications.
e. Any burglary or fire and smoke alarm system other than the fire
sprinkler system as provided for in the Plans and Specifications.
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f. Window treatments of any kind including but not limited to
drapes, blinds or shades.
30F. It is specifically understood and agreed that this Lease supersedes and
replaces all other Leases and agreements heretofore made between the
parties hereto, either orally or in writing, and contains the entire
Agreement between all parties hereto. This Lease shall not be modified
or amended except in writing and executed by all parties hereto.
30G. It is specifically understood and agreed that Landlord shall have the
right, but not the obligation, to designate specific parking spaces to
be used by Tenant, in which Tenant agrees to park only in designated
parking spaces. In the event Landlord elects to designate parking
spaces, Tenant shall have at least eight (8) parking spaces directly in
front of the Premises. Tenant shall have the right to use no less than
thirty six (45) total parking spaces. Improper or unauthorized parking
shall be a violation of the terms of this Lease Agreement.
30H. Tenant agrees to immediately install the appropriate number and type of
fire extinguishers recommended and/or required by the fire department
and/or Landlord and/or Tenant's insurance company. Tenant agrees to
comply with reasonable loss prevention recommendations of Landlord
and/or Tenant's insurance companies.
30I. So long as Tenant is not in default of any of the terms of this Lease,
Landlord will grant Tenant two (2) five (5) year options to extend the
term hereof. Tenant must provide Landlord written notice no later than
one hundred eighty (180) days prior to the termination date of the
Lease or the extended term of the Lease of their intention to exercise
the option. The rental rate for each year of each option shall increase
by Thirty One Hundred and no/100 Dollars ($3,100.00) per Annum (0.20
per square foot ) over the rent for the preceding Lease Year. All other
terms and provisions of this Lease shall remain unchanged. In the event
Landlord does not receive notification within the above-specified
period, it will be assumed that Tenant forfeits this option.
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EXHIBIT C
GENERAL SPECIFICATIONS FOR
COBBLESTONE BUSINESS PARK
WAREHOUSE AREA:
1) Eight 8-foot double tube exposed strip fluorescent lights attached to the
bar joists.
2) Normal hazardous wet fire sprinkler within webb joists. (20 gallons/per
minute for most remote 2,000 s.f.)
OUTSIDE WORK:
1) Recessed can lights at front store front entry and wall mounted outside
lights to exterior truck dock area.
2) Landscaping per plan.
3) TROPIC WHITE energy efficient reflective roof coating, by Monsey Products
Co. of Kimberton, PA, or equivalent.
4) Over designed and oversized box type rear roof down spouts.
5) Rear truck area is approximately 100' deep with 40' continuous 6" concrete
pad with wire mesh; remaining 70' is asphalt containing 6" crusher run; 2"
asphalt binder and 1" asphalt topping.
Incorporated herein are those certain plans and specifications by Philip B.
Windsor Company, Architects and Engineers for Colony Homes indicating
office/warehouse - 50,400 square feet Cherokee County, Georgia dated
9/30/97 revised through 1/20/98.
OFFICE AREA:
GENERAL
DOCUMENTS (By Reference Only)
1. Schematic Floor Plan prepared by Samples Construction SE
2. Reflected ceiling plan prepared by Samples Construction SE
SITE INFORMATION
1. Premises location: 100 Londonderry Drive, Suite 112
Woodstock (Cherokee County),Georgia 30188
2. Office area: As set out on the Plans and Specifications
identified hereinabove
II. CARPENTRY AND MILL WORK
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Base cabinets to be custom-made solid wood cabinets with post formed
laminated tops. Laminate tops and cabinet stain or paint colors to be
selected by Tenant. Millwork by Landlord shall only consist of the
following:
1. Break room base cabinet
III. DOORS & WINDOWS
A. DOOR FRAMES
All door frames to be commercial grade metal frames - 5 5/8" or 5 7/8",
factory primed and painted on site. Glass store front doors to be
anodized aluminum to match store front.
B. DOORS
Doors as shown on the schematic floor plan. Exterior doors to be solid
core metal clad 3'0" by 7'0" metal frame glass store front doors as
indicated. All interior doors to be 3'0" by 7'0" by 1 3/4" solid core
birch doors. All doors to meet all appropriate governmental codes.
DOOR HARDWARE
Door hardware to be Cal Royal. All interior doors shall have passage
sets except restroom doors (privacy) and mechanical room and exterior
doors (locksets). Closers shall be on be on all restroom doors,
mechanical room doors and exterior doors.
IV. FINISHES
A. FINISH MATERIALS
1. Carpet shall be Level loop commercial carpet in offices only.
2. Vinyl composition floor tile at restrooms, breakroom and storag
room.
3. 4" vinyl base at all carpet and vinyl areas.
4. All painted gypsum walls to be painted with 2 coats of flat latex.
5. All metal door frames to be painted semi-gloss enamel.
6. Sealed concrete in all warehouse areas.
B. DRYWALL CONSTRUCTION
1. All partition walls shall be 3 5/8" thick, 25-gage metal studs at
24" center, attached to metal ceiling grid and support to structure
as required.
2. Gypsum board shall be1/2" thick at typical partition, 5/8" thick at
walls as required by U.S. Gypsum Company U.L. listing test data and
as may be required by all applicable local codes.
3. 1/2" moisture-resistant gypsum board to be used in all restrooms and
high-moisture areas.
4. Rigid insulation shall be used between metal furring strips at
exterior masonry wall finish locations.
5. Kraft paper faced batt insulation (R-11) shall be used at all
exterior metal stud wall locations and at all restroom walls.
C. ACOUSTICAL CONSTRUCTION
1. 2' X 4' white ceiling grid suspended from structure above.
2. Acoustical ceiling tile shall be standard edge, 5/8" thick, fissured
pattern, white.
3. Kraft paper faced batt insulation (R-11) shall be installed above
all upstairs and downstairs ceilings.
D. PAINT
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All gypsum board, metal and wood surfaces shall be properly
prepared, primed and painted with two coats of paint or polyurethane
as specified. Walls shall be flat latex, metal door frames and
miscellaneous interior metal shall be semi-gloss alkyd enamel. All
stained cabinetry shall be satin finish polyurethane. All stain and
paint colors to be selected by Owner.
V. MECHANICAL
B. HEATING, VENTILATION, and AIR CONDITIONING SYSTEMS
1. Heat and air conditioning will be provided by with a minimum of one
ton per 400 sq. ft. of finished office area, consisting of roof top
or split system units at the option of Landlord. Heat will be by gas
or electric at the option of Landlord.
2. All supply ducts will be insulated ducts. All returns will be
ducted.
3. Thermostats will be automatic changeover programmable thermostats
located at apx. 54" above floor level.
4. All restrooms will be equipped with exhaust fans.
5. The area outside of the offices shall be heated only (no air
conditioning) by two 250,000 BTU gas fired units suspended from the
roof bar joists.
B. PLUMBING
1. All toilets will be equipped with Sloan flush valve water supplies.
VI. ELECTRICAL AND LIGHTING
Electrical will be as provided in the contract documents set out in
item I. A. above. Lighting will be 2' x 4' fluorescent lay-in fixtures
with acrylic lens.
VII. ALLOWANCES
NONE
42
<PAGE>
EXHIBIT E
RULES AND REGULATIONS
1. All loading and unloading of goods shall be done only at such times in the
areas and through the entrances designated for such purposes by Landlord.
2. The delivery or shipping of the merchandise, supplies and fixtures to and
from the Premises shall be subject to such rules and regulations as in the
judgement of Landlord are necessary for the proper operation of the
Premises or the Center.
3. Tenant will not utilize any unethical method of business operation nor
shall any space in the Premises be used for living or sleeping quarters,
whether temporary or permanent.
4. Tenant shall have full responsibility for protecting the Premises and the
property located therein from theft and robbery and shall keep all doors
and windows securely fastened when not in use.
5. No aerial shall be erected on the roof or exterior walls of the Premises or
on the grounds without, in each instance, the written consent of the
Landlord. Any aerial so installed without such written consent shall be
removed without notice at any time without liability to Landlord and the
expenses involved in said removal shall be charged to and paid by Tenant
upon demand.
6. No loudspeaker, television, phonographs, radios or other devices shall be
used in a manner so as to be heard or seen outside of the Premises without
the prior written consent of Landlord.
7. Tenant shall maintain the inside of the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures inside
the Premises.
8. The plumbing facilities shall not be used for any other purpose than that
for which they are constructed and no foreign substance of any kind shall
be deposited therein. The expense of any breakage, stoppage or damage
resulting from a violation of this provision shall be borne by Tenant.
9. Tenant shall not burn any trash or garbage of any kind in or about the
Premises, the Center or within one mile of the outside property line of the
Center.
10. Tenant shall not cause or permit any unusual or objectionable odors not
commonly associated with Tenant's current operating process to be produced
upon or permeated from the Premises nor shall Tenant vent any cooking fumes
or odors into the interior of the building.
11. Tenant shall not permit, allow or cause any public or private auction,
"going out of business", bankruptcy, distress or liquidation sale in the
Premises. It is the intent of the preceding sentence to prevent the Tenant
from conducting his business in any manner that would give the public the
impression that he is about to cease operation and Landlord shall be the
sole judge as to what shall constitute a "distress type" sale.
12. The sidewalk, entrances, passages, quarters or halls shall not be
obstructed or encumbered by any Tenant or used for any purpose other than
ingress or egress to and from the Premises.
13. No sales tables, merchandise displays, signs or other articles shall be put
in front of or affixed to any part of the exterior building nor placed in
the halls, common passageways, corridors, vestibule or parking area without
the prior written consent of the Landlord.
14. Tenant shall not erect or maintain any barricade or scaffolding which may
obscure the signs, entrances or show window of any other Tenant in the
Center or tend to interfere with any such other Tenant's business.
15. Tenant shall not create or maintain, nor allow others to create or
maintain, any nuisances, including with limiting the foregoing general
language, loud noises, sound effects, bright lights, changing, flashing,
flickering or lighting devices or similar devices, smoke or dust, the
effect of which will be visible from the exterior of the Premises.
16. No additional locks shall be placed on the doors of the Demised Premises by
Tenant, nor shall any
43
<PAGE>
existing lock be changed unless Landlord is immediately furnished with two
keys thereto. Landlord will without charge furnish Tenant with two keys for
each lock existing upon the entrance doors when Tenant assumes possession
with the understanding that at the termination of the Lease these keys
shall be returned.
17. Tenant will refer all contractors, contractor's representatives and
installation technicians, rendering any service on or to the Premises for
Tenant to Landlord's approval and supervision before performance of any
contractual service. This provision shall apply to all work performed in
the Building including installation of telephones, telegraph equipment,
electrical devices and attachments and installation of any nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment or any other
physical portion of the Building.
18. Tenant shall not place, install or operate on demised Premises or in any
part of Building, any engine, stove or machinery or conduct mechanical
operations or cook thereon or therein, or place or use in or about Premises
any explosives, gasoline, kerosene, oil acids, caustics, or any other
inflammable, explosive or hazardous material without written consent of
Landlord.
19. Landlord will not be responsible for lost or stolen personal property,
equipment, money or jewelry from Tenant's area or public rooms regardless
of whether such loss occurs when area is locked against entry or not.
20. Tenant shall not at any time display a "For Rent" sign upon the demised
Premises for rent.
21. Landlord will not permit entrance to Tenant's offices by use of pass key
controlled by Landlord, to any person at any time without written
permission by Tenant, except employees, contractors, or service personnel
directly supervised by Landlord.
22. None of the entries, passages, doors, or hallways shall be blocked or
obstructed, or any rubbish, litter, trash, or material of any nature
placed, emptied or thrown into these areas, including any alleyways to the
rear of the leased Premises, or such areas being used at any time except
for ingress or egress by Tenant, Tenant's agents, employees or invitees.
23. No vehicle shall be stored in the building. No animal shall be brought into
the building.
24. No sign, tag, label, picture, advertisement, or notice (other than price
tags of customary size used in marking samples) shall be displayed,
distributed, inscribed, painted or affixed by Tenant on any part of the
outside or inside or the building or of the Demised Premises without the
prior written consent of the Landlord.
25. Tenant shall not do or permit to be done within the Demised Premises
anything which would unreasonably annoy or interfere with the right of
other Tenants of the Building.
26. During the ninety days prior to the expiration of the Lease, Landlord may
show the Demised Premises to prospective tenants and may place upon the
windows or doors thereon one or more "For Rent" signs of reasonable
dimensions.
27. Landlord reserves the right to waive any rule in any particular instance or
as to any particular person or occurrence and further, Landlord reserves
the right to amend or rescind any of these rules or make, amend and rescind
new rules to the extent Landlord, in its sole judgement deems suitable for
the safety, care and cleanliness of the Center and the conduct of high
standards of merchandising and services therein. Tenant agrees to conform
to such new or amended rules upon receiving written notice of the same.
28. Parking facilities supplied by Landlord for Tenants shall be used for
vehicles that may occupy a standard parking area only (i.e. 8'x13').
Moreover, the use of such parking facilities shall be limited to normal
business parking and shall not be used for a continuous parking of any
vehicle or trailer regardless of size.
44
The Board of Directors
Coffeeam.com, Inc.
We consent to the use in this Registration Statement on Form SB-2 of
Coffeam,com, Inc. of our report dated March 3, 2000 except for note 11 as to
which the date is May 5, 2000, related to the audit of the financial statements
of Coffeeam.com, Inc. at December 31, 1999 and 1998, and for the years then
ended, included herein and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ Cherry, Bekaert, & Holland, L.L.P.
---------------------------------------
Cherry, Bekaert, & Holland, L.L.P.
Certified Public Accountants
Atlanta, Georgia
May 10, 2000
Exhibit 23.1
45
SHARE PURCHASE ORDER
(For assistance in filling out this form, please see the reverse side)
To: CoffeeAM.com, Inc., 3588 Pierce Drive, Chamblee, Georgia 30341:
Please deposit into "SouthTrust Bank, N.A., Escrow Acct No. ________________ "
the attached payment. Upon release of the escrow condition, issue shares of
CoffeeAM.com, Inc. common stock in the amount(s) and name(s) shown below. My
signature acknowledges that I have received the Prospectus by which the shares
are offered and that I am purchasing these shares for investment.
Signature: ______________________ ____________________
Date
Enclosed is payment for _____ (minimum 50) shares, at $7.00 per share, totaling
$______________.
PLEASE MAKE CHECK PAYABLE TO: SouthTrust Bank, N.A. Escrow Account No. ________
79 West Paces Ferry Road, N.W., Atlanta, Georgia 30305
VISA __ MASTERCARD __ AMERICAN EXPRESS __
Number:______________________ Expiration Date:______ Signature:_____________
The only role of SouthTrust Bank, N.A. (the "Bank") in this offering is
that of Escrow Agent. The Bank has not reviewed the Prospectus or any of the
offering materials. It makes no representation at all about the nature of this
offering or whether it complies with any legal requirements. The Bank does not
represent the interests of investors. Its duties are limited to those in the
Escrow Agreement. You may get a copy of that Agreement from CoffeeAM.com, Inc.
Register the shares in the following name(s) and amount(s):
Name(s) ______________________ Number of shares __________
As (check one):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Individual _____ Joint Tenants _______ Trust ______
Tenants in Common _____ Corporation _____ Custodial (UGMA) _____ Other ____
</TABLE>
For the person(s) who will be registered shareowner(s):
Mailing Address: _____________________________________________________
City, State & Zip Code: ______________________________________________
Telephone Number: Business: ( ) Home: ( )
---------------------------------------------------
Social Security or Taxpayer ID Number:_________________________________
(Please attach any special mailing instructions other than shown above)
NO SUBSCRIPTION IS EFFECTIVE UNTIL ACCEPTANCE
(You will be mailed a signed copy of this agreement to retain for your records.)
Subscription accepted by CoffeeAM.com, Inc. and its representative:
- ------------------------------------- ---------------------------
Brian J. Lunsford, President Date
Exhibit 99.1
46
<PAGE>
How to Complete the Share Purchase Order
How can I purchase shares? Personal check, bank check, money order or credit
card are all acceptable.
Who should sign it? The person who is making the decision to buy shares. This
may be different from the persons in whose names the shares are being
registered.
Whose check can be used for payment? It should be either an account in the name
of the person signing this Share Purchase Order or the name(s) in which the
shares are to be registered. We can not, for instance, accept a check on a
corporate bank account, where the registered shareowner is to be an
individual--unless there is an accompanying certified corporate resolution
authorizing the use of corporate funds for that purpose.
Can I buy shares for more than one person on the same form? Yes, you can either
squeeze in the other names and numbers of shares, or put "see attached" next to
"Name(s)" on the form and put the names and number of shares on another sheet.
How can I buy shares for a person who is under 18 years old? There are Uniform
Gift to Minors Acts in the states. The "Custodial" box can be checked and the
shares can be registered in a form like: "Jane Doe, as custodian for Minor Doe,
under UGMA." The effect is that Jane Doe can sell the shares, receive dividends
and otherwise manage the investment, until Minor Doe becomes 18. Then, Jane Doe
can request a replacement certificate in Minor Doe's name. If Jane Doe wants
some other legal arrangement, such as holding the shares until Minor Doe is
older than 18, she would have to create a trust agreement, using a lawyer or a
do-it-yourself guide. She would then check the "Trust" box and fill in the name
something like: "Jane Doe, trustee for Minor Doe," or "Jane Doe, Trustee under
Trust Agreement dated [month,date,year.]"
CanI buy shares for an IRA or other retirement account? If the trust agreement
permits it--that's between you and the trustee. If your trust agreement does not
permit it (many brokerage, mutual fund or bank trustees will not permit it),
then you may be able to "roll over" or open a new account with another trustee.
The check needs to be from the trustee. You would check "Trust" on the form and
write in something like: "[name of trustee company], trustee for Jane Doe IRA."
Guide to registering investments
Joint Tenants: Two or more persons jointly own the shares. If one person passes
away, all of the shares are transferred to the surviving person(s).
Tenants In Common: Two or more persons jointly own the shares. If one person
passes away, half (or whatever individual fraction) automatically goes to the
deceased's estate and not to the surviving person(s).
Trust: If you have established a trust for yourself, family or children. Please
be sure to include exact name of the trust and the trust's taxpayer ID number.
Custodial: Usually established for a minor, so that an adult can maintain
control/voting rights of the stock until the minor becomes of legal age (18).
Registration should read as follows: Jane Doe as Custodian for Minor Doe under
UGMA. Make sure to list the minor's social security number, not yours.
Other: 1) Partnership - Make sure to list Tax ID #
2) IRA (Keogh, SEP or other retirement plan): Make sure your IRA allows
for investments of this kind, check with your plan administrator.
Registration for all IRA's should read as follows: [Trustee or name of
Plan] as Trustee for Jane Doe IRA Account # _________.
47
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," 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 $500,000 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, 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
48
<PAGE>
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.
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 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
49
<PAGE>
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: ____________________________
______________ Brian J. Lunsford
______________ President
50
LOCK-IN AGREEMENT
I. This Promotional Shares Lock-In Agreement ("Agreement"), was entered into on
May___, 2000, between CoffeeAM.com, Inc. ("Issuer"), whose principal place of
business is located in Chamblee, Georgia, and Marandar Marketing, Inc., Brian J.
Lunsford, Maranda Ray Lunsford, Howe D. Whitman (together, the "Security
Holders".)
A. The Issuer has filed an application with the Securities Administrators
of the States shown on the attached Form CER-1 ("Administrators") to
register certain of its Equity Securities for sale to public investors
who are residents of those states ("Registration");
B. The Security Holders are or may become the owner of the shares of
common stock or similar securities and/or possesses convertible
securities, warrants, options or rights which may be converted into, or
exercised to purchase shares of common stock or similar securities of
Issuer.
C. As a condition to Registration, the Issuer and Security Holders
("Signatories") agree to be bound by the terms of this Agreement.
II. THEREFORE, the Security Holders agree not to sell, pledge, hypothecate,
assign, grant any option for the sale of, or otherwise transfer or dispose of,
whether or not for consideration, directly or indirectly, PROMOTIONAL SHARES as
defined in the North American Securities Administrators Association ("NASAA")
Statement of Policy on Corporate Securities Definitions and all certificates
representing stock dividends, stock splits, recapitalizations, and the like,
that are granted to, or received by, the Security Holders while the PROMOTIONAL
SHARES are subject to this Agreement ("Restricted Securities").
Beginning one year from the completion date of the public offering, two
and one-half percent (2 1/2%) of the Restricted Securities may be released each
quarter pro rata among the Security Holders. All remaining Restricted Securities
shall be released from escrow on the anniversary of the second year from the
completion date of the public offering.
III. THEREFORE, the Signatories agree and will cause the following:
A. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the Issuer's assets or securities
(including by way of tender offer), or any other transaction or
proceeding with a person who is not a Promoter, which results in the
distribution of the Issuer's assets or securities ("Distribution"),
while this Agreement remains in effect that:
1. All holders of the Issuer's EQUITY SECURITIES will initially share on a
pro rata, per share basis in the Distribution, in proportion to the
amount of cash or other consideration that they paid per share for
their EQUITY SECURITIES (provided that the Administrator has accepted
the value of the other consideration), until the shareholders who
purchased the Issuer's EQUITY SECURITIES pursuant to the public
offering ("Public Shareholders") have received, or have had irrevocably
set aside for them, an amount that is equal to one hundred percent
(100%) of the public offering's price per share times the number of
shares of EQUITY SECURITIES that they purchased pursuant to the public
offering and which they still hold at the time of the Distribution,
adjusted for stock splits, stock dividends recapitalizations and the
like; and
2. All holders of the Issuer's EQUITY SECURITIES shall thereafter
participate on an equal, per share basis times the number of shares of
EQUITY SECURITIES they hold at the time of the Distribution, adjusted
for stock splits, stock dividends, recapitalizations and the like.
3. The Distribution may proceed on lesser terms and conditions than the
terms and conditions stated in paragraphs 1 and 2 above if a majority
of the EQUITY SECURITIES that are not held by Security Holders,
officers, directors, or Promoters of the Issuer, or their associates or
affiliates vote, or consent by consent procedure, to approve the lesser
terms and conditions.
B. In the event of a dissolution, liquidation, merger, consolidation,
reorganization, sale or exchange of the
Issuer's assets or securities (including by way of tender offer), or
any other transaction or proceeding with a person who is a Promoter,
which results in a Distribution while this Agreement remains in effect,
the Restricted Securities shall remain subject to the terms of this
Agreement.
Exhibit 99.3
51
<PAGE>
C. Restricted Securities may be transferred by will, the laws of descent
and distribution, the operation of law, or by order of any court of
competent jurisdiction and proper venue.
D. Restricted Securities of a deceased Security Holder may be hypothecated
to pay the expenses of the deceased Security Holder's estate. The
hypothecated Restricted Securities shall remain subject to the terms of
this Agreement. Restricted Securities may not be pledged to secure any
other debt.
E. Restricted Securities may be transferred by gift to the Security
Holder's family members, provided that the Restricted Securities shall
remain subject to the terms of this Agreement.
F. With the exception of paragraph A.3 above, the Restricted Securities
shall have the same voting rights as similar EQUITY SECURITIES not
subject to the Agreement.
G. A notice shall be placed on the face of each stock certificate of the
Restricted Securities covered by the terms of the Agreement stating
that the transfer of the stock evidenced by the certificate is
restricted in accordance with the conditions set forth on the reverse
side of the certificate; and
H. A typed legend shall be placed on the reverse side of each stock
certificate of the Restricted Securities representing stock covered by
the Agreement which states that the sale or transfer of the shares
evidenced by the certificate is subject to certain restrictions until
______ (insert date of termination of the Agreement) pursuant to an
agreement between the Security Holders (whether beneficial or of
record) and the Issuer, which agreement is on file with the Issuer and
the stock transfer agent from which a copy is available upon request
and without charge.
I. The term of this Agreement shall begin on the date that the
Registration is declared effective by the Administrators ("Effective
Date") and shall terminate:
1. On the anniversary of the second year from the completion date of the
public offering; or
2. On the date the Registration has been terminated if no securities were
sold pursuant thereto; or
3. If the Registration has been terminated, the date that checks
representing all of the gross proceeds that were derived therefrom and
addressed to the public investors have been placed in the U.S. Postal
Service with first class postage affixed; or
4. On the date the securities subject to this Agreement become "Covered
Securities," as defined under the National Securities Markets
Improvement Act of 1996.
J. This Agreement to be modified only with the written approval of the
Administrators.
IV. THEREFORE, the Issuer will cause the following:
A. A manually signed copy of the Agreement signed by the Signatories to be
filed with the Administrators prior to the Effective Date;
B. Copies of the Agreement and a statement of the per share initial public
offering price to be provided to the Issuer's stock transfer agent;
C. Appropriate stock transfer orders to be placed with the Issuer's stock
transfer agent against the sale or transfer of the shares covered by
the Agreement prior to its expiration, except as may otherwise be
provided in this Agreement;
D. The above stock restriction legends to be placed on the periodic
statement sent to the registered owner if the securities subject to
this Agreement are uncertificated securities.
Pursuant to the requirements of this Agreement, the Signatories have entered
into this Agreement, which may be written in multiple counterparts and each of
which shall be considered an original. The Signatories have signed the Agreement
in the capacities, and on the dates, indicated.
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<PAGE>
IN WITNESS WHEREOF, the Signatories have executed this Agreement.
CoffeeAM.com, Inc. Marandar Marketing, Inc.
By ______________ By ______________
---------------- ------------------- ------------------
Brian J. Lunsford Maranda Ray Howe D. Whitman
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