EXHIBIT 10.70
RESTRICTED ACCOUNT AGREEMENT
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This Restricted Account Agreement (this "Agreement") is entered into
this 23rd day of June 2004, by and among NORTH FORK BANK, a New York
banking corporation with offices at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 (together with its successors and assigns, the "Bank"), HOST
AMERICA CORPORATION, a Colorado corporation with offices at 0 Xxxxxxxx,
Xxxxxx, XX 00000 (together with its successors and assigns, the
"Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands corporation
with offices at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(together with its successors and assigns, "Laurus"). Unless otherwise
defined herein, capitalized terms used herein shall have the meaning
provided such terms in the Purchase Agreement referred to below.
WHEREAS, Laurus has provided financing to the Company, which
financing is evidenced by a Securities Purchase Agreement (as amended,
modified or supplemented from time to time, the "Purchase Agreement") and
the Related Agreements referred to therein;
WHEREAS, the Company and Laurus have retained the Bank to provide
certain services with respect to the Restricted Account (as defined
below); and
WHERERAS, the Company and Laurus have agreed that an amount of cash
equal to $4,000,000 shall be deposited by Laurus on behalf of the Company
by wire transfer of immediately available funds into the Restricted
Account, which cash shall be held by the Bank for the benefit of Laurus,
as security for the Company's and its Subsidiaries' obligations under the
Purchase Agreement and the Related Agreements. For the purposes of this
Agreement, the "Restricted Account" shall mean that certain deposit
account (as defined in Section 9-102 of the Uniform Commercial Code as in
effect in the State of New York on the date hereof) described on Exhibit
B hereto, which Restricted Account shall be maintained at the Bank and
shall be in the sole dominion and control of Laurus;
NOW THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. The Bank is hereby authorized to accept for deposit into the
Restricted Account the sum of $4,000,000. The Bank hereby agrees to hold
any and all monies, and other amounts from time to time on deposit and/or
held in the Restricted Account for the benefit of the Laurus and shall
not release any monies held in the Restricted Account until such time as
the Bank shall have received a notice from Laurus substantially in the
form attached hereto as Exhibit A (a "Release Notice"). Following the
receipt of a Release Notice from Laurus, the Bank agrees to promptly
disburse the amount of cash referred to in such Release Notice to such
account as Laurus shall determine in its sole discretion. The Bank
hereby agrees that it will only comply with written instructions
originated by Laurus directing disposition of funds in the Restricted
Account. The Company hereby irrevocably authorizes the Bank to comply
with any and all instructions given to the Bank by Laurus with respect to
the Restricted Account without further
consent by the Company. The Bank, the Company and Laurus agree that the
Restricted Account is in Laurus' sole dominion and control.
2. Each of the Company, Laurus and the Bank hereby agrees that the
Restricted Account shall not be closed, and the account name and account
number in respect thereof shall not be changed, in any case, without the
consent of the Laurus, except as specifically provided for in Section 9
below.
3. The Bank hereby subordinates any claims and security interests
it may have against, or with respect to, the Restricted Account
(including any amounts from time to time on deposit therein) to the
security interests of Laurus therein, and agrees that no amounts shall be
charged by it to, or withheld or set-off or otherwise recouped by it
from, the Restricted Account or any amounts from time to time on deposit
therein; provided that, in connection with all service charges and any
other charges which the Bank is entitled to receive in connection with
the servicing and maintaining of the Restricted Account (such charges,
collectively, the "Charges"), each of the Company, Laurus and the Bank
hereby agrees that the Bank will collect such Charges in the following
manner: (i) first, the Bank will charge other deposit accounts maintained
by the Company with the Bank, (ii) second, in the event that there are
insufficient collected funds in such other deposit accounts to pay such
Charges, the Bank will promptly notify the Company and Laurus with
respect to same and, within seven (7) business days of the Company's
receipt of such notice, the Company shall pay to the Bank the full amount
of such Charges then due, and (iii) third, if the Company fails to pay
to the Bank such Charges then due within the time period set forth in the
preceding clause (ii), the Bank will promptly provide a written notice to
Laurus of such occurrence and, in such case, the Bank is hereby
authorized, following a period of five (5) business days after the
receipt of such written notice by Laurus, to deduct such Charges then due
from the Restricted Account, unless, during such five (5) business day
period, Laurus pays the amount of any such Charges then due to the Bank
from its own account. Except for the payment of the Charges as set forth
in the immediately preceding proviso, the Bank agrees that it shall not
offset, deduct or claim against the Restricted Account unless and until
Laurus has notified the Bank in writing that all of the Company's
obligations under the Purchase Agreement and the Related Agreements have
been performed.
4. The Company and the Bank agree that the maintenance by the Bank
of the Restricted Account shall be as agent for Laurus. The Bank shall
be responsible for the performance of only such duties as are set forth
herein. The Bank's duties hereunder, however, are merely ministerial,
and the Bank shall have no liability or obligation to the Company or
Laurus or to any other person for any act or omission of the Bank in
connection with the performance of the Bank's duties in servicing and/or
maintaining the Restricted Account, except for acts of gross negligence
or willful misconduct by Bank. IN NO EVENT, HOWEVER, SHALL THE BANK
HAVE ANY RESPONSIBILITY FOR CONSEQUENTIAL, INDIRECT, SPECIAL OR EXEMPLARY
DAMAGES OR LOST PROFITS, WHETHER OR NOT IT HAS NOTICE THEREOF, AND
REGARDLESS OF THE BASIS, THEORY OR NATURE OF THE ACTION UPON WHICH THE
CLAIM IS ASSERTED, NOR SHALL IT HAVE ANY RESPONSIBILITY OR LIABILITY FOR
THE VALIDITY OR ENFORCEABILITY OF ANY SECURITY INTEREST OR OTHER INTEREST
OF LAURUS OR THE COMPANY IN THE RESTRICTED ACCOUNT. In furtherance of
and without limiting the foregoing, the Company and Laurus agree that the
Bank shall not be liable for any damage or loss to them for any delay or
failure of performance arising out of the acts or omissions of any third
parties, including, but not limited to, various communication services,
courier services, the Federal Reserve system, any
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other bank or any third party who may be affected by funds transactions,
fire, mechanical, computer or electrical failures or other unforeseen
contingencies, strikes or any similar or dissimilar cause beyond the
reasonable control of the Bank. This paragraph shall survive the
termination of this Agreement.
5. Except where the Bank has been grossly negligent or has acted
in bad faith, each of Laurus and the Company and their respective
successors and assigns will release the Bank from and shall indemnify and
hold the Bank harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses (including, without limitation,
reasonable counsel fees, whether arising in an action or proceeding among
the parties hereto or otherwise, without regard to the merit or lack of
merit thereof) to which the Bank may become subject, or which it may
suffer or incur, arising out of or based upon this Agreement or the
actions contemplated hereby. This paragraph shall survive termination of
this Agreement.
6. The Bank shall be fully protected in acting on any order or
direction by Laurus respecting the items received by the Bank or the
monies or other items in the Restricted Account without making any
independent inquiry whatsoever as to Laurus' rights or authority to give
such order or direction or as to the application of any payments made
pursuant thereto.
7. Nothing in this Agreement shall be deemed to prohibit the Bank
from complying with its customary procedures in the event that it is
served with any legal process with respect to the Restricted Account.
8. The rights and powers granted in this to Laurus have been
granted in order to protect and further perfect its security interests in
the Restricted Account (including any amounts from time to time on
deposit therein) and are powers coupled with an interest and will be
affected neither by any purported revocation by the Company of this
Agreement or the rights granted to Laurus hereunder or by the bankruptcy,
insolvency, conservatorship or receivership of the Company or the Bank or
by the lapse of time.
9. This Agreement may not be amended or waived except by an
instrument in writing signed by each of the parties hereto. This
Agreement may be terminated by the Bank upon giving the Company and
Laurus thirty (30) days prior written notice. Laurus shall designate a
successor bank on or prior to the effective date of such termination and
the Bank shall deliver the balance in the Restricted Account to such
successor bank. Any notice required to be given hereunder may be given,
and shall be deemed given when delivered, via telefax, U.S. mail return
receipt requested or nationally recognized overnight courier to each of
the parties at the address set forth above. This Agreement may be
executed in any number of counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one
agreement. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof or thereof, as the case may be. This
Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to its conflict of laws
principles. This Agreement sets forth the entire agreement between the
parties hereto as to the matters set forth herein and supersede all prior
communications, written or oral, with respect to the matters herein.
EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH
RESPECT
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TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED
BY THIS AGREEMENT. THE BANK, THE COMPANY AND LAURUS EACH HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE COUNTY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED
TO THIS AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY.
* * * *
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Agreed and accepted this 23rd day of June, 2004.
NORTH FORK BANK
By:
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Name:
Title:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
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Name: Xxxxx Grin
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Title: Managing Partner
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HOST AMERICA CORPORATION
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: CFO
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EXHIBIT A
RELEASE NOTICE
To: North Fork Bank
000 Xxxxx Xxx., Xxxxx 0
Xxx Xxxx, XX 00000
Re: Account Name: ____________
Account Number: ___________
Reference is made to that certain Restricted Account Agreement,
dated as of June 23, 2004 (the "Restricted Account Agreement"), among
North Fork Bank (the "Bank"), Host America Corporation (the "Company"),
and Laurus Master Fund, Ltd. ("Laurus").
This is to notify you that Laurus authorizes the release of
$_____________ (the "Release Amount") from the account referenced above
in accordance with the terms of the Restricted Account Agreement. Within
one business day following the receipt of this Release Notice, the Bank
hereby agrees to wire the Release Amount (or, in the event that the
amount in the Restricted Account is less than the Release Amount, such
lesser amount) to the following account in accordance with the wire
instructions set forth below:
[INSERT WIRE INSTRUCTIONS]
LAURUS MASTER FUND, LTD.
By:
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Name:
Title:
Agreed and accepted this __ day of ___________ 200__.
NORTH FORK BANK
By:
-----------------------
Name:
Title:
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EXHIBIT B
Restricted Account
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* Bank: North Fork Bank
* Bank Routing Number: 000000000
Attn: Xxxxxxx Xxxxxx
Phone: 212-967-9400
Account Name: ________________
Account #: ________________
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