Exhibit 99.2 -- RESTRICTED ACCOUNT AGREEMENT
RESTRICTED ACCOUNT AGREEMENT
This Restricted Account Agreement (this "Agreement") is entered into this
18th day of October 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"), IT&E INTERNATIONAL
GROUP, INC., a Nevada corporation with offices at 000 Xxxxx Xxxxx Xx Xxxxx
Xxxxx 000, Xxxxxx Xxxxx, 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 $2,500,000 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 $2,500,000. 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 (with an acknowledgement of the Company), the Bank agrees to promptly
disburse the amount of cash referred to in such Release Notice to such account
as Laurus shall designate 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 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 Agreement 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 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.
* * * *
#
Agreed and accepted this 18th day of October, 2004.
NORTH FORK BANK
By:
Name:
Title:
LAURUS MASTER FUND, LTD.
By:
-----------------------------------
Name: Xxxxx Grin
Title: Director
IT&E INTERNATIONAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
#
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 October __, 2004 (the "Restricted Account Agreement"), among North Fork Bank
(the "Bank"), IT&E International Group, Inc. (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:
Name:
Title:
Agreed and accepted this __ day of ___________ 200__.
NORTH FORK BANK
By: ______________________________
Name:
Title:
cc: IT&E INTERNATIONAL GROUP, INC.
EXHIBIT B
DEFAULT 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 October __, 2004 (the "Restricted Account Agreement"), among North Fork Bank
(the "Bank"), IT&E International Group, Inc. (the "Company"), and Laurus Master
Fund, Ltd. ("Laurus").
This is to notify you that an Event of Default has occurred under the
Restricted Account Agreement and 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:
Name:
Title:
Agreed and accepted this __ day of ___________ 200__.
NORTH FORK BANK
By: ______________________________
Name:
Title:
#
EXHIBIT C
Restricted Account
o Bank: North Fork Bank
o Bank Routing Number: 000000000
Attn: [Xxxxxxx Xxxxxx]
Phone: 000-000-0000
Account Name: ________________
Account #: ________________
