EXHIBIT 10.71
LAURUS MASTER FUND, LTD.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
June 23, 0000
Xxxx Xxxxxxx Corporation
0 Xxxxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Re: Restricted Account: Account Number 2704051727,
Account Name: Host America Corporation, maintained at North Fork
Bank (the "Restricted Account").
Reference is made to (i) that certain Securities Purchase Agreement,
dated as of June 23, 2004 (as amended, modified or supplemented from time
to time, the "Purchase Agreement"), by and between Host America
Corporation, a Colorado corporation (the "Company"), and Laurus Master
Fund, Ltd. (the "Purchaser") and (ii) that certain Restricted Account
Agreement, dated as of June 23, 2004 (as amended, modified or
supplemented from time to time, the "Restricted Account Agreement"), by
and among the Company, Laurus and North Fork Bank (the "Bank").
Capitalized terms used but not defined herein shall have the meanings
ascribed them in the Purchase Agreement or the Restricted Account
Agreement, as applicable. Pursuant to the Section 3.2 of the Purchase
Agreement, the Company is required to place $4,000,000 in the Restricted
Account, and, subject to the provisions of this letter, the Purchase
Agreement and any Related Agreement, maintain such amount in the
Restricted Account for as long as the Purchaser shall have any
obligations outstanding under the Term B Note and to assign the
Restricted Account for the benefit of the Purchaser as security for the
performance of the Company's obligations to the Purchaser.
The Purchaser and the Company desire to clarify certain aspects
regarding the use of funds contained in the Restricted Account, and for
good consideration, the receipt and sufficiency of which is here
acknowledged, the Company and the Purchaser agree that, so long as no
Event of Default (as defined in each of the Term Note A and the Term Note
B) has occurred and is continuing beyond any applicable grace period, at
such time as (x) the Registration Statement (as defined in the
Registration Rights Agreement) related to each of the Term Note A, Term
Note B and the Warrant has been declared effective by the Securities and
Exchange Commission, (y) the Company or any Subsidiary thereof delivers
to the Purchaser a customer contract and/or purchase order (in each
case, a "Customer Contract/Purchase Order") executed by a customer of the
Company and/or such Subsidiary, as the case may be, obligating such
customer to purchase from the Company and/or such Subsidiary circuit
board units, control boxes and/or other products to be manufactured by
the Company and/or such Subsidiary (each such product, a "Unit"), which
Customer Contract/Purchase Order shall, in each case, be in form and
substance reasonably satisfactory to the Purchaser and (z) the Company
and/or the applicable Subsidiary thereof shall have provided to the
Purchaser calculations of the gross revenue (in each case, a "Gross
Revenue Calculation") to be earned by the Company and/or the applicable
Subsidiary thereof in connection with the respective Customer
Contract/Purchase Order (which Gross Revenue Calculations shall in
each case be reasonably satisfactory to (and in sufficient detail for)
the Purchaser), then the Purchaser shall be obligated to direct the Bank,
pursuant to a Release Notice (as defined in the Restricted Account
Agreement), to wire an amount of funds contained in the Restricted
Account equal to the lesser of (x) 50% of the respective Gross Revenue
Calculation and (y) the amount of funds contained in the Restricted
Account at such time, to such bank account as the Company may direct the
Purchaser in writing. Notwithstanding the foregoing, in no event shall
the Purchaser be required to release funds from the Restricted Account
relating the Customer Contracts/Purchase Orders which exceed 1,000 Units
in the aggregate. In addition, when (and not until) the Amortizing
Principal Amount (as defined in the Term Note B) at such time has been
reduced (through conversions or otherwise) to $0, promptly following any
conversion of a Monthly Principal Amount (as defined in the Term Note B)
or such other Principal Amounts into Common Stock of the Company (such
event, a "Conversion"), the Purchaser shall be obligated to direct the
Bank, pursuant to a Release Notice (as defined in the Restricted Account
Agreement), to wire an amount of funds equal to the corresponding dollar
amount by which the Principal Amount of the Term B Note has been reduced
pursuant to such a Conversion from the Restricted Account to such bank
account as the Company may direct the Purchaser in writing.
Furthermore, the Company may request that the Purchaser direct
the Bank to release all or any portion of the amounts contained in the
Restricted Account (A) following (or in connection with) the consummation
of any acquisition (other than a Disclosed Acquisition) by the Company or
any of its Subsidiaries and/or (B) in connection with the Company's
product development and promotion strategies. Such a release referred
to in the immediately preceding sentence shall be subject (in all
respects) to (x) the Company's and/or the relevant Subsidiary's
compliance with Section 6.12(f) of the Purchase Agreement and (y) the
Purchaser's evaluation of all factors that it considers (in its sole
discretion) relevant at the time of such requested release, including its
determination (i) of the relative benefit of such acquisition to the
Company and its Subsidiaries and (ii) of the overall performance
(financial or otherwise) of the Company and its Subsidiaries at such
time. The Purchaser shall not be under any obligation to release any
amount pursuant to this paragraph and the release of such amounts shall
be in the Purchaser's sole and absolute discretion.
This letter may not be amended or waived except by an
instrument in writing signed by the Company and the Purchaser. This
letter 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 letter by
facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof or thereof, as the case may be. This letter
shall be governed by, and construed in accordance with, the laws of the
State of New York. This letter 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.
If the foregoing meets with your approval please signify your
acceptance of the terms hereof by signing below.
Signed,
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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Agreed and Accepted this 23rd day of June, 2004.
HOST AMERICA CORPORATION
By: /s/ Xxxxx Xxxxxx
------------------------
Name: Xxxxx Xxxxxx
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Title: CFO
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