EXHIBIT 10.72
FUNDS ESCROW AGREEMENT
This Agreement (this "Agreement") is dated as of the 23rd the day of
June, 2004 among HOST AMERICA CORPORATION, a Colorado corporation (the
"Company"), Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb
LLP (the "Escrow Agent"):
W I T N E S S E T H:
WHEREAS, the Purchaser has advised the Escrow Agent that (a) the
Company and the Purchaser have entered into a Securities Purchase
Agreement (the "Purchase Agreement") for the sale by the Company to the
Purchaser of (i) a secured convertible term note A (the "Term Note A")
and (ii) a secured convertible term note B (the "Term Note B"), (b) the
Company has issued to the Purchaser a common stock purchase warrant (the
"Term Note Warrant") in connection with the issuance of the Term Note,
and (c) the Company and the Purchaser have entered into a Registration
Rights Agreement covering the registration of the Company's common stock
underlying the Term Note and the Term Note Warrant (the "Term Note
Registration Rights Agreement");
WHEREAS, the Company and the Purchaser wish the Purchaser to deliver
to the Escrow Agent copies of the Documents (as hereafter defined) and
the Escrowed Payment (as hereafter defined) to be held and released by
Escrow Agent in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent
pursuant to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. DEFINITIONS. Whenever used in this Agreement, the following
terms shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified
and/or supplemented from time to time by written agreement among the
parties hereto.
(b) "Closing Payment" means the closing payment to be paid to
Laurus Capital Management, LLC, the fund manager, as set forth on
Schedule A hereto.
(c) "Disbursement Letter" means that certain letter delivered
to the Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.
(d) "Documents" means copies of the Disbursement Letter, [the
Purchase Agreement, the Term Note A, the Term Note B, the Term Note
Warrant, and the Term Note Registration Rights Agreement.
(e) "Escrowed Payment" means $8,000,000.
1.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the matters contained
herein and supersedes all prior agreements, understandings, negotiations
and discussions of the parties, whether oral or written. There are no
warranties, representations and other agreements made by the parties in
connection with the subject matter hereof except as specifically set
forth in this Agreement.
1.3. EXTENDED MEANINGS. In this Agreement words importing the
singular number include the plural and vice versa; words importing the
masculine gender include the feminine and neuter genders. The word
"person" includes an individual, body corporate, partnership, trustee or
trust or unincorporated association, executor, administrator or legal
representative.
1.4. WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, in each case only by a written
instrument signed by all parties hereto, or, in the case of a waiver, by
the party waiving compliance. Except as expressly stated herein, no
delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right, power or privilege
hereunder preclude any other or future exercise of any other right, power
or privilege hereunder.
1.5. HEADINGS. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings are
for convenience of reference only and shall not affect the construction
or interpretation of this Agreement.
1.6. LAW GOVERNING THIS AGREEMENT; CONSENT TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of
laws. With respect to any suit, action or proceeding relating to this
Agreement or to the transactions contemplated hereby ("Proceedings"),
each party hereto irrevocably submits to the exclusive jurisdiction of
the courts of the County of New York, State of New York and the United
States District court located in the county of New York in the State of
New York. Each party hereto hereby irrevocably and unconditionally (a)
waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it
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may have at any time to the laying of venue of any Proceeding brought in
any such court, waives any claim that such Proceedings have been brought
in an inconvenient forum and further waives the right to object, with
respect to such Proceedings, that such court does not have jurisdiction
over such party. As between the Company and the Purchaser, the
prevailing party shall be entitled to recover from the other party its
reasonable attorneys' fees and costs. In the event that any provision of
this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not
be affected and shall remain in full force and effect.
1.7. CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore,
stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party against the other.
ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. APPOINTMENT. The Company and the Purchaser hereby irrevocably
designate and appoint the Escrow Agent as their escrow agent for the
purposes set forth herein, and the Escrow Agent by its execution and
delivery of this Agreement hereby accepts such appointment under the
terms and conditions set forth herein.
2.2. COPIES OF DOCUMENTS TO ESCROW AGENT. On or about the date
hereof, the Purchaser shall deliver to the Escrow Agent copies of the
Documents executed by the Company to the extent it is a party thereto.
2.3. DELIVERY OF ESCROWED PAYMENT TO ESCROW AGENT. On or about the
date hereof, the Purchaser shall deliver to the Escrow Agent the Escrowed
Payment.
2.4. INTENTION TO CREATE ESCROW OVER THE ESCROWED PAYMENT. The
Purchaser and the Company intend that the Escrowed Payment shall be held
in escrow by the Escrow Agent and released from escrow by the Escrow
Agent only in accordance with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. RELEASE OF ESCROW. Subject to the provisions of Section 4.2,
the Escrow Agent shall release the Escrowed Payment from escrow as
follows:
(a) Promptly following receipt by the Escrow Agent of (i)
copies of the fully executed Documents and this Agreement, (ii) the
Escrowed Payment in immediately available funds, (iii) joint written
instructions ("Joint Instructions") executed by the Company and the
Purchaser setting forth the payment direction instructions with respect
to the Escrowed Payment and (iv) Escrow Agent's verbal instructions from
Xxxxx Grin and/or Xxxxxx Grin (each of whom is a director of the
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Purchaser) indicating that all closing conditions relating to the
Documents have been satisfied and directing that the Escrowed Payment be
disbursed by the Escrow Agent in accordance with the Joint Instructions,
then the Escrowed Payment shall be deemed released from escrow and shall
be promptly disbursed in accordance with the Joint Instructions. The
Joint Instructions shall include, without limitation, Escrow Agent's
authorization to retain from the Escrowed Payment Escrow Agent's fee for
acting as Escrow Agent hereunder and the Closing Payment for delivery to
Laurus Capital Management, LLC in accordance with the Joint Instructions.
(b) Upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order") relating to the Escrowed Payment, the
Escrow Agent shall remit the Escrowed Payment in accordance with the
Court Order. Any Court Order shall be accompanied by an opinion of
counsel for the party presenting the Court Order to the Escrow Agent
(which opinion shall be satisfactory to the Escrow Agent) to the effect
that the court issuing the Court Order is a court of competent
jurisdiction and that the Court Order is final and non-appealable.
3.2. ACKNOWLEDGEMENT OF COMPANY AND PURCHASER; DISPUTES. The
Company and the Purchaser acknowledge that the only terms and conditions
upon which the Escrowed Payment are to be released from escrow are as set
forth in Sections 3 and 4 of this Agreement. The Company and the
Purchaser reaffirm their agreement to abide by the terms and conditions
of this Agreement with respect to the release of the Escrowed Payment.
Any dispute with respect to the release of the Escrowed Payment shall be
resolved pursuant to Section 4.2 or by written agreement between the
Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow
Agent's duties and responsibilities shall be subject to the following
terms and conditions:
(a) The Purchaser and the Company acknowledge and agree that
the Escrow Agent (i) shall not be required to inquire into whether the
Purchaser, the Company or any other party is entitled to receipt of any
Document or all or any portion of the Escrowed Payment; (ii) shall not be
called upon to construe or review any Document or any other document,
instrument or agreement entered into in connection therewith; (iii) shall
be obligated only for the performance of such duties as are specifically
assumed by the Escrow Agent pursuant to this Agreement; (iv) may rely on
and shall be protected in acting or refraining from acting upon any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith
to be genuine and to have been signed or presented by the proper person
or party, without being required to determine the authenticity or
correctness of any fact stated therein or the propriety or validity or
the service thereof; (v) may assume that any person purporting to give
notice or make any statement or execute any document in
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connection with the provisions hereof has been duly authorized to do so;
(vi) shall not be responsible for the identity, authority or rights of
any person, firm or company executing or delivering or purporting to
execute or deliver this Agreement or any Document or any funds deposited
hereunder or any endorsement thereon or assignment thereof; (vii) shall
not be under any duty to give the property held by Escrow Agent hereunder
any greater degree of care than Escrow Agent gives its own similar
property; and (viii) may consult counsel satisfactory to Escrow Agent
(including, without limitation, Loeb & Loeb, LLP or such other counsel of
Escrow Agent's choosing), the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by Escrow Agent hereunder in good faith and in
accordance with the opinion of such counsel.
(b) The Purchaser and the Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the
Escrow Agent shall not be liable for any action taken by Escrow Agent in
good faith and believed by Escrow Agent to be authorized or within the
rights or powers conferred upon Escrow Agent by this Agreement. The
Purchaser and the Company hereby, jointly and severally, indemnify and
hold harmless the Escrow Agent and any of Escrow Agent's partners,
employees, agents and representatives from and against any and all
actions taken or omitted to be taken by Escrow Agent or any of them
hereunder and any and all claims, losses, liabilities, costs, damages and
expenses suffered and/or incurred by the Escrow Agent arising in any
manner whatsoever out of the transactions contemplated by this Agreement
and/or any transaction related in any way hereto, including the fees of
outside counsel and other costs and expenses of defending itself against
any claims, losses, liabilities, costs, damages and expenses arising in
any manner whatsoever out the transactions contemplated by this Agreement
and/or any transaction related in any way hereto, except for such claims,
losses, liabilities, costs, damages and expenses incurred by reason of
the Escrow Agent's gross negligence or willful misconduct. The Escrow
Agent shall owe a duty only to the Purchaser and Company under this
Agreement and to no other person.
(c) The Purchaser and the Company shall jointly and severally
reimburse the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees (which counsel may be Loeb & Loeb LLP or such
other counsel of the Escrow Agent's choosing) incurred in connection with
the performance of its duties and responsibilities hereunder, which shall
not (subject to Section 4.1(b)) exceed $2,000.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) business days prior written notice of
resignation to the Purchaser and the Company. Prior to the effective
date of resignation as specified in such notice, the Purchaser and
Company will issue to the Escrow Agent a Joint Instruction authorizing
delivery of the Documents and the Escrowed Payment to a substitute Escrow
Agent selected by the Purchaser and the Company. If no successor Escrow
Agent is named by the Purchaser and the Company, the Escrow Agent may
apply to a court of competent jurisdiction in the State of New York for
appointment of a successor Escrow Agent, and deposit the Documents and
the Escrowed Payment with the clerk of any such
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court and/or otherwise commence an interpleader or similar action for a
determination of where to deposit the same.
(e) The Escrow Agent does not have and will not have any
interest in the Documents and the Escrowed Payment, but is serving only
as escrow agent, having only possession thereof.
(f) The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and reasonably believed by it to be
authorized hereby or within the rights or powers conferred upon it
hereunder, nor for action taken or omitted by it in good faith, and in
accordance with advice of counsel (which counsel may be Loeb & Loeb, LLP
or such other counsel of the Escrow Agent's choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or
omissions of any kind except to the extent any such liability arose from
its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for
the Purchaser or the Company, as the case may be, in any dispute as to
the disposition of the Documents and the Escrowed Payment, in any other
dispute between the Purchaser and the Company, whether or not the Escrow
Agent is then holding the Documents and/or the Escrowed Payment and
continues to act as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2. DISPUTE RESOLUTION; JUDGMENTS. Resolution of disputes arising
under this Agreement shall be subject to the following terms and
conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Documents and/or the
Escrowed Payment, or if the Escrow Agent shall in good faith be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be
authorized, without liability to anyone, to (i) refrain from taking any
action other than to continue to hold the Documents and the Escrowed
Payment pending receipt of a Joint Instruction from the Purchaser and
Company, (ii) commence an interpleader or similar action, suit or
proceeding for the resolution of any such dispute; and/or (iii) deposit
the Documents and the Escrowed Payment with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent
shall give written notice thereof to the Purchaser and the Company and
shall thereupon be relieved and discharged from all further obligations
pursuant to this Agreement. The Escrow Agent may, but shall be under no
duty to, institute or defend any legal proceedings which relate to the
Documents and the Escrowed Payment. The Escrow Agent shall have the
right to retain counsel if it becomes involved in any disagreement,
dispute or litigation on account of this Agreement or otherwise
determines
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that it is necessary to consult counsel which such counsel may be Loeb &
Loeb LLP or such other counsel of the Escrow Agent's choosing.
(b) The Escrow Agent is hereby expressly authorized to comply
with and obey any Court Order. In case the Escrow Agent obeys or
complies with a Court Order, the Escrow Agent shall not be liable to the
Purchaser and Company or to any other person, firm, company or entity by
reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. TERMINATION. This escrow shall terminate upon disbursement of
the Escrowed Payment in accordance with the terms of this Agreement or
earlier upon the agreement in writing of the Purchaser and Company or
resignation of the Escrow Agent in accordance with the terms hereof.
5.2. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given one (1) day after being sent by
telecopy (with copy delivered by overnight courier, regular or certified
mail):
If to the Company, to:
Host America Corporation
0 Xxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxxxx and Sable LLC
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
With a copy to:
(b) If to the Purchaser, to:
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LAURUS MASTER FUND, LTD.
c/o Ironshore Corporate Services Ltd.
X.X. Xxx 0000 G.T., Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
Attention: Xxxx Xxxxxx, Esq.
(c) If to the Escrow Agent, to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as any of them shall give to the others by
notice made pursuant to this Section 5.2.
5.3. INTEREST. The Escrowed Payment shall not be held in an
interest bearing account nor will interest be payable in connection
therewith.
5.4. ASSIGNMENT; BINDING AGREEMENT. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without
the prior written consent of the other parties hereto. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective legal representatives, successors and assigns.
5.5. INVALIDITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal, or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
5.6. COUNTERPARTS/EXECUTION. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
agreement. This Agreement may be executed by facsimile transmission.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
COMPANY:
HOST AMERICA CORPORATION
By: /s/ Xxxxx Xxxxxx
---------------------------
Name: Xxxxx Xxxxxx
-------------------------
Title: CFO
------------------------
PURCHASER:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
---------------------------
Name: Xxxxx Grin
-------------------------
Title: Managing Partner
------------------------
ESCROW AGENT:
LOEB & LOEB LLP
By:
---------------------------
Name:
Title:
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
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PURCHASER PRINCIPAL NOTE AMOUNT
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LAURUS MASTER FUND, LTD., Term Note A in an aggregate
c/o Ironshore Corporate Services Ltd., principal amount of $4,000,000
X.X. Xxx 0000 G.T., Queensgate House,
South Church Street,
Grand Cayman, Cayman Islands [Term Note B in an aggregate
Fax: 000-000-0000 principal amount of $4,000,000
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TOTAL $8,000,000
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FUND MANAGER CLOSING PAYMENT
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LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in
000 Xxxxx Xxxxxx, 00xx Xxxxx connection with investment by
Xxx Xxxx, Xxx Xxxx 00000 Laurus Master Fund, Ltd. for
Fax: 000-000-0000 which Laurus Capital Management,
L.L.C. is the Manager.
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TOTAL $280,000
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WARRANTS
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WARRANT RECIPIENT WARRANTS IN CONNECTION WITH
OFFERING
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LAURUS MASTER FUND, LTD. Term Note Warrant exercisable
A Cayman Island corporation into 450,000 shares of common
c/o Ironshore Corporate Services Ltd. stock of the Company issuable
X.X. Xxx 0000 G.T. in connection with the Term
Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx Note.
Grand Cayman, Cayman Islands
Fax: 000-000-0000
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TOTAL WARRANTS EXERCISABLE INTO
450,000 SHARES OF COMMON
STOCK OF THE COMPANY
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