RESTRICTED ACCOUNT AGREEMENT

 

EXHIBIT 10.70

 

                      RESTRICTED ACCOUNT AGREEMENT

                      ----------------------------

 

     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 275 Broadhollow Road, Melville, New

York 11747 (together with its successors and assigns, the "Bank"), HOST

AMERICA CORPORATION, a Colorado corporation with offices at 2 Broadway,

Hamden, CT 06518  (together with its successors and assigns, the

"Company"), and LAURUS MASTER FUND, LTD., a Cayman Islands corporation

with offices at 825 Third Avenue, 14th Floor, New York, New York 10022

(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

 

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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.