ESCROW AGREEMENT
THIS AGREEMENT is made as of September 26, 2000 by and among Creative Host
Services, Inc., with its principal office at 6335 Ferris Square, Suite G, San
Diego, CA 92126 (hereinafter the "Company"), GCA Strategic Investment Fund
Limited, with its principal office at Mechanics Building, 12 Church St.,
Hamilton, Bermuda (hereinafter the "Purchaser"), and The Law Offices of Kim T.
Stephens, 220 College Ave., Suite 319, Athens , Georgia (hereinafter the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Purchaser will be purchasing Warrants and Convertible
Debentures (the "Securities") from the Company at a purchase price ("Purchase
Price") as set forth in the Securities Purchase Agreement (the "Securities
Purchase Agreement") signed by the Company and the Purchaser; and
WHEREAS, it is intended that the purchase of Securities be consummated in
accordance with the requirements set forth by Regulation D, promulgated under
the Securities Act of 1933, as amended;
WHEREAS, the Company has requested that the Escrow Agent hold the funds of
the Purchaser representing the Purchase Price in escrow until the Escrow Agent
has received the Securities or had the opportunity to speak with the Company to
confirm their issuance. The Escrow Agent will then immediately wire transfer or
otherwise deliver at the Company's direction immediately available funds to the
Company or the Company's account and arrange for delivery of the Securities to
the Purchaser per the Purchaser's written instructions; and
WHEREAS, the Company has requested the Escrow Agent to hold in escrow the
Security Agreement (as defined in the Securities Purchase Agreement) for a
period of 30 days following the Closing Date and release the Security Agreement
to Purchaser following such thirty-day period.
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE1.
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TERMS OF THE ESCROW
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1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
the Securities.
1.2. Upon the Escrow Agent's receipt of funds into his attorney trustee
account, he shall notify the Company, or the Company's designated attorney or
agent, of the amount of funds he has received into his account.
1.3. The Company, upon receipt of said notice and acceptance of the
Purchaser's Securities Purchase Agreement, as evidenced by the Company's
execution thereof, shall deliver to the Escrow Agent the Securities being
purchased and the Transaction Agreements, including the Security Agreement.
1.4. Once the Escrow Agent confirms the validity of the issuance of the
Securities, he shall immediately wire to the Company that amount of funds
necessary to purchase the Securities, per the written instructions of the
Company. Contemporaneously therewith, the Escrow Agent shall arrange to have the
Securities delivered as per instructions from the Purchaser.
1.5. If, for any reason, these transactions contemplated by the
Securities Purchase Agreement are not consummated within five (5) days of the
date hereof, the Escrow Agent will promptly return any funds received by it from
the Purchaser to the Purchaser, without any further instructions from either the
Company or Purchaser.
1.6. This Agreement may be altered or amended only with the consent of
all of the parties hereto. Should the Company attempt to change this Agreement
in a manner which, in the Escrow Agent's discretion, shall be undesirable, the
Escrow Agent may resign as Escrow Agent by notifying the Company and the
Purchasers in writing. In the case of the Escrow Agent's resignation or removal
pursuant to the foregoing, his only duty, until receipt of notice from the
Company and the Purchasers or their agents that a successor escrow agent shall
have been appointed, shall be to hold and preserve the Securities and/or funds.
Upon receipt by the Escrow Agent of said notice from the Company and the
Purchasers of the appointment of a successor escrow agent, the name of a
successor escrow account and a direction to transfer the Securities and/or
funds, the Escrow Agent shall promptly thereafter transfer all of the Securities
and/or funds held in escrow to said successor escrow agent. Immediately after
said transfer of Securities, the Escrow Agent shall furnish the Company and the
Purchasers with proof of such transfer. The Escrow Agent is authorized to
disregard any notices, request, instructions or demands received by it from the
Company or the Purchasers after notice of resignation or removal shall have been
given, unless the same shall be the aforementioned notice from the Company and
the Purchasers to transfer the Securities and funds to a successor escrow agent
or to return same to the respective parties.
1.7. The Company shall pay the Escrow Agent a fee of $1,500.00 and
shall reimburse the Escrow Agent for any reasonable expenses incurred in
connection with his performance hereunder, including in the event there is a
conflict between the parties and the Escrow Agent shall deem it necessary to
retain counsel.
1.8. The Company shall deliver to the Escrow Agent the Security
Agreement which shall become effective 30 days following the Closing Date and
Escrow Agent shall deliver the Security Agreement to Purchaser upon the
expiration of such 30-day period without further instruction by the Company.
The Company warrants to and agrees with the Escrow Agent that:
(I) except the security interest evidenced by the Security Agreement of even
date herewith between Purchaser and the Company, there is no security interest
in the Securities or any part thereof;
(II) except for the financing statement to be filed pursuant to the Security
Agreement referenced in Section 1.8(i) above, no financing statement under the
Uniform Commercial Code is on file in any jurisdiction claiming a security
interest or in describing (whether specifically or generally) the Securities or
any part thereof; and
(III) the Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Securities or any part
thereof or to file any financing statement under the Uniform Commercial Code
with respect to the Securities or any part thereof.
1.9. The Escrow Agent has no liability hereunder to either party other
than to hold the Securities, the Transaction Agreements and the funds, and to
deliver them in accordance with the terms hereof. The Escrow Agent shall not be
liable for any action taken or omitted by him in good faith; and in no event
shall the Escrow Agent be liable or responsible except for the Escrow Agent's
own gross negligence or willful misconduct.
1.10. Each party hereto agrees to indemnify and hold harmless the
Escrow Agent from and with respect to any and all suits, claims, damages,
demands, actions, liabilities or losses arising in any way out of this
transaction including the obligation to defend any legal action brought which in
any way arises out of or is related to this Agreement.
1.11. Escrow Agent shall not be responsible for: (i) the sufficiency or
correctness as to the form, execution or the validity of this Agreement; or (ii)
the identity, authority or right of any person executing any notice or document
given to Escrow Agent.
ARTICLE2.
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MISCELLANEOUS
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2.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligation or act.
2.2. The Securities shall be delivered to the Purchaser at the address
set forth below. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
(I) To the Company:
Creative Host Services, Inc.
6335 Ferris Square
Suite G
San Diego, CA 92126
Attn: Sayed Ali
Telephone:
Facsimile:
(II) To the Purchaser:
GCA Strategic Investment Fund Limited
c/o Prime Management Limited
Mechanics Building
12 Church Street
Hamilton, Bermuda, HM11
Attn: Joe Kelly
Telephone: (441) 295-0329
Facsimile : (441) 295-3296
(III) To the Escrow Agent:
The Law Offices of Kim T. Stephens
220 College Ave., Suite 319
Athens, Georgia 30601
Attention: Kim T. Stephens, Esq.
Telephone: (706) 548-3933
Facsimile: (706) 548-6229
2.3. This Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and assigns of the parties hereto.
2.4. This Agreement is the final expression of, and contains the entire
Agreement between, the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect thereto. This Agreement may
not be modified, changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by the parties to be
charged or by its agent duly authorized in writing or as otherwise expressly
permitted herein.
2.5. Whenever required by the context of this Agreement, the singular
shall include the plural and masculine shall include the feminine. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Agreement.
2.6. The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of
Georgia. Any action to enforce, existing out of, or relating in any way to, any
provisions of this Agreement shall be brought through the American Arbitration
Association at the designated locale of Atlanta, Georgia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
September___, 2000.
CREATIVE HOST SERVICES, INC.
By: /s/
Name:
Title:
GCA STRATEGIC INVESTMENT FUND LIMITED.
By: /s/
Name: Lewis N. Lester, Director
THE LAW OFFICES OF KIM T. STEPHENS
By: /s/
Name: Kim T. Stephens, Esq.