EXHIBIT 10.3
LAURUS MASTER FUND, LTD.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 31, 2004
Trinity Learning Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxx
Re: Restricted Account: Account Number 2704051990, Account Name: Trinity
Learning Corporation, maintained at North Fork Bank (the "Restricted
Account").
Reference is made to (i) that certain Securities Purchase Agreement, dated
as of August 31, 2004 (as amended, modified or supplemented from time to time,
the "Purchase Agreement"), by and between Trinity Learning Corporation, a Utah
corporation (the "Company"), and Laurus Master Fund, Ltd. (the "Purchaser") and
(ii) that certain Restricted Account Agreement, dated as of August 31, 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 $4,491,000 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 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 the Amortizing Principal Amount
(as defined in the Note) 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 Note) or such other Principal Amounts into Common
Stock of the Company (such event, a "Conversion"), the Purchaser shall 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 aggregate Principal Amount of the 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.
Additionally, the Company may request that the Purchaser direct the
Bank to release all or any portion of the amounts contained in the Restricted
Account following (or in connection with) the consummation of an acquisition by
the Company or any of its Subsidiaries. Such a release referred to in the
immediately preceding sentence shall be subject (in all respects) to 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. Prior to any such acquisition
referred to in this paragraph, the Purchaser shall comply with Section 6.12(f)
of the Purchase Agreement in all respects.
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:_________________________
Name:
Title:
Agreed and Accepted this 31st day of August, 2004.
Trinity Learning Corporation
By:________________________
Name:
Title:
