Exhibit 4.5
FUNDS ESCROW AGREEMENT
This Agreement (this "AGREEMENT") is dated as of the 31 day of August 2006 among
TRINITY LEARNING CORPORATION, a Utah corporation (the "COMPANY"), Laurus Master
Fund, Ltd. ("LAURUS"), and Loeb & Loeb LLP (the "ESCROW AGENT"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Laurus has advised the Escrow Agent that (a) the Company and Laurus
have entered into a Security Agreement (the "SECURITY AGREEMENT") for the sale
by the Company to Laurus of a secured term note (the "SECURED TERM NOTE") and a
secured revolving note (the "SECURED REVOLVING NOTE"), (b) the Company has
issued to Laurus 7% convertible preferred stock of the Company (the "7%
PREFERRED STOCK") in connection with the issuance of the Secured Term Note and
the Secured Revolving Note, and (c) the Company and Laurus have entered into a
Registration Rights Agreement covering the registration of the Company's common
stock underlying the 7% Preferred Stock (the "REGISTRATION RIGHTS AGREEMENT");
WHEREAS, the Company and Laurus wish to deliver to the Escrow Agent copies of
the Documents (as hereafter defined) and, following the satisfaction of all
closing conditions relating to the Documents, Laurus to deliver the Escrowed
Payment (as hereafter defined), in each case, 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
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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) "DISBURSEMENT LETTER" means that certain letter delivered to the Escrow
Agent by the Company, acceptable in form and substance to Laurus, setting forth
wire instructions and amounts to be funded at the Closing.
(c) "DOCUMENTS" means copies of the Disbursement Letter, the Security
Agreement, the Secured Term Note, the Secured Revolving Note, the 7% Preferred
Stock and the Registration Rights Agreement.
(d) "ESCROWED PAYMENT" means $[7,500,000].
(e) "LCM PAYMENT" means the payment to be paid to Laurus Capital Management,
LLC, the fund manager, as set forth on Schedule A hereto.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
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among the parties hereto with respect to the arrangement with the Escrow Agent
and supersedes all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written with respect to the
arrangement with the Escrow Agent. There are no warranties, representations and
other agreements made by the parties in connection with the arrangement with the
Escrow Agent except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
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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,
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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,
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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
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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 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
Laurus, 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
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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 Laurus hereby irrevocably designate and
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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,
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Laurus and the Company shall deliver to the Escrow Agent copies of the Documents
executed by such parties.
2.3. Delivery of Escrowed Payment to Escrow Agent. Following the
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satisfaction of all closing conditions relating to the Documents (other than the
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funding of the Escrowed Payment), Laurus shall deliver to the Escrow Agent the
Escrowed Payment. At such time, the Escrow Agent shall hold the Escrowed
Payment as agent for the Company, subject to the terms and conditions of this
Agreement.
2.4. Intention to Create Escrow Over the Escrowed Payment. Laurus and the
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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
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Escrow Agent shall release the Escrowed Payment from escrow as follows:
(a) Upon receipt by the Escrow Agent of (i) oral instructions from Xxxxx
Grin and/or Xxxxxx Grin (each of whom is a director of Laurus) consenting to the
release of the Escrowed Payment from escrow in accordance with the Disbursement
Letter following the Escrow Agent's receipt of the Escrowed Payment, (ii) the
Disbursement Letter signed by the Company, and (iii) the Escrowed Payment in
immediately available funds, the Escrowed Payment shall promptly be disbursed in
accordance with the Disbursement Letter. The Disbursement Letter 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 LCM
Payment for delivery to Laurus Capital Management, LLC in accordance with the
Disbursement Letter.
(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 the Company andLaurus; Disputes. The Company and
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Laurus 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 Laurus 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 Laurus.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
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duties and responsibilities shall be subject to the following terms and
conditions:
(a) Laurus and the Company acknowledge and agree that the Escrow Agent (i)
shall not be required to inquire into whether Laurus, 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 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) Laurus 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. Laurus 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 Laurus and the Company under this Agreement and to no
other person.
(c) Laurus 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 Laurus and
the Company. Prior to the effective date of resignation as specified in such
notice, Laurus 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 Laurus and the Company. If no successor Escrow Agent
is named by Laurus 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 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 Laurus 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 Laurus 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
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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
Laurus and the 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 Laurus 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 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 Laurus and the 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
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Escrowed Payment in accordance with the terms of this Agreement or earlier upon
the agreement in writing of Laurus and the Company or resignation of the Escrow
Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
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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):
(a) If to the Company, to:
TRINITY LEARNING CORPORATION
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
With a copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
(b) If to Laurus, to: Laurus Master Fund, Ltd.
M&C Corporate Services Limited,
X.X. Xxx 000 XX, Xxxxxx House
South Church Street, Xxxxxx Town
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
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bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or
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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
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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
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
COMPANY:
TRINITY LEARNING CORPORATION
By:
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
PURCHASER:
LAURUS MASTER FUND, LTD.
By:
Name:
Title:
ESCROW AGENT:
LOEB & LOEB LLP
By:
Name:
Title:
SCHEDULE A TO FUNDS ESCROW AGREEMENT
PURCHASER PRINCIPAL NOTE AMOUNT
LAURUS MASTER FUND, LTD., Secured Term Note in an aggregate
M&C Corporate Services Limited, principal amount of $2,500,000;
X.X. Xxx 000 GT, and Secured Revolving Note
Xxxxxx House, South Church Street, in an aggregate principal
Xxxxxx Town, Grand Cayman, Cayman Islands amount of $5,000,000.
Fax: 000-000-0000
TOTAL $7,500,000
FUND MANAGER
LCM PAYMENT
LAURUS CAPITAL MANAGEMENT, L.L.C. Payment payable in connection
000 Xxxxx Xxxxxx, 00xx Xxxxx with investment by Laurus
Xxx Xxxx, Xxx Xxxx 00000 Master Fund, Ltd. for
Fax: 000-000-0000 which Laurus Capital
Management, L.L.C.
is the Manager.
TOTAL $270,000
7% PREFERRED STOCK
7% PREFERRED STOCK RECIPIENT
7% PREFERRED STOCK IN
CONNECTION WITH OFFERING
LAURUS MASTER FUND, LTD. 1,500,000 shares of 7%
M&C Corporate Services Limited, Preferred Stock convertible
X.X. Xxx 000 GT, into 15,000,000 shares
Xxxxxx Xxxxx, Xxxxx Xxxxxx Xxxxxx, of common stock of
Xxxxxx Town, Grand Cayman, Cayman Islands the Company.
Fax: 000-000-0000
TOTAL 1,500,000 shares of 7% Preferred
Stock convertible into 15,000,000
shares of common stock of the
Company