ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of March 31,
2006, by and among Trinity Learning Corporation, a Delaware corporation
(the "Company"), the purchasers signatory hereto (each a "Purchaser" and
together the "Purchasers"), and Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, with
an address at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Escrow Agent"). CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE
THE MEANINGS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT REFERRED TO IN
THE FIRST RECITAL.
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing from the Company,
severally and not jointly with the other Purchasers, in the aggregate, up
to $8.5 million of Debentures and Warrants on the Closing Date as set forth
in the Securities Purchase Agreement (the "Purchase Agreement") dated the
date hereof between the Purchasers and the Company, which securities will
be issued under the terms contained herein and in the Purchase Agreement;
and
WHEREAS, it is intended that the purchase of the securities be
consummated in accordance with the requirements set forth in Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Purchasers have requested that the
Escrow Agent hold the Subscription Amounts in escrow upon the terms set
forth herein;
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:
ARTICLE 1
TERMS OF THE ESCROW
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 up to $8,500,000.00 in the aggregate, of the Debentures and the
Warrants as contemplated by the Purchase Agreement.
1.2. Upon the Escrow Agent's receipt of the aggregate
Subscription Amounts for the Closing into its master escrow account,
together with executed counterparts of this Agreement, the Purchase
Agreement and the Registration Rights Agreement, it shall telephonically
advise the Company, or the Company's designated attorney or agent, of the
amount of funds it has received into its master escrow account.
1.3. Wire transfers to the Escrow Agent shall be made as follows:
HSBC Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
A/C of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, XXXX
A/C# 629034125
ABA# 000000000
REMARK: TTYL/[FUND NAME]
1.4 The Company, promptly following being advised by the Escrow
Agent that the Escrow Agent has received the Subscription Amounts for the
Closing along with facsimile copies of counterpart signature pages of the
Purchase Agreement, Registration Rights Agreement and this Agreement from
each Purchaser, shall deliver to the Escrow Agent for the Closing the
Debentures and Warrant to be issued to each Purchaser at the Closing
together with:
(a) the Company's executed counterpart of the Purchase
Agreement;
(b) the Company's executed counterpart of the Registration
Rights Agreement;
(c) the executed opinion of Company Counsel, in the form of
Exhibit D to the Purchase Agreement;
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(d) warrants registered in the name of HPC Capital
Management (the "HPC Warrant"), in the form of the Warrants, to
purchase up to 50,000 shares of Common Stock per $1,000,000
raised;
(e) the Company's original executed counterpart of this
Escrow Agreement; and
(f) the deliverables as per the Purchase Agreement.
1.5 In the event that the foregoing items are not in the Escrow
Agent's possession within five (5) Business Days of the Escrow Agent
notifying the Company that the Escrow Agent has custody of the Subscription
Amount for the Closing, then each Purchaser shall have the right to demand
the return of their portion of the Subscription Amount.
1.6 Once the Escrow Agent receives a Release Notice, in the form
attached hereto as Exhibit X, (the "Release Notice") executed by the
Company and each Purchaser, it shall wire on the Closing Date 91% of the
$4,500,000 of the aggregate Subscription Amounts for the Debentures and the
Warrants per the wire instructions of the Company, net of $52,000.00 to
cover legal and escrow agent fees, and $25,000.00 to cover due diligence
fees and once the Escrow Agent receives a Release Notice executed by the
Company and each Purchaser, it shall wire on the subsequent Closing Date
90% of the remaining funds for the aggregate Subscription Amounts for the
Debentures and the Warrants per the wire instructions of the Company. For
each disbursement at the Closing and Second Closing, the remaining 9% of
the funds will be disbursed per the written instruction of HPC Capital
Management as its fee in connection with the transaction described herein
1.7 Wire transfers to the Company shall be made pursuant to
written instructions from the Company provided to the Escrow Agent on the
Closing Date and subsequent Closing Date.
1.8 Upon receipt by the Escrow Agent of the first Release
Notice, the Escrow Agent shall deliver the Purchase Agreement, the
Warrants, the Debentures, the Registration Rights Agreement, the Escrow
Agreement, and the opinion of counsel to the appropriate parties. Upon
receipt by the Escrow Agent of the Release Notice for the subsequent
Closing, the Escrow Agent shall deliver the Warrants and the Debentures to
the appropriate parties.
ARTICLE II
MISCELLANEOUS
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
an extension of the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent as set forth in the
Purchase Agreement.
2.3 This Escrow Agreement shall be binding upon and shall
inure to the benefit of the permitted successors and permitted assigns of
the parties hereto.
2.4 This Escrow 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 Escrow 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 Escrow Agreement,
the singular shall include the plural and masculine shall include the
feminine. This Escrow Agreement shall not be construed as if it had been
prepared by one of the parties, but rather as if all parties had prepared
the same. Unless otherwise indicated, all references to Articles are to
this Escrow Agreement.
2.6 The parties hereto expressly agree that this Escrow
Agreement shall be governed by, interpreted under and construed and
enforced in accordance with the laws of the State of New York. Any action
to enforce, arising out of, or relating in any way to, any provisions of
this Escrow Agreement shall only be brought in a state or Federal court
sitting in New York City.
2.7 The Escrow Agent's duties hereunder may be altered,
amended, modified or revoked only by a writing signed by the Company, each
Purchaser and the Escrow Agent.
2.8 The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may
rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed by the Escrow Agent to be genuine and to
have been signed or presented by the proper party or parties. The Escrow
Agent shall not be personally liable for any act the Escrow Agent may do or
omit to do hereunder as the Escrow Agent while acting in good faith and in
the absence of gross negligence, fraud and willful misconduct, and any act
done or omitted by the Escrow Agent pursuant to the advice of the Escrow
Agent's attorneys-at-law shall be conclusive evidence of such good faith,
in the absence of gross negligence, fraud and willful misconduct.
2.9 The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or corporation, excepting only orders or process of courts of
law and is hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court. In case the Escrow Agent obeys or
complies with any such order, judgment or decree, the Escrow Agent shall
not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without
jurisdiction.
2.10 The Escrow Agent shall not be liable in any respect on
account of the identity, authorization or rights of the parties executing
or delivering or purporting to execute or deliver the Purchase Agreement or
any documents or papers deposited or called for thereunder in the absence
of gross negligence, fraud and willful misconduct.
2.11 The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly
to advise the Escrow Agent in connection with the Escrow Agent's duties
hereunder, may rely upon the advice of such counsel, and may pay such
counsel reasonable compensation; provided that the costs of such
compensation shall be borne by the Escrow Agent.
2.12 The Escrow Agent's responsibilities as escrow agent
hereunder shall terminate if the Escrow Agent shall resign by giving
written notice to the Company and the Purchasers. In the event of any such
resignation, the Purchasers and the Company shall appoint a successor
Escrow Agent and the Escrow Agent shall deliver to such successor Escrow
Agent any escrow funds and other documents held by the Escrow Agent.
2.13 If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in
respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
2.14 It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
documents or the escrow funds held by the Escrow Agent hereunder, the
Escrow Agent is authorized and directed in the Escrow Agent's sole
discretion (1) to retain in the Escrow Agent's possession without liability
to anyone all or any part of said documents or the escrow funds until such
disputes shall have been settled either by mutual written agreement of the
parties concerned by a final order, decree or judgment or a court of
competent jurisdiction after the time for appeal has expired and no appeal
has been perfected, but the Escrow Agent shall be under no duty whatsoever
to institute or defend any such proceedings or (2) to deliver the escrow
funds and any other property and documents held by the Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the City of New York in accordance with the
applicable procedure therefore.
2.15 The Company and each Purchaser agree jointly and severally
to indemnify and hold harmless the Escrow Agent and its partners,
employees, agents and representatives from any and all claims, liabilities,
costs or expenses in any way arising from or relating to the duties or
performance of the Escrow Agent hereunder or the transactions contemplated
hereby or by the Purchase Agreement other than any such claim, liability,
cost or expense to the extent the same shall have been determined by final,
unappealable judgment of a court of competent jurisdiction to have resulted
from the gross negligence, fraud or willful misconduct of the Escrow Agent.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of date first written above.
TRINITY LEARNING CORPORATION
By:__________________________________________
Name:
Title:
With a copy to (which shall not constitute notice):
ESCROW AGENT:
SICHENZIA XXXX XXXXXXXX XXXXXXX LLP
By:__________________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
[SIGNATURE PAGE OF PURCHASERS TO TTYL ESCROW]
Name of Purchaser: __________________________
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
Exhibit X to
Escrow Agreement
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of
March 31, 2006, among Trinity Learning Corporation, the Purchasers
signatory thereto and Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, as Escrow Agent
(the "Escrow Agreement"; capitalized terms used herein and not defined
shall have the meaning ascribed to such terms in the Escrow Agreement),
hereby notify the Escrow Agent that each of the conditions precedent to the
purchase and sale of the Securities set forth in the Securities Purchase
Agreement have been satisfied. The Company and the undersigned Purchaser
hereby confirm that all of their respective representations and warranties
contained in the Purchase Agreement remain true and correct and authorize
the release by the Escrow Agent of the funds and documents to be released
at the Closing as described in the Escrow Agreement. This Release Notice
shall not be effective until executed by the Company and the Purchaser.
This Release Notice may be signed in one or more counterparts,
each of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release
Notice to be duly executed and delivered as of this 31st day of March 2006.
TRINITY LEARNING CORPORATION
By:__________________________________________
Name:
Title:
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
[SIGNATURE PAGE OF PURCHASERS TO TTYL RELEASE]
Name of Purchaser: __________________________
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
