Exhibit 10.2
[GRAPHIC OMITTED: SBI USA LOGO]
April 1, 2005
Trinity Learning Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Chief Executive Officer
Gentlemen:
This will confirm the understanding and agreement (the "Agreement") between
SBI USA LLC, a California limited liability company with executive offices
located at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
("SBI"), and Trinity Learning Corp., 0000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
00000 (together with its successors, subsidiaries, or assigns, the "Company") as
set forth below. All capitalized terms used, but not otherwise defined, herein,
shall have the respective definitions assigned thereto in the guarantee attached
hereto as Annex A (the "Guarantee").
1. SBI shall issue to the Sellers the Guarantee upon the performance by the
Company of the obligations thereof set forth herein.
2. The common stock of the Company (the "Common Stock") has been registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Company is subject to the periodic reporting
requirements of Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has heretofore provided to SBI all forms,
reports, schedules, statements, and other documents required to be filed by the
Company with the Securities Exchange Commission (the "SEC") under the Exchange
Act, as such documents have been amended through the date hereof (the "SEC
Documents"). The SEC Documents, including, without limitation, any financial
statements and schedules included therein, at the time filed or, if subsequently
amended, as so amended, (i) did not contain any untrue statement of a material
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fact required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) complied in all respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder. The financial statements included in the SEC Documents complied when
filed as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles in the United States, applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited financial statements, as permitted by the rules and
regulations of the SEC) and fairly present, subject in the case of the unaudited
financial statements, to customary year end audit adjustments, the financial
position of the Company and the Subsidiaries as at the dates thereof and the
results of its operations and cash flows. The Company is in compliance with all
requirements of the Exchange Act.
3. SBI shall be compensated for rendering the Guarantee as follows:
(a) The Company shall issue to SBI 4,000,000 shares (the "Shares") of
Common Stock, which shares shall be duly and validly authorized and
issued, fully paid, and non-assessable, and has not been, and will not
be, issued and is not owned or held in violation of any preemptive or
similar right of stockholders. Until the date three years following
the date hereof, the holders of the Shares shall be entitled to
unlimited piggy-back registrations under the Securities Act of the
resale of the Shares.
(b) SBI shall be entitled upon request to reimbursement for the expenses
incurred by it in connection herewith.
4. In addition to the fees set forth in Paragraph 4 hereof, the Company
shall pay all of the costs and expenses thereof and of SBI, including the fees
and disbursements of counsel to SBI, incident to matters described herein.
5. The financial condition and prospects of the Company shall be reasonably
satisfactory to SBI.
6. (a) The obligation of SBI to provide the Guarantee is subject to the
conditions set forth therein.
(b) This Agreement is conditioned upon the retention by the Company of
RLA Advisors in connection with the disposition of the property which is the
subject of the Building Lease (as defined in the Guarantee).
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(c) Upon the execution hereof, the Company shall repay all outstanding
obligations owned to Hong Kong-based credit unions.
(d) In the event that SBI or any affiliate thereof shall be required
to pay any amount under the Guarantee at any time, the Company shall immediately
repay such amounts to SBI or such affiliates thereof. In the event that the
Company shall not repay such amounts immediately, SBI or such affiliates thereof
shall be entitled to take all actions which it deems reasonably necessary in
order to cause the Company to repay such amounts, including, without limitation,
requiring the Company to issue common stock or other securities thereto,
requiring the Company to dispose of, or borrow against, assets thereof, and
cause the Company to pledge to SBI or such affiliate such number of shares of
common stock of the Company or other securities thereof as shall be required by
SBI or such affiliate to secure the obligation of the Company to repay such
amounts paid by SBI or such affiliates under the Guarantee.
(e) Upon the execution hereof, SBI shall be entitled to designate an
observer to the Board of Directors of the Company (the "Board"), which observer
shall be entitled to receive notice of all meetings of the Board and all
committees thereof when delivered by the Company to the directors or members (as
applicable), and to attend all meetings of the Board and such committees. The
Company compensate such observer monthly at the rate of $15,000 per month until
the earlier of the release of SBI from all liability under the Guarantee and the
repayment by the Company of all amounts pursuant to paragraph 6(d) hereof, and
shall reimburse such observer for all reasonable expenses incurred in attending
such meetings in person. Such observer shall be entitled to indemnified to the
greatest extent permitted by the applicable law of the state of incorporation of
the Company, but in circumstances to no extent less than that permitted by the
state of incorporation of the Company on the date hereof.
7. The Company agrees to indemnify and hold harmless SBI and its
affiliates, its directors, officers, agents, and employees and affiliates, and
each other person, if any, controlling SBI or any of its affiliates
(collectively the "Indemnified Persons"), from and against any losses, claims,
damages, liabilities or expenses (or actions, including shareholder actions, in
respect thereof) related to or arising out of such engagement or SBI's role in
connection therewith, and will reimburse the Indemnified Persons for all
reasonable expenses (including all amounts paid under the Guarantee,
out-of-pocket expenses, and SBI's counsel fees and expenses) as they are
incurred by the Indemnified Persons or in connection with investigating,
preparing or defending any such action or claim, whether or not in connection
with pending or threatened litigation in which SBI or any Indemnified Person is
a party.
8. (a) This Agreement shall be construed in accordance with the laws of the
State of California applicable to contracts made and performed within such
State, without regard to principles of conflicts of law.
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(b) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND OF
THE FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA IN ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH OF THE PARTIES
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT MUST BE LITIGATED EXCLUSIVELY IN ANY SUCH STATE OR, TO THE EXTENT
PERMITTED BY LAW, FEDERAL COURT THAT SITS IN THE COUNTY OF LOS ANGELES OR
ORANGE, AND ACCORDINGLY, EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT. EACH PARTY FURTHER IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN THIS AGREEMENT. NOTHING IN THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY
TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES (1) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8(c).
9. The benefits of this Agreement shall inure to the respective successors
and assigns of the parties hereto and of the indemnified parties hereunder and
their successors and assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the parties hereto shall be binding
upon their respective successors and assigns.
10. For the convenience of the parties hereto, any number of counterparts
of this Agreement may be executed by the parties hereto. Each such counterpart
shall be, and shall be deemed to be, an original instrument, but all such
counterparts taken together shall constitute one and the same Agreement. This
Agreement may not be modified or amended except in writing signed by the parties
hereto.
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11. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested or by the most nearly comparable method if mailed from or to a
location outside of the United States or by Federal Express, Express Mail, or
similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to which it is to be given at the address of such party set forth in the
introduction to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 11) Any
notice to the Company shall be addressed to the attention of the Corporate
Secretary. A copy of any and all notices to SBI shall be delivered in accordance
with this section to Reitler Brown LLC, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx
00000, Attention: Xxxxxx Xxxxxx Xxxxx, Esq. Any notice or other communication
given by certified mail (or by such comparable method) shall be deemed given at
the time of certification thereof (or comparable act), except for a notice
changing a party's address which will be deemed given at the time of receipt
thereof. Any notice given by other means permitted by this Section 11 shall be
deemed given at the time of receipt thereof.
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If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us.
Very truly yours,
SBI USA LLC
/s/ Xxxxxx Xxxxxxx
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BY: Xxxxxx Xxxxxxx
ITS: President and Chief Executive Officer
ACCEPTED AND AGREED TO
this 1ST day of APRIL, 2005
TRINITY LEARNING CORP.
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
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ANNEX A
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GUARANTEE
GUARANTEE, dated as of April 1, 2005 (this "Guarantee") in favor of
PRIMEDIA Inc., a Delaware corporation ("PRM") executed and delivered by SBI USA
LLC, a California limited liability company (the "Guarantor").
W I T N E S S E T H
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WHEREAS, PRIMEDIA Inc., a Delaware corporation ("PRM"), its wholly-owned
entity PRIMEDIA Digital Video Holdings LLC, a Delaware limited liability company
("PDV") and PRIMEDIA Workplace Learning LP, a Delaware limited partnership
("PWPL"), ("PWPL"; collectively with PRM and PDV, "Seller", on the one hand and
Trinity Learning Corporation, a Utah corporation ("Purchaser") on the other
hand, have entered into an Asset Purchase Agreement, dated as of April 1, 2005
(the "Purchase Agreement"), pursuant to which the Seller is selling and the
Purchaser is purchasing certain of the assets of the Business;
WHEREAS, pursuant to the Purchaser Agreement the Purchaser is assuming all
liabilities after the closing date of the transactions contemplated by the
Purchase Agreement (the "Closing Date") for that certain Lease Agreement dated
July 21, 1997 between TIG Development Property Account I, Inc. and Xxxxxxxx
Communications, Inc. (the "Building Lease") and for that certain Galaxy XI
Transponder Lease Agreement dated as of June 12, 2000 (the "Transponder Lease"
and together with the "Building Lease", the "Leases");
WHEREAS, Seller or an affiliate of Seller may have secondary liability
under the Leases following the Closing Date; and
WHEREAS, a condition of Seller's consummation of the Purchase Agreement is
that the Guarantor shall have executed this Guarantee in favor of Seller;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Except as otherwise defined herein, all capitalized terms
used, but not otherwise defined, herein shall have the respective definitions
assigned thereto in the Purchase Agreement.
2. Guarantee of Obligations by Guarantors. The Guarantors hereby
irrevocably, absolutely and unconditionally guarantee, as a surety, to the
Seller the due and punctual payment by the Purchaser of any and all amounts
(without duplication) that are or may become due and payable by the Seller with
respect to the Leases arising on or after the Closing Date and relating to any
date commencing on the Closing Date and the full and prompt performance and
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observance by the Purchaser of each and all of the covenants and agreements
required to be performed and observed by the leasees of the Leases commencing on
the Closing Date (the "Obligations").
3. Discharge. This Guarantee and all covenants and agreements of the
Guarantor contained herein shall continue in full force and effect and shall not
be discharged until the earlier of (a) such time as the Obligations shall have
been paid and performed in full and the agreement of the Guarantors hereunder
shall have been duly performed, and (b) the date of the release of the Seller
from all liabilities under the Leases.
Notwithstanding the foregoing, this Guarantee shall continue to be
effective, or be reinstated as the case may be, if at any time payment, or any
part thereof, of any of the Obligations, as the case may be, is rescinded or
must otherwise be restored or returned by the Seller upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Purchaser or as a
result of the appointment of a receiver, intervener or conservator of or similar
officer for the Purchaser all as though such payments had not been made.
4. Term/Guarantee Limit. This Guarantee shall be in effect for ten (10)
years from the date hereof (the "Term"). The Guarantor's total obligation under
this Guarantee shall be limited to $10 million for the first two years of this
Guarantee and shall be reduced by $1 million at the end of the second year of
this Guarantee and by an additional $1 million per year each year thereafter
(the "Guarantee Limit").
5. Financial Test. The Guarantor represents and warrants that as of the
date hereof it has immediately available no less than $20 million in cash or
readily marketable securities ("Liquid Assets") to be used for satisfaction of
the Obligations, if necessary. The Guarantor agrees that at all times during the
term of this Guarantee, it will have immediately available Liquid Assets equal
to no less than two times the Guarantee Limit (the "Financial Test"). Guarantor
shall provide the Seller with (i) annual financial statements in accordance with
generally accepted accounting principles consistently applied within 120 days
following the end of each fiscal year of the Guarantor and (ii) quarterly
financial statements certified by Guarantor's Chief Financial Officer to be
materially true and correct within 45 days of the end of each calendar quarter.
Additionally, on each date Guarantor delivers the above referenced financial
statements, Guarantor shall also provide a certificate of Guarantor's Chief
Financial Officer certifying to the amount of Liquid Assets on hand.
6. Accelerated Payment/Capital Call. In the event that: (i) the Guarantor
fails to fulfill its obligations under Section 2 hereunder; (ii) the Guarantor
fails a Financial Test; (iii) the Guarantor fails to deliver any of the
financial statements required to be delivered under Section 5 within 15 calendar
days after notice from PRM of failure; or (iv) the Guarantor sells, liquidates,
assigns or otherwise transfers substantially all of its assets, dissolves or
otherwise ceases to operate; or (v) the Guarantor makes a declaration of
bankruptcy or insolvency or assigns substantially all its assets for the benefit
of creditors, the Guarantor, upon demand by PRM, shall immediately pay over to
Seller by wire transfer of immediately available clearing house funds the amount
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of the outstanding Obligation Limit at the time of such demand (the "Accelerated
Payment"). In the event that the Guarantor has insufficient funds to make the
Accelerated Payment, the Guarantor shall promptly issue a mandatory capital call
to all of its members in an amount sufficient to raise the funds necessary to
satisfy the Accelerated Payment which shall immediately thereafter be paid to
the Seller. The Guarantor shall take all necessary steps to enforce compliance
with such capital call by its members. Upon receipt of an Accelerated Payment,
the Seller agrees to apply the full amount of such payment to satisfaction of
the Obligations. To the extent that the Seller receives any monies as an
accelerated payment hereunder and there is any portion of such monies held by
the Seller because the Obligations are not yet due or the Obligations are
current (a) the Seller shall hold such monies in an interest-bearing account and
shall pay over any interest to the Guarantor and (b) upon the annual reduction
of the Guarantee Limit under Section 4, there shall be a corresponding refund of
that portion of the accelerated payment to the Guarantor provided that the
Seller may retain an amount equal to the then-current Guarantee Limit.
7. Representations and Warranties. The Guarantor hereby represents and
warrants for the benefit of the Purchaser as follows:
(a) The Guarantor has the full power and authority to enter into this
Guarantee;
(b) This Guarantee is the legal, valid and binding obligation of such
Guarantor enforceable in accordance with its terms;
(c) The Guarantor has the legal right, power and authority under its
LLC formation documents to make a mandatory capital call on its members to
satisfy its obligations under Section 6;
(d) The Guarantor has uncalled capital in excess of $20 million; and
(e) The Guarantor is not obligated by law or contract to liquidate
prior to the end of the Term.
8. Notices. All notices and other communications under this Guarantee shall
be in writing and shall be deemed given when delivered personally, mailed by
registered mail, return receipt requested, sent by documented overnight delivery
service or, to the extent receipt is confirmed, by telecopy to the parties at
the following addresses (or to such other address as a party may have specified
by notice given to the other party pursuant to the Purchase Agreement) at the
addresses set forth for the Seller and the Purchaser in the Purchase Agreement,
and in the case of the Guarantor, c/o the Purchaser at the address set forth for
Seller in the Purchase Agreement.
9. Amendments. The Guarantor shall remain obligated hereunder
notwithstanding any grant or extension of time for payment or performance under
this Guarantee or the Leases or any amendment or modification of the same or any
term thereof; provided, however, that no amendment of the Leases or extension of
time for payment or performance under the Leases shall operate to increase the
obligations of Guarantor under this Guarantee or extend the duration of
Guarantor's obligations under this Guarantee.
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10. Waiver of Notice. The Guarantor hereby waives notice of the intention
of the Seller and the Purchaser to act in reliance hereon and notice or proof of
the Purchaser's reliance hereon. The obligations guaranteed hereunder, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guarantee and all dealings among Purchaser or the
Guarantors, on the one hand, and the Seller, on the other, with respect to the
Leases shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guarantee. The Guarantor hereby acknowledges full and
complete notice of all the terms, conditions, covenants, obligations and
agreements under this Guarantee and the Leases.
11. Waivers and Amendments. This Guarantee may not be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may not be waived, except by a written instrument signed and agreed to by the
parties hereto or, in the case of a waiver, by the party waiving compliance, and
then such amendment or waiver shall be effective only in the specific instance
and for the specific purpose for which given. 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, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies which any party may otherwise have at law or in equity.
12. Governing Law. This Guarantee shall be governed by, and construed and
enforced in accordance with the laws of the State of New York (without regard to
conflicts of law principles). The Guarantor and Seller irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States located in the Southern district of New York for purposes of
any legal actions which may result from any alleged breaches of this Agreement
and agree to bring any such actions in one of such courts.
13. Severability. If any provision of this Guarantee, or the application of
any such provision to any person or circumstances, shall be held invalid by a
court of competent jurisdiction, the remainder of this Guarantee, or the
application of such provision to persons or circumstances other than those as to
which it is held invalid, shall not be affected thereby.
14. Entire Agreement. This Guarantee supersedes any prior agreements and
understandings with respect to the subject matter hereof and is the complete
agreement of the Guarantor with respect to the subject matter hereof.
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15. Counterparts. This Guarantee may be signed in any number of
counterparts each of which shall be deemed an original, and each party thereto
may become a party hereto by executing a counterpart hereof. This Guarantee and
any counterpart so executed shall be deemed to be one and the same instrument.
The exchange (by facsimile) of facsimile copies of executed counterparts of this
Guarantee shall be deemed execution and delivery thereof, provided that receipt
of such facsimile copies is confirmed in writing. Original copies shall follow
by documented overnight delivery.
16. No Presumption. The parties acknowledge that they have been represented
by competent counsel in the preparation, review and negotiation of this
Guarantee. Accordingly, for purposes of construction, this Guarantee shall be
deemed to have been drafted by all parties, and no ambiguity shall be resolved
against any party by virtue of his, her or its participation in the drafting of
this Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered as of the date first above written.
SBI USA LLC
/s/ Xxxxxx Xxxxxxx
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BY: Xxxxxx Xxxxxxx
ITS: President and Chief Executive Officer
AGREED TO AND ACCEPTED:
PRIMEDIA INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Senior Vice President - Law
PRIMEDIA WORKPLACE LEARNING, L.P.
By: Xxxx Publishing Companies, Inc.,
Its General Partner
By: /s/ Xxxxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Senior Vice President - Law
PRIMEDIA DIGITAL VIDEO HOLDINGS LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Senior Vice President - Law
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