ESCROW AGREEMENT
This Escrow Agreement (the " Escrow Agreement") is made and entered
into as of this 1st day of September, 2003, by and among Trinity Companies,
Inc., a Utah corporation ("Trinity"), Xxxxxxx XxXxxxxxx ("XxXxxxxxx"), Xxxx
Xxxxxx ("Xxxxxx") and Heritage Bank of Commerce, a California corporation,
as escrow agent (the "Escrow Agent").
A. WHEREAS, Trinity, XxXxxxxxx and Xxxxxx have executed a Securities
Purchase Agreement dated August 12, 2003 pursuant to which Trinity has
agreed to deposit 350,000 shares of Trinity common stock in an escrow
account with the Escrow Agent pursuant to the terms of this Escrow
Agreement and the aforesaid Securities Purchase Agreement (the "Purchase
Agreement"); and
B. WHEREAS, Heritage Bank of Commerce is willing to serve as Escrow
Agent pursuant to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by each party hereto, it
is hereby agreed by and among Trinity, XxXxxxxxx, Xxxxxx and the Escrow
Agent as follows:
1. Escrow Deposit.
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On the date hereof, Trinity has delivered to the Escrow Agent
350,000 shares of Trinity common stock (the "Escrow Shares"). The Escrow
Agent shall not be required to inquire into the propriety of the Escrow
Shares deposited hereunder nor shall the Escrow Agent be required to
investigate any other matter or arrangement between Trinity, XxXxxxxxx and
Xxxxxx.
2. Escrow Shares.
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(a) The Escrow Shares shall be available to compensate Trinity
pursuant to the indemnification obligations of XxXxxxxxx and Xxxxxx set
forth in Section 12 of the Purchase Agreement. In the event Trinity issues
any Additional Escrow Shares (as defined below), such shares will be issued
in the name of XxXxxxxxx or Xxxxxx, as applicable, and delivered to the
Escrow Agent in the same manner as the Escrow Shares delivered upon the
execution hereof.
(b) Except for dividends paid in stock declared with respect to
the Escrow Shares ("Additional Escrow Shares"), which shall be treated as
Escrow Shares hereunder, dividends payable in securities or other
distributions of any kind (including cash) made in respect of the Escrow
Shares will be delivered to XxXxxxxxx and Xxxxxx, as their interests
appear. The term "Escrow Shares" as used herein shall also be deemed to
include Additional Escrow Shares. XxXxxxxxx and Xxxxxx will have all
voting rights with respect to their respective Escrow Shares so long as
such Escrow Shares are held in escrow, and Trinity will take all reasonable
steps necessary to allow the exercise of such rights. While the Escrow
Shares remain in the Escrow Agent's possession pursuant to this Escrow
Agreement, XxXxxxxxx and Xxxxxx will retain and will be able to exercise
all other incidents of ownership of their respective Escrow Shares that are
not inconsistent with the terms and conditions of this Escrow Agreement.
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(b) Escrow Period; Release From Escrow.
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(i) Except as otherwise set forth herein, the Escrow Shares
shall be subject to escrow only until one year from the date hereof (the
"Termination Date"); provided, however, that if Trinity delivers an
Officer's Certificate (defined below) to the Escrow Agent prior to the
Release Date (defined below) with respect to facts and circumstances
existing prior to the Termination Date, a number of shares equal in value
to the Damages (as defined in the Purchase Agreement) claimed thereunder
(the "Retained Shares") shall remain in escrow unless and until Escrow
Agent has received either: (a) written instructions signed by all of
Trinity, XxXxxxxxx and Xxxxxx instructing Escrow Agent how the Retained
Shares should be disbursed; or (b) an order from a court of competent
jurisdiction or award from an arbitral authority instructing the Escrow
Agent as to how the Retained Shares should be disbursed. Promptly
following Escrow Agent's receipt of either of the foregoing, Escrow Agent
shall make the disbursement specified therein. For purposes of determining
the number of Retained Shares, each share shall be valued as determined
pursuant to Section 12.5 of the Purchase Agreement.
(ii) Within seven (7) business days after the Termination Date
(the "Release Date"), the Escrow Agent shall release from escrow to each of
XxXxxxxxx and Xxxxxx one-half of the Escrow Shares, except for any Retained
Shares with respect to any pending but unresolved indemnification claims of
Trinity. Any Retained Shares held as a result of the prior sentence shall
be released to XxXxxxxxx and Xxxxxx or released to Trinity (as appropriate)
promptly upon resolution of each specific indemnification claim involved.
Certificates representing Escrow Shares that are subject to resale
restrictions under applicable securities laws will bear a legend to that
effect.
(iii) The Escrow Agent is hereby granted the power to effect any
transfer of Escrow Shares contemplated by this Escrow Agreement. Trinity
will cooperate with the Escrow Agent in promptly issuing stock certificates
to effect such transfers.
(d) Officer's Certificate.
----------------------
The Escrow Agent shall be required to treat some or all Escrow
Shares as Retained Shares only upon delivery to the Escrow Agent on or
before the Release Date of a certificate signed by any officer of Trinity
(an "Officer's Certificate") stating that with respect to the
indemnification obligations set forth in Section 12 of the Purchase
Agreement, Damages exist and specifying in reasonable detail the individual
items of such Damages included in the amount so stated, the date each such
item was paid, or properly accrued or arose, and the nature of the
misrepresentation, breach of warranty, covenant or claim to which such item
is related.
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3. Duties and Responsibilities of Escrow Agent.
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(a) Trinity, XxXxxxxxx and Xxxxxx acknowledge and agree that the
Escrow Agent: (i) shall not be responsible for any of the agreements
referred to herein but shall be obligated only for the performance of such
duties as are specifically set forth in this Escrow Agreement; (ii) shall
not be obligated to take any legal or other action hereunder which might in
its judgment involve any expense or liability unless it shall have been
furnished with acceptable indemnification; (iii) 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 it to be genuine and to have been signed or
presented by the proper person, and shall have no responsibility for
determining the accuracy thereof; and (iv) may consult counsel satisfactory
to it, including house counsel, and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance
with the opinion of such counsel.
(b) Neither the Escrow Agent nor any of its directors, officers
or employees shall be liable to anyone for any action taken or omitted to
be taken by it or any of its directors, officers or employees hereunder
except in the case of negligence or willful misconduct.
(c) Trinity agrees to pay the fees of, and to reimburse all
expenses (including the reasonable fees and expenses of counsel) incurred
by, the Escrow Agent in performing its duties and responsibilities
hereunder, including the Escrow Agent's reasonable compensation for its
normal services hereunder in accordance with the fee schedule attached as
an exhibit hereto. The Escrow Agent shall be entitled to reimbursement on
demand for all expenses incurred in connection with the administration of
the escrow created hereby which are in excess of its compensation for
normal services here under, including without limitation, payment of any
legal fees incurred by the Escrow Agent in connection with resolution of
any claim by any party hereunder.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving thirty (30) days' prior written notice of resignation
to Trinity, XxXxxxxxx and Xxxxxx. Prior to the effective date of the
resignation as specified in such notice, Trinity will issue to the Escrow
Agent a written instruction authorizing redelivery of the Escrow Shares to
a bank or trust company that it selects subject to the reasonable consent
of XxXxxxxxx and Xxxxxx. Such bank or trust company shall have a principal
office in San Francisco, California, shall have capital, surplus and
undivided profits in excess of $50,000,000, and shall have agreed to act as
Escrow Agent hereunder and upon such additional terms and conditions as it,
Trinity, XxXxxxxxx and Xxxxxx shall have agreed, if any, provided that the
original Escrow Agent shall have no responsibility therefor nor any
responsibility for the compensation of such successor Escrow Agent. If,
however, Trinity shall fail to name such a successor escrow agent within
twenty (20) days after the notice of resignation from the Escrow Agent,
then XxXxxxxxx and Xxxxxx shall be entitled to name such successor escrow
agent. If no successor escrow agent is named by either Trinity or
XxXxxxxxx and Xxxxxx pursuant to the foregoing provisions by the effective
date of the Escrow Agent's resignation, then the Escrow Agent shall deliver
the Escrow Shares to Trinity for the benefit of Trinity, XxXxxxxxx and/or
Xxxxxx, as provided herein, whereupon all obligations of the Escrow Agent
shall be deemed fulfilled, and the Escrow Agreement shall terminate,
provided that the provisions of paragraphs (b) and (c) of this Section 3
shall survive the termination of this Escrow Agreement.
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(e) This Escrow 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 Escrow Agreement
against the Escrow Agent.
4. Dispute Resolution.
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It is understood and agreed that should any dispute arise with respect
to the delivery, ownership, right of possession, and/or disposition of the
Escrow Shares, or should any claim be made upon such Escrow Shares by a
third party, the Escrow Agent upon receipt of written notice of such
dispute or claim by the parties hereto or by a third party, is authorized
and directed to retain in its possession without liability to anyone, all
or any of the Escrow Shares until such dispute shall have been settled
either by the mutual agreement of the parties involved or by a final order,
decree judgment of a court in the United States of America or an
arbitrator, the time for perfection of an appeal of such order, decree
judgment or arbitration award having expired. The Escrow Agent may, but
shall be under no duty whatsoever to, institute or defend any legal
proceedings which relate to the Escrow Shares. The Escrow Agent shall have
the right to retain counsel of its choice in case it becomes involved in
any disagreement, dispute or litigation related to the Escrow Agreement,
the Escrow Shares, or otherwise determines that it is necessary or
desirable to consult counsel, and the reasonable fees and expenses of such
counsel shall be reimbursed to the Escrow Agent as provided in Section 3
hereof.
5. Consent to Jurisdiction and Service.
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Trinity, XxXxxxxxx and Xxxxxx hereby absolutely and irrevocably
consent and submit to the jurisdiction of the courts of the State of
California and of any Federal court located in said state in connection
with any actions or proceedings brought against any of them by the Escrow
Agent arising out of or relating to this Escrow Agreement. In any such
action or proceeding, the parties hereby absolutely and irrevocably waive
personal service of any summons, complaint, declaration or other process
and hereby absolutely and irrevocably agree that the service thereof may be
made by certified or registered first-class mail directed to Trinity,
XxXxxxxxx or Xxxxxx, as the case may be, at their respective addresses in
accordance with Section 7 hereof.
6. Force Majeure.
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Neither Trinity, XxXxxxxxx, Xxxxxx nor the Escrow Agent shall be
responsible for delays or failures in performance resulting from acts
beyond its control. Such acts shall include but not be limited to acts of
God, strikes, lockouts, riots, acts of war, epidemics, governmental
regulations superimposed after the fact, fire, communication line failures,
power failures, computer viruses, earthquakes or other disasters.
7. Notices.
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Any notice permitted or required hereunder shall be deemed to have
been duly given if delivered personally, or if telecopied to the parties
at their fax number set forth below (with receipt confirmed by telephone)
or if mailed certified or registered mail, postage prepaid, to their
address set forth below or to such other address as they may hereafter
designate.
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If to Trinity:
Trinity Companies, Inc.
0000 0xx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
If to XxXxxxxxx:
Xxxxxxx XxXxxxxxx
___________________
___________________
Australia
If to Xxxxxx:
Xxxx Xxxxxx
__________________
__________________
Australia
If to the Escrow Agent:
Heritage Bank of Commerce
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000
Attn: Chloe Flowers, SVP/Escrow Department Manager
8. Binding Effect.
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This Escrow Agreement shall be binding upon the respective parties
hereto and their heirs, executors, successors and assigns.
9. Modifications.
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This Escrow Agreement may not be altered or modified without the
express written consent of the parties hereto. No course of conduct shall
constitute a waiver of any of the terms and conditions of this Escrow
Agreement, unless such waiver is specified in writing, and then only to the
extent so specified. A waiver of any of the terms and conditions of this
Escrow Agreement on one occasion shall not constitute a waiver of the other
terms of this Escrow Agreement, or of such terms and conditions on any
other occasion.
10. Governing Law.
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This Escrow Agreement shall be governed by and construed under the
laws of the State of California without regard to principles of conflicts
of law.
11. Judgments.
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The Escrow Agent 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 of any court, the
Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm, corporation or entity by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
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12. Counterparts.
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This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
13. Termination of Escrow.
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This Escrow Agreement shall terminate and the Escrow Agent shall have
no further duties hereunder upon the distribution of all of the Escrow
Funds and Escrow Shares.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
TRINITY LEARNING CORPORATION,
a Utah corporation
By:______________________________________________
Its:_____________________________________________
Xxxxxxx XxXxxxxxx
_________________________________________________
Xxxx Xxxxxx
_________________________________________________
Heritage Bank of Commerce,
a California corporation, as Escrow Agent
By:______________________________________________
Its:_____________________________________________
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Fee Schedule
Initial Set-Up Fee $__________
Annual Maintenance
All fees to be paid by Trinity and not deducted from the Escrow Funds.
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