ESCROW AGREEMENT
This Escrow Agreement (the " Escrow Agreement") is made and entered
into as of this the 1st of September, 2003, by and among Trinity Learning
Corporation, a Utah corporation ("Trinity"), Xxxx Xxxxx ("Xxxxx"), Xxxxx
Xxxxx ("Xxxxx") and Heritage Bank of Commerce a Utah corporation, as escrow
agent (the "Escrow Agent").
A. WHEREAS, Trinity, Roche and Xxxxx have executed a Securities
Purchase Agreement dated September 1, 2003 pursuant to which Trinity has
agreed to cause 312,500 shares of Trinity Learning Corporation ("Trinity")
common stock to be deposited 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, Roche, Xxxxx and the Escrow Agent as
follows:
1. Escrow Deposit. On the date hereof, Trinity has delivered to the
Escrow Agent 312,500 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, Roche and
Xxxxx.
2. Escrow Shares.
(a) The Escrow Shares shall be available to compensate Trinity
pursuant to the indemnification obligations of Roche and Xxxxx set forth in
Section 11 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 Roche or Xxxxx, 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 Roche and Xxxxx, as their interests appear.
The term "Escrow Shares" as used herein shall also be deemed to include
Additional Escrow Shares. Roche and Xxxxx 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, Roche and
Xxxxx 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.
(c) Escrow Period; Release From Escrow.
(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: (i) written instructions signed by all of
Trinity, Roche and Xxxxx instructing Escrow Agent how the Retained Shares
should be disbursed; or (ii) 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 Roche and Xxxxx 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 Roche and Xxxxx 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 obtaining 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.
3. Duties and Responsibilities of Escrow Agent.
(a) Trinity, Roche and Xxxxx 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
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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 will pay the fees and expenses of (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. 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, Roche and Xxxxx. 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 Roche and Xxxxx. 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, Roche and Xxxxx 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 Roche and Xxxxx shall be entitled to name such successor escrow agent.
If no successor escrow agent is named by either Trinity or Roche and Xxxxx
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, Roche and/or Xxxxx, 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.
(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. 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
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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. Trinity, Roche and Xxxxx
hereby absolutely and irrevocably consent and submit to the jurisdiction of
the courts of the State of Utah 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, Roche or Xxxxx, as the case may be, at their
respective addresses in accordance with Section 7 hereof.
6. Force Majeure. Neither Trinity, Roche, Xxxxx 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. 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.
If to Trinity:
c/o Trinity Learning Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, President
If to Roche:
___________________
___________________
___________________
If to Xxxxx:
__________________
__________________
__________________
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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. This Escrow Agreement shall be binding upon the
respective parties hereto and their heirs, executors, successors and
assigns.
9. Modifications. 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. 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. 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.
12. Counterparts. 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. 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
By: _________________________________
Its: ________________________________
____________________________________
Xxxx Xxxxx
____________________________________
Xxxxx Xxxxx
HERITAGE BANK OF COMMERCE, a California
corporation, as Escrow Agent
By:__________________________________
Its: __________________________________
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