EXHIBIT 99.1
[LETTERHEAD OF GLAUCON CAPITAL PARTNERS]
January 3, 2005
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
Chief Executive Officer
Trinity Learning Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇,
This letter agreement (hereafter, the "Agreement") will confirm our mutual
understanding that Glaucon Capital Partners, L.L.C., on behalf of its principals
and registered NASD representatives (collectively "GCP"), has been engaged to
act as financial advisor and exclusive placement agent to Trinity Learning
Corporation (collectively with its subsidiaries or an entity established to
effect the transactions contemplated herein, the "Company") to assist it in
arranging one or more private debt or equity financings (collectively or
individually, the "Transaction").
The Transaction, totalling approximately $50 million may include the private
placement (the "Placement") by the Company of one or more of the following:
subordinated debt, preferred equity or common equity (collectively, any of the
subordinated debt and common or preferred equity securities issued pursuant to
the Placement shall be hereafter referred to as the "Securities"). The
Securities will be offered to "accredited investors" as such term is defined in
pursuant to Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). The proceeds from the Transaction will be used by the Company to (i)
refinance certain existing indebtedness of the Company; (ii) finance
acquisitions by the Company; and (iii) pay the expenses incurred in connection
with the Transaction.
In connection with the Transaction, the Company represents and agrees that
neither it, nor any affiliate or advisor of the Company will, directly or
indirectly, offer the Securities or any substantially similar debt or equity
instrument or any bank financing contemplated in the Transaction to, or solicit
any financing offers from, any person or persons otherwise than through GCP in
its role as financial advisor and exclusive placement agent to the Company
during the term of this Agreement. Any issuance by the Company of any debt or
equity security, other than those Securities placed by GCP in connection with
this Agreement, during the term of this Agreement shall entitle GCP to the
compensation presented in paragraph 3 contained herein. In order to coordinate
our efforts in respect of the Transaction, the Company will promptly inform GCP
of any inquiries received from a third party in respect of the Transaction and
will not initiate any discussions in respect of the Transaction with a third
party without first consulting with GCP.
Under the terms of this Agreement, the Company hereby also agrees to the
following:
1. Financial Advisory and Placement Agent Services
In its capacity as financial advisor and placement agent to the Company
pursuant to this Agreement, GCP will perform the following financial
advisory and investment banking services as it may deem necessary and
appropriate in connection with the Transaction.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ o Mt. Kisco, NY 10549 o ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ (main) o ▇▇▇-▇▇▇-▇▇▇▇ (office)
a. assist the Company with regard to (i) the structuring of the
Transaction to be offered to prospective purchasers by the Company and
(ii) the drafting, preparation and distribution of an offering
memorandum (the "Memorandum") and other related documentation
(together with the Memorandum, the "Offering Materials") describing
the Company, and the proposed terms of the Transaction;
b. assist the Company in identifying and contacting prospective financing
sources pursuant to the Transaction;
c. advise the Company as to the strategy and tactics of negotiations with
prospective financing sources to the Transaction and participate in
such negotiations; and
d. render such other financial advisory and investment banking services
to the Company and the Company as may from time to time be agreed upon
by GCP and the Company.
It is expressly understood and acknowledged both that GCP's engagement does
not constitute any commitment, express or implied, on the part of GCP to
purchase or place the Transaction or to provide any other type of financing
and therefore that the Transaction will be executed by GCP on a "best
efforts" basis. It is further understood that GCP's services hereunder
shall be subject to, among other things, satisfactory completion of due
diligence by GCP, prevailing market conditions at the time of the
Transaction, the absence of adverse changes to the business or financial
condition of the Company or ▇▇▇▇▇, or the terms of the Acquisition, and any
other conditions that GCP may deem appropriate for transactions of such
nature.
2. Term
GCP's engagement shall terminate on the earlier of (i) the Closing Date or
(ii) that date which is six months from the date of this Agreement, unless
extended in writing by each of GCP and the Company. Additionally, either
GCP or the Company may terminate this Agreement, starting 60 days after the
date of the Agreement, upon the giving of 15 business days' prior written
notice. A "Residual Period" shall extend for 12 months from the date of
termination or expiration of this Agreement.
3. Fees
Upon the closing of the Transaction (the "Closing Date"), the Company, on
behalf of the Company, agrees to pay GCP as compensation for its services
under this Agreement the following fees:
(i) An initial retainer payment of $20,000.00 (the "Initial Retainer") due
upon the execution of this Agreement, and a monthly retainer of
$10,000.00 (the "Monthly Retainer") due each month with such Monthly
Retainer payments commencing 60 days from the date of the execution of
this Agreement with which each subsequent Monthly Retainer payment due
each 30 calendar days thereafter from the date of the first Monthly
Retainer payment. The sum of the amounts paid to GCP representing the
Initial Retainer and the Monthly Retainer payments shall be credited,
on a one-time basis only, against the Transaction Fee due to GCP
pursuant to this Agreement. The Initial and all Monthly Retainer
payments shall be non refundable.
(ii) A Transaction fee (the "Transaction Fee") comprised of both cash and
warrants and shall be paid to GCP as follows:
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(a) For all Securities issued at Closing or within 12 months from the
Closing, and, those Securities issued within the 24 months from
Closing pursuant to a commitment made by the purchasers of the
Securities (together with related entities, the "Investors" at
Closing, the Transaction Fee shall be equal to:
(aa) cash equal to the greater of (1) $400,000.00 and (2) the
product of four percent (i.e., 4.0%) times the total dollar
amount of Securities issued, and
(bb) warrants (the "GCP Warrants") to purchase that number of
shares of common stock of the Company (the "Common Stock")
equal to 1.0% of the total number of shares issued by the
Company or committed to be issued through the issuance of
warrants, options or convertible securities to the
purchasers of the Securities.
(b) For all similar Securities issued 13 to 24 months from the
Closing (the "Year Two Securities") which are not issued pursuant
to the Investors' commitment at Closing as discussed in clause
3(ii)(a) above, the Transaction Fee shall be equal to:
(aa) cash equal to the product of two and one half percent (i.e.,
2.5%) times the total dollar amount of the Year Two
Securities issued, and
(bb) GCP Warrants to purchase that number of shares of Common
Stock equal to one half percent (i.e., 0.5%) of the total
number of shares issued by the Company or committed to be
issued through the issuance of warrants, options or
convertible securities to the purchasers of the Year Two
Securities.
The GCP Warrants shall be exercisable at any time during a 10-year
period following their issuance at an exercise price equal to one cent
(i.e., $.01) and shall have customary anti-dilution rights (for stock
splits, recapitalizations, etc.) and piggyback registration rights.
The GCP Warrants shall be assignable or otherwise transferable to the
registered representatives and owners of GCP at any time upon the
issuance of the GCP Warrants.
(iii) The Company shall pay to GCP the Transaction Fee pursuant to clause
(ii) above, if a financing similar to that described in this Agreement
and/or Offering Materials is arranged by the Company during the
Residual Period with financing sources identified by GCP during the
term of this Agreement for which GCP was not remunerated pursuant to
clause (ii) above.
4. Out-of-Pocket Expenses
In addition to the Transaction Fee, the Company will pay all reasonable
legal and other related expenses incurred in connection with the issuance
or arranging of the Transaction, including the fees and expenses of the
special counsel(s) representing the providers of the financing. Upon
request from GCP, the Company shall pay all reasonable and documented
out-of-pocket expenses of GCP, whether or not the Transaction is
consummated.
5. Information
The Company acknowledges that GCP will be using information provided by
others, including, without limitation, information provided by or on behalf
of the Company, and that GCP does not assume responsibility for, and may
therefore rely without independent verification on, the accuracy and
completeness of such information. The Company hereby authorized GCP to
transmit the Offering Materials, together with any and all other data,
material and other information reasonably requested by
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GCP for the purpose of performing the services contemplated hereunder, to
any prospective financing sources.
The Company hereby warrants that the information contained in the Offering
Materials, and any other information relating to any of the Company, a
company to be acquired or a pending acquisition transaction, or the
Transaction, will not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
therein, in the light of circumstances under which they were made, not
misleading. The Company agrees to provide, or cause to be provided, GCP
with (i) prompt notice of any material development affecting any of the
Company, any acquisitions it is pursuing at the time of the Transaction, or
the Transaction, or the occurrence of any event or other change known to
the Company that could result in the Offering Materials or additional
information referred to herein containing an untrue statement of a material
fact or omitting to state any material fact necessary to make the
statements contained therein, in the light of the circumstances under which
they were made, not misleading, (ii) copies of any financial reports as
soon as reasonably practicable, and (iii) such other information concerning
the business and financial condition of the Company as GCP may, from time
to time, reasonably request.
6. Compliance with Law
Neither the Company nor GCP has taken, or will take, any action, directly
or indirectly that may cause this Placement of Securities to fail to be
entitled to exemption from registration under the U.S. federal securities
laws (including the "integration" rules pursuant to Regulation D under the
1933 Act), or applicable state securities or "blue sky" laws. The Company
shall be responsible for any costs and expenses associated with filings,
application or registrations with any governmental or regulatory body,
including, without limitation, those associated with any sales pursuant to
Regulation D under the 1933 Act or "blue sky" laws.
7. Confidentiality
All confidential information ("Confidential Information") that GCP receives
or develops concerning the Company, the Acquisition or the Transaction
shall be held in confidence by GCP and shall be disclosed to third parties,
including prospective financing sources, only as contemplated by this
Agreement. Notwithstanding the preceding, however, GCP may disclose the
Confidential Information (i) to any of GCP's directors, officers, partners,
employees, registered representative or advisors (legal or accounting;
collectively, all of the preceding shall be referred to as the "GCP
Representatives"), (ii) pursuant to or in connection with any action, suit,
or proceeding by, or any statute, rule, regulation or order of, any
"Official Body," (iii) to GCP's or such Official Body's auditors, to the
extent required in the course of their audit(s) and to its counsel, and
(iv) as otherwise required by law. The term Confidential Information
includes written or verbal information provided by the Company, but does
not include information which (i) was or becomes generally available to the
public other than by disclosure by the Company, or (ii) was or becomes
available to either GCP or GCP's Representatives on a non-confidential
basis from a source other than the Company.
8. Disclosure
The Company agrees that any information or advice rendered by GCP in
connection with this Agreement is solely for the confidential use of the
Company and, except as otherwise required by applicable law, regulation or
legal process, the Company will not and will not permit any third party to
disclose, reproduce, disseminate, quote or otherwise refer to such advice
or information in any manner without GCP's prior written consent, which
consent shall not be unreasonably withheld.
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9. Indemnification
In connection with the preparation of the Offering Materials and
conversations or correspondence conducted by GCP with prospective financing
sources, officers and employees of the Company will be furnishing GCP and
GCP Representatives with information, including Confidential Information,
about the Company (the "Information") which may be used by prospective
buyers when deciding whether or not to participate in the Sale. The Company
agrees to indemnify GCP and the GCP Representatives against any losses,
claims, damages or liabilities, together with related reasonable legal
expenses, to which GCP or the GCP Representatives may become subject
insofar as they arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Information
or arise out of or are based upon any omission or alleged omission to state
therein any material fact necessary to make the statements therein not
misleading.
Furthermore, the Company and its successors, and assigns agree that it and
they will indemnify and hold harmless GCP and the GCP Representatives
against all losses, claims, liabilities and expenses (including, without
limitation, all expenses of litigation and all reasonable attorney fees)
caused by or arising out of GCP's performance of services pursuant to this
Agreement) and reimburse GCP and the GCP Representatives, as applicable,
for such losses, claims, liabilities and expenses as incurred, except that
the Company will not be liable to the extent that any loss or claim is
found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted solely from GCP's gross negligence or
willful misconduct in performing such services.
If the indemnification and reimbursement provisions set forth above are
unavailable or insufficient to hold GCP harmless, then the Company shall
nonetheless contribute to any such amounts paid or payable to GCP in a
proportion that appropriately reflects the relative benefits received by
the Company, on the one hand, and GCP, on the other hand, in connection
with the matters to which such expenses or other amounts relate. If the
foregoing allocation according to relative benefits is not permitted by
applicable law, then amounts shall be contributed by the Company to GCP in
such proportion as appropriately reflects not only the relative benefits
referred to above but also reflects the relative fault of the Company, on
the one hand, and GCP on the other hand, as well as any other relevant
equitable considerations. In no event shall the aggregate amount of
liability of GCP hereunder be in excess of the Transaction Fees actually
received by GCP in connection with this Agreement.
10. Publicity
The Company acknowledges that upon completion of the Transaction, GCP may,
at its own expense, place an announcement in such newspapers and
periodicals as it may choose, stating that GCP has acted as financial
advisor and exclusive placement agent to the Company in connection with the
Transaction.
11. Amendments and Successors
This Agreement may not be waived, amended, modified or assigned, in any
way, in whole or in part, including by operation of law, without the prior
written consent of each of the Company and GCP. The provisions of this
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Company and GCP.
12. Entire Agreement
This Agreement constitutes the entire agreement between GCP and the
Company, and supersedes any prior agreements and understandings, with
respect to the subject matter of this Agreement.
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13. No Brokers
The Company acknowledges and agrees that he has not retained brokers,
agents, representatives or other parties that have an interest in
compensation paid or payable to GCP hereunder.
14. Termination & Expiration
Upon termination or expiration, this Agreement shall have no further force
or effect, except that the provisions concerning the obligations of the
Company to GCP and certain related persons provided in Paragraph 6
(Compliance with Law) and Paragraph 9 (Indemnification) of this Agreement,
the Company's obligations to pay GCP fees and expenses as described in this
Agreement, governing law, and successors and assigns shall survive any such
termination or expiration of this Agreement.
15. Governing Law
This letter and any claim or dispute of any kind or nature whatsoever
arising out of or in any way relating to this Agreement, directly or
indirectly (including any claim concerning advice provided pursuant to this
Agreement), shall be governed by and construed in accordance with the laws
of the State of New York.
▇▇▇▇, GCP is pleased to accept this engagement and looks forward to working with
you in the completion of the Transaction. Please confirm that the foregoing is
in accordance with your understanding by signing below and returning to us the
enclosed duplicate of this letter, which shall thereupon constitute a binding
Agreement.
Sincerely,
/s/ ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
Glaucon Capital Partners, L.L.C.
Agreed to by:
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/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
Chief Executive Officer
Trinity Learning Corporation
Date: 1-6-05
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