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Exhibit C
ESCROW AGREEMENT
THIS AGREEMENT made in triplicate this 16th day of December, 1997
AMONG:
NEWBRIDGE NETWORKS CORPORATION
KANATA RESEARCH PARK CORPORATION
XXXXXXX X. XXXXXXXX
XXXX X. XXXXXX
(hereinafter collectively called the "Security Holders")
and
MONTREAL TRUST COMPANY OF CANADA
(hereinafter called the "Escrow Agent")
and
CROSSKEYS SYSTEMS CORPORATION
(hereinafter called the "Issuer")
WHEREAS in furtherance of complying with the requirements of the Securities
Act (Ontario), the Security Holders are desirous of depositing in escrow certain
securities in the Issuer owned or to be acquired by them;
AND WHEREAS the Escrow Agent has agreed to undertake and perform its duties
according to the terms and conditions hereof;
NOW THEREFORE this Agreement witnesses that in consideration of the
foregoing agreements, and of the sum of one dollar ($1.00) now paid by the
parties hereto, each to the other (receipt of which sum the parties hereby
respectively acknowledge each to the other), the Security Holders jointly and
severally covenant and agree with the Issuer and with the Escrow Agent and the
Issuer and the Escrow Agent covenant and agree each with the other and with the
Security Holders jointly and severally as follows:
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1. Each of the Security Holders hereby places and deposits in escrow those
securities of the Issuer which are represented by the certificates
described or referred to in Schedule "A" hereto (the "Escrowed Shares")
with the Escrow Agent and undertakes and agrees forthwith to deliver those
Escrowed Shares (including any replacement securities or certificates if
and when such are issued or allotted) to the Escrow Agent for deposit in
escrow to be held by the Escrow Agent on and subject to the terms of this
Agreement. The Escrow Agent shall not be responsible for ensuring that any
securities or certificates representing the same are delivered to it and
shall incur no liability whatsoever should the Security Holders or any of
them fail to perform their or its duties in accordance with this paragraph.
2. Subject to section 4 of this Agreement, the Security Holders and the
Issuer agree that the Escrowed Shares and the beneficial ownership of or
any interest in them and the certificates representing them (including any
replacement securities or certificates) shall not be sold, assigned,
hypothecated, alienated, released from escrow, transferred within escrow,
or otherwise in any manner dealt with, without the express consent, order
or direction in writing of the Ontario Securities Commission (hereinafter
referred to as the "Commission") being first obtained or except as may
be required by reason of the death or bankruptcy of any Security Holder,
in which cases the Escrow Agent shall hold the said certificates subject
to this agreement, for whatever person, firm or corporation shall be
legally entitled to be or become the registered owner thereof.
3. The Security Holders direct the Escrow Agent to retain their respective
Escrowed Shares and the certificates (including any replacement securities
or certificates) representing the same and not to do or cause anything to
be done to release the same from escrow or to allow any transfer,
hypothecation or alienation thereof except in accordance with sections 2
and 4 of this Agreement. The Escrow Agent accepts the responsibilities
placed on it by this Agreement and agrees to perform the same in
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accordance with the terms hereof and the written consents, orders or
directions of the Commission. The Escrow Agent agrees to hold separate the
Escrowed Shares and the certificates representing them from all other
securities and other property owned or held by it.
4. The Escrowed Shares shall be released from this Agreement and the Escrow
Agent shall be authorized to release certificates representing the Escrowed
Shares as follows:
(a) 10% of the Escrowed Shares shall be released to the Security Holders
immediately after the date (the "Initial Release Date") which is nine
months after the date on which the receipt for the final prospectus
relating to the offering of common shares is received from the
Commission;
(b) 20% of the Escrowed Shares shall be released to the Security Holders
on each of the first, second and third anniversaries of the Initial
Release Date; and
(c) 30% of the Escrowed Shares shall be released to the Security Holders
on the date which is the fourth anniversary of the Initial Release
Date.
The Issuer agrees to promptly provide to the Escrow Agent a copy of the
receipt referred to in subsection 4(a) above. The Escrow Agent shall then
forthwith notify in writing each of the Security Holders of the Initial
Release Date of the Escrowed Shares.
5. If during the period in which any of the Escrowed Shares are retained in
escrow pursuant to this Agreement, any dividend (other than a stock
dividend) or other distribution upon the liquidation or winding up of the
Issuer is received by the Escrow Agent in respect of the Escrowed Shares,
any such dividend or distribution
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shall be forthwith paid or transferred to the respective Security Holders
entitled thereto.
6. All voting rights attached to the Escrowed Shares shall at all times be
exercised by the respective registered owners thereof.
7. The acceptance by the Escrow Agent of its duties and obligations under
this Agreement is subject to the following terms and conditions, which the
parties to this Agreement hereby agree shall govern and control with
respect to the Escrow Agent's rights, duties, liabilities and immunities:
(a) the Escrow Agent shall not be responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity
of any securities deposited with it;
(b) the Escrow Agent shall be protected in acting and relying upon any
written notice, request, waiver, consent, receipt or other paper or
document furnished to it by or on behalf of the Security Holders, the
Issuer or the Commission, not only as to its due execution and the
validity and effectiveness of its provisions but also as to the truth
and acceptability of any information contained therein which it in
good faith believes to be genuine and what it purports to be;
(c) except for acts of gross negligence or wilful misconduct the Escrow
Agent shall not be liable for any act done or step taken or omitted
by it in good faith, or for any mistake of fact or law and the
Security Holders and the Issuer jointly and severally agree to
indemnify and save harmless the Escrow Agent from and against all
claims, demands, actions, suits or other proceedings by whomsoever
made, prosecuted or brought and from all losses, costs, damages and
expenses in any manner based upon, occasioned by or attributable to
any
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act of the Escrow Agent in the execution of its obligations hereunder;
this indemnity shall survive resignation or removal of the Escrow
Agent and termination of this Agreement;
(d) the Escrow Agent may consult with and obtain advice from legal counsel
or other experts in the event of any question as to any of the
provisions hereof or its duties hereunder, and it shall incur no
liability and shall be fully protected in acting and relying in good
faith in accordance with the opinion and instructions of such counsel
or other expert and the cost for such services shall be added to and
be part of the Escrow Agent's fees hereunder; and
(e) the Escrow Agent shall have no duties except those which are expressly
set forth herein and it shall not be bound by any notice of a claim or
demand with respect thereto or any waiver, modification, amendment,
termination or rescission of this Agreement, unless received by it in
writing and signed by the Issuer and the Security Holders, and, if
applicable, the Commission, and, if the Escrow Agent's duties or
indemnities herein are affected, unless it shall have given its prior
written consent thereto. For greater certainty the Escrow Agent shall
have no obligation to take any action to obtain any consent of the
Commission relating to the release of any escrowed securities.
8. The Issuer acknowledges the terms and conditions of this Agreement and
agrees to take all reasonable steps to facilitate its performance. The
Issuer agrees to pay all proper fees of the Escrow Agent and to reimburse
the Escrow Agent for all necessary and proper disbursements incurred by the
Escrow Agent pursuant to this Agreement.
9. If the Escrow Agent should wish to resign, it shall give at least three
months' notice to the Issuer, which may, with the written consent of the
Commission, by writing
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appoint another escrow agent in its place and such appointment shall be
binding on the Security Holders and the new escrow agent shall assume and
be bound by the obligations of the Escrow Agent hereunder.
10. The release of all or part of the Escrowed Shares from escrow pursuant to
section 2 or section 4 of this Agreement shall terminate this Agreement
only in respect to those Escrowed Shares so released. For greater
certainty, this clause does not apply to securities transferred within
escrow.
11. Any notice required or permitted to be given hereunder shall be delivered
or, except in the event of an actual or threatened postal disruption or
strike, given by prepaid registered mail or certified mail or by facsimile
transmission as follows:
(a) in the case of the Security Holders, to:
Newbridge Networks Corporation
000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attention: Corporate Secretary
Facsimile: (000) 000-0000
(b) Xxxx X. Xxxxxx
c/o Crosskeys Systems Corporation
Crosskeys Centre
000 Xxxxx Xxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attention: General Counsel
Facsimile: (000) 000-0000
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(c) in the case of the Escrow Agent, to:
Montreal Trust Company of Canada
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Senior Manager, Client Services
Facsimile: (000) 000-0000
(d) in the case of the Issuer, to:
Crosskeys Systems Corporation
000 Xxxxx Xxx Xxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: General Counsel
Facsimile: (000) 000-0000
(e) Xxxxxxx X. Xxxxxxxx
c/o Kanata Research Park Corporation
000 Xxxxx Xxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attention: General Counsel
Facsimile: (000) 000-0000
Any notice given by personal delivery shall be conclusively deemed to have been
given on the day of the actual delivery thereof, or if by mail on the third
business day following the deposit thereof with postal authorities, or if by
telecopier on the date of transmission thereof except where transmitted after
4:00 p.m. in which case it shall be deemed to have been given on the next
following business day.
12. This Agreement may be executed in several parts in the same form and such
parts as so executed shall together form one original agreement, and such
parts if more
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than one shall be read together and construed as if all the signing parties
had executed one copy of this Agreement.
13. Wherever the singular or masculine are used throughout this Agreement, the
same shall be construed as being the plural or feminine or neuter where the
context so requires.
14. This Agreement shall ensure to the benefit of and be binding upon the
parties hereto, their and each of their heirs, executors, administrators,
successors and assigns.
IN WITNESS whereof the parties hereto have executed these presents this day
of December, 1997.
NEWBRIDGE NETWORKS CORPORATION
Per: [SIGNATURE]
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Name:
Title: Secretary
Per:
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Name:
Title:
KANATA RESEARCH PARK CORPORATION
Per: [SIGNATURE]
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Name:
Title: Corporate Secretary
Per:
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Name:
Title:
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WITNESS XXXXXXX X. XXXXXXXX
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WITNESS XXXX X. XXXXXX
MONTREAL TRUST COMPANY OF CANADA
Per:
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Name:
Title:
Per:
--------------------------------
Name:
Title:
CROSSKEYS SYSTEMS CORPORATION
Per:
--------------------------------
Name:
Title:
Per:
--------------------------------
Name:
Title:
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SCHEDULE "A"
Beneficial Number of Certificate
Holder Owner Securities Number
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Newbridge Networks Newbridge Networks 4,516,621 *
Corporation Corporation
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Kanata Research Xxxxxxx Xxxxxxxx 2,006,509 *
Park Corporation
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Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxxxx & 1,005,665 *
Xxx Xxxxxxxx
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Xxxx Xxxxxx Xxxx Xxxxxx & 812,644 *
Xxxxxx Xxxxxx
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* The share certificate numbers are currently subject to change and will be
forwarded once new share certificates have been issued by the Issuer.
