EXHIBIT H
ESCROW AGREEMENT
H-1
INDEMNITY ESCROW AGREEMENT
This INDEMNITY ESCROW AGREEMENT (this "Agreement"), dated as of January
15, 2003, is entered into among VITALSTREAM BROADCASTING CORPORATION, a Nevada
corporation ("VitalStream Broadcasting"), VITALSTREAM HOLDINGS, INC. a Nevada
corporation ("VitalStream" and, together with VitalStream Broadcasting, the
"Buyers"), EPOCH HOSTING, INC., a Delaware corporation ("Hosting") and CITY
NATIONAL BANK, as escrow agent (the "Escrow Agent," which term also includes any
successor escrow agent appointed in accordance with Section 9(b) hereof). The
Escrow Agent, VitalStream Broadcasting, VitalStream and Hosting are each
referred to herein as a "Party" and collectively as the "Parties." All
capitalized terms used but not defined in this Agreement have the meanings
ascribed in the Purchase Agreement (as defined below).
WHEREAS, reference is made to the Amended and Restated Asset Purchase
Agreement, dated as of January 15, 2003 (as amended, modified, restated,
superseded or replaced from time to time, the "Purchase Agreement") among
VitalStream, VitalStream Broadcasting, Epoch Networks, Inc., a California
corporation ("Networks") and Hosting;
WHEREAS, this Agreement is the "Escrow Agreement" under the
Purchase Agreement;
WHEREAS, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, Hosting and Networks have agreed to
provide certain indemnification rights to VitalStream;
WHEREAS, pursuant to the terms of the Purchase Agreement, the parties
to the Purchase Agreement have agreed to place a portion of the Initial Purchase
Shares into escrow pursuant to the terms hereof, which Initial Purchase Shares
shall be available to satisfy any amounts owed by Hosting or Networks to
VitalStream pursuant to Section 8 of the Purchase Agreement; and
WHEREAS, the Escrow Agent is willing to act as escrow agent under this
Agreement.
NOW, THEREFORE, to induce the Buyers to enter into, and in
consideration of the Buyers entering into, the Purchase Agreement, and in
consideration of the premises and the representations, warranties and agreements
contained herein, the Parties agree as follows:
1. Appointment of Escrow Agent. The Parties hereby designate and
appoint the Escrow Agent as joint escrow agent for the Buyers, on the one hand,
and Hosting, on the other hand, pursuant to the terms hereof. The Escrow Agent
agrees to (a) act as the Escrow Agent and (b) deposit and hold all portions of
the Escrow Fund (as defined below) in an account or accounts maintained by the
Escrow Agent, in each case in accordance with the terms and conditions of
this Agreement.
2. Escrow Fund. On the date of this Agreement, pursuant to the
Purchase Agreement, VitalStream has delivered a stock certificate representing
an aggregate amount of shares of Common Stock equal to thirty percent of the
Initial Purchase Shares (the "Escrow Shares") in the name of Hosting (the
"Escrow Fund"), and the Escrow Agent is accepting the Escrow Fund for deposit in
escrow pursuant to the provisions of this Agreement. The Escrow Shares shall be
subject to appropriate adjustment in the event of any stock dividend, stock
split,
stock combination or other similar recapitalization of VitalStream's capital
stock affecting any class or series of which the Escrow Shares are part.
3. Rights to Escrow Fund. The Escrow Fund shall be for the
exclusive benefit of the VitalStream Indemnitees, Hosting and, with respect to
amounts to which the Escrow Agent may be entitled pursuant to Sections 9(c) and
9(d) hereof, the Escrow Agent and the Escrow Agent's respective successors and
assigns. No other person or entity shall have any right, title or interest in
the Escrow Fund. Any claim of any person to the Escrow Fund, or any part
thereof, shall be subject and subordinate to the prior right thereto of the
VitalStream Indemnitees, Hosting and the Escrow Agent, as contemplated by this
Section 3.
4. Distribution of the Escrow Fund.
(a) From time to time on or before October 15, 2003 (the
"Escrow Termination Date"), in the event that a VitalStream Indemnitee shall
desire to claim (each, a "Claim") a right to payment of an indemnifiable Loss
pursuant to Section 8 of the Purchase Agreement, VitalStream shall, on behalf of
such VitalStream Indemnitee, give written notice (each, a "Claims Notice") to
Hosting and the Escrow Agent specifying in reasonable detail the nature and
dollar amount of such Claim and the Fair Market Value of an Escrow Share as
determined on the day immediately prior to the date on which such Claims Notice
is sent by VitalStream. VitalStream shall also deliver to the Escrow Agent
evidence, satisfactory to the Escrow Agent in its sole discretion, of the date
of the receipt by Hosting of the Claims Notice regarding such Claim.
(b) After receipt of a Claims Notice, Hosting may give
written notice (each, a "Dispute Notice") to VitalStream and to the Escrow Agent
disputing the Claim which is the subject of such Claims Notice or the Fair
Market Value set forth in such Claims Notice and setting forth the basis of such
dispute. If, at any time prior to the expiration of the 30-day period (the
"Dispute Notice Period") following the receipt by Hosting of such Claims Notice,
the Escrow Agent receives a Dispute Notice in respect of such Claims Notice,
then the Escrow Agent shall not take the action(s) requested in such Claims
Notice unless and until the Escrow Agent has received either (i) a Joint
Instruction Notice (as defined in Section 10(a) hereof) in respect of the
requested actions from VitalStream and Hosting acting jointly in accordance with
Section 10(a) hereof or (ii) a Notice of Arbitration Decision (as defined in
Section 10(b) hereof) in accordance with Section 10(b) hereof from either
VitalStream or Hosting.
(c) With respect to each Claims Notice, if no Dispute
Notice is received by the Escrow Agent prior to the expiration of the Dispute
Notice Period in respect of such Claims Notice, then the dollar amount of
indemnifiable damages claimed by the VitalStream Indemnitee as set forth in such
Claims Notice shall be deemed established for purposes of this Agreement and the
Purchase Agreement and, after the expiration of the Dispute Notice Period, the
Escrow Agent shall release from the Escrow Fund and deliver to the VitalStream
Indemnitee such number of Escrow Shares from the Escrow Fund equal to the dollar
amount of indemnifiable damages claimed in such Claims Notice divided by the
Fair Market Value of an Escrow Share as set forth in such Claims Notice.
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(d) As may be necessary pursuant to any release of Escrow
Shares from the Escrow Fund pursuant to this Section 4, VitalStream shall
provide the Escrow Agent with (i) a new certificate registered in the name of
the VitalStream Indemnitee representing the aggregate number of shares of Common
Stock to be released from the Escrow Fund and delivered to the VitalStream
Indemnitee pursuant to this Section 4 and (ii) a new certificate registered in
the name of Hosting for deposit into the Escrow Fund representing an aggregate
number of shares of Common Stock equal to (A) the number of shares of Common
Stock initially deposited in the Escrow Fund (subject to appropriate adjustment
in the event of any stock dividend, stock split, stock combination or other
similar recapitalization of VitalStream's stock affecting any class or series of
which the Escrow Shares are part) minus (B) an amount of shares of Common Stock
equal to the sum of (1) the number of Escrow Shares to be released from the
Escrow Fund and delivered to the VitalStream Indemnitee in respect of a Claim
pursuant to this Section 4 plus (2) the aggregate number of Escrow Shares
previously released from the Escrow Fund pursuant to this Section 4, if any
(such number of Escrow Shares to be subject to appropriate adjustment in the
event of any stock dividend, stock split, stock combination or other similar
recapitalization of VitalStream's stock affecting any class or series of which
the Escrow Shares are part).
(e) The Escrow Agent shall not inquire into or consider
whether a Claim complies with the requirements of the Purchase Agreement.
5. Termination.
(a) On the Escrow Termination Date, the Escrow Fund shall
terminate and the Escrow Agent shall release any Escrow Shares constituting the
Escrow Fund from the Escrow Fund and deliver such Escrow Shares to Hosting
unless the Escrow Agent shall have received any Claims Notices prior to the
Escrow Termination Date that have not been resolved in accordance with the terms
hereof, in which case a number of Escrow Shares as determined in accordance with
Section 10 hereof that may be reasonably necessary to satisfy each unresolved
Claim ("Unresolved Claims") specified in such Claims Notices shall be retained
by the Escrow Agent in the Escrow Fund (and the balance of the Escrow Shares
constituting the Escrow Fund shall be released from the Escrow Fund and
delivered to Hosting) until such Unresolved Claims are processed in accordance
with the terms hereof. As soon as each Unresolved Claim is resolved, the Escrow
Agent shall deliver to Hosting all of the Escrow Shares which were retained in
the Escrow Fund in respect of such Unresolved Claim less any Escrow Shares, if
any, to be released from the Escrow Fund and delivered to a VitalStream
Indemnitee in satisfaction of such Unresolved Claim.
(b) As may be necessary pursuant to any release of Escrow
Shares from the Escrow Fund pursuant to this Section 5, VitalStream shall
provide the Escrow Agent with (i) a new certificate registered in the name of
the VitalStream Indemnitee representing the aggregate number of shares of Common
Stock, if any, to be released from the Escrow Fund and delivered to the
VitalStream Indemnitee in respect of pursuant to this Section 4 and (ii) a new
certificate registered in the name of Hosting for deposit into the Escrow Fund
representing an aggregate number of shares of Common Stock equal to (A) the
number of shares of Common Stock initially deposited in the Escrow Fund (subject
to appropriate adjustment in the event of any stock dividend, stock split, stock
combination or other similar recapitalization of VitalStream's stock affecting
any class or series of which the Escrow Shares are part) minus (B) an amount of
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shares of Common Stock equal to the sum of (1) the number of Escrow Shares to be
released from the Escrow Fund and delivered to the VitalStream Indemnitee in
respect of a Claim pursuant to this Section 4 and (2) the aggregate number of
Escrow Shares previously released from the Escrow Fund pursuant to this Section
4, if any (such number of Escrow Shares to be subject to appropriate adjustment
in the event of any stock dividend, stock split, stock combination or other
similar recapitalization of VitalStream's stock affecting any class or series of
which the Escrow Shares are part).
(c) As may be necessary pursuant to any release of Escrow
Shares from the Escrow Fund pursuant to this Section 5, VitalStream shall
provide the Escrow Agent with (i) a new certificate registered in the name of
Hosting representing the aggregate number of Escrow Shares to be released from
the Escrow Fund and delivered to Hosting pursuant to this Section 5 upon
termination of the Escrow Fund and (ii) a new certificate registered in the name
of Hosting for deposit into the Escrow Fund representing an aggregate number of
shares of Common Stock equal to (A) the number of shares of Common Stock
initially deposited in the Escrow Fund (subject to appropriate adjustment in the
event of any stock dividend, stock split, stock combination or other similar
recapitalization of VitalStream's stock affecting any class or series of which
the Escrow Shares are part) minus (B) an amount of shares of Common Stock equal
to the sum of (1) the number of Escrow Shares to be released from the Escrow
Fund and delivered to the Hosting pursuant to this Section 5 plus (2) the
aggregate number of Escrow Shares previously released from the Escrow Fund
pursuant to Section 4 and this Section 5, if any (such number of Escrow Shares
to be subject to appropriate adjustment in the event of any stock dividend,
stock split, stock combination or other similar recapitalization of
VitalStream's stock affecting any class or series of which the Escrow Shares are
part).
(d) Upon disbursement of the entirety of the Escrow Fund
pursuant to Section 5(a) hereof, this Agreement shall terminate and the Escrow
Agent shall close the escrow account and shall thereafter have no further
obligations hereunder.
(e) Notwithstanding any termination of this Agreement, the
provisions of Sections 9(c) and 9(d) hereof shall survive such termination and
remain in full force and effect.
6. Further Assurances. In order to effectuate the release of the
Escrow Shares from the Escrow Fund in accordance with the terms of this
Agreement (a) Hosting hereby agrees to execute and deliver to the Escrow Agent
and the Buyers (or VitalStream's transfer agent) such documents and instruments
(including instructions regarding the release of the Escrow Shares as provided
herein) as may be necessary to effectuate such release in accordance with the
terms of this Agreement and (b) the Buyers hereby agree to execute and deliver
(and cause VitalStream's transfer agent to execute and deliver) such documents
and instruments (including certificates representing the Escrow Shares to be
released to Hosting in accordance with the terms of this Agreement and
certificates representing the remaining Escrow Shares that are to be held by the
Escrow Agent in accordance with the terms of this Agreement) as may be necessary
to effectuate such release in accordance with the terms of this Agreement.
7. Voting Rights. During the term of this Agreement, Hosting
shall have the right to vote the Escrow Shares (including the right to take
action by written shareholder consent) on all matters which come before the
holders of the Common Stock of VitalStream.
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8. Cancellation of Escrow Shares. VitalStream hereby agrees
that any Escrow Shares released to VitalStream from the Escrow Fund shall be
held by VitalStream as treasury shares and shall no longer be deemed issued or
outstanding.
9. Escrow Agent.
(a) Obligations.
(i) The obligations of the Escrow Agent are those
specifically provided in this Agreement and no other, and the Escrow Agent shall
have no Liability under, or duty to inquire into the terms and provisions of,
any agreement between the Parties hereto. The duties of the Escrow Agent are
purely ministerial in nature, and the Escrow Agent shall not incur any Liability
whatsoever, except for as a result of willful misconduct or gross negligence.
The Escrow Agent may consult with counsel of its choice and shall not be liable
for following the reasonable advice of such counsel.
(ii) The Escrow Agent shall not have any
responsibility for the genuineness or validity of any document or other item
deposited with the Escrow Agent or of any signature thereon and shall not have
any Liability for acting in accordance with any written instructions or
certificates received by the Escrow Agent hereunder and believed by it to be
signed by the proper parties. In performing its duties under this Agreement, the
Escrow Agent shall assume that the "VitalStream Indemnities" include the Buyers
and anyone certified in writing by VitalStream to be a VitalStream Indemnity.
(iii) The Escrow Agent shall not be required to
expend or risk any of its own funds or otherwise incur any financial or other
Liability in the performance of any of its duties hereunder.
(iv) The Escrow Agent shall not be under any duty
to give the Escrow Fund any greater degree of care than the Escrow Agent gives
the Escrow Agent's own similar property and shall not be required to invest any
funds held hereunder except as directed in this Escrow Agreement.
(b) Resignation and Removal. The Escrow Agent may resign
at any time by giving at least 30 days' notice of such resignation to
VitalStream and Hosting, specifying a date upon which such resignation shall
take effect (the "Resignation Notice"); provided, however, that the Escrow Agent
shall continue to serve until the Escrow Agent's successor accepts the Escrow
Fund. Upon receipt of any Resignation Notice, a successor Escrow Agent shall be
appointed by the mutual agreement of VitalStream and Hosting, such successor
Escrow Agent to become the "Escrow Agent" hereunder on the later of the date set
forth in the Resignation Notice and the date on which the successor Escrow Agent
accepts the Escrow Fund. If an instrument of acceptance by a successor Escrow
Agent shall not have been delivered to the resigning Escrow Agent within 40 days
after delivery of the Resignation Notice, the resigning Escrow Agent may
petition any court of competent jurisdiction for the appointment of a successor
Escrow Agent. The expenses relating to such petition shall be paid one-half by
VitalStream and one-half out of the Escrow Fund. VitalStream and Hosting, acting
jointly, may at any time substitute a new
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Escrow Agent by giving 10 days' notice thereof to the current Escrow Agent and
paying all fees and expenses of the current Escrow Agent as provided in Section
9(d) hereof.
(c) Indemnification. The Buyers, on the one hand, and
Hosting, on the other hand, shall jointly and severally hold the Escrow Agent
harmless from, and indemnify the Escrow Agent against, any loss, Liability,
expense (including reasonable attorneys' fees and expenses), claim or demand
arising out of or in connection with the performance of the Escrow Agent's
obligations under this Agreement and which are attributable to any act or
omission of the Escrow Agent, except for any of the foregoing arising out of the
gross negligence or willful misconduct of the Escrow Agent. The foregoing
indemnification obligations in this Section 9(c) shall survive the resignation
and substitution of the Escrow Agent and the termination of this Agreement.
(d) Fees and Expenses of the Escrow Agent.
(i) For the Escrow Agent's services hereunder,
the Escrow Agent shall separately xxxx VitalStream and Hosting for the time
spent by its professionals in accordance with the Escrow Agent's fee schedule
attached hereto as Exhibit C. VitalStream and Hosting shall each be responsible
for one-half of the fees of the Escrow Agent. In addition, except as otherwise
provided in Section 9(d)(ii) hereof, VitalStream and Hosting shall reimburse the
Escrow Agent for all reasonable expenses, disbursements and advances, including
reasonable attorneys' fees, incurred by the Escrow Agent in connection with
carrying out its ordinary duties to maintain and dispose of the Escrow Fund
pursuant to this Agreement. The amount of such reimbursement shall be paid
one-half by VitalStream and one-half by Hosting.
(ii) Hosting, on the one hand, and the Buyers, on
the other hand, agree that if the Escrow Agent shall incur or suffer any other
reasonable costs, charges, damages or attorneys' fees on account of being the
Escrow Agent or on account of having received the Escrow Fund hereunder
(including, without limitation, costs, charges, damages and reasonable
attorneys' fees as a result of litigation involving this Agreement or the Escrow
Fund other than by reason of the gross negligence or willful misconduct of the
Escrow Agent), then such costs, charges, damages or fees shall be paid one-half
by VitalStream and one-half by Hosting, or, in the case of any cost, charge,
damage or fee arising as a result of litigation, in such manner as the court in
which such litigation occurs may direct.
10. Dispute Resolution Procedures.
(a) Amicable Resolution. In the event of delivery of a
Dispute Notice by Hosting, VitalStream and Hosting shall attempt in good faith
to establish the merits and amount, if any, of any outstanding Claim (the
"Dispute") and, upon the mutual written agreement by VitalStream and Hosting of
the merits and amount, if any, of such Claim, VitalStream and Hosting shall
deliver a written instrument jointly executed by VitalStream and Hosting
substantially in the form set forth in Exhibit A attached hereto (such written
instrument hereinafter referred to as a "Joint Instruction Notice") to the
Escrow Agent. If VitalStream and Hosting are unable to reach such an agreement,
the merits and amount, if any, of the Claim shall be determined by an arbitrator
in accordance with the arbitration provisions set forth in Section 10(b) hereof.
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(b) Arbitration.
(i) Generally; Notice. If any Dispute is not
resolved pursuant to Section 10(a) hereof prior to the thirtieth day after the
related Dispute Notice is received by VitalStream, then either VitalStream or
Hosting (in either case, the "Disputing Person") may commence an arbitration
proceeding pursuant to this Section 10(b) by giving the non-Disputing Person a
written notice (an "Arbitration Notice") setting forth any matters which are
required to be set forth therein in accordance with the arbitration rules of the
Association as in effect from time to time (the "AAA Rules") and a copy of such
Arbitration Notice shall be furnished to the Escrow Agent; provided that such
arbitration will be the sole and exclusive method of resolving such Dispute;
provided further that nothing in this Section 10(b) will prohibit a Party from
instituting litigation to enforce any Final Arbitration Award (as defined
below). Except as otherwise provided in the AAA Rules, the arbitration
procedures described in this Section 10(b) and any Final Arbitration Award will
be governed by, and will be enforceable pursuant to, the Uniform Arbitration Act
as in effect in the State of California from time to time. The arbitration shall
be conducted in Orange County, California.
(ii) Selection of Arbitrator. VitalStream and
Hosting will attempt to select a single arbitrator by mutual agreement. If no
such arbitrator is selected prior to the tenth day after the related Arbitration
Notice is received, then an arbitrator which is experienced in matters of the
type which are the subject matter of the Dispute will be selected in accordance
with the AAA Rules.
(iii) Conduct of Arbitration. The arbitration will
be conducted under the AAA Rules, as modified by any written agreement between
VitalStream and Hosting. The arbitrator (the "Arbitrator") will conduct the
arbitration in a manner so that the final result, determination, finding,
judgment or award determined by the Arbitrator (the "Final Arbitration Award")
is made or rendered as soon as practicable, and the parties will use reasonable
efforts to cause a Final Arbitration Award to occur not later than the sixtieth
day after the Arbitrator is selected. The Final Arbitration will include a
determination with respect to the matters contained in the Dispute Notice (the
"Determination") and written directions substantially in the form set forth in
Exhibit B attached hereto (such written instrument hereinafter referred to as a
"Notice of Arbitration Decision") to make disbursements from the Escrow Fund
(or, if appropriate, withdrawal of a request for such action or disbursement)
which are appropriate in order to give effect to the provisions of this
Agreement in light of the Determination, and either VitalStream or Hosting may
deliver a copy of such Notice of Arbitration Decision to the Escrow Agent for
execution pursuant to this Agreement. The Escrow Agent may rely conclusively on
any copy of such Notice of Arbitration Decision provided to the Escrow Agent.
Any Final Arbitration Award will be final and binding upon VitalStream and
Hosting, and there will be no appeal from or reexamination of any Final
Arbitration Award, except in the case of fraud, perjury or evident partiality or
misconduct by the Arbitrator prejudicing the rights of VitalStream or Hosting.
(iv) Enforcement. VitalStream and Hosting agree
that a Final Arbitration Award may be enforced in any state or federal court in
the State of California.
(v) Expenses. Each prevailing Party in any
arbitration proceeding in connection with this Agreement also will be entitled
to recover from any non-prevailing Party(s)
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such prevailing Party's reasonable attorneys' fees and disbursements in addition
to any damages or other remedies awarded to it, and the non-prevailing Party(s)
also will be required to pay all other costs and expenses associated with the
arbitration; provided that (A) if the Arbitrator is unable to determine that a
Party is a prevailing Party in any such arbitration proceeding, then such costs
and expenses will be equitably allocated by such Arbitrator upon the basis of
the outcome of such arbitration proceeding, (B) if the Arbitrator is unable to
allocate such costs and expenses in such a manner, then the costs and expenses
of such arbitration will be paid one-half by Hosting and one-half by
VitalStream, and each Party will pay the out-of-pocket expenses incurred by it
and (C) the Escrow Agent shall not be considered a "non-prevailing Party" for
purposes of this Section 10(b)(v). As part of any Final Arbitration Award, the
Arbitrator may designate the prevailing Party(s) for purposes of this Section
10(b)(v). Except as provided in the preceding sentences of this Section
10(b)(v), each Party to this Agreement will bear its own costs and expenses
(including legal fees and disbursements) in connection with any such proceeding
or submission.
11. Miscellaneous.
(a) Definitions. For the purposes of this Agreement,
the following terms have the meanings set forth below:
(i) "Fair Market Value" means the price at which
an asset would change hands between a willing buyer and a willing seller when
the former is not under any compulsion to buy and the latter is not under any
compulsion to sell, and both parties are able, as well as willing, to trade and
are well-informed about the asset and the market for the asset, as determined
jointly by VitalStream and Hosting. If such parties are unable to reach
agreement within a reasonable period of time, such "Fair Market Value" shall be
determined by an independent appraiser experienced in valuing such type of asset
jointly selected by VitalStream and Hosting. The determination of such appraiser
shall be final and binding upon the Parties and VitalStream shall pay the first
$10,000 of the fees and expenses of such appraiser, after which VitalStream and
Hosting shall each pay one-half of the fees and expenses of such appraiser.
Notwithstanding the foregoing, the "Fair Market Value" of any security listed on
any securities exchange or quoted in the NASDAQ System (including the proposed
Bulletin Board Exchange) or the over-the-counter market shall be the "Market
Price."
(ii) "Market Price" of any security means either
(1) if such security is listed on an exchange, the closing prices of such
security on the principal exchange on which such security is listed, or, if
there has been no sales on such exchange on any day, the closing price of such
security on the principal exchange on the most recent day on which sales have
taken place on such exchange or (2) if such security is not listed on an
exchange but is quoted in the NASDAQ System or on the domestic over-the-counter
market as reported by the National Quotation Bureau, the average of the closing
sales prices as reported by the NASDAQ System or the National Quotation Bureau,
as applicable, in each case over a period of thirty (30) days consisting of the
day as of which the "Market Price" is being determined and the twenty nine (29)
consecutive business days prior to such day on which trades were reported in
such security. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the Fair Market Value thereof.
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(b) Notices. All notices, demands or other communications
to be delivered under or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been received when delivered personally
to the recipient or when sent by facsimile followed by delivery by reputable
overnight courier service (charges prepaid), one day after being sent to the
recipient by reputable overnight courier service (charges prepaid) or five days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Any notice, demand or other communication
hereunder may be delivered by any other means (including telecopy or electronic
mail), but shall not be deemed to have been duly received unless and until it is
actually received by the intended recipient. Such notices, demands and other
communications shall be sent to the addresses indicated below:
If to Hosting, to:
Epoch Hosting, Inc.
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: General Counsel
with a copy (which shall not constitute notice to Hosting) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 212-446-4900
Attention: Xxxx Xxxxx, Esq.
If to the Buyers to:
VitalStream Holdings, Inc.
Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Chief Operating Officer
with a copy (which shall not constitute notice to the Buyers)
to:
Stoel Rives LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile (000) 000-0000
Attn: Xxxxx Xxxxx
If to the Escrow Agent, to:
City National Bank
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Attn: Xxx Xxxxxxx, VP
0000 Xxxxxx xx xxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
or to such other address as any Party hereto to whom notice is to be given may
have furnished to the other Parties hereto in writing in accordance herewith.
(c) Counterparts; Facsimile. This Agreement may be
executed by facsimile and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
(d) Governing Law. This Agreement shall be governing by
and construed in accordance with the laws of the State of California without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California. in furtherance of the foregoing, the internal law of the State of
California shall control the interpretation and construction of this agreement
(and all annexes and exhibits hereto), even though under that jurisdiction's
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
(e) JURISDICTION AND VENUE. ALL JUDICIAL PROCEEDINGS
BROUGHT BY ANY BUYER, ANY VITALSTREAM INDEMNITEE OR HOSTING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN ORANGE COUNTY, CALIFORNIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION AGREEMENTS. EACH PARTY HEREBY WAIVES
ANY CLAIM THAT ORANGE COUNTY, CALIFORNIA IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE.
(f) WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY in any
litigation in any court with respect to, in connection with, or arising out of
this Agreement or the validity, protection, interpretation, collection or
enforcement hereof or thereof. EACH PARTY AGREES THAT THIS SECTION 11(f) IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE OTHER
PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT AND CONSUMMATED THE
TRANSACTIONS CONTEMPLATED HEREBY IF THIS SECTION 11(f) WERE NOT PART OF THIS
AGREEMENT.
(g) Benefits of Agreement. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the Parties hereto
and their respective successors and
10
assigns. Anything contained in the preceding sentence to the contrary
notwithstanding, neither this Agreement nor any of the rights, interests or
obligations herein or hereunder shall be assignable by any Party hereto without
the consent of the other Parties hereto; provided, however, without the consent
of the other Parties, Hosting shall have the right to assign its rights to
receive any of the Escrow Shares released hereunder upon termination of the
Escrow Fund to any Affiliate provided that written notice of such assignment is
furnished to each of the other Parties hereto and such distribution is in
accordance with the terms of the Purchase Agreement. An individual VitalStream
Indemnitee's right to payment from the Escrow Fund may not be assigned except,
upon the death or judicial declaration of incompetency of such VitalStream
Indemnitee, to the executors, administrators or heirs of such VitalStream
Indemnitee.
(h) Modifications. This Agreement shall not be altered
or otherwise amended except pursuant to an instrument in writing signed by each
of the Parties hereto.
(i) Descriptive Headings. The descriptive headings in
this Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement.
(j) Time of the Essence; Computation of Time. Time is of
the essence for each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge of any duty under this
Agreement shall fall upon a Saturday, Sunday or any date on which banks in
Orange County, California are closed, the Party having such privilege or duty
may exercise such privilege or discharge such duty on the next succeeding day
which is a regular business day. Any notice that, pursuant to Section 11(a)
hereof, would be deemed to have been given on a day that is not a business day
will instead be deemed to have been given on the next succeeding business day.
(k) Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable Law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable Law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement or such other Agreement.
(l) Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local,
or foreign Law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
(m) Incorporation of Exhibits. The exhibits identified
in this Agreement are incorporated herein by reference and made a part hereof.
(n) Representations and Warranties. Each of VitalStream
Broadcasting, VitalStream and Hosting hereby represents and warrants (i) that
this Agreement has been duly authorized, executed and delivered on its behalf
and constitutes its legal, valid and binding
11
obligation and (ii) that the execution, delivery and performance of this
Agreement by each of VitalStream Broadcasting, VitalStream and Hosting,
respectively, does not and will not violate any applicable Law.
12
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
VITALSTREAM HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxx
Title: President & Chief Executive Officer
VITALSTREAM BROADCASTING CORPORATION
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxx
Title: President & Chief Executive Officer
EPOCH HOSTING, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------------
Name: Xxxxx Xxxxxx
Title: Secretary
CITY NATIONAL BANK
By: __________________________________________
Name:
Title:
EXHIBIT A
[ESCROW AGENT]
[ADDRESS]
[Date]
Joint Instructions Notice
Ladies and Gentlemen:
Reference is made to the Indemnity Escrow Agreement dated January 15,
2003 (the "Escrow Agreement"), by and among VitalStream Broadcasting
Corporation, a Nevada corporation, VitalStream Holdings, Inc., a Nevada
corporation, Epoch Hosting, Inc., a Delaware corporation and you.
Pursuant to Section 10(a) of the Escrow Agreement, the undersigned
hereby instruct you to disburse from the Escrow Fund (as defined in the Escrow
Agreement) to the Party or Parties set forth on Annex I hereto the respective
amounts set forth opposite their names thereon.
VITALSTREAM HOLDINGS, INC.
By: _______________________________
Name:
Title:
VITALSTREAM BROADCASTING CORPORATION
By: _______________________________
Name:
Title:
EPOCH HOSTING, INC.
By: _______________________________
Name:
Title:
A-1
ANNEX I
[To be supplied by the undersigned to the attached Joint Written Instructions]
A-2
EXHIBIT B
[ESCROW AGENT]
[ADDRESS]
[Date]
Notice of Arbitration Decision
Ladies and Gentlemen:
Reference is made to the Indemnity Escrow Agreement dated January 15,
2003 (the "Escrow Agreement"), by and among VitalStream Broadcasting
Corporation, a Nevada corporation, VitalStream Holdings, Inc., a Nevada
corporation, Epoch Hosting, Inc., a Delaware corporation, and you.
Pursuant to Section 10 of the Escrow Agreement, the undersigned hereby
instructs you to deliver to [insert recipient] _____________ shares of Common
Stock from the Escrow Fund (as defined in the Escrow Agreement) in accordance
with the or decision of the American Arbitration Association a certified copy of
which is attached hereto.
VITALSTREAM HOLDINGS, INC.
By: _______________________________
Name:
Title:
VITALSTREAM BROADCASTING CORPORATION
By: _______________________________
Name:
Title:
EPOCH HOSTING, INC.
By: _______________________________
Name:
Title:
B-1
ANNEX I
[Attach certified copy of arbitration decision]
B-2
EXHIBIT C
[SCHEDULE OF ESCROW AGENT FEES]
C-1
