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EXHIBIT 4.03
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is entered into as of June 1,
1999 (the "EFFECTIVE DATE"), by and among VERITAS Software Corporation, a
Delaware corporation ("VERITAS"), VERITAS Operating Corporation, a Delaware
corporation, TeleBackup Systems Inc., an Alberta corporation ("TELEBACKUP"), the
TeleBackup shareholders listed on Exhibit A attached hereto (the
"SHAREHOLDERS"), Xx. Xxxxx Xxxxx as representative (the "REPRESENTATIVE") of the
Shareholders and Chase Manhattan Bank and Trust Company, National Association,
as escrow agent (the "ESCROW AGENT).
A. This Escrow Agreement is entered into pursuant to that certain
Amended and Restated Combination Agreement, dated as of April 12, 1999, by and
among VERITAS Software Corporation (currently VERITAS Operating Corporation),
VERITAS Holding Corporation (currently VERITAS Software Corporation) and
TeleBackup as such may be amended (the "COMBINATION AGREEMENT"). The Combination
Agreement provides for the recapitalization of TeleBackup pursuant to which
TeleBackup will become a subsidiary of VERITAS and all the voting power of
TeleBackup will be owned by VERITAS (the "ARRANGEMENT"). The capitalized terms
used in this Agreement and not otherwise defined herein will have the meanings
given them in the Combination Agreement; provided, however, that the Escrow
Agent shall not be charged with knowledge of, or under any obligations to
determine or interpret, the meaning of any such terms as so defined in the
Combination Agreement for purposes of performing or observing its duties
hereunder.
B. Upon the consummation of the Arrangement and in connection therewith,
the undersigned Shareholders will become the owners of (i) an aggregate of
632,804 fully paid and non-assessable, non-voting exchangeable shares of
TeleBackup Exchangeco Inc. (the "EXCHANGEABLE SHARES"), which shall be
exchangeable at the option of the holder on a one-for-one basis for VERITAS
common stock, and (ii) an aggregate of 3,308 fully paid and non-assessable,
common shares of VERITAS. The VERITAS common stock received upon exchange of the
Exchangeco shares are referred to herein as the "NEW SHARES".
C. The Combination Agreement provides that ten percent (10%) of the
Exchangeable Shares shown on Exhibit A attached that would be issued to the
Shareholders pursuant to the Arrangement assuming all Shareholders properly
elect to receive Exchangeable Shares (which, together with any equivalent number
of New Shares received in exchange for any Exchangeco shares are hereafter
referred to as the "ESCROW SHARES") shall be withheld by VERITAS and placed in
an escrow account (the "ESCROW ACCOUNT") to secure certain indemnification
obligations of the Shareholders to VERITAS and other Indemnified Persons under
the Combination Agreement on the terms and conditions set forth herein.
D. The parties hereto desire to establish the terms and conditions
pursuant to which the Escrow Shares will be deposited, held in, and disbursed
from the Escrow Account.
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NOW, THEREFORE, the parties hereto hereby agree as follows:
1. ESCROW AND INDEMNIFICATION
(a) Escrow of Shares. Promptly after the Effective Date,
notification of which shall have been given to the Escrow Agent in writing,
VERITAS will cause the Escrow Shares to be deposited with the Escrow Agent, who
will hold them in escrow as collateral for the indemnification obligations of
the Shareholders under Section 11.2 of the Combination Agreement until VERITAS
is required to release such Escrow Shares pursuant to the terms of this
Agreement. The Escrow Shares will include "Additional Escrow Shares" as that
term is defined in Section 2(b) of this Agreement. The Escrow Agent agrees to
accept delivery of the Escrow Shares and to hold such Escrow Shares in escrow
subject to the terms and conditions of this Agreement.
(b) Indemnification. Each of the parties to this Agreement
other than the Escrow Agent (collectively, the "INTERESTED PARTIES") agree that,
(i) VERITAS and the other Indemnified Persons are indemnified pursuant to the
terms of Section 11.2 of the Combination Agreement (which terms and the terms
defined therein are incorporated herein by reference) from and against any
Claims, subject to the limitations set forth in Section 11.2 of the Combination
Agreement and herein (ii) for purposes of this Agreement, references to VERITAS
will include all other Indemnified Persons, as applicable, and (iii) the Escrow
Shares will be the sole security for this indemnity obligation, subject to the
limitations, and in the manner provided, in Section 11.2 of the Combination
Agreement and this Agreement. The foregoing incorporation by reference of
Section 11.2 of the Combination Agreement (and the terms defined therein) by the
Interested Parties shall not in any way be deemed to cause the Escrow Agent to
be charged with knowledge thereof, or under any duty to determine or interpret,
or to determine or compel compliance with, such terms. Promptly upon becoming
aware of any Claim giving rise to indemnification rights under the Combination
Agreement, VERITAS will give the Representative notice of such Claim as provided
for in Section 3 hereof (the "NOTICE OF CLAIM") and will also provide the Escrow
Agent with a copy of the Notice of Claim. The Escrow Agent will not transfer any
of the Escrow Shares held in the Escrow Account pursuant to a Notice of Claim
until such Notice of Claim has been finally resolved in accordance with Section
4 below.
(c) Third Party Claims. In the case of a Third Party Claim
(as defined in Section 3 herein), within ten days of receipt of a Notice of
Claim, the Representative may, by written notice to VERITAS, elect to, at its
own expense, participate in or assume control of the negotiation, settlement or
defense of the Claim and, in such event, the Representative shall reimburse
VERITAS for all of VERITAS' out-of-pocket expenses as a result of such
participation or assumption. If the Representative elects to assume such
control, VERITAS shall have the right to participate in the negotiation,
settlement or defense of such Third Party Claim and to retain counsel to act on
its behalf, provided that the fees and disbursements of such counsel shall be
paid by VERITAS unless the Representative consents to the retention of such
counsel at its expense. If the Representative, having elected to assume such
control, thereafter fails to defend the Third Party Claim within a reasonable
time, VERITAS shall be entitled to assume such control and the Representative
shall be bound by the results obtained by VERITAS with respect to such Third
Party Claim. If either Party makes a payment, resulting in settlement of the
Third Party Claim, which
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precludes a final determination of the merits of the Third Party Claim and
VERITAS and the Representative are unable to agree whether such payment was
unreasonable in the circumstances having regard to the amount and merits of the
Third Party Claim, then such dispute shall be referred to and finally settled by
binding arbitration (as provided for in Section 5 herein) from which there shall
be no appeal.
(d) Settlement of Third Party Claims. If the
Representative fails to assume control of the defense of any Third Party Claim,
VERITAS shall have the exclusive right to contest, settle or pay the amount
claimed. Whether or not the Representative assumes control of the negotiation,
settlement or defense of any Third Party Claim, neither Party shall settle any
Third Party Claim without the written consent of the other Party, which consent
shall not be unreasonably withheld or delayed; provided, however, that the
liability of such Party shall be limited to the proposed settlement amount if
any such consent is not obtained for any reason within a reasonable time after
the request therefor.
(e) Direct Claims. In the case of a Direct Claim (as
defined in Section 3 herein), the Representative shall have 60 days from receipt
of notice of the Claim within which to make such investigation of the Claim as
the Representative considers necessary or desirable. For the purpose of such
investigation, VERITAS shall make available to the Representative the
information relied upon by VERITAS to substantiate the Claim, together with all
such other information as the Representative may reasonably request. If both
Parties agree at or before the expiration of such 60 day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Representative shall immediately pay to VERITAS the full agreed upon amount of
the Claim or it will be settled pursuant to Section 4(a) below. Failing such
agreement, the matter shall be referred to binding arbitration as provided for
in Section 5 herein.
(f) Limitation on Liability. The Shareholders shall not
have any liability for indemnification under Section 11.2 of the Combination
Agreement unless and until the accumulated aggregate amount of Claims of VERITAS
exceeds $200,000, following which all Claims of VERITAS (including the first
$200,000 thereof) shall be recoverable as provided in this Agreement net of any
recoveries under insurance policies, indemnities or other similar recoveries.
(g) The Escrow Agent shall have no responsibility for or
with respect to compliance by the Interested Parties with the terms or
requirements of this Section 1.
2. DEPOSIT OF ESCROW SHARES; RELEASE FROM ESCROW.
(a) Delivery of Escrow Shares. Promptly after the
Effective Date, VERITAS will cause the Escrow Shares to be delivered to the
Escrow Agent in the form of duly authorized stock certificates issued in the
name of the Shareholders (as set forth in Exhibit A) and the Escrow Agent shall
deposit the Escrow Shares in Account No. C28978 at the Escrow Agent (or an
affiliate or custodian acting on its behalf). In the event VERITAS issues any
Additional Escrow Shares (as defined below), such shares will be issued and
delivered to the Escrow Agent in the same manner as the Escrow Shares were
delivered. The Escrow Shares shall be maintained in such account until the
release of the Escrow Shares in accordance with Sections 2(c) and 2(d) hereof.
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(b) Dividends, Voting and Rights of Ownership. Except for
tax-free dividends paid in stock declared with respect to the Escrow Shares
pursuant to Section 305(a) of the Code or VERITAS stock issued to the
Shareholders in connection with any stock split effected with respect to the
Escrow Shares ("ADDITIONAL ESCROW SHARES"), any cash dividends, dividends
payable in securities or other distributions of any kind made in respect of the
Escrow Shares will be distributed currently by VERITAS to the Shareholders. The
Shareholders will have the right to vote the Escrow Shares deposited in its
Escrow Account so long as such Escrow Shares are held in escrow, and VERITAS
will take all necessary steps to allow the exercise of such rights. While the
Escrow Shares remain in the Escrow Agent's possession pursuant to this
Agreement, the Shareholders will retain and will be able to exercise all other
incidents of ownership of said Escrow Shares that are not inconsistent with the
terms and conditions hereof.
(c) Distribution to the Shareholders. On the first
anniversary of Effective Date (the "FINAL RELEASE DATE"), the Escrow Agent will
release the Escrow Shares, plus all Additional Escrow Shares, to the
Shareholders less (A) any Escrow Shares delivered to VERITAS in accordance with
Section 4 hereof in satisfaction of Claims and (B) any Escrow Shares subject to
delivery to VERITAS in accordance with Section 4 hereof with respect to any then
pending but unresolved Claims of VERITAS, subject to the Escrow Agent's receipt
of written instructions from VERITAS and the Representative as provided in
Section 2(d) below. Any Escrow Shares held as a result of clause (B) will be
released to the shareholders or released to VERITAS for cancellation (as
appropriate) promptly upon resolution of each specific Claim involved pursuant
to Section 4. All Claims (and claims for Estimated Damages, as defined below)
will be allocated among the Shareholders (and against each Shareholder's Escrow
Shares) on a pro rata basis, based upon their respective pro rata percentages as
set forth on Exhibit A.
(d) Release of Shares. The Escrow Shares will be held by
Escrow Agent until released pursuant to Section 2(c) above or Section 4, below.
On the Final Release Date (in the case of Section 2(c)) or after the applicable
release condition is met (in the case of Section 4), as the case may be, Escrow
Agent will deliver to the Shareholders the requisite number of Escrow Shares to
be released on such date as identified by VERITAS and the Representative to the
Escrow Agent in writing (in the case of Section 2(c)) or as identified in the
applicable Notice of Claim (in the case of Section 4(a)) or in the final
decision of litigation or arbitration, as applicable (in the case of Section
4(b)) received by the Escrow Agent, as the case may be. Such delivery will be in
the form of stock certificate(s) issued in the name of the Shareholders. VERITAS
and the Representative undertake to deliver a timely written notice to Escrow
Agent identifying the number of Escrow Shares to be released at such time.
VERITAS will take such action as may be necessary to cause stock certificate(s)
to be issued in the name of the Shareholders. Certificates representing Escrow
Shares for the persons and entities listed on Exhibit B will bear a legend
indicating that they are subject to resale restrictions under Rule 145. Cash
will be paid in lieu of fractions of Escrow Shares in an amount equal to the
product determined by multiplying such fraction by the per share Value (as
defined in Section 4(a) below). Within five business days after written request
from the Representative, VERITAS will deposit with Escrow Agent sufficient funds
to pay such cash amounts for fractional shares together with written
instructions identifying the cash amount to be paid to each Shareholder.
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(e) No Encumbrance. Unless otherwise agree to in writing
by VERITAS, no Escrow Shares or any beneficial interest therein may be pledged,
sold, assigned or transferred, including by operation of law, by the
Shareholders or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of the Shareholders (other than such
Shareholders' obligations under Section 11.2 of the Combination Agreement),
prior to the delivery to the Shareholders of the Escrow Shares by the Escrow
Agent.
(f) Power to Transfer Escrow Shares. The Escrow Agent is
hereby granted the power to effect any transfer of Escrow Shares contemplated by
this Agreement. VERITAS and its transfer agent will cooperate with the Escrow
Agent in promptly issuing stock certificates to effect such transfers.
3. NOTICE OF CLAIM. Each Notice of Claim by VERITAS will be in
writing delivered to the Representative with a copy to the Escrow Agent, will
specify whether the Claim arises as a result of a claim by a Person against
VERITAS (a "THIRD PARTY CLAIM") or whether the Claim does not so arise (a
"DIRECT CLAIM"), and shall also specify with reasonable particularity (to the
extent that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known, or if not known,
VERITAS' good faith estimate of the reasonably foreseeable maximum amount of the
alleged damages arising from such Claim (which amount may be the amount of
damages claimed by a third party plaintiff in an action brought against VERITAS
based on alleged facts, which if true, would constitute a breach of TeleBackup's
or the Shareholders' representations and warranties) (the "ESTIMATED DAMAGES"),
the basis thereof and documentation supporting same.
As among themselves, the Interested Parties agree that if,
through the fault of VERITAS, the Representative does not receive notice of any
Claim in time effectively to contest the determination of any liability
susceptible of being contested, then the liability of the Shareholders to
VERITAS under Section 11.2 of the Combination Agreement shall be reduced by the
amount of any increased liability incurred by the Shareholders resulting from
VERITAS' failure to give such notice on a timely basis.
4. RESOLUTION OF NOTICE OF CLAIM AND TRANSFER OF ESCROW SHARES.
Any Notice of Claim received by the Representative and the Escrow Agent
(subject, as among the Interested Parties, to the limitation contained in
Section 1(f) herein), will be resolved as follows:
(a) Uncontested Claims. In the event that the
Representative does not either (i) contest a Notice of Claim in writing to the
Escrow Agent and VERITAS or (ii) pay the amount demanded (as certified by the
Representative to the Escrow Agent in writing), all within 60 days after Notice
of Claim was received by the Escrow Agent, then the Escrow Agent will promptly
submit for transfer to VERITAS for cancellation that number of Escrow Shares
having a Value (as defined below) equal to the amount of the Claim and/or
Estimated Damages specified in the Notice
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of Claim and will notify the Representative of such transfer. For purposes of
this Agreement, Escrow Shares shall be deemed to have a per share "VALUE" equal
to the average of the closing sale prices of one share of VERITAS common stock
reported in the Wall Street Journal, on the basis of information provided by the
NASDAQ Stock Market for each of the ten trading days ending two trading days
preceding the date the Representative receives the Notice of Claim.
(b) Contested Claims. In the event that the Representative
delivers written notice contesting all, or a portion of, a Notice of Claim to
VERITAS and the Escrow Agent within the 60-day period provided above, matters
that are subject to Third Party Claims brought against VERITAS in a litigation
or arbitration will await the final decision, award or settlement of such
litigation or arbitration and shall be subject to the provisions and procedures
set forth in this Agreement. Matters that are subject to Direct Claims and that
are not resolved by the Representative and VERITAS as provided for in Section
1(e) herein will be settled by binding arbitration which will be conducted as
provided in Section 5 herein. Any portion of the Notice of Claim that is not
contested will be resolved as set forth above in Section 4(a). The final
decision of the arbitrator will be furnished to the Escrow Agent, the
Representative and VERITAS in writing and will constitute a conclusive
determination of the issue in question, binding upon the Shareholders and
VERITAS. After notice that the Notice of Claim is contested by the
Representative, the Escrow Agent will continue to hold in the Escrow Account
Escrow Shares having a Value sufficient to cover such Claim (and Estimated
Damages, if any) (notwithstanding the expiration of the Final Release Date)
until (i) execution, and delivery to the Escrow Agent, of a settlement agreement
by VERITAS and the Representative setting forth a resolution of the Notice of
Claim, (ii) receipt by the Escrow Agent of a copy of the final award of the
arbitrator or court, as the case may be, together with a written certificate
from VERITAS or the Representative certifying that the same is a true, accurate
and complete copy of a final decision, award or settlement of such Notice of
Claim pursuant to this Section 4(b), or (iii) one year has elapsed since the
plaintiff has taken any further action in the advance of the Claim.
(c) Determination of Amount of Claims. Any amount owed to
VERITAS hereunder, as finally determined pursuant to Section 4(a) or (b) above,
will constitute an Uncontested Claim under Section 4(a) hereof.
(d) No Exhaustion of Remedies. VERITAS need not exhaust
any other remedies that may be available to it but shall proceed directly in
accordance with the provisions of this Agreement. VERITAS may institute claims
against the Escrow Shares and in satisfaction thereof may recover all or a
portion of the Escrow Shares, in accordance with the terms of this Agreement,
without making any other claims directly against the Shareholders and without
rescinding or attempting to rescind the transactions consummated pursuant to the
Combination Agreement. The assertion of any single Claim for indemnification
hereunder will not bar VERITAS from asserting other Claims hereunder.
(e) Deliveries to Shareholders. Deliveries to Shareholders
shall be made to the applicable address set forth on Exhibit A, or such other
address as to which the Escrow Agent shall have received prior written notice
from the Representative pursuant to Section 7, on which the Escrow Agent may
rely conclusively. All risks of shipment shall be borne by the intended
recipient.
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5. ARBITRATION. VERITAS and the Representative agree that they
shall use best reasonable efforts to settle amicably disagreements arising from
or in connection with this Agreement. To this effect, following notice of either
to the other (with copy to the Escrow Agent) of a disagreement, which shall
include any failure to agree upon a matter to be agreed upon (a "DISPUTE") the
parties hereto shall consult and negotiate with one another in good faith an
understanding to reach a just and equitable solution. If those attempts fail
after a period of ten (10) Business Days from the time the parties have been
notified of the Dispute, then every such Dispute shall be settled by arbitration
in Santa Xxxxx County, California, and, except as herein specifically stated, in
accordance with the commercial arbitration rules of American Arbitration
Association ("AAA RULES") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now or
hereafter be contained in the AAA Rules. Any judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction over the subject
matter thereof. The arbitrator shall have the authority to grant any equitable
and legal remedies that would be available in a judicial proceeding instituted
to resolve the Dispute.
(a) Selection of Arbitrator. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with California contract law; provided,
however, that such lawyers cannot work for a firm then performing services for
either party, that each party will have the opportunity to make such reasonable
objection to any of the arbitrators listed in such party may wish and that the
American Arbitration Association will select the arbitrator from the list of
arbitrators as to whom neither party makes any such objection. In the event that
the foregoing procedure is not followed, each party will choose one person from
the list of arbitrators provided by the American Arbitration Association
(provided that such person does not have a conflict of interest), and the two
persons so selected will select from the list provided by the American
Arbitration Association the person who will act as arbitrator.
(b) Payment of Costs. VERITAS and the Shareholders will
bear the expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator may apportion the costs, fees
and expenses related to the arbitration, including reasonable fees and expenses
of attorneys, accountants and other professionals incurred in connection with
the arbitration, between the parties as such arbitrator deems just and
equitable. VERITAS and the Shareholders shall pay in equal proportions all
reasonable costs and expenses of the Escrow Agent in connection with any
arbitration.
(c) Burden of Proof. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
(d) Award. Upon the conclusion of the arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
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(e) Appeal of Award. The award of the arbitrator shall be
appealable to the federal courts located in the Northern District of California
solely on the grounds of manifest error in the law or in application of the
facts to the law or in the case of fraudulent conduct on the part of the
arbitrator.
(f) Terms of Arbitration. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
(g) Exclusive Remedy. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy to
VERITAS or the Shareholders for any Dispute arising out of this Agreement.
6. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) The Escrow Agent shall only have those duties as are
expressly set forth in this Agreement, and no implied duties shall be read into
this Agreement or the rest of the Escrow Agreement. The Escrow Agent will incur
no liability with respect to any action taken or suffered by it in reliance upon
any notice, direction, instruction, consent, statement or other document
believed by it to be genuine and duly authorized, nor for any other action or
inaction, except its own willful misconduct or gross negligence. The Escrow
Agent will not be responsible for the validity or sufficiency of this Agreement.
In all questions arising under this Agreement, the Escrow Agent may rely on the
advice or opinion of counsel, including in-house counsel, and for anything done,
omitted or suffered in good faith by the Escrow Agent based on such advice or
opinion, the Escrow Agent will not be liable to anyone. The Escrow Agent will
not be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner satisfactory to it.
The Escrow Agent shall not be obligated to take any legal action or other action
hereunder which might, in its judgment, involve any expense or liability unless
it shall have been furnished with acceptable indemnification.
(b) In the event conflicting demands are made or
conflicting notices are served upon the Escrow Agent with respect to the Escrow
Account, the Escrow Agent will have the absolute right, at the Escrow Agent's
election, to do either or both of the following: (i) resign so a successor can
be appointed pursuant to Section 10 hereof or (ii) file a suit in interpleader
and obtain an order from a court of competent jurisdiction requiring the parties
to interplead and litigate in such court their several claims and rights among
themselves. In the event such interpleader suit is brought, the Escrow Agent
will thereby be fully released and discharged from all further obligations
imposed upon it under this Agreement, and VERITAS will pay the Escrow Agent
(subject to reimbursement from the Shareholders pursuant to Section 9 hereof)
all costs, expenses and reasonable attorney's fees expended or incurred by the
Escrow Agent pursuant to the exercise of Escrow Agent's rights under this
Section 6 (such costs, fees and expenses will be treated as extraordinary fees
and expenses for the purposes of Section 9 hereof).
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(c) In no event shall the Escrow Agent be liable for any
indirect, punitive, special or consequential damages, or any amount in excess of
the value of the pledged collateral (as of the date of the action or omission
giving rise to liability).
(d) The Escrow Agent shall in no instance be under any
duty to give any property held by it hereunder any greater degree of care than
it gives its own similar property. The Escrow Agent shall not be required to
invest any funds that may be held hereunder. In no event shall the Escrow Agent
have any obligation to advance or risk funds.
(e) The Escrow Agent shall not be deemed to have notice of
any fact, claim or demand with respect hereto unless actually known by an
officer charged with responsibility for administering this Agreement or unless
in writing received by the Escrow Agent and making specific reference to this
Agreement.
(f) All indemnifications contained in this Agreement shall
survive the resignation or removal of the Escrow Agent, and shall survive the
termination of this Agreement.
(g) The Escrow Agent is not responsible for the recitals
appearing in this Agreement. The recitals shall be deemed to be statements of
the other parties to this Agreement.
(h) The Escrow Agent has no responsibility for the
sufficiency of this Agreement for any purpose. Without limiting the foregoing,
if any security interest is referred to herein, the Escrow Agent shall have no
responsibility for, and makes no representation or warranty as to, the creation,
attachment or perfection of any such security interest or the sufficiency of
this Agreement therefor.
(i) Nothing in this Agreement shall obligate the Escrow
Agent to qualify to do business or act in any jurisdiction in which it is not
presently qualified to do business, or be deemed to impose upon the Escrow Agent
the duties of a trustee. The duties of the Escrow Agent under this Agreement are
strictly ministerial in nature.
(j) In no event shall the Escrow Agent have any liability
for any failure or inability of any of the other parties to perform or observe
its duties under the Agreement, or by reason of a breach of this Agreement by
either of the other parties hereto. In no event shall the Escrow Agent be
obligated to take any action against any of the other parties to compel
performance hereunder.
(k) The Escrow Agent shall in no instance be obligated to
commence, prosecute or defend any legal proceedings in connection herewith. The
Escrow Agent shall be authorized and entitled, however, in any instance to
commence, prosecute or defend any legal proceedings in connection herewith,
including without limitation any proceeding it may deem necessary to resolve any
matter or dispute, to obtain a necessary declaration of rights, or to appoint a
successor upon resignation (and after failure by VERITAS to appoint a successor,
as provided hereinafter).
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(l) In the event of any ambiguity or uncertainty under
this Agreement, or in any notice, instruction, or other communication received
by the Escrow Agent hereunder, the Escrow Agent may, in its discretion, refrain
from taking action, and may retain the pledged collateral until and unless it
receives written instruction signed by VERITAS and the Representative which
eliminates such uncertainty or ambiguity.
(m) The Escrow Agent shall have no liability for the
actions or omissions of any book-entry depository, transfer agent, nominee,
correspondent, subagent or subcustodian. The Escrow Agent shall be permitted to
use the services of any recognized securities depository or clearing agent, such
as (without limitation) The Depository Trust Company and the Federal Reserve
Bank book-entry securities system, as applicable, in connection with any
securities or investments held hereunder.
(n) The Escrow Agent shall not be responsible or liable
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, laws or governmental regulations changes or
superimposed after the fact, fire, communication line failures, power failures,
computer viruses, earthquakes or other disasters, or to unavailability of
Federal Reserve Bank wire or telex facilities.
7. NOTICES. Any notice, certificate, consent, determination or
other communication required or permitted to be given or made under this
Agreement shall be in writing and shall be effectively given and made if (i)
delivered personally, (ii) sent by prepaid courier service or mail, or (iii)
sent prepaid by fax and receipt thereof is confirmed, in each case to the
applicable address set out below:
(i) if to the Representative, to:
Xx. Xxxxx Xxxxx
c/o TeleBackup Systems Inc.
000, 000-00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 126
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxx
Xxxxxx XxXxxx
3400 Petro-Canada Centre
000 - 0 Xxxxxx XX
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
(ii) if to VERITAS, to:
VERITAS Software Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(iii) If to the Escrow Agent, to:
Chase Manhattan Bank and Trust Company, N.A.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention.: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as a party may have furnished to the other parties by
written notice given in accordance with this Section 7.
Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of delivery if
delivered, or on the day of faxing or sending by other means of recorded
electronic communication, provided that such day in either event is a Business
Day and the communication is so delivered, faxed or sent before 4:30 p.m. on
such day. As used herein, a "BUSINESS DAY" shall be any day which is not a
Saturday, Sunday or federal holiday in the United States. Otherwise, such
communication shall be deemed to have been given and made and to have been
received on the next following Business Day. Any such communication sent by mail
shall be deemed to have been given and made and to have been received on the
fifth Business Day following the mailing thereof; provided however that no such
communication shall be mailed during any actual or apprehended disruption of
postal services. Any such communication given or made in any other manner shall
be deemed to have been given or made and to have been received only upon actual
receipt; provided that for any notice or other
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12
writing required to be delivered to the Escrow Agent, such notice or other
writing shall only be deemed delivered when actually received.
Any Party may from time to time change its address under this
Section 7 by notice to the other party given in the manner provided by this
Section.
In the event of receipt by the Escrow Agent of any cash hereunder
for fractional shares, the Representative shall provide to the Escrow Agent
written wire payment instructions for any Shareholder wishing to receive payment
by wire transfer, on which the Escrow Agent may rely conclusively, and in the
absence of such written wire instruction, the Escrow Agent may make any payment
to any Shareholder by check to the address set forth in Exhibit A (or such other
address for any Shareholder as to which the Escrow Agent has received prior
written notice from the Representative).
8. GENERAL.
(a) Governing Law, Assigns. This Agreement will be
governed by and construed in accordance with the internal laws of the State of
California without regard to conflict-of-law principles and will be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
(b) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(c) Entire Agreement. Except as otherwise set forth in the
Combination Agreement, this Agreement constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement
and supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any
condition or of any breach of any provision of this Agreement will be effective
unless in writing. No waiver by any party of any such condition or breach, in
any one instance, will be deemed to be a further or continuing waiver of any
such condition or breach or a waiver of any other condition or breach of any
other provision contained herein.
9. FEES AND EXPENSES AND INDEMNITY.
(a) All fees and expenses of the Escrow Agent incurred in
the acceptance of, and legal fees and expenses incurred in the preparation of
this Agreement, and in the ordinary course of performing its responsibilities
hereunder will be paid by VERITAS upon receipt of a written invoice by Escrow
Agent. Any extraordinary fees and expenses, including without limitation any
fees or expenses incurred by the Escrow Agent in connection with a dispute over
the distribution of Escrow Shares or the validity of a Notice of Claim, will be
paid 50% by VERITAS and 50% by the Shareholders. The Shareholders' liability for
the reasonable fees and expenses of
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the Escrow Agent may be paid by VERITAS and recovered as a Claim hereunder out
of the Escrow Shares. To the extent that insufficient Escrow Shares remain to
cover the Shareholders' liability for the fees and expenses of the Escrow Agent,
VERITAS shall indemnify the Escrow Agent for such fees and expenses.
(b) Each of VERITAS and the Shareholders, jointly and
severally, hereby covenants and agrees to indemnify the Escrow Agent, its
directors, officers, agents and employees, for, and to defend and hold them
harmless from and against, any and every loss, liability, damage, claim, cost
and expense of any nature incurred or suffered by the Escrow Agent and arising
out of or in connection with this Agreement or the administration of this
Agreement or the due performance or observance by the Escrow Agent of its
responsibilities or services under this Agreement (including but not limited to
attorneys fees and other costs and expenses of defending or preparing to defend
against any claim or liability but excluding loss of profits, special, punitive
or consequential damages), unless and except to the extent such loss, liability,
damage, cost or expense shall be caused by the Escrow Agent's own willful
misconduct or gross negligence. The Escrow Agent shall be entitled to
reimbursement on demand for all expenses incurred in connection with the
administration of this Agreement or the escrow created hereby which are in
excess of its compensation for normal services hereunder, including, without
limitation, payment of any reasonable legal fees and expenses incurred by the
Escrow Agent in connection with the resolution of any claim by any party
hereunder.
(c) Each of VERITAS and the Shareholders, jointly and
severally, agree to assume any and all obligations imposed now or hereafter by
any applicable tax law with respect to the payment of pledged collateral under
this Agreement, and, without limiting the generality of Section 9(b) above,
hereby agree to indemnify and hold the Escrow Agent harmless from and against
any taxes, additions for late payment, interest, penalties and other expenses,
that may be assessed against the Escrow Agent on any such payment or other
activities under this Agreement. VERITAS and the Representative undertake to
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting in connection
with its acting as Escrow Agent under this Agreement. VERITAS and the
Shareholders, jointly and severally, each agrees to indemnify and hold the
Escrow Agent harmless from any liability on account of taxes, assessments or
other governmental charges, including without limitation the withholding or
deduction or the failure to withhold or deduct same, and any liability for
failure to obtain proper certifications or to properly report to governmental
authorities, to which the Escrow Agent may be or become subject in connection
with or which arises out of the due performance by the Escrow Agent of this
Agreement, including costs and expenses (including reasonable legal fees),
interest and penalties but excluding any criminal or quasi-criminal fines or
sanctions. VERITAS and the Representative shall each promptly provide to Escrow
Agent with appropriate IRS Forms W-9 for taxpayer indemnification number
certifications, or Forms W-8 for non-resident alien certifications. The parties
hereto understand that, in the event their tax identification numbers are not
certified to the Escrow Agent, the Internal Revenue Code, as amended from time
to time, may require withholding of a portion of dividends or other income
earned on the Escrow Shares.
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10. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
notice of its resignation to the parties to this Agreement, specifying a date
not less than ten business days' following such notice date of when such
resignation will take effect. VERITAS will designate a successor Escrow Agent
prior to the expiration of such ten-day period by giving written notice to the
Escrow Agent and the Representative. VERITAS may appoint a successor Escrow
Agent without the consent of the Representative so long as such successor is a
bank with net assets of at least $50,000,000, and may appoint any other
successor Escrow Agent with the consent of the Representative, which will not be
unreasonably withheld. The Escrow Agent will promptly deliver the Escrow Shares
to such designated successor. If no successor Escrow Agent is named by VERITAS
and the Representative, the Escrow Agent may apply to a court of competent
jurisdiction for appointment of a successor Escrow Agent.
11. LIMITATION OF RESPONSIBILITY. The Escrow Agent's duties are
limited to those set forth in this Agreement and applicable laws, and Escrow
Agent is not charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement including without limitation the
Combination Agreement.
12. AMENDMENT. This Agreement may be amended by the written
agreement of VERITAS, the Escrow Agent and the Shareholders, provided that, if
the Escrow Agent does not agree to an amendment agreed upon by VERITAS and the
Shareholders (except an amendment adversely affecting the rights or protections
of the Escrow Agent), the Escrow Agent will resign and VERITAS will appoint a
successor Escrow Agent in accordance with Section 10 above.
13. DISPUTE RESOLUTION RELATING TO DISPUTES INVOLVING THE ESCROW
AGENT. 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 said Escrow Shares until
such dispute shall have been settled either by the mutual written agreement of
the parties involved or by a final order, decree or judgment of court in the
United States of America, the time for perfection of an appeal of such order,
decree or judgment 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 Fund.
14. CONSENT TO JURISDICTION AND SERVICE RELATING TO DISPUTES
INVOLVING THE ESCROW AGENT. VERITAS and the Shareholders hereby absolutely and
irrevocably consent and submit to the jurisdiction of the courts in the State of
California (and of any Federal court located in said state in connection with
any actions or proceedings brought against VERITAS and the Shareholders by the
Escrow Agent arising out of or relating to this Escrow Agreement). In any such
action or proceeding, VERITAS and the Shareholders 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
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directed to VERITAS and the Representative, as the case may be, as their
respective addresses in accordance with Section 7 hereof.
15. REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible as evidence.
16. AUTHORITY OF REPRESENTATIVE. The Shareholders hereby consent
to and approve (i) the use of the Escrow Shares as collateral for the
Shareholder's indemnification obligations under Section 11.2 of the Combination
Agreement in the manner set forth in this Agreement, (ii) the appointment of the
Representative under this Agreement and as the attorney-in-fact and agent for
and on behalf of each Shareholder and the taking by the Representative of any
and all actions and the making of any decisions required or permitted to be
taken by the Representative under this Agreement (including, without limitation,
the exercise of the power to: (a) authorize delivery to VERITAS of Escrow Shares
in satisfaction of claims by VERITAS; (b) agree to, negotiate, enter into
settlements and compromises of and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims; (c) resolve any
claim made by Indemnified Persons pursuant to Section 11.2 of the Combination
Agreement; and (d) take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing) and (iii) to all of the
other terms, conditions and limitations in this Agreement.
(a) The Representative shall not be liable for any act done or
omitted hereunder as Representative while acting in good faith and in the
exercise of reasonable judgment. The Shareholders on whose behalf the Escrow
Shares were contributed to the Escrow Account shall severally indemnify the
Representative and hold the Representative harmless against any loss, liability
or expense incurred without negligence or bad faith on the part of the
Representative and arising out of or in connection with the acceptance or
administration of the Representative's duties hereunder, including the
reasonable fees and expenses of any legal counsel retained by the
Representative, but excluding loss of profits, special, punitive or
consequential damages.
(b) A decision, act, consent or instruction of the Representative
shall constitute a decision of all the Shareholders and shall be final, binding
and conclusive upon each of such Shareholders, and the Escrow Agent and VERITAS
may rely upon any such decision, act, consent or instruction of the
Representative as being the decision, act, consent or instruction of each such
Shareholder. The Escrow Agent and VERITAS are hereby relieved from any liability
to any person for any acts done by them in accordance with such decision, act,
consent or instruction of the Representative.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
VERITAS SOFTWARE CORPORATION TELEBACKUP SYSTEMS INC.
By: /s/ XXXX XXXXXX By: /s/ XXXXX XXXXX
------------------------------- -------------------------------
Xxxx Xxxxxx, President and Xx. Xxxxx Xxxxx, President and
Chief Executive Officer Chief Executive Officer
VERITAS OPERATING CORPORATION ESCROW AGENT
Chase Manhattan Bank and Trust
Company National Association
By: /s/ XXXX XXXXXX By: /s/ XXXXX XXXXX
------------------------------- -------------------------------
Xxxx Xxxxxx, President and Authorized Signatory
Chief Executive Officer
REPRESENTATIVE: SHAREHOLDERS
By: /s/ XXXXX XXXXX By: /s/ XXXXX XXXXX
------------------------------- -------------------------------
By: /s/ XXXX XXXXXXX
-------------------------------
By: /s/ XXXXXX XXXXXXXXX
-------------------------------
By: /s/ XXXXX XXXX
-------------------------------
By: /s/ XXX XXXX
-------------------------------
By: /s/ XXXXXXX XXXXX
-------------------------------
SIGNATURE PAGE TO
ESCROW AGREEMENT
17
EXHIBIT A
NUMBER OF NUMBER OF
TELEBACKUP EXCHANGEABLE PRO RATA
NAME AND ADDRESS SHARES SHARES ESCROW SHARES PERCENTAGE
---------------- ---------- ------------ ------------- ----------
Panzer Group Ltd. 1,283,910 169,900 16,990 26.71%
R.R. 2 Stn. LCD 1
Xxxxxxx XX X0X 0X0
000000 Xxxxxxx Ltd. 1,468,000 194,260 19,426 30.54%
c/o Xxxxxx Xxxxxx
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx XX X0X 0X0
Xxxxxx Xxxxxxxxx 36,000 4,764 476 0.75%
0000 Xxxxxxxxx Xxxxx XX
Xxxxxxx XX X0X 0X0
Xxxx Xxxxxxx 122,400 16,197 1,620 2.55%
Xxx 000, Xxxx 00,
X.X. 0
Xxxxxxx XX
Xxx Xxxx 26,000 3,441 344 0.54%
Xxxx Developments Inc. 40,872 5,409 541 0.85%
Xxxx 00, Xxx 0, X.X. 00
Xxxxxxx XX X0X 0X0
X.X. Xxxxxxxxxx 98,959 13,095 1,309 2.06%
R.R. 2
Xxxxxxx XX X0X 0X0
Xxxx Xxxxxxxx 45,000 5,955 595 0.94%
0000 Xxxxxxx Xxxxxxx Xxxxx
XX
Xxxxxxx XX X0X 0X0
Kenbeau Ltd. and 30,000 3,970 397 0.62%
Xxxxxxx Xxxxx
00 Xxxxxx Xxxxx XX
Xxxxxxx XX X0X 0X0
Xxxxx Xxxx 25,000 3,308* 331 0.52%
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx XX X0X 0X0
18
NUMBER OF NUMBER OF
TELEBACKUP EXCHANGEABLE PRO RATA
NAME AND ADDRESS SHARES SHARES ESCROW SHARES PERCENTAGE
---------------- ---------- ------------ ------------- ----------
Xxxxx Xxxxx 650,300 86,064 8,606 13.53%
00 Xxxxxxxx Xxxxx XX
Xxxxxxx XX X0X 0X0
000000 Xxxxxxx Ltd. 322,000 42,610 4,261 6.70%
Xxx 0, Xxxx 00, X.X. 0
Xxxxxxx XX X0X 0X0
713801 Alberta Ltd. 658,500 87,139 8,714 13.70%
Xxx 0, Xxxx 00, X.X. 0
Xxxxxxx XX X0X 0X0
* VERITAS Shares
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EXHIBIT B
None
