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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
MAY 28, 1999
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Date of Report (Date of earliest event reported)
VERITAS SOFTWARE CORPORATION
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(Exact name of Registrant as specified in its charter)
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DELAWARE 000-26247 77-0507675
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(State of incorporation) (Commission file number) (I.R.S. Employer Identification No.)
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1600 PLYMOUTH STREET
MOUNTAIN VIEW, CALIFORNIA 94043
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(Address of principal executive offices, including zip code)
(650) 335-8000
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(Registrant's telephone number, including area code)
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CONTENTS
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Item 2: Acquisition or Disposition of Assets 3
Item 7: Financial Statements and Exhibits 4
Signatures 7
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ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On May 28, 1999, Registrant ("New VERITAS" or the "Company"), acquired all
of the Seagate Software Network & Storage Management Group ("NSMG") business
(the "NSMG Combination"), pursuant to an Amended and Restated Agreement and Plan
of Reorganization, dated as of April 15, 1999, among the Company, VERITAS
Software Corporation, a Delaware corporation ("Old VERITAS"), Seagate
Technology, Inc., a Delaware corporation ("STI"), Seagate Software, Inc., a
Delaware corporation ("SSI"), and Seagate Software Network & Storage Management
Group, Inc., a Delaware corporation (the "NSMG Combination Agreement"). Under
the NSMG Combination Agreement, (i) the Company acquired Old VERITAS through the
merger of a wholly-owned subsidiary with and into Old VERITAS, which survived as
a wholly-owned subsidiary of the Company (the "VERITAS Merger"); and (ii) SSI,
STI and certain of their subsidiaries contributed to the Company tangible and
intangible assets used in the NSMG business, including all of the capital stock
of certain SSI and STI subsidiaries, and the Company issued shares of its common
stock to SSI and offered to employees of SSI who were to become employees of the
Company the opportunity to exchange their options to purchase SSI common stock
for options to purchase common stock of the Company (the "Seagate Transaction").
Pursuant to the VERITAS Merger each outstanding share of Old VERITAS common
stock, $.001 par value per share, issued and outstanding prior to the effective
time of the merger was converted into one share of New VERITAS common stock,
$.001 par value per share. Each outstanding option to purchase Old VERITAS
common stock, and each outstanding convertible note of Old VERITAS, was assumed
and converted into an option, or convertible note, of New VERITAS, at an
exercise price per share, or conversion price per share, equal to the exercise
or conversion price per share of such Old VERITAS security in effect on May 28,
1999. Old VERITAS remained co-obligor on such convertible notes. Each
outstanding right to purchase shares of Old VERITAS common stock under the Old
VERITAS employee stock purchase plan was assumed and converted into a right to
purchase the same number of shares of New VERITAS common stock.
Pursuant to the Seagate Transaction, in consideration for the contribution
and transfer to New VERITAS of the stock and assets of the NSMG business by STI,
SSI and their respective subsidiaries, New VERITAS (i) issued to SSI 34,000,000
shares of its common stock, (ii) offered to issue options to purchase New
VERITAS common stock to holders of options to purchase SSI common stock who were
to become employees of New VERITAS, at an exchange ratio of 0.657226 shares of
New VERITAS common stock for each share of SSI common stock (with a
proportionate adjustment in the exercise price of such options), and (iii)
agreed to issue to SSI additional shares of New VERITAS common stock to the
extent that the shares issued or issuable under clauses (i) and (ii) amounted to
less than approximately 40% of the fully-diluted equity interests of New
VERITAS.
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The NSMG business offers network and storage management software solutions
which focus on enabling information technology professionals to manage
distributed network resources and to secure and protect enterprise data. Its
products include features to backup, recover, store and protect data.
Some of the assets acquired by New VERITAS in the Seagate Transaction consisted
of real or personal property used in the NSMG business; New VERITAS intends to
continue to use those assets in the NSMG business.
This summary of the provisions of the NSMG Combination Agreement is
qualified by reference to the NSMG Combination Agreement, which is incorporated
herein by reference to Appendix A to the Prospectus/Proxy Statement that forms a
part of the Registration Statement on Form S-4 of New VERITAS, as filed with the
Securities and Exchange Commission and declared effective April 22, 1999.
Registrant, formerly VERITAS Holding Corporation, is now named VERITAS
Software Corporation; Old VERITAS is now named VERITAS Operating Corporation.
On June 1, 1999, New VERITAS acquired TeleBackup Systems Inc. (the
"TeleBackup Combination") pursuant to an Amended and Restated Combination
Agreement among New VERITAS, Old VERITAS and TeleBackup Systems Inc., an Alberta
corporation ("TSI"), dated as of April 12, 1999 (the "TeleBackup Combination
Agreement").
Under the TeleBackup Combination Agreement, TSI amalgamated with a
wholly-owned Alberta subsidiary of New VERITAS. Former shareholders of TSI
ultimately received either non-voting shares of TeleBackup Exchangeco, Inc., a
subsidiary of the Registrant, that are exchangeable for shares of New VERITAS
common stock (in the case of properly electing shareholders who were residents
of Canada), or they received shares of New VERITAS common stock (for all other
former TSI shareholders). In order to afford holders of these exchangeable
shares voting rights analogous to those associated with the shares of New
VERITAS common stock, New VERITAS issued to a trustee one share of special
voting stock carrying a number of votes equal to the number of shares of New
VERITAS common stock into which the exchangeable shares are exchangeable.
Pursuant to the TeleBackup Combination Agreement, New VERITAS issued or
reserved for issuance an aggregate of 1,555,000 shares of its common stock for
issuance to former shareholders of TSI. New VERITAS, Old VERITAS, Chase
Manhattan Bank and affiliates of TSI entered into an Escrow Agreement pursuant
to which certificates representing ten percent of the total number of
exchangeable shares or shares of New VERITAS Common Stock issuable to the TSI
affiliates are deposited as collateral to secure the indemnification obligations
of TSI affiliates under the TeleBackup Combination Agreement. Each share of TSI
common stock was converted into 0.13233 shares of New VERITAS common stock.
TSI develops software solutions for local and remote backup and recovery of
electronic information stored on networked, remote and mobile personal
computers. Mobile users of computers, or users who are remote from their
organizations, can automatically backup their systems remotely over transmission
mediums such as telephone lines, the Internet or an intranet. Some of the assets
acquired by the Company in the TeleBackup Combination consisted of real or
personal property used in
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the TSI business; the Company intends to continue to use those assets in the
TSI business.
Upon consummation of the TeleBackup Combination, New VERITAS issued options
to purchase 42,184 shares of its common stock to former holders of options to
purchase TSI common stock. Each TSI option was exchanged for an option to
purchase a number of shares of New VERITAS common stock equal
to the number of TSI common shares subject to the TSI option multiplied by the
TSI exchange ratio of 0.13233 shares of New VERITAS common stock for each common
share of TSI, and the exercise price was proportionately adjusted.
This summary of the provisions of the TeleBackup Combination Agreement is
qualified by reference to the TeleBackup Combination Agreement, which is
incorporated herein by reference to Appendix G to the Prospectus/Proxy Statement
that forms a part of the Registration Statement on Form S-4 of the Registrant,
as filed with the Securities and Exchange Commission and declared effective
April 22, 1999.
Registrant and SSI and STI entered into a Stockholder Agreement limiting the
rights of SSI and STI to resell and acquire additional shares of common stock of
the Company. Registrant and SSI also entered into a Registration Rights
Agreement pursuant to which Registrant granted SSI certain rights to have the
resale of the shares of common stock of the Company issued to it under the NSMG
Combination Agreement registered under the Securities Act of 1933. Under the
terms of the Registration Rights Agreement, until all of the registrable shares
could be resold under Rule 144 under the Securities Act, New VERITAS will permit
SSI to "piggyback" on other registration statements, and to request registration
of resales once in any nine-month period.
Registrant will account for its acquisitions of the NSMG business and TSI
under the purchase method of accounting. As a result, the excess of the purchase
price over the fair value of identified tangible assets acquired, less the fair
value of liabilities assumed, will be capitalized by the Company.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is impracticable for Registrant currently to provide the financial
statements called for by this Item 7(a). Pursuant to paragraph (a)(4) of Item 7
of Form 8-K, the financial statements required to be filed under paragraph (a)
of this Item 7 will be filed as soon as practicable, but not later than required
by Item 7 of Form 8-K.
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(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable for Registrant currently to provide the pro forma
financial information called for by this Item 7(b). Pursuant to paragraphs
(b)(2) and (a)(4) of Item 7, the pro forma financial statements required to be
filed under paragraph (b) of this Item 7 will be filed as soon as practicable,
but not later than required by paragraphs (b)(2) and (a)(4) of Item 7 of Form
8-K.
(c) EXHIBITS
The following exhibits are filed herewith:
2.01 Amended and Restated Agreement and Plan of Reorganization, dated
as of April 15, 1999, among Registrant, Old VERITAS, Seagate
Technology, Inc., Seagate Software, Inc. and Seagate Software
Network & Storage Management Group, Inc. (Incorporated by
reference to Exhibit 2.01 of the Registrant's Registration
Statement on Form S-4, as amended, declared effective on April
22, 1999 (the "April 1999 Registration Statement")).
2.02 Amended and Restated Combination Agreement by and among
Registrant, Old VERITAS and TeleBackup Systems Inc., an Alberta
corporation ("TSI"), dated as of April 12, 1999 (incorporated by
reference to Exhibit 2.02 of the April 1999 Registration
Statement).
2.03 Plan of Arrangement Under Section 186 of the Business
Corporations Act (Alberta). (Incorporated by reference to
Appendix M of the Prospectus/Proxy Statement contained in the
April 1999 Registration Statement).
4.01 Registration Rights Agreement between Registrant and Seagate
Software, Inc., dated as of May 28, 1999.
4.02 Stockholder Agreement between Registrant, Old VERITAS, Seagate
Software, Inc. and Seagate Technology, Inc., dated as of May 28,
1999.
4.03 Escrow Agreement among Registrant, Old VERITAS, Dr. Byron G.
Osing as representative for certain holders of TSI common
shares, and Chase Manhattan Bank and Trust Company, National
Association, as Escrow Agent.
4.04 Voting, Support and Exchange Trust Agreement, dated June 1, 1999,
between Registrant, Old VERITAS, TeleBackup Exchangeco Inc., an
Alberta corporation, and Montreal Trust Company of Canada, a
Canadian trust company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VERITAS Software Corporation
By: /s/ KENNETH E. LONCHAR
Date: June 11, 1999 --------------------------------------
Kenneth E. Lonchar
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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NUMBER DESCRIPTION
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4.01 Registration Rights Agreement between Registrant and Seagate
Software, Inc., dated as of May 28, 1999.
4.02 Stockholder Agreement between Registrant, Old VERITAS, Seagate
Software, Inc. and Seagate Technology, Inc., dated as of May 28,
1999.
4.03 Escrow Agreement among Registrant, Old VERITAS, Dr. Byron G.
Osing as representative for certain holders of TSI common
shares, and Chase Manhattan Bank and Trust Company, National
Association, as Escrow Agent.
4.04 Voting, Support and Exchange Trust Agreement, dated June 1,
1999, between Registrant, Old VERITAS, Telebackup Exchangeco
Inc., an Alberta corporation, and Montreal Trust Company of
Canada, a Canadian trust company.
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EXHIBIT 4.01
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is entered into as
of May 28, 1999, by and between VERITAS Holding Corporation, a Delaware
corporation (the "COMPANY"), and Seagate Software, Inc. (the "STOCKHOLDER").
RECITALS
WHEREAS, the Stockholder is acquiring shares of Common Stock of the
Company pursuant to that certain Amended and Restated Agreement and Plan of
Reorganization by and among the Company, VERITAS Software Corporation, a
Delaware corporation ("VERITAS"), Seagate Technology, Inc., a Delaware
corporation ("STI"), Seagate Software, Inc., a Delaware corporation ("SSI" or
the "STOCKHOLDER") and Seagate Software Network & Storage Management Group,
Inc., a Delaware corporation, dated April 15, 1999 (the "PLAN") in connection
with the merger of the Company's subsidiary with and into VERITAS and the
contribution by STI, the Stockholder and certain affiliated entities to the
Company of all assets used in connection with the business previously carried on
by the Network & Storage Management Group of STI and the Stockholder
(collectively, the "REORGANIZATION"); and
WHEREAS, as an inducement for STI and the Stockholder to consummate the
transactions contemplated by the Plan, the Company desires to grant registration
rights to the Stockholder as set forth herein, which Agreement shall become
effective on the effective date of the Reorganization.
NOW, THEREFORE, in consideration of the facts set forth in the foregoing
recitals and the mutual promises and covenants hereinafter set forth, the
Company and the Stockholder agree as follows:
SECTION 1
REGISTRATION RIGHTS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "SEC" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
(b) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
(c) "HOLDER" shall mean the Stockholder or anyone who
holds outstanding Registrable Securities to whom the registration rights
conferred by this Agreement have been transferred in compliance with
Section 1.8 hereof.
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(d) "REGISTER," "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement, and
compliance with applicable state securities laws of such states in which
Holders notify the Company of their intention to offer and sell
Registrable Securities.
(e) "REGISTRABLE SECURITIES" shall mean all of the
following to the extent that same have not been resold by Holder in any
public offering: (i) any and all shares of Common Stock of the Company
issued to the Stockholder pursuant to the Plan; (ii) any and all shares
of Common Stock of the Company issued to the Stockholder as a result of
the exercise of its rights set forth in Section 5 of the Stockholder
Agreement being executed concurrently herewith; (iii) securities issued
in any reorganization with respect to the Common Stock referred to in
clause (i) above; or (iv) securities issued as a result of a stock
split, stock dividend, recapitalization or combination with respect to
the stock referred to in clauses (i) and (ii) above.
(f) "REGISTRATION EXPENSES" shall mean all expenses
incurred in connection with a Registration hereunder, including, without
limitation, all registration and filing fees, printing expenses, custody
fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, and the expense of any special audits incident to or
required by any such Registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by
the Company).
(g) "SECURITIES ACT" shall mean the Securities Act of 1933
as amended, or any successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect at the time.
(h) "SELLING EXPENSES" shall mean, with respect to any
Registration pursuant to this Agreement, all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and
all fees and disbursements of counsel for the Holders.
1.2 PIGGYBACK REGISTRATION.
(a) If at any time or from time to time the Company shall
determine to Register any of its securities for its own account (other than
Registrations relating solely to employee benefit plans, offerings of debt
securities of the Company, transactions covered by Rule 145 under the Securities
Act, registrations relating to any acquisitions by the Company, or registrations
on any form (other than Form S-1, S-2 or S-3, or their successor forms) which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities), provided that if the Company approves the inclusion of Registrable
Securities in such Registration, the Company will:
(i) give each Holder written notice thereof as soon
as practicable prior to filing the registration statement, and indicate
in such notice the total number of Registrable Securities which may be
included in such Registration as determined by the Company in its sole
discretion (the "MAXIMUM NUMBER"); and
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(ii) include in such Registration and in any
underwriting involved therein, the number of Registrable Securities
specifically requested to be included therein, subject to the
limitations of subsection (b) of this Section 1.2, and which number
shall not exceed the Maximum Number. Any such notice shall be in writing
and shall be delivered within ten days after receipt of such notice from
the Company. In the event that the Registrable Securities requested to
be included in such Registration by the Holders exceeds the Maximum
Number, the Maximum Number of Registrable Securities shall be allocated
among those Holders of Registrable Securities requesting Registration in
proportion to the number of Registrable Securities then outstanding held
by all Holders requesting Registration.
(b) If the Registration is for an underwritten public offering,
the Company shall so advise the Holders in the written notice given pursuant to
subsection 1.2(a)(i) above. In such event the right of any Holder to participate
in the Registration pursuant to Section 1.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall (together with the Company) enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 1.2, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may exclude shares (including Registrable
Securities) from the Registration and underwriting and the number of shares that
may be included in the Registration and the underwriting shall be allocated
FIRST to the Company, SECOND to any holder (other than Holders) of any other
securities of the Company entitled to inclusion in such Registration, and THIRD
to each of the Holders requesting inclusion of Registrable Securities in such
Registration in proportion to the number of outstanding Registrable Securities
then held by all such Holders. If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the managing underwriter. If, by the withdrawal of such
Registrable Securities, a greater number of Registrable Securities held by other
Holders may be included in such Registration (up to the limit imposed by the
managing underwriters), the Company shall offer to all Holders who have included
Registrable Securities in the Registration the right to include additional
Registrable Securities in the same proportion used in determining the limitation
as set forth above. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such Registration and shall remain subject
to the lockup agreement in Section 1.10.
(c) The Holders of Registrable Securities so Registered shall pay
all Selling Expenses, and shall pay the proportion of all Registration Expenses
incurred in connection with any Registration pursuant to this Section 1.2 that
the aggregate number of Registrable Securities included in such Registration
bears to the aggregate number of all securities included in such Registration.
Such Selling Expenses and Registration Expenses shall be paid by all selling
Holders in proportion to the aggregate number of Registrable Securities sold by
such selling Holders.
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1.3 FORM S-3 REGISTRATIONS. If at any time or from time to time the
Company shall receive from Holders a written request or requests that the
Company effect a Registration with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, then the Company will:
(a) Promptly give written notice of the proposed
Registration and the Holder's or Holders' request therefor, and any
related qualification or compliance, to all other registered Holders of
Registrable Securities.
(b) In accordance with Section 1.4 hereof, effect such
Registration and as would permit the sale and distribution of such
Registrable Securities as are specified in such requests, together with
all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request
given within 20 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to
effect any such Registration, qualification or compliance pursuant to
this Section 1.3 if:
(1) Form S-3 is not available for such offering;
(2) the Holders, together with the Holders of other
Registrable Securities, propose to sell Registrable Securities
with an aggregate price to the public of less than $2,500,000;
(3) the Company shall furnish to the Holders a
certificate signed by the President or Chief Executive Officer of
the Company stating that in the good faith judgment of the
Company's Board of Directors, it would be seriously detrimental
to the Company and its stockholders for such Registration to be
effected at such time, in which event the Company shall have the
right, no more than once during any 12-month period, to defer the
filing of the Form S-3 registration statement for a period of up
to 120 days after receipt of the final request of Holders under
this Section 1.3;
(4) the Company has, within the nine-month period
preceding the date of such request, already effected one
Registration on Form S-3 with respect to Registrable Securities
pursuant to this Section 1.3; or
(5) Notwithstanding anything else herein contained
to the contrary, the company will not be required to qualify to
do business in any particular jurisdiction or to execute a
general consent to service of process in effecting such
Registration, qualification or compliance in an jurisdiction
where it would not otherwise be subject to service of process.
(c) If the Holders initiating the Registration request
under this Section 1.3 ("INITIATING HOLDERS") intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, then they shall so advise the Company as a part of their
request made pursuant to this Section 1.3 and the Company shall include
such information in the written notice referred to in subsection 1.3(a).
In such event, the right
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of any Holder to include its Registrable Securities in such Registration
shall be conditioned upon such Holder's participation in such
underwritten offering and the inclusion of such Holder's Registrable
Securities in the underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder) to the
extent provided herein. A majority in interest of the Initiating Holders
shall select an underwriter who shall serve as lead manager of the
offering to which the Registration relates and the Company shall select
an underwriter which shall serve as co-manager of the offering with the
underwriter selected by the Holders. All Holders proposing to distribute
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing underwriters
selected for such underwriting by the Initiating Holders and the
Company. Notwithstanding any other provision of this Section 1.3, if
such managing underwriters advise the Company in writing that marketing
factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable
Securities that would otherwise be Registered and underwritten pursuant
hereto, and the number of Registrable Securities that may be included in
the underwriting shall be reduced as required by the managing
underwriters and allocated among the Holders participating in such
Registration in proportion to the number of Registrable Securities then
outstanding held by each such participating Holder (including the
Initiating Holders). Any Registrable Securities excluded and withdrawn
from such underwriting shall be withdrawn from the Registration.
(d) The Holders of Registrable Securities so Registered
shall pay all Selling Expenses, and shall pay the proportion of all
Registration Expenses incurred in connection with any Registration
pursuant to this Section 1.3 that the aggregate number of Registrable
Securities included in such Registration bears to the aggregate number
of all securities included in such Registration. Such Selling Expenses
and Registration Expenses shall be paid by all selling Holders in
proportion to the aggregate number of Registrable Securities sold by
such selling Holders.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
Registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable best
efforts to cause such registration statement to become effective, and
keep such registration statement effective until the distribution is
completed, but not longer than 90 days after the effective date thereof
(to be extended for any days in which the Company requires the Holders
to cease sales of shares as provided below); provided, however, that the
Company may by written notice require that the Holders immediately cease
sales of shares (for a period not to exceed 60 days) pursuant to such
registration statement at any time that (i) the Company becomes engaged
in business activity or negotiation which is not disclosed in the
registration statement (or the prospectus included therein) which the
Company reasonably believes must be disclosed therein under applicable
law and which the Company desires to keep confidential for business
purposes, (ii) the Company determines that a particular
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disclosure so determined to be required to be disclosed therein would be
premature or would adversely affect the Company or its business or
prospects, or (iii) the registration statement can no longer be used
under the existing rules and regulations promulgated under the
Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them that are included in such
Registration.
(d) Use its reasonable best efforts to register and
qualify the securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided, however, that the Company
shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) Enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(g) Furnish to the underwriters in connection with the
closing of the sale of such Registrable Securities (i) an opinion, dated
as of such closing date, of the counsel representing the Company for the
purposes of such Registration, in form and substance as is customarily
given to underwriters in an underwritten public offering of the size and
nature of the applicable Registration, and (ii) a "comfort" letter dated
as of such closing date, from the independent certified public
accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering addressed to the underwriters.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 1.2 or 1.3
that the selling Holders shall furnish
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to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
Registrable Securities as shall be required to timely effect the
Registration of Registrable Securities.
1.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 1.2 or 1.3:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners,
officers and directors of each Holder, any underwriter (as defined in
the Securities Act) for such Holder, and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities
Act or the Exchange Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"VIOLATION"):
(i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto;
(ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein, in light of the
circumstances in which made, not misleading; or
(iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any federal
or state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any federal or
state securities law in connection with the offering covered by
such registration statement;
and the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this subsection 1.6(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly for
use in connection with such Registration by such Holder, partner,
officer, director, underwriter or controlling person of such Holder or
underwriter.
(b) By Selling Holders. To the extent permitted by law,
each selling Holder will indemnify and hold harmless the Company, each
of its directors, each of its
7
<PAGE> 8
officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter (as defined in the Securities Act) and any other Holder
selling securities under such registration statement or any of such
other Holder's partners, directors or officers or any person who
controls such underwriter or other Holder within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages
or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder,
partner or director, officer or controlling person of such underwriter
or other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state securities law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder
expressly for use in connection with such Registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director or controlling
person of such other Holder or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this subsection 1.6(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is
effected without the written consent of the Holder, which consent shall
not be unreasonably withheld; and, provided, further, that the total
amounts payable in indemnity by a Holder under this subsection 1.6(b) in
respect of any Violation shall not exceed the proceeds (net of
underwriting discounts and commissions) received by such Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
under Section 1.6 of notice of the commencement of any action
(including, without limitation, any governmental action), such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under Section 1.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding; and, provided, further,
that the indemnifying party shall not be required to pay for more than
one separate counsel for all indemnified parties. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under Section 1.6, but the
omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under Section 1.7.
8
<PAGE> 9
(d) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities Act, the
Exchange Act or any federal or state securities laws in any case in
which either (i) any Holder exercising rights under this Agreement, or
any controlling person of any such Holder, makes a claim for
indemnification pursuant to Section 1.6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that Section 1.6 provides for
indemnification in such case, or (ii) contribution under the Securities
Act, the Exchange Act or any federal or state securities laws may be
required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under
Section 1.6; then, and in each such case, the Company and such Holder
will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on the one hand and the indemnified party
on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or parties on the one hand or the indemnified party
on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission; provided, however, that, in any such case, (A) no such
Holder will be required to contribute any amount in excess of the
proceeds (net of underwriting discounts and commissions) received by
such Holder from all such Registrable Securities offered and sold by
such Holder pursuant to such registration statement; and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
(e) Survival. The obligations of the Company and Holders
under Section 1.6 shall survive the completion of any offering of
Registrable Securities in a registration statement.
1.7 "MARKET STAND-OFF" AGREEMENT. Each Holder who gives notice to the
Company of such Holder's desire to participate in any Registration under Section
1.2 or 1.3 hereof hereby agrees that it shall not, to the extent requested by
the Company or the managing underwriter, sell or otherwise transfer or dispose
of any Registrable Securities or other shares of stock of the Company then owned
by such Holder (other than to donees, affiliates or partners of the Holder who
agree to be similarly bound) for the period from the filing of the registration
statement until up to 90 days following the date of the final prospectus in
connection with the registration statement. In order to enforce the foregoing
covenant, the Company shall have the right to place restrictive legends on the
certificates representing the shares subject to this Section 1.7 and to impose
stop transfer instructions with respect to the Registrable Securities of such
Holders until the end of such period. The provisions of this Section 1.7 shall
be binding upon any transferee of any Registrable Securities.
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<PAGE> 10
1.8 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
Register securities granted to the Holder under Sections 1.2 and 1.3 of this
Agreement may be assigned, but only to (A) any parent or subsidiary corporation
of the Holder or to any other corporation or other entity under common control
with Holder, (B) any party acquiring Stockholder or (C) any party who acquires
Registrable Securities representing an interest sufficient to trigger a
requirement that such party file a Form 13D with respect to such acquisition,
provided that (i) such transfer may be effected in accordance with the
applicable securities laws, (ii) the Company is given written notice of such
assignment prior to such assignment; and (iii) in any such case Stockholder
shall, and shall be authorized, to act for all Holders of Registrable Securities
for all purposes under this Agreement.
1.9 TERMINATION OF RIGHTS. The rights granted pursuant to this Agreement
(a) shall terminate as to any Holder when the aggregate number of Registrable
Securities owned by such Holder could all be sold in a three-month period in
compliance with Rule 144 under the Securities Act (together with other
Registrable Securities the sales of which would be required to be aggregated
with such Holder's sales under such rule) using the 1% volume limitation
contained in Rule 144(e)(1)(i), and (b) shall not be exercisable by any Holder
if at the time of the request for or notice of Registration under Section 1.2 or
1.3 such Holder could sell (together with other Holders whose sales may be
aggregated) in a three-month period all Registrable Securities then held by such
Holder in compliance with Rule 144 using the Company's average weekly trading
volume calculation at such time.
1.10 RULE 144 REPORTING. With a view to making available the benefits of
Rule 144, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its reasonable best efforts to file with the SEC
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(c) furnish to the Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144, and provide a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of
Rule 144.
SECTION 2
MISCELLANEOUS
2.1 WAIVERS AND AMENDMENTS. The rights and obligations of the Company
and the rights and obligations of the Holders under this Agreement may be waived
(either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely) or
amended, only with the written consent of the Company and Holders of a majority
of the Registrable Securities then outstanding.
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<PAGE> 11
2.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as such laws are applied to contracts
made and to be fully performed entirely within that state between residents of
that state. All disputes arising out of this Agreement shall be subject to the
exclusive jurisdiction and venue of the California State courts Santa Clara
County, California (or, if there is exclusive federal jurisdiction, the United
States District Court for the Northern District of California), and the parties
consent to the personal and exclusive jurisdiction and venue of these courts.
2.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
2.4 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
2.5 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed first class, postage prepaid,
addressed (a) if to a Holder, at such Holder's address set forth on the
signature page hereof, or at such other address as such Holder shall have
furnished to the Company in writing, or (b) if to the Company, at its principal
executive offices (Attention: Chief Financial Officer) or at such other address
as the Company shall have furnished to the Holders in writing. Notices shall be
effective upon mailing.
2.6 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
2.7 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute one instrument.
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<PAGE> 12
The foregoing Registration Rights Agreement is hereby executed as of the
date first above written.
"COMPANY"
VERITAS HOLDING CORPORATION,
A DELAWARE CORPORATION
/s/ MARK LESLIE
----------------------------------------
Signature of Authorized Signatory
Mark Leslie, President and CEO
----------------------------------------
Print Name and Title
"STOCKHOLDER"
SEAGATE SOFTWARE, INC.,
A DELAWARE CORPORATION
/s/ ELLEN E. CHAMBERLAIN
----------------------------------------
Signature of Authorized Signatory
Ellen E. Chamberlain, Chief Financial
Officer
----------------------------------------
Print Name and Title
Address:
12
<PAGE> 1
EXHIBIT 4.02
STOCKHOLDER AGREEMENT
This Stockholder Agreement (the "AGREEMENT") is entered into as of May
28, 1999, (the "EFFECTIVE DATE") by and among VERITAS Software Corporation, a
Delaware corporation ("VERITAS"), VERITAS Holding Corporation, a Delaware
corporation ("NEWCO"), Seagate Technology, Inc., a Delaware corporation ("STI"),
and Seagate Software, Inc., a Delaware corporation ("SSI", and collectively with
STI and STI's other controlled subsidiaries, "SEAGATE").
RECITALS
A. The parties have entered into an Agreement and Plan of Reorganization
(the "PLAN") whereby (i) a newly formed, wholly owned subsidiary of Newco
("NEWCO VERITAS MERGER SUB") will be merged with and into VERITAS, with VERITAS
being the surviving corporation of such merger (the "VERITAS MERGER"); (ii) all
VERITAS securities will be converted, share-for-share, into Newco securities
with identical rights, preferences and privileges (and Newco will assume all
outstanding options, warrants, convertible debentures and other rights to
purchase shares of capital stock of VERITAS); and (iii) Seagate will transfer to
Newco all assets used in connection with the business previously carried on by
Seagate's Network & Storage Management Group ("NSMG"), in consideration for
which Newco will issue Newco securities to SSI and offer to issue Newco
securities to former NSMG employees holding options to purchase SSI securities,
which Newco securities in the aggregate will represent approximately 40% of the
fully diluted equity securities of Newco (collectively, the "REORGANIZATION").
B. As an inducement for Newco to enter into the Plan, the parties desire
to enter into this Agreement, which shall become effective on the effective date
of the Reorganization and, among other things, grants Seagate certain rights and
places certain restrictions on Seagate and on the Newco securities that Seagate
now holds or hereafter acquires.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
1. BOARD OF DIRECTORS
1.1 APPOINTMENTS. Upon the closing of the Plan, Newco shall
increase the size of its Board of Directors (the "NEWCO BOARD") to ten persons
and appoint Terence R. Cunningham and two designees of Seagate, Stephen J.
Luczo, and Greg Kerfoot, as members of the Newco Board.
1.2 TWO DESIGNEES. For so long as Seagate owns at least 15% of
the outstanding Common Stock of Newco, Newco and its Board of Directors shall
nominate, in connection with each stockholder solicitation relating to the
election of Newco directors, two candidates designated by Seagate who are
reasonably acceptable to Newco.
1.3 ONE DESIGNEE. For so long as Seagate owns at least 5% and not
more than 15% of the outstanding Common Stock of Newco, Newco and its Board of
Directors shall
<PAGE> 2
nominate, in connection with each stockholder solicitation relating to the
election of Newco directors, one candidate designated by Seagate who is
reasonably acceptable to Newco.
1.4 AFFILIATES. For purposes of this Agreement, all shares held
by an entity or person controlling, controlled by or under common control with
Seagate will be deemed to be owned by Seagate.
1.5 VOTING OF MANAGEMENT SHARES. Newco shall use its best efforts
(i) to cause the Newco Board to unanimously recommend to its stockholders that
such stockholders vote in favor of the designee(s) of Seagate under Section 1.2
or 1.3 of this Agreement (the "SEAGATE Designee(s)"); and (ii) to cause the
shares for which Newco's management holds proxies to be voted in favor of the
election of such Seagate Designee(s) nominated pursuant to this Agreement.
1.6 VACANCIES. In the event that any Seagate Designee shall cease
to serve as a member of the Board of Directors of Newco for any reason, the
vacancy resulting therefrom shall be filled by another Seagate Designee.
1.7 EQUAL TREATMENT. Newco shall provide to the Seagate
Designee(s) that are not employees of Newco the same compensation, rights and
benefits and indemnities as are provided to other non-employee members of the
Newco Board.
1.8 PARTICIPATION ON BOARD COMMITTEES. At the Effective Date,
Newco will have two committees of the Board of Directors: a Compensation
Committee and an Audit Committee.
1.9 STAGGERED BOARD OF DIRECTORS. At the Effective Date, Newco's
Board of Directors shall be classified into three classes consisting of Classes
A, B and C, with each class serving for staggered three year terms. As an
initial matter, the Directors in Class A will serve for a term ending at Newco's
annual meeting of stockholders in 1999; the Directors in Class B will serve for
a term ending at Newco's annual meeting of stockholders in 2000; and the
Directors in Class C will serve for a term ending at Newco's annual meeting of
stockholders in 2001. At the Effective Date, the class A Directors shall consist
of Gregory Kerfoot, Geoffrey Squire and Roel Pieper; the Class B Directors shall
consist of Mark Leslie, Joseph Rizzi, William Janeway and Terence R. Cunningham;
and the Class C Directors shall consist of Stephen Brooks, Fred van den Bosch
and Stephen J. Luczo.
1.10 TERMINATION. All rights and obligations under this Section 1
shall terminate and have no further force or effect immediately upon Seagate
ceasing to hold at least 5% of the outstanding Common Stock of Newco.
2. RESTRICTIONS UPON TRANSFER OF SHARES
2.1 PERMITTED SALES OF NEWCO STOCK. For so long as Seagate owns
(of record or beneficially) at least 5% of the outstanding Common Stock of
Newco, Seagate shall not sell, transfer, assign, pledge, hypothecate or
otherwise dispose of any interest in any Newco securities, directly or
indirectly, for a period of one year following the consummation of the Plan,
except as
2
<PAGE> 3
provided in Section 2.2 below, and thereafter shall not so dispose of any Newco
securities except (i) to Newco or to a person or persons that Newco has
previously approved in writing; (ii) pursuant to a Bona Fide Public Offering (as
defined below); (iii) pursuant to Rule 144 under the Securities Act of 1933, as
amended (the "SECURITIES ACT"); (iv) in other private transactions so long as
such private transactions do not result, to the knowledge of Seagate, in any
single person or group owning 5% or more of the total outstanding voting stock
of Newco; (v) in response to a tender offer not opposed by the Newco Board; (vi)
in a merger or consolidation approved by the Newco Board in which Newco is
acquired; or (vii) pursuant to a plan of liquidation that is authorized by the
Newco Board. As used in this Agreement, "BONA FIDE PUBLIC OFFERING" means a firm
commitment underwritten public offering of Newco equity or convertible debt
securities registered under the Securities Act in which Newco securities are
offered to a broad range of investors and which registration has been declared
effective by the Securities and Exchange Commission.
2.2 PERMITTED SALES DURING FIRST YEAR. Seagate may sell (a) up to
a maximum number of 6,000,000 shares of Newco Common Stock in One Bona Fide
Public Offering in the first year following consummation of the Plan, and (b) in
any quarter in which the Bona Fide Public Offering referred to in clause (a)
above has not been completed, Newco Common Stock according to the following
schedule: (i) up to a maximum number of 2,000,000 shares in the quarters ending
in September, 1999, December, 1999 and March, 2000, and (ii) up to a maximum
number of 3,000,000 shares in the quarter ending in June, 2000. Newco shall pay
all expenses incurred in connection with a Bona Fide Public Offering pursuant to
this Section including, without limitation, all registration and filing fees,
printing expenses, custody fees, fees and disbursements of counsel for Newco,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such Bona Fide Public Offering but not including any
underwriting discounts and selling commissions applicable to the sale of the
shares and all fees and disbursements of counsel for Seagate.
3. VOTING PROVISIONS.
3.1 PROPORTIONAL VOTING. For so long as Seagate owns (of record
or beneficially) at least 5% of the outstanding Common Stock of Newco in
connection with all matters to be voted on by the stockholders of Newco, Seagate
shall vote all shares of Newco Common Stock then owned, directly or indirectly,
by it in the same proportion as the votes cast by all other holders of Newco's
Common Stock, except that Seagate may vote its shares as it determines in its
sole discretion as to the following specific matters: (i) a change in the
Fundamental Rights (as defined below) of Newco Common Stock; and (ii) a
recapitalization in which Newco Common Stock is converted or exchanged for a
security having substantially different Fundamental Rights than Newco Common
Stock (but in all events excluding any recapitalization or reorganization
accomplished in connection with a Corporate Event). A "CORPORATE EVENT" shall
include any merger, acquisition, consolidation or reorganization, any
transaction of a type contemplated by Section 351 of the Internal Revenue Code
of 1986, as amended (the "CODE") or any other similar transaction whereby (a)
Newco is acquired by a third party, (b) where there has been a "change of
control" such that the stockholders of Newco prior to a transaction own, in the
aggregate, less than a majority of the outstanding stock of Newco or
3
<PAGE> 4
the acquiring entity after the transaction, (c) Newco acquires another entity,
or (d) Newco acquires all or substantially all of the assets of another entity.
"FUNDAMENTAL RIGHTS" shall mean the right to vote Newco's shares and to
participate pro rata with other holders of Newco Common Stock in any
distribution to the holders of Newco Common Stock.
3.2 NO DISSENT. For so long as Seagate owns (of record or
beneficially) at least 5% of the outstanding Newco Common Stock, Seagate agrees
that it will not exercise dissenter's or appraisal rights or otherwise dissent
or seek appraisal rights with respect to any Corporate Event involving Newco
that has been approved by the Newco Board.
4. STANDSTILL PROVISIONS.
4.1 STANDSTILL. Seagate hereby agrees that, until the fifth
anniversary of the Effective Date, Seagate will not, without Newco's prior
written consent:
(i) acquire, or enter into discussions, negotiations,
arrangements or understandings with any third party to acquire, beneficial
ownership (as defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) of any Newco securities entitled
to vote with respect to the election of any directors of Newco ("VOTING STOCK"),
any securities convertible into, exchangeable for or exerciseable for, or that
may otherwise become, Voting Stock, or any other right to acquire Voting Stock,
if the effect of such acquisition would be that Seagate would then beneficially
own and/or have the right to acquire more than [__] percent (__%) of the Voting
Stock (the "STANDSTILL PERCENTAGE");
(ii) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined or used in Regulation 14A under the
Exchange Act, as such Regulation is currently in effect) with respect to the
voting of any Voting Stock if Newco is at the time of such solicitation
publicly-traded and subject to the proxy rules promulgated under the Exchange
Act; or
(iii) otherwise seek, either alone or in concert with others, to
control the Newco Board or the policies of Newco.
Notwithstanding the foregoing, nothing herein shall limit Seagate's ability to
exercise its rights under Section 5 hereof. For purposes of this Section 4, any
shares of Newco Common Stock or options or rights to acquire such Newco Common
Stock acquired by Seagate Affiliates who are also employees or directors of
Newco pursuant to Newco's option and employee stock purchase plans (including
any options to purchase Newco securities issued to such persons under the terms
of the Plan) shall be excluded from the calculation of the number of shares of
Voting Stock held by Seagate.
4.2 EXCEPTIONS TO STANDSTILL. Notwithstanding the restrictions
set forth in Section 4.1 above:
(a) ACQUISITIONS. Seagate may acquire Voting Stock, and
the limitations of Section 4.1 shall be suspended, upon the earlier of: (i) the
date that a third party not
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<PAGE> 5
affiliated with Seagate commences a tender or exchange offer that is made and is
not withdrawn or terminated to purchase, or to exchange for cash or other
consideration, Voting Stock that, if accepted or if otherwise successful, would
result in such person or group beneficially owning or having the right to
acquire shares of Voting Stock (not counting any shares of Voting Stock
originally acquired by such third party from Seagate or any Seagate Affiliate)
with aggregate Voting Power (as defined below) representing more than 50% of the
Total Voting Power (as defined below) of Newco then in effect provided, however,
that the foregoing standstill limitation will be reinstated if any such tender
or exchange offer is withdrawn or terminated, (ii) the public announcement by
Newco that it has entered into any agreement with respect to a merger,
consolidation, reorganization or similar transaction involving Newco in which
all the stockholders of Newco before such transaction collectively will own less
than 50% of the outstanding voting stock of the surviving or acquiring entity
immediately after such transaction provided, however; that the foregoing
standstill limitation will be reinstated if such transaction is terminated prior
to consummation thereof, or (iii) the sale or disposition of all or
substantially all of Newco's assets.
(b) NO OBLIGATION TO DISPOSE. Seagate will not be obliged
to dispose of any Voting Stock to the extent that the aggregate percentage of
the Total Voting Power represented by shares of Voting Stock beneficially owned
by Seagate or which Seagate has a right to acquire is increased beyond the
Standstill Percentage: (i) as a result of a recapitalization of Newco or a
repurchase or exchange of securities by Newco or any other action taken by Newco
or its affiliates; (ii) as the result of any acquisition of Voting Stock made
during the period when Seagate's "standstill" obligations are suspended pursuant
to Section 4.2(a); (iii) by way of stock dividend or other distribution or
rights or offerings made available to holders of shares of Voting Stock
generally; (iv) with the consent of a simple majority of the members of Newco's
Board of Directors that have not been designated by Seagate; or (v) as part of a
transaction on behalf of Seagate's Profit Sharing Retirement Plan, 401(k)
Savings Plan, or any successor or additional retirement plans thereto
(collectively, the "RETIREMENT PLANS") where Newco shares in such Retirement
Plans are voted by a trustee for the benefit of Seagate employees or, for those
Retirement Plans where Seagate controls voting, where Seagate agrees that any
shares of Voting Stock in such Retirement Plans will be subject to the Voting
Provisions of Section 3 hereof.
(c) VOTING POWER. As used in this Section 4, (i) the term
"VOTING POWER" means the number of votes such Voting Stock is entitled to cast
with respect to the election of directors of Newco at any meeting of
stockholders of Newco; and (ii) the term "TOTAL VOTING POWER" means the total
number of votes which may be cast in the election of directors of Newco at any
meeting of stockholders of Newco if all Voting Stock was represented and voted
to the fullest extent possible at such meeting, other than votes that may be
cast only upon the happening of a contingency that has not occurred.
For purposes of this Section 4, "SEAGATE" shall mean not only Seagate, as
defined in the preamble of this Agreement, but also any entity or person
controlling, controlled by or under common control with Seagate (except as set
forth in the last paragraph of Section 4.1).
5
<PAGE> 6
5. RIGHT TO MAINTAIN.
5.1 GENERAL. If Newco is contemplating the issuance of Dilutive
Securities (as defined in Section 5.2 below) to a third party (including but not
limited to a customer, supplier, developer or reseller) as part of a strategic
business relationship with such third party (a "STRATEGIC CUSTOMER"), SSI will
have the right, pursuant to the terms and conditions of this Section 5, to
purchase from Newco the same Dilutive Securities as are issued by Newco to the
Strategic Customer ("MAINTENANCE SECURITIES") at the Purchase Price (as defined
in Section 5.3) following the issuance by Newco of such securities to the
Strategic Customer, solely in order to maintain SSI's Prior Percentage Interest
(as defined in Section 5.4) in Newco (the "RIGHT OF MAINTENANCE"). Each right to
purchase Maintenance Securities pursuant to this Section 5 shall be on the same
terms (other than price to the extent provided in Section 5.3 below) as the
issuance of securities which gave rise to the right to purchase such Maintenance
Securities.
5.2 DILUTIVE SECURITIES. "DILUTIVE SECURITIES" shall mean any
Common Stock, Preferred Stock or voting capital stock of Newco, whether or not
now authorized, which is issued to a Strategic Customer; provided, however, that
the term "Dilutive Securities" does not include:
(a) any Common Stock, Preferred Stock or other capital
stock issued upon exercise of any options or warrants or upon conversion of any
debentures or other convertible securities outstanding as of the date hereof;
(b) any Common Stock, Preferred Stock or other capital
stock issued to employees, directors, consultants or advisors, pursuant to
incentive agreements, plans or arrangements approved by the Newco Board;
(c) any securities (including Common Stock, Preferred
Stock, capital stock or convertible debt securities) issued in connection with a
Bona Fide Public Offering;
(d) any securities issued in connection with any stock
split, stock dividend or similar event in which SSI is entitled to participate
on a proportionate basis; or
(e) any securities issued in connection with any Corporate
Event.
5.3 PURCHASE PRICE.
(a) GENERAL. The per share "PURCHASE PRICE" of the
Maintenance Securities shall equal the per share price at which such Dilutive
Securities were issued, unless the issuance of such other Dilutive Securities
occurred upon the exercise, conversion or exchange of other securities
("EXCHANGEABLE SECURITIES"), in which case, the per share "Purchase Price" of
the Maintenance Securities shall equal the sum of (i) the per share amounts paid
upon each such exercise, conversion or exchange, and (ii) the per share amount
previously paid for the Exchangeable Securities (adjusted for any stock splits,
stock dividends or other similar events).
(b) CONSIDERATION OTHER THAN CASH. In the event that
Dilutive Securities or Exchangeable Securities were issued for consideration
other than cash, the per share
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<PAGE> 7
amounts paid for such Dilutive Securities or Exchangeable Securities shall be
determined jointly by Newco and SSI.
(c) APPRAISER. If Newco and SSI are unable to reach
agreement within a reasonable period of time with respect to (i) the fair market
value of unlisted securities (the "MARKET PRICE"); or (ii) the per share amounts
paid for Dilutive Securities or Exchangeable Securities issued for consideration
other than cash, such Market Price or per share amounts paid, as the case may
be, shall be determined by an appraiser jointly selected by Newco and SSI. The
determination of such appraiser shall be final and binding on Newco and SSI. The
fees and expenses of such appraiser shall be paid by Newco, provided that such
fees and expenses shall be paid by SSI in the event that the appraiser's
determination of the Market Price or the per share amounts paid, as the case may
be, is higher than, or no more than 5% lower than, the last amount previously
offered by Newco.
5.4 PRIOR PERCENTAGE INTEREST. SSI's "PRIOR PERCENTAGE INTEREST"
for purposes of the Right of Maintenance is the ratio of (a) the number of
shares of Common Stock held by SSI as of the date of such Maintenance Notice (as
defined in Section 5.6) (the "NOTICE DATE") that represent shares that SSI
purchased pursuant to (i) the Plan, and (ii) prior exercises of the Right of
Maintenance, to (b) the total number "Common Stock Equivalents" (as defined
below) of Newco outstanding immediately prior to the issuance of the Dilutive
Securities. The total number of Common Stock Equivalents of Newco shall be
calculated assuming the conversion of all outstanding options, warrants and
convertible debentures to Common Stock; provided, however, that the total number
of shares subject to outstanding options (but not the number of shares issuable
upon the exercise of convertible debentures) shall be calculated on the Treasury
Method.
5.5 MAINTENANCE AMOUNT. SSI's "MAINTENANCE AMOUNT" with respect
to any Maintenance Notice shall equal such number of Maintenance Securities as
is obtained by multiplying the number of Dilutive Securities specified in such
Maintenance Notice by SSI's Prior Percentage Interest, rounded to the nearest
whole share.
5.6 NOTICE OF ISSUANCE. Within 15 business days of each issuance
of Dilutive Securities, Newco shall give to SSI written notice (the "MAINTENANCE
NOTICE") describing the number of Dilutive Securities issued since such prior
Notice Date and the terms upon which Newco issued such Dilutive Securities, and
the Maintenance Amount of Maintenance Securities that SSI is entitled to
purchase as a result of such issuance.
5.7 PURCHASE OF MAINTENANCE SECURITIES. SSI shall have 15
business days from the receipt of a Maintenance Notice to elect to purchase up
to SSI's Maintenance Amount of such Maintenance Securities at the Purchase Price
as defined in Section 5.3 and upon the terms and conditions specified in the
Maintenance Notice. The closing of such purchase shall occur within 5 business
days after such election to purchase. If SSI fails to elect to purchase SSI's
full Maintenance Amount of Maintenance Securities within such 15 business day
period, then SSI shall forfeit the right hereunder to purchase that part of
SSI's Maintenance Amount that it did not so elect to purchase.
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<PAGE> 8
5.8 TERMINATION. The Right of Maintenance shall terminate upon
the earlier of (i) the third anniversary of the Effective Date; or (ii) such
time as Seagate ceases to own at least ten percent of the outstanding Common
Stock of Newco.
6. GENERAL PROVISIONS.
6.1 NOTICES. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, as follows:
(a) if to Newco, at:
VERITAS Holding Corporation
1600 Plymouth Avenue
Mountain View, CA
Attention: Vice President, General Counsel
Facsimile: 650-526-2581
with a copy to:
Fenwick & West LLP
Two Palo Alto Square, Suite 800
Palo Alto, CA 94306
Attention: Jacqueline Daunt, Esq.
Facsimile: 650-494-1417
(b) If to Seagate:
Seagate Software, Inc.
915 Disc Drive
Scotts Valley, CA 95066-7427
Attention: General Counsel
Facsimile: 831-438-0721
with a copy to:
Wilson, Sonsini, Goodrich & Rosati P.C.
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Larry Sonsini, Esq.
Facsimile: 650-493-6811
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or when
deposited in the mail in the manner set forth above.
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<PAGE> 9
6.2 ENTIRE AGREEMENT. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
6.3 AMENDMENT OF RIGHTS. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of Newco, SSI and STI (or any of their permitted successors or
assigns).
6.4 GOVERNING LAW. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State of
Delaware as applied to agreements among Delaware residents entered into and to
be performed entirely within Delaware, excluding that body of law relating to
conflict of laws and choice of law.
6.5 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
6.6 THIRD PARTIES. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
6.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.
6.8 CAPTIONS. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6.10 COSTS AND ATTORNEYS' FEES. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover from the other party all of such prevailing party's costs and attorneys'
fees incurred in each such action, suit or other proceeding, including any and
all appeals or petitions therefrom.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Stockholder
Agreement as of the date and year first above written.
SEAGATE SOFTWARE, INC. VERITAS HOLDING CORPORATION
By: /s/ SUSAN J. WOLFE By: /s/ MARK LESLIE
------------------------------ ------------------------------
Name: Susan J. Wolfe Name: Mark Leslie
Title: Vice President Title: Chief Executive Officer
SEAGATE TECHNOLOGY, INC. VERITAS SOFTWARE CORPORATION
By: /s/ DONALD L. WAITE By: /s/ MARK LESLIE
------------------------------ ------------------------------
Name: Donald L. Waite Name: Mark Leslie
Title: Executive VP and CAO Title: Chief Executive Officer
[SIGNATURE PAGE TO STOCKHOLDER AGREEMENT]
<PAGE> 1
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"), Dr. Byron Osing 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.
<PAGE> 2
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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<PAGE> 3
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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<PAGE> 4
(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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<PAGE> 5
(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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<PAGE> 6
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 Clara 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.
-7-
<PAGE> 8
(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).
-8-
<PAGE> 9
(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).
-9-
<PAGE> 10
(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:
Dr. Byron Osing
c/o TeleBackup Systems Inc.
200, 119-14th Street N.W.
Calgary, Alberta
T2N 126
Telephone: (403) 283-3995
Facsimile: (403) 283-3907
with a copy to:
Bruce A. Lawrence
Parlee McLaws
3400 Petro-Canada Centre
150 - 6 Avenue SW
Calgary, Alberta
Canada T2P 3Y7
Telephone: (403) 294-7032
-10-
<PAGE> 11
Facsimile: (403) 294-7052
(ii) if to VERITAS, to:
VERITAS Software Corporation
1600 Plymouth Street
Mountain View, CA 94043
Attention: Chief Financial Officer
Telephone: (650) 335-8000
Facsimile: (650) 335-8660
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Jacqueline A. Daunt, Esq.
Telephone: (650) 858-7232
Facsimile: (650) 494-1417
(iii) If to the Escrow Agent, to:
Chase Manhattan Bank and Trust Company, N.A.
101 California Street, Suite 2725
San Francisco, CA 94111
Attention.: Cecil D. Bobey
Telephone: (415) 954-9581
Facsimile: (415) 693-8850
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
-11-
<PAGE> 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
-12-
<PAGE> 13
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.
-13-
<PAGE> 14
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
-14-
<PAGE> 15
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.
-15-
<PAGE> 16
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/ MARK LESLIE By: /s/ BYRON OSING
------------------------------- -------------------------------
Mark Leslie, President and Dr. Byron Osing, President and
Chief Executive Officer Chief Executive Officer
VERITAS OPERATING CORPORATION ESCROW AGENT
Chase Manhattan Bank and Trust
Company National Association
By: /s/ MARK LESLIE By: /s/ CECIL BOBEY
------------------------------- -------------------------------
Mark Leslie, President and Authorized Signatory
Chief Executive Officer
REPRESENTATIVE: SHAREHOLDERS
By: /s/ BYRON OSING By: /s/ BYRON OSING
------------------------------- -------------------------------
By: /s/ LYNN THURLOW
-------------------------------
By: /s/ THOMAS GLASSFORD
-------------------------------
By: /s/ EAMON HOEY
-------------------------------
By: /s/ CAL MANZ
-------------------------------
By: /s/ STEPHEN KENNY
-------------------------------
SIGNATURE PAGE TO
ESCROW AGREEMENT
<PAGE> 17
EXHIBIT A
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
TELEBACKUP EXCHANGEABLE PRO RATA
NAME AND ADDRESS SHARES SHARES ESCROW SHARES PERCENTAGE
- ---------------- ---------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Panzer Group Ltd. 1,283,910 169,900 16,990 26.71%
R.R. 2 Stn. LCD 1
Calgary AB T2P 2G5
694114 Alberta Ltd. 1,468,000 194,260 19,426 30.54%
c/o Howard Mackie
1000, 400 - 3rd Avenue SW
Calgary AB T2P 4H2
Thomas Glassford 36,000 4,764 476 0.75%
9200 Scurfield Drive NW
Calgary AB T3L 1Z5
Lynn Thurlow 122,400 16,197 1,620 2.55%
Box 104, Site 17,
R.R. 2
Calgary AB
Cal Manz 26,000 3,441 344 0.54%
Manz Developments Inc. 40,872 5,409 541 0.85%
Site 30, Box 1, R.R. 12
Calgary AB T3E 6W3
W.J. Copithorne 98,959 13,095 1,309 2.06%
R.R. 2
Calgary AB T2P 2G5
Fred Callaway 45,000 5,955 595 0.94%
1207 Varsity Estates Drive
NW
Calgary AB T3B 4P1
Kenbeau Ltd. and 30,000 3,970 397 0.62%
Stephen Kenny
32 Rosery Place NW
Calgary AB T2K 1L2
Eamon Hoey 25,000 3,308* 331 0.52%
146 Laird Drive, Suite 303
Toronto ON M4G 3V7
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
TELEBACKUP EXCHANGEABLE PRO RATA
NAME AND ADDRESS SHARES SHARES ESCROW SHARES PERCENTAGE
- ---------------- ---------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Bruce Meyer 650,300 86,064 8,606 13.53%
38 Sunhaven Place SE
Calgary AB T2X 2X6
708204 Alberta Ltd. 322,000 42,610 4,261 6.70%
Box 5, Site 14, R.R. 2
Calgary AB T2P 2G5
713801 Alberta Ltd. 658,500 87,139 8,714 13.70%
Box 5, Site 14, R.R. 2
Calgary AB T2P 2G5
</TABLE>
* VERITAS Shares
-2-
<PAGE> 19
EXHIBIT B
None
<PAGE> 1
EXHIBIT 4.04
VOTING, SUPPORT AND EXCHANGE TRUST AGREEMENT
AGREEMENT made the 1st day of June, 1999,
BETWEEN:
VERITAS HOLDING CORPORATION, a corporation existing under the laws of
the State of Delaware ("VERITAS"),
- and -
VERITAS SOFTWARE CORPORATION, a corporation existing under the laws of
the State of Delaware ("VERITAS Software"),
- and -
TELEBACKUP EXCHANGECO INC., a corporation existing under the laws of
the Province of Alberta (the "Corporation"),
- and -
MONTREAL TRUST COMPANY OF CANADA, a trust company existing under the
laws of Canada (the "Trustee").
WHEREAS, pursuant to a revised and restated combination agreement dated April 1,
1999 among VERITAS, VERITAS Software, TeleBackup Systems Inc. and the
Corporation (the "Combination Agreement"), the parties agreed that on the
Effective Date (as defined in the Combination Agreement), VERITAS, VERITAS
Software, the Corporation and a Canadian trust company would execute and deliver
a Voting, Support and Exchange Trust Agreement substantially in the form set
forth as an Exhibit to the Combination Agreement;
<PAGE> 2
-2-
AND WHEREAS, pursuant to an arrangement (the "Arrangement") effected pursuant to
the Business Corporations Act (Alberta),
(a) TeleBackup Systems Inc. ("TeleBackup") was amalgamated with a
numbered corporation existing under the laws of the Province
of Alberta ("Amalco") (the "Amalgamation");
(b) holders of TeleBackup common shares received class A
non-voting shares of the Corporation ("Corporation Class A
Shares") pursuant to the Amalgamation;
(c) holders of Corporation Class A Shares who were resident in
Canada and who properly elected in accordance with the terms
and conditions set out in the Plan of Arrangement relating to
the Arrangement received 0.13233 of an Exchangeable Share of
the Corporation (the "Exchangeable Shares") for each
Corporation Class A Share held by them.
AND WHEREAS the Parent is to grant to and in favour of Non-Affiliated Holders
(as hereinafter defined) from time to time of Exchangeable Shares the right, in
the circumstances set forth herein, to require the Parent to purchase from each
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holder;
<PAGE> 3
-3-
AND WHEREAS the parties desire to make appropriate provision and to establish a
procedure whereby voting rights in the Parent shall be exercisable by
Non-Affiliated Holders from time to time of Exchangeable Shares by and through
the Trustee, which will hold legal title to the Voting Share (as hereinafter
defined) to which voting rights attach for the benefit of Non-Affiliated Holders
and whereby the rights to require the Parent to purchase Exchangeable Shares
from the Non-Affiliated Holders shall be exercisable by Non-Affiliated Holders
from time to time of Exchangeable Shares by and through the Trustee, which will
hold legal title to such rights for the benefit of Non-Affiliated Holders;
AND WHEREAS the parties desire to make appropriate provision and to establish a
procedure whereby the Parent will take certain actions and make certain payments
and deliveries necessary to ensure that the Corporation will be able to make
certain payments and to deliver or cause to be delivered shares of Parent Common
Stock (as hereinafter defined) in satisfaction of the obligations of the
Corporation under the Exchangeable Share Provisions (as hereinafter defined) and
this trust agreement;
AND WHEREAS these recitals and any statements of fact in this trust agreement
are made by VERITAS Software, VERITAS and the Corporation and not by the
Trustee;
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this trust agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
<PAGE> 4
-4-
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this trust agreement, unless something in the subject matter or
content is inconsistent therewith:
"Applicable Laws" has the meaning set out in Section 6.6 hereof;
"Arrangement" has the meaning set out in the recitals hereto;
"Article 4 Subsidiary" means a Subsidiary of the Parent that, under Section 160
of the Delaware Revised Statutes or any successor provision thereto, is
precluded from voting any shares of Parent Common Stock held by it;
"Automatic Exchange Right" means the automatic exchange of shares of Parent
Common Stock for Exchangeable Shares pursuant to Section 5.3 of the Exchangeable
Share Provisions;
"Board of Directors" means the board of directors of the Corporation;
"Business Day" means any day other than a Saturday, a Sunday or a day when banks
are not open for business in either or both of Mountain View, California and
Calgary, Alberta;
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the official noon
spot exchange rate on such date for such foreign currency as reported by the
Bank of Canada or, in the event such spot exchange rate is not available, such
exchange rate on such date for such foreign currency as may be deemed by the
Board of Directors to be appropriate for such purpose;
"Code" means the United States Internal Revenue Code of 1986, as amended;
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"Combination Agreement" has the meaning set out in the recitals hereto;
"Corporation Class A Shares" has the meaning set out in the recitals hereto;
"Current Market Price" means, in respect of a share of Parent Common Stock on
any date, the Canadian Dollar Equivalent of the average closing sales price of a
share of Parent Common Stock during a period of 10 consecutive trading days
ending on the second trading day before such date quoted on the NASDAQ National
Market or, if the shares of Parent Common Stock are not then quoted on the
NASDAQ National Market, on such other stock exchange or automated quotation
system on which the shares of Parent Common Stock are listed or quoted, as the
case may be, as may be selected by the Board of Directors for such purpose;
provided, however, that if, in the opinion of the Board of Directors the public
distribution or trading activity of shares of Parent Common Stock during such
period is inadequate to create a market that reflects the fair market value of a
share of Parent Common Stock, then the Current Market Price of a share of Parent
Common Stock shall be determined by the Board of Directors based upon the advice
of such qualified independent financial advisors as the Board of Directors may
deem to be appropriate, and provided further than any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding;
"Dividend Amount" has the meaning set out in Section 1.1 of the Exchangeable
Share Provisions;
"Effective Date" has the meaning set out in Section 1.1 of the Plan of
Arrangement;
"Exchange Right" has the meaning set out in Section 5.1 hereof;
"Exchangeable Share Provisions" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares;
"Exchangeable Shares" has the meaning set out in the recitals hereto;
"Insolvency Event" means the institution by the Corporation of any proceeding to
be adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the
consent of the Corporation to the institution of bankruptcy, insolvency,
dissolution or winding-up proceedings against it, or the filing of a petition,
answer or consent seeking dissolution or winding up under any bankruptcy,
insolvency or analogous laws, including without limitation the Companies
Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency Act
(Canada), and the failure by the Corporation to contest in good faith any such
proceedings commenced in respect of the Corporation within 15 days of becoming
aware thereof, or the consent by the Corporation to the filing of any such
petition or to the appointment of a receiver, or the making by the Corporation
of a general assignment for the benefit of creditors, or the admission in
writing by the Corporation of its inability to pay its debts generally as they
become due, or the Corporation not
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being permitted, pursuant to solvency requirements or other provisions of
applicable law, to redeem any Retracted Shares pursuant to Section 6.1 of the
Exchangeable Share Provisions;
"Liquidation Amount" has the meaning set out in Section 5.1(a) of the
Exchangeable Share Provisions;
"Liquidation Call Right" has the meaning set out in Section 5.2(a) of the
Exchangeable Share Provisions;
"List" has the meaning set out in Section 4.6 hereof;
"Management Information Circular/Joint Proxy Statement/Prospectus" means the
Management Information Circular/Joint Proxy Statement/Prospectus dated - , 1999
of VERITAS Software, Seagate and TeleBackup;
"NSMG Combination" has the meaning ascribed to such term in the Management
Information Circular/Joint Proxy Statement/Prospectus;
"Non-Affiliated Holder Votes" has the meaning set out in Section 4.2 hereof;
"Non-Affiliated Holders", when used in Article 3 or Article 4 or otherwise with
respect to the right to vote or direct the votes to be cast by the holder of the
Voting Shares, means the registered holders of Exchangeable Shares other than
the Parent and its Article 4 Subsidiaries and, for all other purposes, means the
registered holders of Exchangeable Shares other than the Parent and its
Subsidiaries;
"Offer" has the meaning set out in Section 6.8 hereof;
"Officer's Certificate" means with respect to the Parent or the Corporation, as
the case may be, a certificate signed by any one of the Chairman of the Board,
the Vice-Chairman of the board, the President, any Vice-President or any other
senior officer of the Parent or the Corporation, as the case may be;
"Optional Redemption Date" has the meaning set out in Section 1.1 in the
Exchangeable Share Provisions;
"Parent" means, subject to Section 1.2, VERITAS;
"Parent Board of Directors" means the board of directors of the Parent;
"Parent Common Stock" means the shares of Common Stock of the Parent, par value
US$0.001 per share, having voting rights of one vote per share, and any other
securities into which such shares may be changed or for which such shares may be
exchanged (whether or not the Parent
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shall be the issuer of such other securities) or any other consideration which
may be received by the holders of such shares, pursuant to a recapitalization,
reconstruction, reorganization or reclassification of, or amalgamation, merger,
liquidation or similar transaction, affecting such shares;
"Parent Consent" has the meaning set out in Section 4.2 hereof;
"Parent Meeting" has the meaning set out in Section 4.2 hereof;
"Parent Successor" has the meaning set out in Section 11.1 hereof;
"Plan of Arrangement" means the plan of arrangement relating to the arrangement
of the Corporation providing for the Arrangement;
"Redemption Call Right" has the meaning set out in Section 7.2(a) of the
Exchangeable Share Provisions;
"Redemption Price" has the meaning set out in Section 7.1(a) of the Exchangeable
Share Provisions;
"Retracted Shares" has the meaning set out in Section 5.7 hereof;
"Retraction Call Right" has the meaning set out in Section 6.2(a) of the
Exchangeable Share Provisions;
"Retraction Price" has the meaning set out in Section 6.1(a) of the Exchangeable
Share Provisions;
"Seagate" means Seagate Software, Inc., a corporation existing under the laws of
the State of Delaware;
"Subsidiary" of the Parent means any corporation more than 50% of the
outstanding stock of which, by vote or by value, is owned, directly or
indirectly, by the Parent, by one or more other Subsidiaries of the Parent, or
by the Parent and one or more other Subsidiaries of the Parent;
"Transfer Agent" has the meaning set out in Section 1.1 of the Exchangeable
Share Provisions;
"Trust" means the trust created by this trust agreement;
"Trust Estate" means the Voting Share, any other securities, the Exchange Right
and any money or other right or asset that may be held by the Trustee from time
to time pursuant to this trust agreement;
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"Trustee" means Montreal Trust Company of Canada, and subject to the provisions
of Article 10 hereof, includes any successor trustee or permitted assigns;
"Voting Rights" means the voting rights attached to the Voting Share; and
"Voting Share" means the one share of Special Voting Stock of the Parent, par
value US$0.001, issued by the Parent to and deposited with the Trustee, which
entitles the holder of record to a number of votes at meetings of holders of
Parent Common Stock equal to the number of Exchangeable Shares outstanding from
time to time that are held by Non-Affiliated Holders.
1.2 Redefinition of Parent
If, prior to the Effective Time, the stockholders of VERITAS Software and
Seagate have not approved the NSMG Combination and the NSMG Combination has not
been effected, all as described in the Management Information Circular/Joint
Proxy Statement/Prospectus, "Parent" for the purposes of this Agreement shall
mean VERITAS Software and the rights and obligations of VERITAS hereunder shall
be assigned to and shall be assumed by VERITAS Software.
1.3 Interpretation Not Affected by Headings, etc.
The division of this trust agreement into articles and sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this trust agreement. Unless otherwise indicated, any
reference in this trust agreement to an article or Section refers to the
specified article or Section of this trust agreement.
1.4 Number, Gender and Persons
In this trust agreement, unless the context otherwise requires, words importing
the singular number include the plural and vice versa, words importing any
gender include all genders and words importing persons include individuals,
corporations, partnerships, companies, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities of any
kind.
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1.5 Date for Any Action
If any date on which any action is required to be taken under this trust
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
1.6 Payments
All payments to be made hereunder will be made without interest and less any tax
required by law to be deducted and withheld.
ARTICLE 2
TRUST
2.1 Establishment of Trust
One of the purposes of this trust agreement is to create the Trust for the
benefit of the Non-Affiliated Holders, as herein provided. The Trustee will hold
the Voting Share in order to enable the Trustee to exercise the Voting Rights
and will hold the Exchange Right in order to enable the Trustee to exercise such
right and will hold the other rights granted in or resulting from the Trustee
being a party to this trust agreement in order to enable the Trustee to exercise
or enforce such rights, in each case as trustee for and on behalf of the
Non-Affiliated Holders as provided in this trust agreement.
ARTICLE 3
VOTING SHARE
3.1 Issue and Ownership of the Voting Share
Simultaneously with the execution and delivery of this trust agreement, the
Parent will issue to and deposit with the Trustee the Voting Share to be
hereafter held of record by the Trustee as trustee for and on behalf of, and for
the use and benefit of, the Non-Affiliated Holders, in accordance with the
provisions of this trust agreement. The Parent hereby acknowledges receipt from
the Trustee as trustee for and on behalf of the Non-Affiliated Holders of good
and valuable consideration (and the adequacy thereof) for the issuance of the
Voting Share by the Parent to the Trustee. During the term of the Trust and
subject to the terms and conditions of this trust
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agreement, the Trustee shall possess and be vested with full legal ownership of
the Voting Share and shall be entitled to exercise all of the rights and powers
of an owner with respect to the Voting Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Non-Affiliated Holders
in accordance with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement,
have no power or authority to sell, transfer, vote or
otherwise deal in or with the Voting Share and the Voting
Share shall not be used or disposed of by the Trustee for any
purpose other than the purposes for which the Trust is created
pursuant to this trust agreement.
3.2 Legended Share Certificates
The Corporation will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Non-Affiliated Holders of their right
to instruct the Trustee with respect to the exercise of the Voting Rights with
respect to the Exchangeable Shares held by a Non-Affiliated Holder.
3.3 Safekeeping of Certificate
The certificate representing the Voting Share shall at all times be held in safe
keeping by the Trustee or its agent.
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ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 Voting Rights
The Trustee, as the holder of record of the Voting Share, shall be entitled to
all of the Voting Rights, including the right to consent to or to vote in person
or by proxy the Voting Share, on any matter, question or proposition whatsoever
that may come before the stockholders of the Parent at a Parent Meeting or in
connection with a Parent Consent. The Voting Rights shall be and remain vested
in and exercised by the Trustee. Subject to Section 7.15 hereof, the Trustee
shall exercise the Voting Rights only on the basis of instructions received
pursuant to this Article 4 from Non-Affiliated Holders entitled to instruct the
Trustee as to the voting thereof at the time at which the Parent Consent is
sought or the Parent Meeting is held. To the extent that no instructions are
received from a Non-Affiliated Holder with respect to the Voting Rights to which
such Non-Affiliated Holder is entitled, the Trustee shall not exercise or permit
the exercise of the Voting Rights relating to such Non-Affiliated Holder's
Exchangeable Shares.
4.2 Number of Votes
With respect to all meetings of stockholders of the Parent at which holders of
shares of Parent Common Stock are entitled to vote (a "Parent Meeting") and with
respect to all written consents sought from the holders of shares of Parent
Common Stock (a "Parent Consent"), each Non-Affiliated Holder shall be entitled
to instruct the Trustee to cast and exercise, in the manner instructed, subject
to adjustments that may arise as a result of the provisions hereof including
Section 6.7, one vote for each Exchangeable Share owned of record by such
Non-Affiliated Holder on the record date established by the Parent or by
applicable law for such Parent Meeting or Parent Consent, as the case may be
(the "Non-Affiliated Holder Votes") in respect of each matter, question or
proposition to be voted on at such Parent Meeting or to be consented to in
connection with such Parent Consent.
4.3 Mailings to Shareholders
With respect to each Parent Meeting and Parent Consent, the Trustee will mail or
cause to be mailed (or otherwise communicate in the same manner that the Parent
utilizes in communications to holders of Parent Common Stock, subject to the
Trustee being advised in writing of such method and its ability to provide this
method of communication) to each of the Non-Affiliated Holders named in the List
on the same day as the initial mailing or notice (or other communication) with
respect thereto is given by the Parent to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related
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materials to be provided to stockholders of the Parent;
(b) a statement that such Non-Affiliated Holder is entitled,
subject to the provisions of Section 4.7 hereof, to instruct
the Trustee as to the exercise of the Non-Affiliated Holder
Votes with respect to such Parent Meeting or Parent Consent,
as the case may be, or, pursuant and subject to Section 4.7
hereof to attend such Parent Meeting and to exercise
personally the Non-Affiliated Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Non-Affiliated Holder or its designee to
exercise personally such holder's Non-Affiliated Holder
Votes; or
(ii) a proxy to a designated agent or other representative of
the management of the Parent to exercise such
Non-Affiliated Holder Votes;
(d) a statement that if no such instructions are received from the
Non-Affiliated Holder, the Non-Affiliated Holder Votes to
which such Non-Affiliated Holder is entitled will not be
exercised;
(e) a form of direction whereby the Non-Affiliated Holder may so
direct and instruct the Trustee as contemplated herein; and
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(f) a statement of (i) the time and date by which such
instructions must be received by the Trustee in order to be
binding upon it, which in the case of a Parent Meeting shall
not be earlier than the close of business on the second
Business Day prior to such meeting, and (ii) the method for
revoking or amending such instructions.
The materials referred to above are to be provided by the Parent to the Trustee,
but shall be subject to review and comment by the Trustee. For the purpose of
determining Non-Affiliated Holder Votes to which a Non-Affiliated Holder is
entitled in respect of any such Parent Meeting or Parent Consent, the number of
Exchangeable Shares owned of record by the Non-Affiliated Holder shall be
determined at the close of business on the record date established by the Parent
or by applicable law for purposes of determining stockholders entitled to vote
at such Parent Meeting or to give written consent in connection with such Parent
Consent. The Parent will notify the Trustee in writing of any decision of the
Parent Board of Directors with respect to the calling of any such Parent Meeting
or the seeking of any such Parent Consent and shall provide all necessary
information and materials to the Trustee in each case promptly and in any event
in sufficient time to enable the Trustee to perform its obligations contemplated
by this Section 4.3.
4.4 Copies of Stockholder Information
The Parent will deliver to the Trustee copies of all proxy materials (including
notices of Parent Meetings but excluding proxies to vote shares of Parent Common
Stock), information statements, reports (including without limitation all
interim and annual financial statements) and other written communications that
are to be distributed from time to time to holders of Parent Common Stock in
sufficient quantities and in sufficient time so as to enable the Trustee to send
those materials to each Non-Affiliated Holder at the same time as such materials
are first sent to holders of Parent Common Stock. The Trustee will mail or
otherwise send to each Non-Affiliated Holder, at the expense of Parent, copies
of all such materials (and all materials specifically directed to the
Non-Affiliated Holders or to the Trustee for the benefit of the Non-Affiliated
Holders by the Parent) received by the Trustee from the Parent at the same time
as such materials are first sent to holders of Parent Common Stock. The Trustee
will make copies of all such materials available for inspection by any
Non-Affiliated Holder at the Trustee's principal office in the city of Calgary.
<PAGE> 14
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4.5 Other Materials
Immediately after receipt by the Parent or any stockholder of the Parent of any
material sent or given generally to the holders of Parent Common Stock by or on
behalf of a third party, including without limitation, dissident proxy and
information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), the Parent
shall use reasonable efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such material
(unless the same has been provided directly to Non-Affiliated Holders by such
third party) to each Non-Affiliated Holder as soon as practicable thereafter. As
soon as practicable after receipt thereof, the Trustee will mail or otherwise
send to each Non-Affiliated Holder, at the expense of the Parent, copies of all
such materials received by the Trustee from the Parent. The Trustee will also
make copies of all such materials available for inspection by any Non-Affiliated
Holder at the Trustee's principal office in the city of Calgary.
4.6 List of Persons Entitled to Vote
The Corporation shall, (a) prior to each annual, general and/or special Parent
Meeting or the seeking of any Parent Consent and (b) forthwith upon each request
made at any time by the Trustee in writing, prepare or cause to be prepared a
list (a "List") of the names and addresses of the Non-Affiliated Holders
arranged in alphabetical order and showing the number of Exchangeable Shares
held of record by each such Non-Affiliated Holder, in each case at the close of
business on the date specified by the Trustee in such request or, in the case of
a List prepared in connection with a Parent Meeting or a Parent Consent, at the
close of business on the record date established by the Parent or pursuant to
applicable law for determining the holders of Parent Common Stock entitled to
receive notice of and/or to vote at such Parent Meeting or to give consent in
connection with such Parent Consent. Each such List shall be delivered to the
Trustee promptly after receipt by the Corporation of such request or the record
date for such meeting or seeking of consent, as the case may be, and, in any
event, within sufficient time as to enable the Trustee to perform its
obligations under this trust agreement. The Parent agrees to give the
Corporation written notice (with a copy to the Trustee) of the calling of any
Parent Meeting or the seeking of any Parent Consent, together with the record
dates therefor, sufficiently prior to the date of the calling of such meeting or
seeking of such consent so as to enable the Corporation to perform its
obligations under this Section 4.6.
4.7 Entitlement to Direct Votes
Any Non-Affiliated Holder named in a List prepared in connection with any Parent
Meeting or
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any Parent Consent will be entitled (a) to instruct the Trustee in the manner
described in Section 4.3 hereof with respect to the exercise of the
Non-Affiliated Holder Votes to which such Non-Affiliated Holder is entitled or
(b) to attend such meeting and personally to exercise thereat (or to exercise
with respect to any written consent), as the proxy of the Trustee, the
Non-Affiliated Holder Votes to which such Non-Affiliated Holder is entitled
except, in each case, to the extent that such Non-Affiliated Holder has
transferred the ownership of any Exchangeable Shares in respect of which such
Non-Affiliated Holder is entitled to Non-Affiliated Holder Votes after the close
of business on the record date for such meeting or seeking of consent.
4.8 Voting by Trustee, and Attendance of Trustee Representative, at Meeting
In connection with each Parent Meeting and Parent Consent, the Trustee shall
exercise, either in person or by proxy, in accordance with the instructions
received from a Non-Affiliated Holder pursuant to Section 4.3 hereof, the
Non-Affiliated Holder Votes as to which such Non-Affiliated Holder is entitled
to direct the vote (or any lesser number thereof as may be set forth in the
instructions); provided, however, that such written instructions are received by
the Trustee from the Non-Affiliated Holder prior to the time and date fixed by
it for receipt of such instructions in the notice given by the Trustee to the
Non-Affiliated Holder pursuant to Section 4.3 hereof.
The Trustee shall cause such representatives as are empowered by it to sign and
deliver, on behalf of the Trustee, proxies for Voting Rights enabling a
Non-Affiliated Holder to attend each Parent Meeting. Upon submission by a
Non-Affiliated Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Non-Affiliated Holder's request, such
representatives shall sign and deliver to such Non-Affiliated Holder (or its
designee) a proxy to exercise personally the Non-Affiliated Holder Votes as to
which such Non-Affiliated Holder is otherwise entitled hereunder to direct the
vote, if such Non-Affiliated Holder either (i) has not previously given the
Trustee instructions pursuant to Section 4.3 hereof in respect of such meeting,
or (ii) submits to the Trustee's representatives written revocation of any such
previous instructions. At such meeting, the Non-Affiliated Holder exercising
such Non-Affiliated Holder Votes shall have the same rights as the Trustee to
speak at the meeting in respect of any matter, question or proposition, to vote
by way of ballot at the meeting in respect of any matter, question or
proposition and to vote at such meeting by way of a show of hands in respect of
any matter, question or proposition.
4.9 Distribution of Written Materials
Any written materials to be distributed by the Trustee to the Non-Affiliated
Holders pursuant to
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this trust agreement shall be delivered or sent by mail (or otherwise
communicated in the same manner as the Parent utilizes in communications to
holders of Parent Common Stock, subject to the Trustee being advised in writing
of such method of communication and its ability to provide same) to each
Non-Affiliated Holder at its address as shown on the books of the Corporation.
The Corporation shall provide or cause to be provided to the Trustee for this
purpose, on a timely basis and without charge or other expense:
(a) current Lists of the Non-Affiliated Holders; and
(b) upon the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this trust agreement.
The materials referred to above are to be provided by the Parent to the Trustee,
but shall be subject to review and comment by the Trustee.
4.10 Termination of Voting Rights
All the rights of a Non-Affiliated Holder with respect to the Non-Affiliated
Holder Votes exercisable in respect of the Exchangeable Shares held by such
Non-Affiliated Holder, including the right to instruct the Trustee as to the
voting of or to vote personally such Non-Affiliated Holder Votes, shall be
deemed to be surrendered by the Non-Affiliated Holder to the Parent and such
Non-Affiliated Holder Votes and the Voting Rights represented thereby shall
cease immediately upon the delivery by such Non-Affiliated Holder to the Trustee
of the certificates representing such Exchangeable Shares in connection with the
exercise by the Non-Affiliated Holder of the Exchange Right or the occurrence of
the automatic exchange of Exchangeable Shares for shares of Parent Common Stock,
as specified in Article 5 hereof, or upon the redemption of Exchangeable Shares
pursuant to Article 6 or Article 7 of the Exchangeable Share Provisions, or upon
the effective date of the liquidation, dissolution or winding-up of the
Corporation pursuant to Article 5 of the Exchangeable Share Provisions, or upon
the purchase of Exchangeable Shares from the holder thereof by the Parent
pursuant to the exercise by the Parent of the Retraction Call Right, the
Redemption Call Right or the Liquidation Call Right (unless in any case the
Corporation or the Parent shall not have delivered the requisite shares of
Parent Common Stock and cheque, if any, deliverable in exchange therefor to the
Transfer Agent or the Trustee for delivery to the Non-Affiliated Holders).
<PAGE> 17
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ARTICLE 5
EXCHANGE RIGHT AND PARENT SUPPORT
5.1 Grant and Ownership of the Exchange Right
The Parent hereby grants to the Trustee as trustee for and on behalf of, and for
the use and benefit of, the Non-Affiliated Holders the right (the "Exchange
Right"), upon the occurrence and during the continuance of an Insolvency Event,
to require the Parent to purchase from each or any Non-Affiliated Holder all or
any part of the Exchangeable Shares held by the Non-Affiliated Holder, all in
accordance with the provisions of this trust agreement. The Parent hereby
acknowledges receipt from the Trustee, as trustee for and on behalf of the
Non-Affiliated Holders, of good and valuable consideration (and the adequacy
thereof) for the grant of the Exchange Right by the Parent to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
trust agreement, the Trustee shall possess and be vested with full legal
ownership of the Exchange Right and shall be entitled to exercise all of the
rights and powers of an owner with respect to the Exchange Right, provided that
the Trustee shall:
(a) hold the Exchange Right and the legal title thereto as trustee
solely for the use and benefit of the Non-Affiliated Holders
in accordance with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement,
have no power or authority to exercise or otherwise deal in or
with the Exchange Right, and the Trustee shall not exercise
such right for any purpose other than the purposes for which
this Trust is created pursuant to this trust agreement.
5.2 Legended Share Certificates
The Corporation will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Non-Affiliated Holders of their right
to instruct the Trustee with respect to the exercise of the Exchange Right in
respect of the Exchangeable Shares held by a
<PAGE> 18
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Non-Affiliated Holder.
5.3 General Exercise of Exchange Right
The Exchange Right shall be and remain vested in and exercisable by the Trustee.
Subject to Section 7.15 hereof, the Trustee shall exercise the Exchange Right
only on the basis of instructions received pursuant to this Article 5 from
Non-Affiliated Holders entitled to instruct the Trustee as to the exercise
thereof. To the extent that no instructions are received from a Non-Affiliated
Holder with respect to the Exchange Right, the Trustee shall not exercise or
permit the exercise of the Exchange Right.
5.4 Purchase Price
The purchase price payable by the Parent for each Exchangeable Share to be
purchased by the Parent under the Exchange Right shall be an amount per share
equal to (a) the Current Market Price of a share of Parent Common Stock on the
last Business Day prior to the day of closing of the purchase and sale of such
Exchangeable Share under the Exchange Right, which shall be satisfied in full by
causing to be delivered to such holder one share of Parent Common Stock, plus
(b) the Dividend Amount, if any. The purchase price for each such Exchangeable
Share so purchased may be satisfied only by the Parent delivering or causing to
be delivered to the Trustee, on behalf of the relevant Non-Affiliated Holder,
one share of Parent Common Stock and a cheque for the balance, if any, of the
purchase price.
5.5 Exercise Instructions
Subject to the terms and conditions herein set forth, a Non-Affiliated Holder
shall be entitled, upon the occurrence and during the continuance of an
Insolvency Event, to instruct the Trustee to exercise the Exchange Right with
respect to all or any part of the Exchangeable Shares registered in the name of
such Non-Affiliated Holder on the books of the Corporation. To cause the
exercise of the Exchange Right by the Trustee, the Non-Affiliated Holder shall
deliver to the Trustee, in person or by certified or registered mail, at its
principal office in Calgary, Alberta or at such other places in Canada as the
Trustee may from time to time designate by written notice to the Non-Affiliated
Holders, the certificates representing the Exchangeable Shares which such
Non-Affiliated Holder desires the Parent to purchase, duly endorsed in blank,
and accompanied by such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the Business Corporations Act
(Alberta) and such additional documents and
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instruments as the Trustee or the Corporation may reasonably require together
with (a) a duly completed form of notice of exercise of the Exchange Right,
contained on the reverse of or attached to the Exchangeable Share certificates,
stating (i) that the Non-Affiliated Holder thereby instructs the Trustee to
exercise the Exchange Right so as to require the Parent to purchase from the
Non-Affiliated Holder the number of Exchangeable Shares specified therein, (ii)
that such Non-Affiliated Holder has good title to and owns all such Exchangeable
Shares to be acquired by the Parent free and clear of all liens, claims and
encumbrances, (iii) the names in which the certificates representing Parent
Common Stock issuable in connection with the exercise of the Exchange Right and
the cheques with respect to the balance of the purchase price, if any, are to be
issued and (iv) the names and addresses of the persons to whom such new
certificates should be delivered and (b) payment (or evidence satisfactory to
the Trustee, the Corporation and the Parent of payment) of the taxes (if any)
payable as contemplated by Section 5.8 of this trust agreement. If only a
portion of the Exchangeable Shares represented by any certificate delivered to
the Trustee are to be purchased by the Parent under the Exchange Right, a new
certificate for the balance of such Exchangeable Shares shall be issued to the
holder at the expense of the Corporation.
5.6 Delivery of Parent Common Stock; Effect of Exercise
Promptly after receipt of the certificates representing the Exchangeable Shares
that a Non-Affiliated Holder desires the Parent to purchase under the Exchange
Right (together with such documents and instruments of transfer and a duly
completed form of notice of exercise of the Exchange Right and payment of taxes
payable as contemplated by Section 5.8, if any, or evidence thereof), duly
endorsed for transfer to the Parent, the Trustee shall notify the Parent and the
Corporation of its receipt of the same, which notice to the Parent and the
Corporation shall constitute exercise of the Exchange Right by the Trustee on
behalf of the holder of such Exchangeable Shares, and the Parent shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
delivery to the Non-Affiliated Holder of such Exchangeable Shares (or to such
other persons, if any, properly designated by such Non-Affiliated Holder), a
certificate for the number of shares of Parent Common Stock deliverable in
connection with such exercise of the Exchange Right (which shares shall be duly
issued as fully paid and non-assessable and shall be free and clear of any lien,
claim or encumbrance, security interest or adverse claim) and a cheque for the
balance, if any, of the purchase price therefor; provided, however, that no such
delivery shall be made unless and until the Non-Affiliated Holder requesting the
same shall have paid (or provided evidence satisfactory to the Trustee, the
Corporation and the Parent of the payment of) the taxes (if any) payable as
contemplated by Section 5.8 of this trust agreement. Immediately upon the giving
of notice by the Trustee to the Parent and the Corporation of the exercise of
the Exchange Right, as provided in this Section 5.6, the Closing of the
transaction of purchase and sale contemplated by the Exchange Right shall be
deemed to have occurred, and the Non-Affiliated Holder of such Exchangeable
Shares shall be deemed to have transferred to the
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Parent all of its right, title and interest in and to such Exchangeable Shares
and the related interest in the Trust Estate and shall not be entitled to
exercise any of the rights of a holder in respect thereof, other than the right
to receive its proportionate part of the total purchase price therefor, unless
the requisite number of shares of Parent Common Stock (together with a cheque
for the balance, if any, of the total purchase price therefor) is not delivered
by the Parent to the Trustee, for delivery to such Non-Affiliated Holder (or to
such other persons, if any, properly designated by such Non-Affiliated Holder),
within three Business Days of the date of the giving of such notice by the
Trustee, in which case the rights of the Non-Affiliated Holder shall remain
unaffected until such shares of Parent Common Stock are so delivered by the
Parent and any such cheque is so delivered and paid. Concurrently with the
closing of the transaction of purchase and sale contemplated by the Exchange
Right, such Non-Affiliated Holder shall be considered and deemed for all
purposes to be the holder of the shares of Parent Common Stock delivered to it
pursuant to the Exchange Right.
5.7 Exercise of Exchange Right Subsequent to Retraction
In the event that a Non-Affiliated Holder has exercised its right under Article
6 of the Exchangeable Share Provisions to require the Corporation to redeem any
or all of the Exchangeable Shares held by the Non-Affiliated Holder (the
"Retracted Shares") and is notified by the Corporation pursuant to Section
6.1(d) of the Exchangeable Share Provisions that the Corporation will not be
permitted as a result of solvency requirements of applicable law to redeem all
such Retracted Shares, subject to receipt by the Trustee of written notice to
that effect from the Corporation and provided that the Parent shall not have
exercised its Retraction Call Right with respect to the Retracted Shares and
that the Non-Affiliated Holder shall not have revoked the retraction request
delivered by the Non-Affiliated Holder to the Corporation pursuant to Section
6.1 of the Exchangeable Share Provisions, the retraction request will constitute
and will be deemed to constitute notice from the Non-Affiliated Holder to the
Trustee instructing the Trustee to exercise the Exchange Right with respect to
those Retracted Shares that the Corporation is unable to redeem. In any such
event, the Corporation hereby agrees with the Trustee and in favour of the
Non-Affiliated Holder immediately to notify the Trustee of such prohibition
against the Corporation redeeming all of the Retracted Shares and immediately to
forward or cause to be forwarded to the Trustee all relevant materials delivered
by the Non-Affiliated Holder to the Corporation or to the Transfer Agent
(including without limitation a copy of the retraction request delivered
pursuant to Section 6.1(a) of the Exchangeable Share Provisions) in connection
with such proposed redemption of the Retracted Shares and the Trustee will
thereupon exercise the Exchange Right with respect to the Retracted Shares that
the Corporation is not permitted to redeem and will require the Parent to
purchase such shares in accordance with the provisions of this Article 5.
<PAGE> 21
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5.8 Stamp or Other Transfer Taxes
Upon any sale of Exchangeable Shares to the Parent pursuant to the Exchange
Right, the share certificate or certificates representing Parent Common Stock to
be delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Non-Affiliated Holder of the Exchangeable
Shares so sold or in such names as such Non-Affiliated Holder may otherwise
direct in writing without charge to the holder of the Exchangeable Shares so
sold, provided, however, that such Non-Affiliated Holder shall (a) pay (and
neither the Parent, the Corporation nor the Trustee shall be required to pay)
any documentary, stamp, transfer or other similar taxes that may be payable in
respect of any transfer involved in the issuance or delivery of such shares to a
person other than such Non-Affiliated Holder or (b) have established to the
satisfaction of the Trustee, the Parent and the Corporation that such taxes are
not payable or have been paid.
5.9 Notice of Insolvency Event
Immediately upon the occurrence of an Insolvency Event or any event that with
the giving of notice or the passage of time or both would be an Insolvency
Event, the Corporation and the Parent shall give written notice thereof to the
Trustee. As soon as practicable after receiving notice from the Corporation or
the Parent or from any other person of the occurrence of an Insolvency Event,
the Trustee will mail to each Non-Affiliated Holder, at the expense of the
Parent, a notice of such Insolvency Event in the form provided by the Parent,
which notice shall contain a brief statement of the right of the Non-Affiliated
Holders with respect to the Exchange Right under this Article 5.
5.10 Call Rights
The Liquidation Call Right, the Redemption Call Right, the Retraction Call Right
and the Automatic Exchange Right are hereby agreed, acknowledged and confirmed,
and it is agreed and acknowledged that such rights are granted in part in
consideration of the obligations of the Parent under this trust agreement.
<PAGE> 22
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ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 Covenants of Parent Regarding Exchangeable Shares
So long as any Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on Parent Common Stock unless
(i) the Corporation will have sufficient money or other assets
or authorized but unissued securities available to enable the
due declaration and the due and punctual payment in accordance
with applicable law, of an equivalent dividend on the
Exchangeable Shares and (ii) the Corporation shall
simultaneously declare or pay, as the case may be, an
equivalent dividend on the Exchangeable Shares;
(b) advise the Corporation sufficiently in advance of the
declaration by the Parent of any dividend on Parent Common
Stock and take all such other actions as are necessary, in
cooperation with the Corporation, to ensure that the
respective declaration date, record date and payment date for
a dividend on the Exchangeable Shares shall be the same as the
declaration date, record date and payment date for the
corresponding dividend on Parent Common Stock and that such
dividend on the Exchangeable Shares shall correspond with any
requirements of the stock exchange on which the Exchangeable
Shares are listed;
(c) ensure that the record date for determining shareholders
entitled to receive any dividend declared on Parent Common
Stock is not less than 10 Business Days after the declaration
date for such dividend or such shorter period within which
applicable
<PAGE> 23
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law may be complied with;
(d) take all such actions and do all such things as are necessary
or desirable to enable and permit the Corporation, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Liquidation Amount in respect of each issued and outstanding
Exchangeable Share upon the liquidation, dissolution or
winding up of the Corporation, including without limitation
all such actions and all such things as are necessary or
desirable to enable and permit the Corporation to cause to be
delivered shares of Parent Common Stock to the holders of
Exchangeable Shares in accordance with the provisions of
Article 5 of the Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary
or desirable to enable and permit the Corporation, in
accordance with applicable law, to pay and otherwise perform
its obligations with respect to the satisfaction of the
Retraction Price and the Redemption Price, including without
limitation all such actions and all such things as are
necessary or desirable to enable and permit the Corporation to
cause to be delivered shares of Parent Common Stock to the
holders of Exchangeable Shares, upon the retraction or
redemption of the Exchangeable Shares in accordance with the
provisions of Article 6 or Article 7 of the Exchangeable Share
Provisions, as the case may be;
<PAGE> 24
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(f) use its best efforts to enable the Corporation to maintain the
listing of the Exchangeable Shares on the Alberta Stock
Exchange or another stock exchange in Canada prescribed under
the Income Tax Act (Canada); and
(g) not exercise its vote as a shareholder to initiate the
voluntary liquidation, dissolution or winding up of the
Corporation nor take any action or omit to take any action
that is designed to result in the liquidation, dissolution or
winding up of the Corporation.
6.2 Segregation of Funds
The Parent will cause the Corporation to deposit a sufficient amount of funds in
a separate account and segregate a sufficient amount of such other assets as is
necessary to enable the Corporation to pay or otherwise satisfy the applicable
dividends, Liquidation Amount, Retraction Price or Redemption Price, in each
case for the benefit of Non-Affiliated Holders from time to time of the
Exchangeable Shares, and to use such funds and other assets so segregated
exclusively for the payment of dividends and the payment or other satisfaction
of the Liquidation Amount, the Retraction Price or the Redemption Price, as
applicable.
6.3 Certain Representations
The Parent hereby represents, warrants and covenants that:
(a) it has irrevocably reserved for issuance and will at all times
keep available, free from pre-emptive and other rights, out of
its authorized and unissued capital stock such number of
shares of Parent Common Stock (or other shares or securities
into which Parent Common Stock may be reclassified or changed
as contemplated by
<PAGE> 25
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Section 6.7 hereof) (i) as is equal to the sum of (x) the
number of Exchangeable Shares issued and outstanding from time
to time and (y) the number of Exchangeable Shares issuable
upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time and (ii) as are now and may
hereafter be required to enable and permit each of the
Corporation and the Parent to meet its obligations hereunder,
under the Exchangeable Share Provisions and under any other
security or commitment pursuant to which the Corporation or
the Parent may now or hereafter be required to issue and/or
deliver shares of Parent Common Stock; and
(b) it is not as of the Effective Date, and has not been at any
time within the last year prior to the Effective Date, a
"United States real property holding corporation" within the
meaning of Section 897 of the Internal Revenue Code of 1986,
as amended.
6.4 Notification of Certain Events
In order to assist the Parent to comply with its obligations hereunder, the
Corporation will give the Parent notice of each of the following events at the
time set forth below:
(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding-up
proceedings with respect to the Corporation or to effect any
other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, at
least 60 days prior to the
<PAGE> 26
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proposed effective date of such liquidation, dissolution,
winding up or other distribution;
(b) immediately, upon the earlier of (i) receipt by the
Corporation of notice of, and (ii) the Corporation otherwise
becoming aware of, any threatened or instituted claim, suit,
petition or other proceedings with respect to the involuntary
liquidation, dissolution or winding up of the Corporation or
to effect any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding
up its affairs;
(c) immediately, upon receipt by the Corporation of a Retraction
Request (as defined in the Exchangeable Share Provisions);
(d) at least 130 days prior to any Optional Redemption Date
determined by the Board of Directors in accordance with the
Exchangeable Share Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of
any Exchangeable Shares or rights to acquire Exchangeable
Shares.
6.5 Delivery of Shares of Parent Common Stock
Upon notice of any event that requires the Corporation to cause to be delivered
shares of Parent Common Stock to any holder of Exchangeable Shares, the Parent
shall, in any reasonable manner deemed appropriate by it, provide such shares or
cause such shares to be provided to the Corporation, which shall forthwith
deliver the requisite shares of Parent Common Stock to or to the order of the
former holder of the surrendered Exchangeable Shares, as the Corporation shall
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direct. All such shares of Parent Common Stock shall be duly issued as fully
paid, non-assessable, free of pre-emptive rights and shall be free and clear of
any lien, claim, encumbrance, security interest or adverse claim.
6.6 Qualification of Shares of Parent Common Stock
The Parent covenants that if any shares of Parent Common Stock (or other shares
or securities into which Parent Common Stock may be reclassified or changed as
contemplated by Section 6.7 hereof) to be issued and delivered hereunder,
including for greater certainty, pursuant to the Plan of Arrangement, the
Exchangeable Share Provisions or the Exchange Right, require registration or
qualification with, or approval of, or the filing of any document including any
prospectus or similar document or the taking of any proceeding with, or the
obtaining of any order, ruling or consent from any governmental or regulatory
authority under any Canadian or United States federal, provincial or state law
or regulation or pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other legal requirement (collectively, the
"Applicable Laws") before such shares (or other shares or securities into which
Parent Common Stock may be reclassified or changed as contemplated by Section
6.7 hereof) may be issued and delivered by the Parent to the initial holder
thereof or in order that such shares may be freely traded thereafter (other than
any restrictions on transfer by reason of a holder being a "control person" of
the Parent for purposes of Canadian federal or provincial securities law or an
"affiliate" of the Parent or, prior to the Effective Date, of the Corporation
for purposes of United States federal or state securities law), the Parent will
in good faith expeditiously take all such actions and do all such things as are
necessary to cause such shares of Parent Common Stock (or other shares or
securities into which Parent Common Stock may be reclassified or changed as
contemplated by Section 6.7 hereof) to be and remain duly registered, qualified
or approved. The Parent represents and warrants that it has in good faith taken
all actions and done all things as are necessary under Applicable Laws as they
exist on the date hereof to cause the shares of Parent Common Stock (or other
shares or securities into which Parent Common Stock may be reclassified or
changed as contemplated by Section 6.7 hereof) to be issued and delivered
hereunder, including for greater certainty, pursuant to the Plan of Arrangement,
the Exchangeable Share Provisions or the Exchange Right, to be freely tradeable
thereafter (other than restrictions on transfer by reason of a holder being a
"control person" of the Parent for the purposes of Canadian federal and
provincial securities law or an "affiliate" of the Parent or, prior to the
Effective Date, of the Corporation for the purposes of United States federal or
state securities law). The Parent will in good faith expeditiously take all such
actions and do all such things as are necessary to cause all shares of Parent
Common Stock (or other shares or securities into which Parent Common Stock may
be reclassified or changed as contemplated by Section 6.7 hereof) to be
delivered hereunder, including for greater certainty, pursuant to the Plan of
Arrangement, the Exchangeable Share Provisions or the Exchange Right, to be
listed,
<PAGE> 28
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quoted or posted for trading on all stock exchanges and quotation systems on
which such shares are listed, quoted or posted for trading at such time. The
Parent will in good faith expeditiously take all such action and do all such
things as are necessary to cause all Exchangeable Shares to be listed and posted
for trading on a stock exchange in Canada prescribed under the Income Tax Act
(Canada).
Without limiting any other obligations set forth herein with respect to the
qualification of shares of Parent Common Stock, until the later of:
(a) the seventh year anniversary of the effective date of the
registration statement on Form S-3 covering the exchange of
Exchangeable Shares for shares of Parent Common Stock (the
"Form S-3"); or
(b) such time as no Exchangeable Shares remain outstanding,
The Parent shall use its best efforts to:
(a) maintain the effectiveness of the Form S-3;
(b) keep the prospectus contained in the Form S-3 (the
"Prospectus") current on a continuous basis;
(c) maintain the listing, on the NASDAQ National Market, of the
shares of Parent Common Stock covered by the Form S-3 (the
"S-3 Shares"); and
(d) take such other steps as shall be necessary to keep the S-3
Shares freely tradeable to the public.
<PAGE> 29
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6.7 Economic Equivalence
(1) The Parent will not, without the prior approval of the
Corporation and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 of
the Exchangeable Share Provisions:
(a) issue or distribute shares of Parent Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common
Stock) to the holders of all or substantially all of
the then outstanding Parent Common Stock by way of
stock dividend or other distribution, other than an
issue of shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock) to
holders of shares of Parent Common Stock who exercise
an option to receive dividends in Parent Common Stock
(or securities exchangeable for or convertible into or
carrying rights to acquire shares of Parent Common
Stock) in lieu of receiving cash dividends;
(b) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding shares of Parent Common Stock entitling
them to subscribe for or to purchase shares of Parent
Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares
of Parent Common Stock); or
(c) issue or distribute to the holders of all or
substantially all of the then outstanding shares of
Parent Common Stock (i) shares or securities of the
Parent of any class other than Parent Common Stock
(other than shares convertible into or exchangeable
<PAGE> 30
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for or carrying rights to acquire shares of Parent Common
Stock), (ii) rights, options or warrants other than those
referred to in Section 6.7(l)(b) above, (iii) evidences of
indebtedness of the Parent or (iv) assets of the Parent,
unless (x) the Corporation is permitted under applicable law to
simultaneously issue or distribute the economic equivalent on a per
share basis of such rights, options, securities, shares, evidences of
indebtedness or other assets to holders of the Exchangeable Shares or
simultaneously make the same or an economically equivalent change to,
or in the rights of holders of, the Exchangeable Shares (including,
without limitation, a change to the number of shares of Parent common
stock for which the Exchangeable Shares are exchangeable) and (y) the
Corporation shall simultaneously issue or distribute such rights,
options, securities, shares, evidences of indebtedness or other assets
to holders of the Exchangeable Shares or the same or an economically
equivalent change is made to, or in the rights of the holders of, the
Exchangeable Shares.
(2) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 9.2 of the Exchangeable Share Provisions:
(a) subdivide, redivide or change the then outstanding shares of
Parent Common Stock into a greater number of shares of Parent
Common Stock; or
(b) reduce, combine or consolidate or change the then outstanding
shares of Parent Common Stock into a lesser number of shares
of Parent Common Stock; or
(c) reclassify or otherwise change the shares of Parent Common
Stock or effect an amalgamation, merger, reorganization or
other transaction affecting the shares of Parent Common Stock;
unless (x) the Corporation is permitted under applicable law to
simultaneously make the same or an economically equivalent change to,
or in the rights of holders of, the Exchangeable Shares (including,
without limitation, a change to the number of shares of Parent common
stock for which the Exchangeable Shares are exchangeable) and (y) the
same or an economically equivalent change is made to, or in the rights
of the holders of, the Exchangeable Shares.
(3) The Parent will ensure that the record date for any event referred to
in Section 6.7(l) or 6.7(2) above, or (if no record date is applicable
for such event) the effective date for any such event, is not less than
20 Business Days after the date on which such event is declared or
announced by the Parent (with simultaneous notice thereof to be given
by the Parent to the
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Corporation).
(4) The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified
independent financial advisors and/or other experts as the board may
require), economic equivalence for the purposes of any event referred
to in Section 6.7(l) or 6.7(2) and each such determination shall be
conclusive and binding on the Parent. In making each such
determination, the following factors shall, without excluding other
factors determined by the board to be relevant, be considered by the
Board of Directors:
(a) in the case of any stock dividend or other distribution
payable in shares of Parent Common Stock, the number of such
shares issued in proportion to the number of shares of Parent
Common Stock previously outstanding;
(b) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase shares of
Parent Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of
Parent Common Stock), the relationship between the exercise
price of each such right, option or warrant and the current
market value (as determined by the Board of Directors in the
manner above contemplated) of a share of Parent Common Stock;
(c) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of the Parent of any class other than Parent Common
Stock, any rights, options or warrants other than those
referred to in Section 6.7(4)(b) above, any evidences of
indebtedness of the Parent or any assets of the Parent), the
relationship between the fair market value (as determined by
the Board of Directors in the manner above contemplated) of
such property to be issued or distributed with respect to each
outstanding share of Parent Common Stock and the current
market value (as determined by the Board of Directors in the
manner above contemplated) of a share of Parent Common Stock;
(d) in the case of any subdivision, redivision or change of the
then outstanding shares of Parent Common Stock into a greater
number of shares of Parent Common Stock or the reduction,
combination or consolidation or change of the then outstanding
shares of Parent Common Stock into a lesser number of shares
of Parent Common Stock or any amalgamation, merger,
reorganization or other transaction affecting Parent Common
Stock, the effect thereof upon the then outstanding shares of
Parent Common Stock; and
(e) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation
consequences to holders of shares of Parent Common Stock as a
result of differences between taxation laws of Canada and the
United States (except for any differing consequences arising
as a result of differing marginal taxation rates and without
regard to the individual circumstances of holders of
Exchangeable Shares).
<PAGE> 32
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For purposes of the foregoing determinations, the current market value
of any security listed and traded or quoted on a securities exchange
shall be the weighted average of the daily trading prices of such
security during a period of not less than 10 consecutive trading days
ending on the second trading day before the date of determination on
the principal securities exchange on which such securities are listed
and traded or quoted; provided, however, that, if in the opinion of the
Board of Directors, the public distribution or trading activity of such
securities during such period does not create a market that reflects
the fair market value of such securities, then the current market value
thereof shall be determined by the Board of Directors, in good faith
and in its sole discretion (with the assistance of such reputable and
qualified independent financial advisors and/or other experts as the
board may require), and provided further that any such determination by
the Board of Directors shall be conclusive and binding on the Parent.
6.8 Tender Offers, etc.
In the event that a tender offer, share exchange offer, issuer bid, take-over
bid or similar transaction with respect to Parent Common Stock (each, an
"Offer") is proposed by the Parent or is proposed to the Parent or its
shareholders and is recommended by the Parent Board of Directors, or is
otherwise effected or to be effected with the consent or approval of the Parent
Board of Directors, the Parent will use reasonable efforts (to the extent, in
the case of an offer by a third party, within its control) expeditiously and in
good faith to take all such actions and do all such things as are necessary or
desirable to enable and permit holders of Exchangeable Shares to participate in
such Offer to the same extent and on an economically equivalent basis as the
holders of shares of Parent Common Stock, without discrimination. Without
limiting the generality of the foregoing, the Parent will use reasonable efforts
expeditiously and in good faith to ensure that holders of Exchangeable Shares
may participate in all such Offers without being required to retract
Exchangeable Shares as against the Corporation (or, if so required, to ensure
that any such retraction shall be effective only upon, and shall be conditional
upon, the closing of the Offer and only to the extent necessary to tender or
deposit to the Offer).
6.9 Ownership of Outstanding Shares
Without the prior approval of the Corporation and the prior approval of the
Non-Affiliated Holders given in accordance with Section 9.2 of the Exchangeable
Share Provisions, the Parent covenants and agrees that, as long as any
outstanding Exchangeable Shares are owned by any person or entity other than the
Parent or any of its Subsidiaries, the Parent will be and remain the direct or
indirect beneficial owner of more than 50% of all issued and outstanding
securities of the Corporation carrying or otherwise entitled to voting rights in
any circumstances, other than
<PAGE> 33
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the Exchangeable Shares.
6.10 Parent Not to Vote Exchangeable Shares
The Parent covenants and agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by the Parent and its
Subsidiaries for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. The Parent further covenants and agrees that it will not, and will
cause its Subsidiaries not to, exercise any voting rights or rights of dissent
that may be exercisable by holders of Exchangeable Shares from time to time
pursuant to the Exchangeable Share Provisions or pursuant to the provisions of
the Business Corporations Act (Alberta) (or any successor or other corporate
statute by which the Corporation may in the future be governed) with respect to
any Exchangeable Shares held by it or by its direct or indirect Subsidiaries in
respect of any matter considered at any meeting of holders of Exchangeable
Shares.
6.11 Due Performance
On and after the Effective Date of the Plan of Arrangement, the Parent shall
duly and timely perform all of its obligations provided for in the Plan of
Arrangement, including any obligations that may arise upon the exercise of
rights by any holder of Exchangeable Shares or by the Parent or under the
Exchangeable Share Provisions.
6.12 Issue of Additional Shares
During the term of this trust agreement, the Parent will not issue any shares of
Parent Special Voting Stock in addition to the Voting Share.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 Powers and Duties of the Trustee
The rights, powers and authorities of the Trustee under this trust agreement, in
its capacity as
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trustee of the trust, shall include:
(a) receiving and depositing of the Voting Share from the Parent
as trustee and agent for and on behalf of the Non-Affiliated
Holders in accordance with the provisions of this trust
agreement;
(b) granting proxies and distributing materials to Non-Affiliated
Holders as provided in this trust agreement;
(c) voting the Non-Affiliated Holder Votes in accordance with the
provisions of this trust agreement;
(d) receiving the grant of the Exchange Right and the Automatic
Exchange Right from the Parent as trustee and agent for and on
behalf of the Non-Affiliated Holders in accordance with the
provisions of this trust agreement;
(e) exercising the Exchange Right in accordance with the
provisions of this trust agreement, and in connection
therewith, receiving from Non-Affiliated Holders Exchangeable
Shares and other requisite documents and distributing to such
Non-Affiliated Holders the shares of Parent Common Stock and
cheques, if any, to which such Non-Affiliated Holders are
entitled upon the exercise of the Exchange Right;
(f) holding title to the Trust Estate;
(g) investing any money forming, from time to time, a part of the
Trust Estate as provided in
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this trust agreement;
(h) taking action at the direction of a Non-Affiliated Holder to
enforce the obligations of the Corporation and/or the Parent
under this trust agreement and/or under the Plan of
Arrangement, including the Exchangeable Share Provisions; and
(i) taking such other actions and doing such other things as are
specifically provided in this trust agreement.
In the exercise of such rights, powers and authorities the Trustee shall have
(and is granted) such incidental and additional rights, powers and authority not
in conflict with any of the provisions of this trust agreement as the Trustee,
acting in good faith and in the reasonable exercise of its discretion, may deem
necessary, appropriate or desirable to effect the purpose of the Trust. Any
exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
trust agreement. The Trustee in exercising its rights, powers, duties and
authorities hereunder shall act honestly and in good faith with a view to the
best interests of the Non-Affiliated Holders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not be bound to give any notice or
do or take any act, action or proceeding by virtue of the powers conferred on it
hereby unless and until it shall be specifically required to do so under the
terms hereof; nor shall the Trustee be required to take any notice of, or to do
or to take any act, action or proceeding as a result of any default or breach of
any provision hereunder, unless and until notified in writing of such default or
breach, which notice shall distinctly specify the default or breach desired to
be brought to the attention of the Trustee and in the absence of such notice the
Trustee may for all purposes of this trust agreement conclusively assume that no
default or breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained
herein.
7.2 No Conflict of Interest
The Trustee represents to the Corporation and the Parent that at the date of
execution and delivery of this trust agreement there exists no material conflict
of interest in the role of the Trustee as a fiduciary hereunder and the role of
the Trustee in any other capacity. The Trustee
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shall, within 90 days after it becomes aware that such a material conflict of
interest exists, either eliminate such material conflict of interest or resign
in the manner and with the effect specified in Article 10 hereof. If,
notwithstanding the foregoing provisions of this Section 7.2, the Trustee has
such a material conflict of interest, the validity and enforceability of this
trust agreement shall not be affected in any manner whatsoever by reason only of
the existence of such material conflict of interest. If the Trustee contravenes
the foregoing provisions of this Section 7.2, any interested party may apply to
the Court of Queen's Bench of Alberta for an order that the Trustee be replaced
as trustee hereunder.
7.3 Dealings with Transfer Agents, Registrars, etc.
The Corporation and the Parent irrevocably authorize the Trustee, from time to
time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and
Parent Common Stock; and
(b) requisition, from time to time, from any such registrar or
transfer agent any information readily available from the
records maintained by it which the Trustee may reasonably
require for the discharge of its duties and responsibilities
under this trust agreement. The Parent covenants that it will
supply the Trustee, or the Transfer Agent, as the case may be,
in a timely manner, with duly executed share certificates for
the purpose of completing the exercise from time to time of
all rights to acquire Parent Common Stock hereunder, under the
Plan of Arrangement, under the Exchangeable Share Provisions
and under any other security or commitment given to the
Non-Affiliated Holders pursuant thereto, in each case pursuant
to the provisions hereof, of the Plan of Arrangement or of the
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Exchangeable Share Provisions or otherwise.
7.4 Books and Records
The Trustee shall keep available for inspection by the Parent and the
Corporation, at the Trustee's principal office in Calgary, Alberta, correct and
complete books and records of account relating to the Trustee's actions under
this trust agreement, including without limitation all information relating to
mailings and instructions to and from Non-Affiliated Holders and all
transactions pursuant to the Voting Rights and the Exchange Right for the term
of this Agreement. On or before January 31, 2000, and on or before January 31 in
every year thereafter, so long as the Voting Share is on deposit with the
Trustee, the Trustee shall transmit to the Parent and the Corporation a brief
report, dated as of the immediately preceding December 31, with respect to:
(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the
Trustee on behalf of Non-Affiliated Holders in consideration
of the issue and delivery by the Parent of shares of Parent
Common Stock in connection with the Exchange Right, during the
calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance of
its duties under this trust agreement which it had not
previously reported.
7.5 Income Tax Returns and Reports
The Trustee shall, to the extent necessary, prepare and file on behalf of the
Trust appropriate United States and Canadian income tax returns and any other
returns or reports as may be required by applicable law or pursuant to the rules
and regulations of any securities exchange or
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other trading system through which the Exchangeable Shares are traded and, in
connection therewith, may obtain the advice and assistance of such experts as
the Trustee may consider necessary or advisable. If requested by the Trustee,
the Parent shall retain such experts as may be required for the purposes of
providing such advice and assistance.
7.6 Indemnification Prior to Certain Actions by Trustee
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this trust agreement at the request, order or
direction of any Non-Affiliated Holder upon such Non-Affiliated Holder
furnishing to the Trustee reasonable funding, security and indemnity against the
costs, expenses and liabilities that may be incurred by the Trustee therein or
thereby, provided that no Non-Affiliated Holder shall be obligated to furnish to
the Trustee any such funding, security or indemnity in connection with the
exercise by the Trustee of any of its rights, duties, powers and authorities
with respect to the Voting Share pursuant to Article 4 hereof and with respect
to the Exchange Right pursuant to Article 5 hereof, subject to the provisions of
Section 7.15 hereof. None of the provisions contained in this trust agreement
shall require the Trustee to expend or risk its own funds or otherwise incur
financial liability in the exercise of any of its rights, powers, duties or
authorities unless funded, given funds, security and indemnified as aforesaid.
7.7 Actions by Non-Affiliated Holders
No Non-Affiliated Holder shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this trust agreement
for the purpose of enforcing any of its rights or for the execution of any trust
or power hereunder unless the Non-Affiliated Holder has requested the Trustee to
take or institute such action, suit or proceeding and furnished the Trustee with
the funding, security and indemnity referred to in Section 7.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Non-Affiliated Holder shall be entitled to take
proceedings in any court of competent jurisdiction such as the Trustee might
have taken; it being understood and intended that no one or more Non-Affiliated
Holders shall have any right in any manner whatsoever to affect, disturb or
prejudice the rights hereby created by any such action, or to enforce any right
hereunder or under the Voting Rights or the Exchange Right except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Non-Affiliated Holders.
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7.8 Reliance upon Declarations
The Trustee shall not be considered to be in contravention of any of its rights,
powers, duties and authorities hereunder if, when required, it acts and relies
in good faith upon lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or documents furnished pursuant
to the provisions hereof or required by the Trustee to be furnished to it in the
exercise of its rights, powers, duties and authorities hereunder and such lists,
mailing labels, notices, statutory declarations, certificates, opinions, reports
or other papers or documents comply with the provisions of Section 7.9 hereof,
if applicable, and with any other applicable provisions of this trust agreement.
7.9 Evidence and Authority to Trustee
The Corporation and/or the Parent shall furnish to the Trustee evidence of
compliance with the conditions provided for in this trust agreement relating to
any action or step required or permitted to be taken by the Corporation and/or
the Parent or the Trustee under this trust agreement or as a result of any
obligation imposed under this trust agreement, including, without limitation, in
respect of the Voting Rights or the Exchange Right and the taking of any other
action to be taken by the Trustee at the request of or on the application of the
Corporation and/or the Parent forthwith if and when:
(a) such evidence is required by any other Section of this trust
agreement to be furnished to the Trustee in accordance with
the terms of this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this trust agreement, gives the Corporation
and/or the Parent written notice requiring it to furnish such
evidence in relation to any particular action or obligation
specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Corporation
and/or the Parent or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this trust agreement.
Whenever such evidence relates to a matter other than the Voting Rights or the
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Exchange Right and except as otherwise specifically provided herein, such
evidence may consist of a report or opinion of any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert or any other person
whose qualifications give authority to a statement made by such person, provided
that if such report or opinion is furnished by a director, officer or employee
of the Corporation and/or the Parent it shall be in the form of an Officer's
Certificate or a statutory declaration. Each statutory declaration, certificate,
opinion or report furnished to the Trustee as evidence of compliance with a
condition provided for in this trust agreement shall include a statement by the
person giving the evidence:
(a) declaring that such person has read and understands the
provisions of this trust agreement relating to the condition
in question;
(b) describing the nature and scope of the examination or
investigation upon which such person based the statutory
declaration, certificate, statement or opinion; and
(c) declaring that such person has made such examination or
investigation as such person believes is necessary to enable
such person to make the statements or give the opinions
contained or expressed therein.
7.10 Experts, Advisers and Agents
The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any
solicitor, auditor, accountant, appraiser, valuer, engineer or
other expert, whether retained by the Trustee or by the
Corporation and/or the Parent or otherwise, and may employ
such assistants as may be necessary to the proper
determination and discharge of its powers and duties and
determination of its rights hereunder and may pay proper and
reasonable compensation for all such legal and other advice or
assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper
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determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all
services performed for it (and shall be entitled to receive
reasonable remuneration for all services performed by it) in
the discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in
the determination and discharge of its duties hereunder and in
the management of the Trust.
7.11 Investment of Money Held by Trustee; Deposit of Securities
(a) Unless otherwise provided in this trust agreement, any money
held by or on behalf of the Trustee which under the terms of
this trust agreement may or ought to be invested or which may
be on deposit with the Trustee or which may be in the hands of
the Trustee may be invested and reinvested in the name or
under the control of the Trustee in securities in which, under
the laws of the Province of Alberta, trustees are authorized
to invest trust money, provided that such securities are
stated to mature within two years after their purchase by the
Trustee, and the Trustee shall so invest such money on the
written direction of the Corporation.
(b) Any securities, documents of title or other instruments that
may at any time be held by the Trustee subject to the trusts
hereof may be placed in the deposit vaults of the Trustee or
of any Canadian chartered bank listed in Schedule I of the
Bank Act (Canada) or deposited for safekeeping with any such
bank.
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Pending the investment of any money as provided in this Section7.11, such money
may be deposited in the name of the Trustee in any chartered bank in Canada or,
with the consent of the Corporation, in the deposit department of the Trustee or
any other loan or trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest then current on similar
deposits.
7.12 Trustee Not Required to Give Security
The Trustee shall not be required to give any bond or security in respect of the
execution of the trusts, rights, duties, powers and authorities of this trust
agreement or otherwise in respect of the premises.
7.13 Trustee Not Bound to Act on Corporation's Request
Except as in this trust agreement otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of the
Corporation and/or the Parent or of the directors thereof until a duly
authenticated copy of the instrument or resolution containing such direction or
request shall have been delivered to the Trustee, and the Trustee shall be
empowered to act and rely upon any such copy purporting to be authenticated and
believed by the Trustee to be genuine.
7.14 Authority to Carry on Business
The Trustee represents to the Corporation and the Parent that at the date of
execution and delivery by it of this trust agreement it is authorized to carry
on the business of a trust company in the Province of Alberta but if,
notwithstanding the provisions of this Section 7.14, it ceases to be so
authorized to carry on business, the validity and enforceability of this trust
agreement and the Voting Rights, the Exchange Right and the other rights granted
in or resulting from the Trustee being a party to this trust agreement shall not
be affected in any manner whatsoever by reason only of such event but the
Trustee shall, within 90 days after ceasing to be authorized to carry on the
business of a trust company in the Province of Alberta, either become so
authorized or resign in the manner and with the effect specified in Article 10
hereof.
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7.15 Conflicting Claims
If conflicting claims or demands are made or asserted with respect to any
interest of any Non-Affiliated Holder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Non-Affiliated Holder in
any Exchangeable Shares resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claim or demand.
In so refusing, the Trustee may elect not to exercise any Voting Rights, the
Exchange Right or other rights subject to such conflicting claims or demands
and, in so doing, the Trustee shall not be or become liable to any person on
account of such election or its failure or refusal to comply with any such
conflicting claims or demands. The Trustee shall be entitled to continue to
refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or other rights subject to such
conflicting claims or demands have been adjudicated by a final
judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, Exchange
Right or other rights subject to such conflicting claims or
demands have been conclusively settled by a valid written
agreement binding on all such adverse claimants, and the
Trustee shall have been furnished with an executed copy of
such agreement.
If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.
7.16 Acceptance of Trust
The Trustee hereby accepts the Trust created and provided for by and in this
trust agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for and as agent on behalf of the
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various persons who shall from time to time be Non-Affiliated Holders, subject
to all the terms and conditions herein set forth.
ARTICLE 8
COMPENSATION
8.1 Fees and Expenses of the Trustee
The Parent and the Corporation jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this trust
agreement and will reimburse the Trustee for all reasonable expenses (including
but not limited to taxes, compensation paid to experts, agents and advisors and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency reasonably incurred by the Trustee in connection with its rights and
duties under this trust agreement; provided that the Parent and the Corporation
shall have no obligation to reimburse the Trustee for any expenses or
disbursements paid, incurred or suffered by the Trustee in any suit or
litigation in which the Trustee is determined to have acted in bad faith or with
negligence or wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 Indemnification of the Trustee
The Parent and the Corporation jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, employees and agents
appointed and acting in accordance with this trust agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, costs, penalties,
fines and reasonable expenses (including reasonable expenses of the Trustee's
legal counsel) which, without fraud, gross negligence, wilful misconduct or bad
faith on the part of such Indemnified Party, may be paid, incurred or suffered
by the Indemnified Party by reason of or as a result of the Trustee's acceptance
or administration of the Trust, its compliance with its duties set forth in this
trust agreement, or any written or oral instructions delivered to the Trustee by
the Parent or the Corporation pursuant hereto. In no case shall the Parent or
the Corporation be liable under this indemnity for any claim against any of the
Indemnified Parties if such claim is incurred or suffered by reason of or as a
result of the fraud,
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gross negligence, wilful misconduct or bad faith of an Indemnified Party and
unless the Parent and the Corporation shall be notified by the Trustee of the
written assertion of a claim or of any action commenced against the Indemnified
Parties, promptly after any of the Indemnified Parties shall have received any
such written assertion of a claim or shall have been served with a summons or
other first legal process giving information as to the nature and basis of the
claim. Subject to (ii), below, the Parent and the Corporation shall be entitled
to participate at their own expense in the defense and, if the Parent or the
Corporation so elect at any time after receipt of such notice, any of them may
assume the defense of any suit brought to enforce any such claim. The Trustee
shall have the right to employ separate counsel in any such suit and participate
in the defense thereof but the fees and expenses of such counsel shall be at the
expense of the Trustee unless: (i) the employment of such counsel has been
authorized by the Parent or the Corporation, such authorization not to be
unreasonably withheld; or (ii) the named parties to any such suit include both
the Trustee and the Parent or the Corporation and the Trustee shall have been
advised by counsel acceptable to the Parent or the Corporation that there may be
one or more legal defenses available to the Trustee that are different from or
in addition to those available to the Parent or the Corporation and that an
actual or potential conflict of interest exists (in which case the Parent and
the Corporation shall not have the right to assume the defense of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee). Such indemnification shall survive the
resignation or removal of the Trustee and the termination of this trust
agreement.
9.2 Limitation of Liability
The Trustee shall not be held liable for any loss which may occur by reason of
depreciation of the value of any part of the Trust Estate or any loss incurred
on any investment of funds pursuant to this trust agreement, except to the
extent that such loss is attributable to the fraud, negligence, wilful
misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 Resignation
The Trustee, or any trustee hereafter appointed, may at any time resign by
giving written notice of such resignation to the Parent and the Corporation
specifying the date on which it desires to resign, provided that such notice
shall never be given less than 60 days before such desired resignation date
unless the Parent and the Corporation otherwise agree and provided further that
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such resignation shall not take effect until the date of the appointment of a
successor trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, the Parent and the
Corporation shall promptly appoint a successor trustee by written instrument in
duplicate, one copy of which shall be delivered to the resigning trustee and one
copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the Court of Queen's Bench of
Alberta upon application of one or more of the parties hereto.
10.2 Removal
The Trustee, or any trustee hereafter appointed, may be removed (i) without
cause, at any time on 60 days' prior notice (ii) with cause on such notice as
the Parent and the Corporation may determine by written instrument executed by
the Parent and the Corporation, in duplicate, one copy of which shall be
delivered to the trustee so removed and one copy to the successor trustee.
10.3 Successor Trustee
Any successor trustee appointed as provided under this trust agreement shall
execute, acknowledge and deliver to the Parent and the Corporation and to its
predecessor trustee an instrument accepting such appointment. Thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations of its
predecessor under this trust agreement, with like effect as if originally named
as trustee in this trust agreement. However, on the written request of the
Parent and the Corporation or of the successor trustee, the trustee ceasing to
act shall, upon payment of any amounts then due it pursuant to the provisions of
this trust agreement, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.
Upon the request of any such successor trustee, the Parent and the Corporation
and such predecessor trustee shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers.
10.4 Notice of Successor Trustee
Upon acceptance of appointment by a successor trustee as provided herein, the
Parent and the Corporation shall cause to be mailed notice of the succession of
such trustee hereunder to each Non-Affiliated Holder specified in a List. If the
Parent or the Corporation shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor trustee, the
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successor trustee shall cause such notice to be mailed at the expense of the
Parent and the Corporation.
ARTICLE 11
PARENT SUCCESSORS
11.1 Certain Requirements in Respect of Combination, etc.
The Parent shall not enter into any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of a
merger, of the continuing corporation resulting therefrom unless, but may do so
if:
(a) such other person or continuing corporation (the "Parent
Successor "), by operation of law, becomes, without more,
bound by the terms and provisions of this trust agreement or,
if not so bound, executes, prior to or contemporaneously with
the consummation of such transaction a trust agreement
supplemental hereto and such other instruments (if any) as are
satisfactory to the Trustee and in the opinion of legal
counsel to the Trustee are necessary or advisable to evidence
the assumption by the Parent Successor of liability for all
money payable and property deliverable hereunder and the
covenant of such Parent Successor to pay and deliver or cause
to be delivered the same and its agreement to observe and
perform all the covenants and obligations of the Parent under
this trust agreement; and
(b) such transaction shall, to the satisfaction of the Trustee and
in the opinion of legal counsel to the Trustee, be upon such
terms as substantially to preserve and not to
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impair in any material respect any of the rights, duties,
powers and authorities of the Trustee or of the Non-Affiliated
Holders hereunder.
11.2 Vesting of Powers in Successor
Whenever the conditions of Section 11.1 hereof have been duly observed and
performed, if required by Section 11.1 hereof, the Trustee, the Parent Successor
and the Corporation shall execute and deliver the supplemental trust agreement
provided for in Article 12 hereof and thereupon the Parent Successor shall
possess and from time to time may exercise each and every right and power of the
Parent under this trust agreement in the name of the Parent or otherwise and any
act or proceeding by any provision of this trust agreement required to be done
or performed by the Parent Board of Directors or any officers of the Parent may
be done and performed with like force and effect by the directors or officers of
such Parent Successor.
11.3 Wholly-Owned Subsidiaries
Nothing herein shall be construed as preventing the amalgamation or merger of
any wholly-owned Subsidiary of the Parent with or into the Parent or the winding
up, liquidation or dissolution of any wholly-owned Subsidiary of the Parent
provided that all of the assets of such Subsidiary are transferred to the Parent
or another wholly-owned Subsidiary of the Parent, and any such transactions are
expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 Amendments, Modifications, etc.
This trust agreement may not be amended or modified except by an agreement in
writing executed by the Corporation, the Parent and the Trustee and approved by
the Non-Affiliated Holders in accordance with Section 9.2 of the Exchangeable
Share Provisions.
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12.2 Ministerial Amendments
Notwithstanding the provisions of Section 12.1 hereof, the parties to this trust
agreement may in writing, at any time and from time to time, without the
approval of the Non-Affiliated Holders, amend or modify this trust agreement for
the purposes of:
(a) adding to the covenants of any or all of the parties hereto
for the protection of the Non-Affiliated Holders hereunder;
(b) making such amendments or modifications not inconsistent with
this trust agreement as may be necessary or desirable with
respect to matters or questions which, in the opinion of the
Board of Directors and the Parent Board of Directors and in
the opinion of the Trustee and its counsel, having in mind the
best interests of the Non-Affiliated Holders as a whole, it
may be expedient to make, provided that such boards of
directors and the Trustee and its counsel shall be of the
opinion that such amendments and modifications will not be
prejudicial to the interests of the Non-Affiliated Holders as
a whole; or
(c) making such changes or corrections which, on the advice of
counsel to the Corporation, the Parent and the Trustee, are
required for the purpose of curing or correcting any ambiguity
or defect or inconsistent provision or clerical omission or
mistake or manifest error, provided that the Trustee and its
counsel and the Board of Directors and the Parent Board of
Directors shall be of the opinion that such changes or
corrections will not be prejudicial to the interests of the
Non-Affiliated Holders as a whole.
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12.3 Meeting to Consider Amendments
The Corporation, at the request of the Parent, shall call a meeting or meetings
of the Non-Affiliated Holders for the purpose of considering any proposed
amendment or modification requiring approval pursuant hereto. Any such meeting
or meetings shall be called and held in accordance with the by-laws of the
Corporation, the Exchangeable Share Provisions and all applicable laws.
12.4 Changes in Capital of Parent and the Corporation
At all times after the occurrence of any event effected pursuant to Section 6.7
or Section 6.8 of this trust agreement, as a result of which either Parent
Common Stock or the Exchangeable Shares or both are in any way changed, this
trust agreement shall forthwith be amended and modified as necessary in order
that it shall apply with full force and effect, mutatis mutandis, to all new
securities into which Parent Common Stock or the Exchangeable Shares or both are
so changed and the parties hereto shall execute and deliver a supplemental trust
agreement giving effect to and evidencing such necessary amendments and
modifications.
12.5 Execution of Supplemental Trust Agreements
No amendment to or modification or waiver of any of the provisions of this trust
agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time the
Corporation (when authorized by a resolution of its Board of Directors), the
Parent (when authorized by a resolution of the Parent Board of Directors) and
the Trustee may, subject to the provisions of these presents, and they shall,
when so directed by these presents, execute and deliver by their proper
officers, trust agreements or other instruments supplemental hereto, which
thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Parent Successors to the Parent
and the covenants of and obligations assumed by each such
Parent Successor in accordance with the provisions of Article
11 and the successor of any successor trustee in accordance
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with the provisions of Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this trust agreement or the Voting Rights or the
Exchange Right which, in the opinion of the Trustee and its
counsel, will not be prejudicial to the interests of the
Non-Affiliated Holders as a whole or are in the opinion of
counsel to the Trustee necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to the Parent, the Corporation, the
Trustee or this trust agreement; and
(c) for any other purposes not inconsistent with the provisions of
this trust agreement, including without limitation to make or
evidence any amendment or modification to this trust agreement
as contemplated hereby, provided that, in the opinion of the
Trustee and its counsel, the rights of the Trustee and the
Non-Affiliated Holders as a whole will not be prejudiced
thereby.
ARTICLE 13
TERMINATION
13.1 Term
The Trust created by this trust agreement shall continue until the earliest to
occur of the following events:
(a) no outstanding Exchangeable Shares are held by any
Non-Affiliated Holder;
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(b) each of the Corporation and the Parent elects in writing to
terminate the Trust and such termination is approved by the
Non-Affiliated Holders of the Exchangeable Shares in
accordance with Section 9.2 of the Exchangeable Share
Provisions; and
(c) 21 years after the death of the last survivor of the
descendants of Her Majesty Queen Elizabeth II of the United
Kingdom of Great Britain and Northern Ireland living on the
date of the creation of the Trust.
13.2 Survival of Agreement
This trust agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by any
Non-Affiliated Holder; provided, however, that the provisions of Articles 8 and
9 hereof and the representation contained in Section 6.3(b) hereof shall survive
any such termination of this trust agreement.
ARTICLE 14
GENERAL
14.1 Severability
If any provision of this trust agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
trust agreement shall not in any way be affected or impaired thereby and this
trust agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
14.2 Enurement
This trust agreement shall be binding upon and enure to the benefit of the
parties hereto and their
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respective successors and permitted assigns and to the benefit of the
Non-Affiliated Holders, and with respect to the representations contained in
Section 6.3(b), all shareholders of the Corporation who receive Parent Common
Stock through holding Exchangeable Shares.
14.3 Notices to Parties
All notices and other communications between the parties hereunder shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed telecopy to the parties at the following addresses (or at such other
address for such party as shall be specified in like notice):
(a) if to the Parent, VERITAS and/or VERITAS Software at:
VERITAS Holding Corporation/VERITAS Software Corporation
1600 Plymouth Street
Mountain View, California 94043
Attention: General Counsel
Telecopy: (650) 526-2525
(b) if to the Corporation at:
Exchangeco
200, 119 -14 St. N.W.
Calgary, Alberta T2N 1Z6
Attention: President
Telecopy: (403) 270-3822
(c) if to the Trustee at:
Montreal Trust Company of Canada
710, 530-8th Ave. S.W.
Calgary, AB T2P 3S8
Attention: Manager
Corporate Trust Department
Telecopy: (403) 267-6598
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Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
14.4 Notice of Non-Affiliated Holders
Any and all notices to be given and any documents to be sent to any
Non-Affiliated Holders may be given or sent to the address of such holder shown
on the register of holders of Exchangeable Shares in any manner permitted by the
Business Corporations Act (Alberta) from time to time in force in respect of
notices to shareholders and shall be deemed to be received (if given or sent in
such manner) at the time specified in such Act, the provisions of which Act
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
holders.
14.5 Risk of Payments by Post
Whenever payments are to be made or documents are to be sent to any
Non-Affiliated Holder by the Trustee or by the Corporation, the Parent or by
such Non-Affiliated Holder to the Trustee or to the Parent or the Corporation,
the making of such payment or sending of such document sent through the post
shall be at the risk of the Corporation, in the case of payments made or
documents sent by the Trustee or the Corporation or the Parent and the
Non-Affiliated Holder, in the case of payments made or documents sent by the
Non-Affiliated Holder.
14.6 Counterparts
This trust agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
14.7 Jurisdiction
This trust agreement shall be construed and enforced in accordance with the laws
of the Province of Alberta and the laws of Canada applicable therein.
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14.8 Attornment
The Parent agrees that any action or proceeding arising out of or relating to
this trust agreement may be instituted in the courts of Alberta, waives any
objection which it may have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the jurisdiction of the said courts in any
such action or proceeding, agrees to be bound by any judgment of the said courts
and agrees not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints the
Corporation at its registered office in the Province of Alberta as its attorney
for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this trust agreement to be
duly executed as of the date first above written.
VERITAS HOLDING CORPORATION
By: /s/ JAY A. JONES
-------------------------------
Name: Jay A. Jones
Title: Chief Administrative Officer
<PAGE> 56
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By: /s/ JAY A. JONES
-------------------------------
Name: Jay A. Jones
Title: Chief Administrative Officer
VERITAS SOFTWARE CORPORATION
By: /s/ JAY A. JONES
-------------------------------
Name: Jay A. Jones
Title: Vice President and Secretary
By: /s/ JAY A. JONES
-------------------------------
Name: Jay A. Jones
Title: Vice President and Secretary
TELEBACKUP EXCHANGECO INC.
By: /s/ BYRON OSING
-----------------
Name: Byron Osing
Title: Pres/CEO
<PAGE> 57
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By: /s/ JAY A. JONES
-----------------------
Name: Jay A. Jones
Title:
MONTREAL TRUST COMPANY OF CANADA
By: /s/ CAVELL FLOWLER
-----------------------
Name: Cavell Flowler
Title: Corporate Trust Officer
