ASSET PURCHASE AGREEMENT
BY AND AMONG
VERISIGN, INC.,
▇▇▇▇▇▇▇▇▇▇.▇▇▇ ACQUISITION CORPORATION,
INTERNET DOMAIN REGISTRARS CORP.,
IDR INTERNET DOMAIN REGISTRARS CORP. (CANADA)
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ DOMAIN REGISTRATION CORP.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ DOMAIN REGISTRATION CORP.
AND
NETWORK COMMERCE, INC.
June 15, 2001
Table of Contents
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") entered into this 15th day
of June, 2001, by and among VeriSign, Inc., a Delaware corporation ("Buyer");
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Buyer ("Acquisition Sub"); Internet Domain Registrars Corp.,
a California corporation ("Seller"); IDR Internet Domain Registrars Corp., a
Canadian federally incorporated company and a wholly owned subsidiary of Seller
("IDR Canada"), ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Domain Registration Corp., a California
corporation and a wholly owned subsidiary of Seller ("▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"), and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Domain Registration Corp., a California corporation and a wholly
owned subsidiary of Seller ("▇▇▇▇▇▇▇▇▇▇▇.▇▇▇")(IDR Canada, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, collectively, the "Seller Subs"); and Network Commerce, Inc.,
the sole shareholder of Seller ("Seller Shareholder"). Buyer, Acquisition Sub,
Seller, Seller Subs and Seller Shareholder are individually referred to herein
as a "Party" or, collectively, the "Parties."
WHEREAS, Seller, Seller Subs and Seller Shareholder own and operate a
business that is engaged in the registration of internet domain names (the
"Business"); and
WHEREAS, Buyer and the Acquisition Sub wish to purchase substantially all
of the assets and assume certain of the related liabilities of the Business from
Seller, Seller Subs and Seller Shareholder, and Seller, Seller Subs and Seller
Shareholder desire to sell substantially all of the assets and assume certain of
the related liabilities of the Business to Buyer and the Acquisition Sub, upon
the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. CERTAIN DEFINITIONS
"Accounts Receivable" means all rights to payment for goods sold, licensed
or leased or for services rendered, all sums of money or other proceeds due or
becoming due thereon and all instruments pertaining thereto as carried on
Seller's Balance Sheet totaling approximately US$353,000.
"Acquired Assets" means all right, title, and interest in and to assets of
Seller set forth on Schedule A, including:
(a) the personal property and interests therein, including equipment,
furniture, office equipment, communications equipment, spare and replacement
parts and other tangible property as set forth on Schedule A;
(b) all accounts, Accounts Receivable, notes and notes receivable which are
payable to Seller, all sums of money or other proceeds due or becoming due
thereon, all instruments pertaining thereto, all guaranties and security
therefore, and all goods and services giving rise thereto and the rights
pertaining to such goods and services and all related insurance with respect
thereto;
(c) Seller's Intellectual Property, remedies against infringements thereto,
and rights to protection of interest therein under the laws of all
jurisdictions;
(d) all rights and privileges (subject to those liabilities or obligations
expressly assumed pursuant to Section 2(b) hereof) of Seller under the
Contracts, and originals or copies of all such Contracts if in Seller's
possession, custody or control as of the date hereof;
(e) all rights of Seller against suppliers or Third Parties, including
rights under express or implied warranties, representations and guarantees, and
all other claims and rights of Seller, including without limitation, any and all
asserted and unasserted claims, right to ▇▇▇, choses in action, rights to
receive amounts in settlement, judgments, causes of action and indemnities;
(f) all of Seller's right, title and interest in and to all goodwill,
including the goodwill associated with any of the Seller's Intellectual Property
described in Section 1(c) hereof, all of Seller's current Customer Lists (as
defined, below), marketing materials, brochures and other printed materials;
(g) the transferable (whether with or without consent) licenses, permits or
other governmental authorizations listed as being transferred on Schedule A;
(h) copies of all books, records, files and papers, whether in hard copy or
computer format, including, without limitation, sales and promotional
literature, manuals and data, sales and purchase correspondence, documentation
including Intellectual Property to be transferred hereunder, lists of present
and former suppliers, Customer Lists, personnel and employment records, and any
information relating to Taxes imposed on the Acquired Assets, all to the extent
requested by Buyer (whether before or after the Closing);
(i) the telephone numbers listed on Schedule A;
(j) the Post Office Box(es) listed on Schedule A;
(k) agreements, contracts (including, without limitation, all customer
contracts for domain name registration and maintenance), indentures, mortgages,
instruments, Security Interests, guaranties, other similar arrangements and
rights thereunder;
(l) claims, deposits, prepayments, refunds, causes of action, choses in
action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the payment of Taxes) and
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(m) franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies;
(n) the corporate names "Internet Domain Registrars Corp.", "IDR Internet
Domain Registrars Corp.", "▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Domain Registration Corp." and
"▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Domain Registration Corp.";
(o) the domain names listed in Schedule A; and
(p) Seller's deposit with VeriSign Global Registry Services;
provided, however, that the Acquired Assets shall not include (i) the corporate
charter, qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of Seller as a corporation or (ii) any of the rights
of Seller under this Agreement (or under any side agreement between Seller on
the one hand and Buyer on the other hand entered into on or after the date of
this Agreement), and (iii) such other assets specifically excluded from the
Acquired Assets set forth on Schedule A.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Ancillary Agreements" means the Bills of Sale and all assignment
agreements, and other documents and instruments listed on Schedule B, pursuant
to which Seller's right, title or interest in any of the Acquired Assets are
transferred to Buyer.
"Assumed Liabilities" means: (a) all duties and obligations of Seller under
the agreements, contracts, leases, licenses, and other arrangements included
with the Acquired Assets; (b) all Liabilities and obligations of Seller for
length of service, severance, damages, or pay in lieu of notice, whether arising
by contract, statute, common law or otherwise, with respect to the termination
of the Transferred Employees; and (c) the Liability owed to VeriSign Global
Registry Services; provided, however, that notwithstanding anything to the
contrary in this Agreement, the Assumed Liabilities shall not include: (i) any
Liability of Seller and/or Seller Subs for or with respect to Taxes, including,
without limitation, any Liability of Seller and/or Seller Subs for the unpaid
Taxes of any Person under Reg. Section 1.1502-6 (or any similar provision of
state, provincial, local, or foreign law), as a transferee or successor, by
contract, or otherwise any liability under any tax-sharing, tax allocation or
similar agreement; (ii) any Liability arising by reason of any action of any
officer, director or employee of Seller or any obligation of Seller and/or
Seller Subs to indemnify any Person by reason of the fact that such Person was a
director, officer, employee, or agent of Seller and/or Seller Subs or was
serving at the request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such indemnification is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such indemnification is pursuant to
any statute, charter document, bylaw, agreement, or otherwise); (iii) any
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Liability under any of Seller's and/or Seller Subs' Employee Benefit Plan,
Employee Pension Benefit Plan or Employee Welfare Benefit Plan; (iv) any
Liability of Seller and/or Seller Subs for costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby; or (v)
any Liability or obligation of Seller and/or Seller Subs under this Agreement
(or under any side agreement between Seller and/or Seller Subs on the one hand
and Buyer and/or Acquisition Sub on the other hand entered into on or after the
date of this Agreement).
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or is reasonably likely to form the
basis for any specified consequence.
"Buyer Material Adverse Effect" means any event, circumstance, condition,
development or occurrence causing, resulting in or having a material adverse
effect on the business, financial condition, operations, results of operations
or future prospects of Buyer.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP (as defined in
Section 3(h)) applied on a basis consistent with the preparation of the
Financial Statements (as defined in Section 3(h)).
"Closing Payment" shall mean Four Million Six Hundred Seventy-five Thousand
U.S. Dollars ($4,675,000) in cash.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code Section 4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means the contracts, agreements, leases, license and other
instruments of Seller set forth on Schedule A.
"Customer Lists" shall mean the list of Seller's and Seller Subs' customers
attached hereto as Exhibit ___.
"DGCL" means the General Corporation Law of the State of Delaware (8 Del.
Codess.101 et. seq).
"Employee Benefit Plan" shall mean any written or oral plan, agreement or
arrangement established for the benefit of Seller's and Seller Subs' employees
involving direct or indirect compensation, including without limitation
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA Affiliate" means each entity which is treated as a single employer
with Seller for purposes of Code Section 414.
"Escrow Funds" shall mean that amount of cash equal to five percent (5%) of
the Purchase Price plus US$175,000.
"Governmental Entity" means any United States or Canadian federal, state or
provincial court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency of the United States,
Canada or other foreign country.
"ICANN" means The Internet Corporation for Assigned Names and Numbers.
"Intellectual Property" means all U.S. and foreign, whether proprietary or
pursuant to license, as the case may be: (a) inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) registered and unregistered trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith; (c) registered and unregistered copyrightable
works and copyrights, and all applications, registrations, and renewals in
connection therewith; (d) mask works and all applications, registrations, and
renewals in connection therewith; (e) trade secrets and confidential business
information (including research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, Customer Lists, pricing and cost
information, and business and marketing plans and proposals to the extent that
any of the foregoing constitute trade secrets or confidential information used
in connection with the operation of the Business); (f) computer software
programs (including data and related documentation); and (g) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation. If not
capitalized, "knowledge" means actual knowledge (with no duty of investigation).
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Material Adverse Change" means a material adverse change in the financial
condition, properties, assets (including the Acquired Assets), Liabilities,
business, operations or results of operations of a Person, excluding any event,
change or effect that primarily results from (1) the execution and delivery or
announcement of this Agreement, (2) factors generally affecting the U.S. economy
or financial markets or (3) factors generally affecting the industries in which
such Person operates.
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"Most Recent Balance Sheet" means Seller's balance sheet as of May 31,
2001, appended hereto as Exhibit ___.
"Most Recent Financial Statements" means Seller's Financial Statements
appended hereto as Exhibit ___.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" shall mean the sum of the Closing Payment plus the value
of the Assumed Liabilities.
"Security Act" means the Securities Act of 1933 (as amended).
"Securities Exchange Act" means the Securities Exchange Act of 1934 (as
amended).
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest (whether arising by contract or operation of law).
"Seller Material Adverse Change" means a material adverse change in the
financial condition, properties, assets (including the Acquired Assets),
Liabilities, business, operations or results of operations of Seller or its
Subsidiaries, excluding any event, change or effect that primarily results from
(1) the execution and delivery or announcement of this Agreement, (2) factors
generally affecting the U.S. economy or financial markets or (3) factors
generally affecting the industries in which Seller and/or the Seller Subs
operate.
"Seller Material Adverse Effect" means any event, circumstance, condition,
development or occurrence causing, resulting in or having a material adverse
effect on the Acquired Assets or the business, financial condition, operations,
results of operations or future prospects of Seller or its Subsidiaries;
provided that such term shall not include effects resulting from (1) the
execution and delivery or announcement of this Agreement, (2) factors generally
affecting the U.S. economy or financial markets or (3) factors generally
affecting the industries in which Seller and/or the Seller Subs operate.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
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"Tax" means any federal, state, provincial, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party" means any Person or group (as such term is defined in the
Securities Exchange Act) other than Buyer, Acquisition Sub, Seller, Seller Subs,
Seller Shareholder or any Affiliate thereof.
"Transferred Employees" shall mean those employees who are listed on
Exhibit ___ and who accept employment with Buyer or Acquisition Sub, as the case
may be.
2. PURCHASE OF ASSETS.
(a) Purchase and Sale of Assets. Upon and subject to the terms and
conditions of this Agreement, Buyer and Acquisition Sub agree to purchase from
Seller and Seller Subs, and Seller and Seller Subs agree to sell, transfer,
convey, and deliver to Buyer and Acquisition Sub, all of the Acquired Assets and
Assumed Liabilities at the Closing in consideration of payment of the Purchase
Price by Buyer to Seller as provided herein.
(b) Assumption of Liabilities. Upon and subject to the terms and conditions
of this Agreement, Buyer agrees to assume and become responsible for all of the
Assumed Liabilities at the Closing. Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
Seller and/or Seller Subs not included within the definition of Assumed
Liabilities.
(c) Allocation. The Parties agree to allocate the Purchase Price (and all
other capitalizable costs) in accordance with the allocation schedule attached
hereto as Exhibit ___; each of the Parties agrees to file their respective tax
returns and filings on a basis that is consistent with the allocations contained
in Exhibit ___.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
commencing at 10:00 a.m. local time on June 15, 2001, or, if all of the
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby have not been satisfied or waived by such date, on such
mutually agreeable later date as soon as practicable after the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby, but in no event later than June 18, 2001 (the
"Closing Date"). All rights, title and interests in and to the Acquired Assets
and Assumed Liabilities shall pass from Seller and the Seller Subs, as the case
may be, to the Acquisition Sub at 11:59:00 p.m. PST on the Closing Date.
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(e) Deliveries at the Closing. At the Closing: (A) Seller and Seller Subs
will deliver to Buyer and Acquisition Sub the various certificates, instruments,
and documents referred to in Section 6(b) below; (B) Seller and/or Seller Subs
will execute, acknowledge (if appropriate), and deliver to Buyer and/or
Acquisition Sub (1) assignments (including real property and Intellectual
Property transfer documents) as expressly described herein in the forms attached
hereto as Exhibits _____ through _____ and (2) such other instruments of sale,
transfer, conveyance, and assignment as Buyer and its counsel reasonably may
request; (C) except as otherwise provided in Section 2(__), below, Buyer will
deliver to Seller the Closing Payment and various certificates, instruments, and
documents referred to in Section 6(c) below (D) Buyer and/or Acquisition Sub
will execute, acknowledge (if appropriate), and deliver to Seller and/or Seller
Subs (1) an assumption in the form attached hereto as Exhibit ___ and (2) such
other instruments of assumption as Seller and its counsel reasonably may
request; and (E) subject to and in accordance with the provisions of Article 8
hereof, the Buyer shall cause to be delivered to the Escrow Agent (as defined in
Section 8(b)) the Escrow Funds. The Escrow Funds shall be held in escrow and
shall be available to compensate the Buyer for certain damages as provided in
Section 8(a) and Article 6. To the extent not used for such purposes, the Escrow
Funds shall be released as provided in Article 8.
(f) Further Assurances. At any time and from time to time after the
Closing, at Buyer's request and without further consideration, Seller, Seller
Subs and Seller Shareholder shall promptly execute and deliver such instruments
of sale, transfer, conveyance, assignment, license and confirmation, and take
such action, and provide such advice, as Buyer may reasonably request to more
effectively transfer, convey and assign to Buyer and/or Acquisition Sub, and to
confirm Buyer's and/or Acquisition Sub's title to, all of the Acquired Assets
and Assumed Liabilities, to put Buyer and/or Acquisition Sub in actual
possession and operating control thereof and all rights with respect thereto and
to carry out the purpose and intent of this Agreement.
(g) Taxes. Buyer shall be liable for and shall pay all provincial sales tax
and goods and services tax and registration charges and transfer fees properly
payable upon and in connection with sale and transfer of the assets by the
Seller and the Seller Subs to the Purchaser.
The Purchase Price will be reduced by an amount equivalent to the sum of
all Canadian Federal Goods and Services Taxes, provincial Social Services Taxes,
US sales and use taxes, if any, required to be paid with respect to the sale or
transfer of the Acquired Assets; provided, however, that such amount shall not
exceed US$10,000. All recording costs and filing fees, if any, required to be
paid with respect to the sale or transfer of the Acquired Assets will be paid by
the Buyer. The Parties acknowledge that it is their intention that the
transactions contemplated herein be treated as a taxable transaction for all
purposes under the code and not as a "tax-free reorganization" under Section 368
of the Code.
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(h) Notwithstanding any provision to the contrary contained herein, the
Buyer shall withhold payment of $350,000 of the Purchase Price which shall be
released to Seller upon satisfactory completion and/or resolution of all of the
following conditions precedent: (i) completion of Buyer's satisfactory review of
Partner Contracts which shall be completed by Buyer within 30 business days from
the earlier of (A) the Closing Date or (B) the date upon which Seller delivers
all of the partner agreements to Buyer, (ii) Buyer's receipt of all consents
required to assign Contracts listed in Section ___ of the Disclosure Schedule,
and (iii) receipt of satisfactory evidence of satisfaction of all outstanding
tax liabilities which could result in the attachment of Liens upon any of the
Acquired Assets.
3. REPRESENTATIONS AND WARRANTIES OF SELLER, SELLER SUB AND SELLER SHAREHOLDER.
Each of Seller, Seller Subs and Seller Shareholder represent and warrant to
Buyer and Acquisition Sub that the statements contained in this Article 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article 3),
except as set forth in the disclosure letter accompanying this Agreement and
initialed by the Parties (the "Disclosure Letter"). The Disclosure Letter will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article 3.
(a) Organization of Seller and Seller Subs. Seller is a corporation duly
organized, validly existing and in corporate and tax good standing under the
laws of the State of California; Seller Subs is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of
Canada. Each of Seller and Seller Subs is duly qualified to conduct business and
is in corporate and tax good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification, except where the lack of such qualification would
not give rise to a Seller Material Adverse Effect. Each of Seller and Seller
Subs has the corporate power and authority to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it. Each of
Seller and Seller Subs has furnished or made available to Buyer true and
complete copies of its Articles of Incorporation and By-laws. Neither Seller nor
Seller Subs is in default under or in violation of any provision of its Articles
of Incorporation or By-laws.
(b) Capitalization. (i) The authorized capital stock of Seller consists of
70,000,000 shares of common stock, of which 20,000,000 shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
30,000,000 shares of preferred stock, of which no shares are issued or
outstanding (the "Seller Stock"). No shares of Seller Stock are held in Seller's
treasury. There are no obligations, contingent or otherwise, of Seller to
repurchase, redeem or otherwise acquire any shares of Seller Stock. There are no
equity securities of any class of Seller, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. There are no outstanding options, warrants, equity securities,
calls, rights, commitments or agreements of any character to which Seller is a
party or by which it is bound (x) obligating Seller to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of Seller Stock or
(y) obligating Seller to grant, extend, accelerate the vesting of or enter into
any such option, warrant, equity security, call, right, commitment or agreement;
and (iii) to the Knowledge of Seller, there are no voting trusts, proxies or
other agreements or understandings with respect to the shares of Seller Stock.
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(ii) The authorized capital stock of IDR Canada consists of 1,000,000
shares of Class A common stock, of which 200 shares are issued and outstanding
and 1,000,000 shares of Class B common stock, of which 200 shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable (the
"IDR Canada Stock"). No shares of IDR Canada Stock are held in IDR Canada's
treasury. There are no obligations, contingent or otherwise, of IDR Canada to
repurchase, redeem or otherwise acquire any shares of IDR Canada Stock. There
are no equity securities of any class of IDR Canada, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. There are no outstanding options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
IDR Canada is a party or by which it is bound (x) obligating IDR Canada to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of IDR Canada Stock or (y) obligating IDR Canada to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement; and (z) to the Knowledge of IDR
Canada, there are no voting trusts, proxies or other agreements or
understandings with respect to the shares of IDR Canada Stock.
(iii) The authorized capital stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ consists of
__________ shares of common stock, of which _____ shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable (the
"▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock"). No shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock are held in
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s treasury. There are no obligations, contingent or otherwise,
of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to repurchase, redeem or otherwise acquire any shares of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock. There are no equity securities of any class of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. There are no
outstanding options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ is a party or by which it
is bound (x) obligating ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock or (y)
obligating ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement; and (z) to the Knowledge of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, there are no voting
trusts, proxies or other agreements or understandings with respect to the shares
of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock.
(iv) The authorized capital stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ consists of __________
shares of common stock, of which _____ shares are issued and outstanding, all of
which are validly issued, fully paid and nonassessable (the "▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Stock"). No shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock are held in ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s
treasury. There are no obligations, contingent or otherwise, of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
to repurchase, redeem or otherwise acquire any shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock.
There are no equity securities of any class of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. There are no outstanding options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ is a party or by which it is bound (x) obligating
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to issue, deliver or sell, or cause to be issued, delivered or
10
sold, additional shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Stock or (y) obligating
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement; and
(z) to the Knowledge of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, there are no voting trusts, proxies or
other agreements or understandings with respect to the shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Stock.
(c) Authorization of Transaction. Each of Seller, Seller Subs and/or Seller
Shareholder has the corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements and to perform its obligations hereunder
and thereunder. The execution and delivery of this Agreement and the Ancillary
Agreements, the sale of the Acquired Assets, the performance by Seller, Seller
Subs and/or Seller Shareholder of their obligations under this Agreement and the
Ancillary Agreements and the consummation by Seller, Seller Subs and/or Seller
Shareholder of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate and shareholder action on the
part of Seller, Seller Subs and/or Seller Shareholder. This Agreement and the
Ancillary Agreements constitute the valid and legally binding obligation of
Seller, Seller Subs and/or Seller Shareholder, enforceable in accordance with
their respective terms and conditions.
(d) Noncontravention. Neither the execution and delivery of this Agreement
or the Ancillary Agreements by any of Seller, Seller Subs and/or Seller
Shareholder, nor the consummation by Seller, Seller Subs and/or Seller
Shareholder of the transactions contemplated hereby and thereby, including
delivery of the Acquired Assets and Assumed Liabilities and the assignments and
assumptions referred to in Section 2, above, will (i) conflict with or violate
any provision of the Articles of Incorporation or By-laws of Seller, Seller Subs
and/or Seller Shareholder; (ii) require on the part of Seller, Seller Subs
and/or Seller Shareholder any filing with, or any permit, authorization, consent
or approval of, any Governmental Entity; (iii) conflict with, result in a breach
of, constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require notice, consent or waiver
under, any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
Security Interest or other arrangement to which any of Seller, Seller Subs
and/or Seller Shareholder is a party or by which any of Seller, Seller Subs
and/or Seller Shareholder is bound or to which any of the Acquired Assets is
subject; (iv) result in the imposition of a Security Interest upon any of the
Acquired Assets; or (v) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Seller and/or Seller Shareholder or any of the
Acquired Assets except where such violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not give rise to a Seller Material Adverse Effect.
(e) Brokers' Fees. Neither Seller nor Seller Subs has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement or the Ancillary
Agreements.
11
(f) Title to and Sufficiency of Assets. (i) Each of Seller and Seller Subs
has good and marketable title to, or a valid leasehold interest in, the
properties and assets used by it, located on its premises, or shown on the Most
Recent Balance Sheet or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet. Without
limiting the generality of the foregoing, each of Seller and Seller Subs has
good and marketable title to, and/or (as to material Intellectual Property) has
the right to use pursuant to a license, all of the Acquired Assets, free and
clear of any Security Interest or restriction on transfer.
(ii) The Acquired Assets constitute, and on the Closing Date will
constitute, all of the assets or property useful and/or necessary in the
operation of the Business as such Business has been operated by Seller and the
Seller Subs up to the Closing Date.
(iii) Upon consummation of the transactions contemplated herein, Buyer will
have acquired good and marketable and exclusive title in and to, or a valid
leasehold interest in, each of the Acquired Assets, free and clear of all
Security Interests.
(g) Subsidiaries. Except as disclosed on Schedule 3(g), neither Seller nor
Seller Subs has any direct or indirect subsidiaries or any other equity interest
in any other firm, corporation, partnership, joint venture, association or other
business organization.
(h) Financial Statements and Condition. (i) Attached as Exhibits and ___,
respectively, are Seller's and Seller Subs': (A) audited balance sheet and
statements of operations, changes in shareholders' equity and cash flows for the
fiscal years ended July 31, 1999 and July 31, 2000; and (B) unaudited balance
sheet, statement of operations, statement of results and statement of cash flows
as of May 31, 2001. Such financial statements (collectively, the "Financial
Statements") have been prepared in accordance with (a) United States generally
accepted accounting principles ("GAAP") with respect to the Seller and (b)
Canadian GAAP with respect to the Seller Subs, each applied on a consistent
basis throughout the periods covered thereby, fairly and accurately present the
financial condition, results of operations and cash flows of Seller and Seller
Subs as of the respective dates thereof and for the periods referred to therein
and are consistent with the books and records of Seller and Seller Subs,
provided, however, that the Financial Statements referred to in clause (ii)
above are subject to normal recurring year-end adjustments (which, to Seller's
and Seller Subs' knowledge, will not in the aggregate be material) and do not
include footnotes.
(ii) Each of the Seller, Seller Subs and the Seller Shareholder has assets
sufficient to discharge all of its debts and both presently is, and, at the time
of Closing, will be, capable of timely discharge of its debts as they come due.
(i) Events Subsequent to Most Recent Fiscal Year End. Since December 31,
2000, there has not been any Seller Material Adverse Change. Without limiting
the generality of the foregoing, since that date:
12
(i) Neither Seller nor Seller Subs has sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) Neither Seller nor Seller Subs has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) outside the Ordinary Course of Business;
(iii) No party (including Seller and Seller Subs) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses), to which
Seller or Seller Subs is a party or by which Seller and/or Seller Subs is bound
except where any such action would not constitute a Seller Material Adverse
Effect;
(iv) Neither Seller nor Seller Subs has imposed any Security Interest upon
any of its assets, tangible or intangible, except (a) conditional sales or
similar Security Interests granted in connection with the purchase of equipment
or supplies in the Ordinary Course of Business, (b) assessments for current
taxes not yet due and payable, (c) landlord's liens for rental payments not yet
due and payable, and (d) mechanics', materialmen's, carriers' and other similar
statutory liens securing indebtedness that is in the aggregate less than
$25,000, was incurred in the Ordinary Course of Business and is not yet due and
payable;
(v) Neither Seller nor Seller Subs has made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of Business;
(vi) Neither Seller nor Seller Subs has made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) outside the
Ordinary Course of Business;
(vii) Neither Seller nor Seller Subs has issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than $5,000
individually or $15,000 in the aggregate;
(viii) Neither Seller nor Seller Subs has delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) Neither Seller nor Seller Subs has cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(x) Except as disclosed on Schedule 3(n)(iii)(A), neither Seller nor Seller
Subs has granted any license or sublicense of any rights under or with respect
to any Intellectual Property;
13
(xi) There has been no change made or authorized in Seller's or Seller
Subs' Articles of Incorporation or By-laws;
(xii) Neither Seller nor Seller Subs has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xiii) Neither Seller nor Seller Subs has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xiv) Neither Seller nor Seller Subs has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xv) Neither Seller nor Seller Subs has made any loan to, or entered into
any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) Except as disclosed on Schedule 3(i)(xvi), neither Seller nor Seller
Subs has entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any such existing contract
or agreement;
(xvii) Neither Seller nor Seller Subs has granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) Neither Seller nor Seller Subs has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(xix) Neither Seller nor Seller Subs has made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) Neither Seller nor Seller Subs has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) Neither Seller nor Seller Subs has paid any amount to any Third Party
with respect to any Liability or obligation (including any costs and expenses
Seller and/or Seller Subs has incurred or may incur in connection with this
Agreement and the transactions contemplated hereby) which would not constitute
an Assumed Liability if in existence as of the Closing;
14
(xxii) There has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving Seller and/or Seller Subs; and
(xxiii) Neither Seller nor Seller Subs has entered into an agreement or
otherwise committed to any of the foregoing.
(j) Undisclosed Liabilities. Neither Seller nor Seller Subs has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability), except for (i) Liabilities set forth,
accrued or reserved against on the face of the Most Recent Balance Sheet (rather
than in any notes thereto); (ii) Liabilities which have arisen since the date of
the Most Recent Balance Sheet in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law); (iii) contractual or statutory liabilities incurred in the Ordinary Course
of Business which are not required by US or Canadian GAAP, as applicable, to be
reflected on a balance sheet and (iv) all indebtedness and other obligations set
forth in Section 3(j) of the Disclosure Letter.
(k) Legal Compliance. Each of Seller and Seller Subs has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
provincial, local, and foreign governments, or of any Governmental Entity,
including, without limitation, ICANN and other applicable regulatory agencies,
and to the Knowledge of Seller or Seller Shareholder, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against Seller alleging any failure so to comply,
nor is Seller aware of any facts or circumstances which could reasonably be
expected to lead to any such action suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice. Section 3(k) of the Disclosure
Letter contains a list of all permits necessary for the operation of the
Business with expiration dates, if any.
(l) Tax Matters. (i) Each of Seller and Seller Subs has timely (taking into
account extensions of time to file) filed all Tax Returns that it was required
to file. All such Tax Returns were true, correct and complete in all material
respects. All Taxes owed by Seller and Seller Subs, or for which Seller or
Seller Subs may be liable (whether or not shown on any Tax Return) have been
timely paid. Neither Seller nor Seller Subs is currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever been
made by an authority in a jurisdiction where Seller or Seller Subs does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction. Taxes
accrued since the date of the most recent Tax Returns are reflected in the most
recent Financial Statements. There are no Security Interests on any of the
assets of Seller or Seller Subs that arose in connection with any failure (or
alleged failure) to pay any Tax.
15
(ii) Each of Seller and Seller Subs has withheld or collected and paid or
deposited in accordance with law all Taxes required to have been withheld or
collected and paid or deposited in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other Third Party.
(iii) No stockholder or director or officer (or employee responsible for
Tax matters) of Seller or Seller Subs expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of Seller or Seller Subs either
(A) claimed or raised by any authority in writing or (B) as to which Seller or
Seller Subs and their respective directors and officers (and employees
responsible for Tax matters) has Knowledge. Each of Seller and Seller Subs has
delivered to Buyer correct and complete copies of all Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by Seller
or Seller Subs since July31, 1998. No examination or audit of any Tax Return of
Seller or Seller Subs by any Governmental Entity is currently in progress or, to
the Knowledge of Seller or Seller Subs, threatened or contemplated.
(iv) All Tax Returns filed or required to be filed by Seller and/or Seller
Subs have been delivered to the Internal Revenue Service or other appropriate
taxing authority, or closed by the applicable statute of limitations, for all
years through July 31, 2000. Neither Seller nor Seller Subs has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
nor has any such waiver or extension been required with respect to a Tax
assessment or deficiency. The unpaid Taxes of Seller and Seller Subs (A) did
not, as of the date of the end of Seller's and Seller Subs' respective most
recent fiscal year, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Seller Most Recent Balance
Sheet (rather than in any notes thereto) and (B) do not exceed such reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Seller or Seller Subs, as the case may be, in filing
their Tax Returns.
(v) None of the Assumed Liabilities is an obligation to make a payment that
will not be deductible under Code Section 280G. Seller has not taken any
position on its federal income Tax Returns that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section 6662.
Seller is not a party to any Tax allocation or sharing agreement. Seller (A) has
not been a member of an affiliated group (within the meaning of Code Section
1504(a)) filing a consolidated federal income Tax Return (other than a group the
common parent of which was Seller) or (B) does not have any Liability for the
Taxes of any Person (other than Seller) under Reg. Section 1.1502-6 (or any
similar provision of state, provincial, local, or foreign law), as a transferee
or successor, by contract, or otherwise.
(vi) No taxing authority has raised any issues with respect to Taxes that,
by the application of similar principles, might result in the issuance of a
notice of deficiency or similar notice of intention to assess Taxes by any
taxing authority.
(vii) Seller has not taken any action that would have the effect of
deferring any liability for Taxes from any taxable period ending on or before
the Closing Date to any taxable period ending thereafter.
16
(viii) IDR Canada hereby represents and warrants that the Acquired Assets
(i) are sufficient to constitute a separate business or part of a business; (ii)
were being used, immediately prior to the Closing Date, by IDR Canada to operate
the Business as a business or separate business; and (iii) comprise all or
substantially all of the property necessary to carry on the Business. This
representation and warranty is being made for the purposes of the section 167 of
the Canadian Excise Tax Act ("ETA").
(ix) IDR Canada is a Canadian federally incorporated company and is not a
"non-resident" of Canada for purposes of the Canadian Income Tax Act.
(x) No Canadian withholding taxes, are owing or may become owing as of the
transfer of the Acquired Assets as a result of an assessment or reassessment on
the transactions contemplated herein.
(m) Real Property. (i) Neither Seller nor Seller Subs owns any real
property.
(ii) Section 3(m)(ii) of the Disclosure Letter lists and describes briefly
all real property leased or subleased to Seller and Seller Subs. Each of Seller
and Seller Subs has delivered to Buyer and the Acquisition Sub correct and
complete copies of the leases and subleases listed in Section 3(m)(ii) of the
Disclosure Letter (as amended to date). With respect to each lease and sublease
listed in Section 3(m)(ii) of the Disclosure Letter which is included in the
Acquired Assets:
(A) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(B) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Article 2, above);
(C) no party to the lease or sublease is in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration thereunder;
(D) no party to the lease or sublease has repudiated any provision thereof;
(E) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(F) with respect to each sublease, the representations and warranties set
forth in subsections (A) through (E) above are true and correct with respect to
the underlying lease;
17
(G) neither Seller nor Seller Subs has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(H) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations;
(I) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of such facilities; and
(J) the owner of the facility leased or subleased has good and marketable
title to the parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for installments of special
easements not yet delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto.
(n) Intellectual Property. (i) Each of Seller and Seller Subs, as the case
may be, owns or has the right to use pursuant to license, sublicense, agreement
or permission all Intellectual Property necessary for the operation of the
Business as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used under license by Seller and/or
Seller Subs immediately prior to the Closing hereunder, including without
limitation, any shared licenses will be owned or available for use by Buyer
and/or Acquisition Sub on identical terms and conditions immediately subsequent
to the Closing hereunder. Each of Seller and Seller Subs has taken all necessary
action to maintain and protect its rights in each item of Intellectual Property
that it owns or uses.
(ii) Neither Seller nor Seller Subs has infringed upon or misappropriated
any Intellectual Property rights of Third Parties, and none of the directors and
officers (and employees with responsibility for Intellectual Property matters)
of Seller or Seller Subs has ever received any charge, complaint, claim, demand,
or notice alleging any such infringement or misappropriation(including any claim
that Seller and/or Seller Subs must license or refrain from using any
Intellectual Property rights of any Third Party). To the Knowledge of any of the
directors and officers (and employees with responsibility for Intellectual
Property matters) of Seller and/or Seller Subs, no Third Party has infringed
upon or misappropriated any Intellectual Property rights of Seller and/or Seller
Subs.
(iii) Section 3(n)(iii) of the Disclosure Letter identifies each patent or
registration which has been issued to Seller and Seller Subs with respect to any
of their respective Intellectual Property, identifies each pending patent
application or pending application for registration which Seller and Seller Subs
has made with respect to any of its Intellectual Property, and identifies each
license or sublicense which Seller and/or Seller Subs has granted to any Third
Party with respect to any of its Intellectual Property (together with any
material exceptions, whether oral or written). Each of Seller and Seller Subs
has delivered to Buyer and Acquisition Sub correct and complete copies of all
such patents, registrations, applications, licenses and sublicenses (as amended
to date). Section 3(n)(iii) of the Disclosure Letter also identifies each trade
name or unregistered trademark used by Seller and/or Seller Subs in connection
with the Businesses. With respect to each item of Intellectual Property required
to be identified in Section 3(n)(iii) of the Disclosure Letter:
18
(A) Except as disclosed on Schedule 3(n)(iii)(A), Seller and/or Seller Subs
possesses all right, title, and interest in and to the item, free and clear of
any Security Interest, license or other restriction;
(B) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling or charge;
(C) no action, suit, proceeding, hearing, investigation, complaint, or
claim is pending or, to the Knowledge of any directors and officers (and
employees with responsibility for Intellectual Property matters) of Seller and
Seller Subs, is threatened which challenges any of the Seller's or Seller Subs'
use or ownership of the item; and
(D) Neither Seller nor Seller Subs has ever agreed to indemnify any Person
for or against any infringement or misappropriation with respect to the item.
(iv) Section 3(n)(iv) of the Disclosure Letter identifies each item of
Intellectual Property that any Third Party owns and that Seller and/or Seller
Subs uses pursuant to license or, sublicense, other than "shrink-wrap" or "off
the shelf" software. Each of Seller and Seller Subs has delivered to Buyer
correct and complete copies of all such licenses and sublicenses (as amended to
date). With respect to each item of Intellectual Property required to be
identified in Section 3(n)(iv) of the Disclosure Letter:
(A) the license or, sublicense is legal, valid, binding, enforceable, and
the license or sublicense is in full force and effect;
(B) the license or sublicense will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above);
(C) no party to the license or sublicense is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration thereunder;
(D) no party to the license or sublicense has repudiated any provision
thereof;
(E) with respect to each sublicense, the representations and warranties set
forth in subsections (A) through (D) above are true and correct with respect to
the underlying license;
19
(F) neither Seller's nor Seller Subs' use of the item is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation, complaint, or
claim is pending or is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(H) neither Seller nor Seller Subs has granted any sublicense or similar
right with respect to the license or sublicense.
(v) To the Knowledge of any of the directors, officers and employees with
responsibility for Intellectual Property matters of Seller and/or Seller Subs,
neither Seller nor Seller Subs will interfere with, infringe upon or
misappropriate any Intellectual Property rights of Third Parties as a result of
the continued enjoyment of the Acquired Assets as presently conducted and as
presently proposed to be conducted.
(o) Tangible Assets. Each of Seller and Seller Subs owns or leases all
equipment and other tangible assets necessary for the conduct of the Business as
presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used and presently is proposed to be used.
(p) Contracts. Section 3(p) of the Disclosure Letter lists the following
contracts and other agreements, whether or not reduced to writing, to which
Seller and/or Seller Subs is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase or
sale of services, supplies, products or other personal property, including
without limitation, all customer contracts for the provision of domain name
registration and maintenance, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year, the
cancellation or termination of which would give rise to a Seller Material
Adverse Effect, or which involves consideration in excess of $10,000, including
all agreements with merchants and banks;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
20
(v) any agreement imposing duties of confidentiality or noncompetition on
Seller and/or Seller Subs;
(vi) any agreement involving the Seller Shareholder and its Affiliates
(other than Seller and/or Seller Subs);
(vii) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement for the
benefit of its current or former directors, officers, and employees;
(viii) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$10,000 or providing severance benefits and any such agreement with any officer
or director of Seller and/or Seller Subs;
(ix) any agreement under which it has advanced or loaned any amount to any
of its directors, officers and employees;
(x) any agreement under which the consequences of a default or termination
would have a Seller Material Adverse Effect; or
(xi) any joint marketing agreements, merchant agreements and reseller
agreements; or
(xii) any other agreement (or group of related agreements) the performance
of which involves consideration in excess of $10,000.
Each of Seller and Seller Subs has delivered to Buyer and Acquisition Sub a
correct and complete copy of each written agreement listed in Section 3(p) of
the Disclosure Letter (as amended to date). Neither Seller nor Seller Subs is
party to any oral contracts that would fall within any of the criteria listed in
subsection 3(p)(i) through (xii). With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
Seller and Seller Subs are reflected properly on Seller's or Seller Subs' books
and records, as the case may be, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in accordance
with their terms at their recorded amounts, subject only to the reserve for bad
debts set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Seller and/or Seller Subs.
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(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Seller or Seller Subs.
(s) Insurance. Each of Seller and Seller Subs is covered by the insurance
policies listed in Section 3(s) of the Disclosure Letter (including directors
and officers insurance) true and complete copies of which have been provided to
Buyer and Acquisition Sub. With respect to each such insurance policy: (A) the
policy is legal, valid, binding, enforceable, and in full force and effect; (B)
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) none of Seller, Seller Subs or any other
party to the policy is in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. Each insurance policy
is customary and reasonable in scope and amount for the businesses in which
Seller and/or Seller Subs is engaged.
(t) Litigation. Section 3(t) of the Disclosure Letter sets forth each
action, suit, proceeding, hearing and investigation in which Seller and/or
Seller Subs (i) is subject to any outstanding injunction, judgment, order,
decree, ruling or charge or (ii) is a party or is threatened to be made a party
to any action, suit, proceeding, hearing or investigation of, in, or before any
court or quasi-judicial or administrative agency of any Governmental Entity (the
"Pending Litigation"). None of the Pending Litigation is reasonably likely to
result in a Seller Material Adverse Effect. None of the Pending Litigation is
reasonably likely to be brought against Buyer and/or Acquisition Sub subsequent
to Closing.
(u) Employees. (i) Each of Seller and Seller Subs has provided Buyer with a
written list of all its employees, including the annual rate of compensation for
each employee. To the Knowledge of Seller and Seller Subs, no executive, key
employee or group of employees has any plans to terminate employment with Seller
or Seller Subs other than as contemplated by this Agreement. Neither Seller nor
Seller Subs is a party to or bound by any collective bargaining agreement, nor
has Seller or Seller Subs experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. Neither Seller nor
Seller Subs has committed any unfair labor practice. None of the directors and
officers (and employees with responsibility for employment matters) of Seller
and/or Seller Subs has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of Seller and/or Seller Subs.
(ii) (A) Each of Seller and Seller Subs has provided Buyer and Acquisition
Sub with a complete written list of all of its employees and, with respect to
each employee listed in Exhibit ___, the material terms of employment and
relevant information relating to each such employee including age, length of
service, salary, position and any special circumstances which may affect
severance such as the presence of any inducement;
22
(B) with respect to the Transferred Employees, there are no written
employment contracts , other than the employment contracts copies of which
Seller and/or Seller Subs has provided to Buyer and Acquisition Sub;
(C) with respect to the Transferred Employees, there are no undisclosed
employment contracts or any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance with applicable law;
(D) neither Seller nor Seller Subs has any plans under which the
Transferred Employees would be entitled to any benefits relating to retirement
or retirement savings including, without limitation, pension plans, pensions or
supplemental pensions, registered retirement savings plans or any other pension
plans or retirement compensation arrangements [except for the statutory CPP
Plan];
(E) other than as set out in Exhibit ____, neither Seller nor Seller Subs
has any policies that provide additional compensation to any of the Transferred
Employees such as bonuses, incentive pay or compensation, performance
compensation, deferred compensation, profit sharing, share options, employee
loans or any other type of arrangement providing for compensation for benefits
additional to base pay or salary;
(F) each of Seller and Seller Subs has delivered to Buyer and Acquisition
Sub a true and complete copy of any Employee Benefit Plan and except for such
Employee Benefit Plans, there are no employment policies or plans that are
binding upon Seller and/or Seller Subs with respect to the Transferred
Employees; no such Employee Benefit Plan is subject to the requirements of ERISA
and no Transferred Employee is covered under or otherwise eligible to
participate in any Employee Benefit Plan of Seller Shareholder, or any other
ERISA Affiliate, that is subject to ERISA;
(G) none of the Transferred Employees is on short-term or long-term
disability leave, extended absence or receiving benefits under workers'
compensation legislation in the Province of British Columbia or any equivalent
in any jurisdiction where Seller or Seller Subs carries on business;
(H) each of Seller's and Seller Subs' business has been and is being
operated in full compliance with all laws relating to its employees, including
employment standards, occupational health and safety and human rights, and there
are no claims or complaints nor, to the Knowledge of Seller and/or Seller Subs,
are there any threatened claims or complaints, against Seller or Seller Subs
pursuant to any such laws;
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(I) all assessments under workers' compensation or employment standards
legislation in the Province of British Columbia or any equivalent in any
jurisdiction where Seller and/or Seller Subs carries on business have been or
shall have been by the Closing Date, paid by Seller and/or Seller Subs, as the
case may be;
(J) all employer and employee payments, contributions and premiums required
to be remitted, paid to or in respect of each Employee Benefit Plan have been
paid or remitted or shall have been paid or remitted by the Closing Date in
accordance with the terms thereof;
(K) all payroll deductions required by law to be made by Seller and/or
Seller Subs in respect of its employees to the Closing Date shall have been made
and have been or shall be remitted as and when required by law, along with all
necessary contributions of Seller and/or Seller Subs as employer to the
applicable Governmental Entity;
(L) neither Seller nor Seller Subs is a party to and is not bound by any
collective bargaining agreements or any agreement, certification or other
relationship with a trade union or subject to any complaint by a trade union by
which Buyer and/or Acquisition Sub shall be bound by virtue of acquiring the
Acquired Assets and some of Seller's and/or Seller Subs' employees.
(v) Intentionally Omitted.
(w) Guaranties. Neither Seller nor Seller Subs is a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
(x) Environmental, Health and Safety Matters. Neither Seller nor Seller
Subs is in violation of any applicable statute, law or regulation relating to
the environment or occupational health and safety, and to its knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation. No Hazardous Materials, as defined below,
are used or have been used, stored, or disposed of by the Seller or Seller Subs
or, to the Knowledge of Seller and/or Seller Subs, by any other person or entity
on any property owned, leased or used by the Seller and/or Seller Subs. As used
herein, the term "Hazardous Materials" shall mean (i) materials which are listed
or otherwise defined as "hazardous" or "toxic" under any applicable local,
state, federal and/or foreign laws and regulations that govern the existence
and/or remedy of contamination on property, the protection of the environment
from contamination, the control of hazardous wastes, or other activities
involving hazardous substances, including building materials, or (ii) any
petroleum products or nuclear materials.
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(y) Disclosure. No representation or warranty by Seller and/or Seller Subs
contained in this Agreement, and no statement contained in any document,
certificate or other instrument delivered to or on behalf of Seller and/or
Seller Subs pursuant to this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, to make the statements herein or therein
not misleading, except that, with respect to any financial projections submitted
to Buyer and/or Acquisition Sub, each of Seller and Seller Subs represents and
warrants only that such projections were prepared in good faith based on
reasonable assumptions.
(z) Approval. The boards of directors of each of Seller and Seller Subs, at
a meeting duly called and held, has by the unanimous vote of all directors (i)
determined that the transaction contemplated by this Agreement is fair and in
the best interests of Seller or Seller Subs, as the case may be, and its
respective shareholder; (ii) adopted this Agreement in accordance with the
provisions of applicable California or Canadian law, as the case may be; (iii)
directed that this Agreement and the transactions contemplated hereby be
submitted to its respective shareholder for its adoption and approval; and (iv)
resolved to recommend that its shareholder vote in favor of the adoption of this
Agreement and the transactions contemplated hereby.
(aa) Customer Lists. Under all applicable laws, including but not limited
to (i) Canadian and US privacy laws, and (ii) its posted privacy policy, each of
Seller and Seller Subs has lawfully obtained and may lawfully transfer to Buyer
and/or Acquisition Sub, as the case may be, all personal information of Seller's
and Seller Subs' customers which are included in the Acquired Assets. All of the
customers set forth on the Customer Lists have entered into and are bound by
Seller's standard online forms of (i) Registration Agreement, (ii) Privacy
Policy, (iii) Affiliate Partner Agreement, (iv) Referral Partner Agreement,
and/or (v) Global Partner Agreement, as the case may be, each as available
through Seller's website and attached hereto as Exhibit ____. The Customer Lists
contain the names of all domain name end user customers related to the Business.
The Customer Lists contain a minimum of 500,000 domain names and 300,000 generic
top level domain name pre-registrations.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION SUB
Each of the Buyer and Acquisition Sub, jointly and severally, represents
and warrants to Seller, Seller Subs and the Seller Shareholder that the
statements contained in this Section 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 4).
(a) Organization of Buyer. Each of Buyer and the Acquisition Sub is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of Delaware. Each of Buyer and the
Acquisition Sub is duly qualified to conduct business and is in corporate and
tax good standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, except where the lack of such qualification would not give rise
to a Buyer Material Adverse Effect. Each of Buyer and the Acquisition Sub has
25
the corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Each of Buyer
and the Acquisition Sub has furnished or made available to Seller and the Seller
Subs true and complete copies of its Certificate of Incorporation and By-laws.
Neither Buyer nor the Acquisition Sub is in default under or in violation of any
provision of its Certificate of Incorporation or By-laws, each as amended to
date.
(b) Authorization of Transaction. Each of Buyer and the Acquisition Sub has
the corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Ancillary Agreements, and
subject to the performance by each of Buyer and the Acquisition Sub of this
Agreement and the Ancillary Agreements and the consummation by Buyer and the
Acquisition Sub of the transactions contemplated hereby and thereby have been
duly and validly authorized by the necessary corporate and shareholder action on
the part of Buyer and the Acquisition Sub. This Agreement and the Ancillary
Agreements constitute the valid and legally binding obligations of Buyer and the
Acquisition Sub, enforceable in accordance with their respective terms and
conditions.
(c) Noncontravention. Neither the execution and delivery of this Agreement
and the Ancillary Agreements by Buyer and the Acquisition Sub, nor the
consummation by Buyer and the Acquisition Sub of the transactions contemplated
hereby and thereby, will (a) conflict with or violate any provision of the
Certificate of Incorporation or By-laws of Buyer or the Acquisition Sub, (b)
require on the part of Buyer or the Acquisition Sub any filing with, or any
permit, authorization, consent or approval of, any Governmental Entity, (c)
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which Buyer is a party or by which Buyer or the Acquisition Sub is bound, or (d)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or the Acquisition Sub except where such violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not give rise to a Buyer Material
Adverse Effect.
(d) Brokers' Fees. Neither Buyer nor the Acquisition Sub has any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which
Seller, Seller Subs or Seller Shareholder could become liable or obligated.
(e) Financial Condition. Each of Buyer and the Acquisition Sub has assets
sufficient to discharge all of its debts and presently is, and, at the time of
Closing, will be, capable of timely discharge of its debts as they come due.
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(f) Further Assurances. At any time and from time to time after the Closing
at Seller Shareholders' request and without further consideration, Buyer and
Acquisition Sub shall promptly deliver such information, take such action, and
provide such advice, as Seller Shareholder may reasonably request in order to
prepare and complete the filing of Tax Returns for Seller and Seller Subs for
any periods that are currently under an extension or that will be necessary for
the dissolution of the Seller and any wholly-own subsidiaries.
5. COVENANTS.
The Parties hereby agree as follows.
(a) General. Each of the Parties will use its best efforts, to the extent
commercially reasonable, to take all action and to do all things necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement.
(b) Notices and Consents. Each of the Parties shall use its respective best
efforts to obtain, at its own expense, all waivers, permits, consents, approvals
or other authorizations from third parties and Governmental Entities, and to
effect all such registrations, filings and notices with or to Third Parties and
Governmental Entities, as may be required by or with respect to such Party in
connection with the transactions contemplated by this Agreement. Without
limiting the foregoing, Seller and/or Seller Shareholder shall prepare and
deliver to ICANN a letter regarding transfer of Seller's ICANN accreditation
under Seller's November 10, 1999 ICANN Registrar Accreditation Agreement ("ICANN
Agreement") from Seller to Buyer.
(c) Employment Offers. Buyer and/or Acquisition Sub shall extend a written
offer of employment, effective immediately on the close of the sale of assets
and assumption of liability hereunder, to all employees listed in Exhibit ___
hereto, which offer shall be in an offer letter issued no later than (each an
"Offer Letter") and which offer of employment shall at a minimum include:
continued employment in the same location, in the same position, with
substantially similar duties and responsibilities, as was held by the employee
immediately preceding the asset sale; substantially similar compensation and
benefits as the employee earned in his or her position with Seller immediately
preceding the asset sale; and recognition of such employee's past service to
Seller for purposes of notice of termination, vacation, holiday pay, accrued
service for pension purposes, pension entitlement and benefit eligibility
purposes.
(d) Transferred Employees. Buyer or Acquisition Sub, as the case may be,
shall from the Effective Time assume Seller's and/or Seller Subs' obligations to
the Transferred Employees arising or accruing from and after the time at which
the Transferred Employee shall have commenced employment with the Buyer or the
Acquisition Sub, as the case may be (with respect to each such Transferred
Employee, the "Effective Time"), based on the employees' terms of current
employment, including compensation, job description, benefits and recognition of
past years of service, such that the Transferred Employees' employment is
continued with Buyer or Acquisition Sub on substantially the same terms as
before the Effective Time, provided Buyer or Acquisition Sub, as the case may
be, is under no obligation to assume the Employee's Benefit Plan, retirement
savings plan or bonus program but shall substitute alternate compensation or
benefits so as to provide comparable terms of employment to the Transferred
Employees, to the extent Buyer or Acquisition Sub, as the case may be, does not
currently offer similar benefits as the Employee's Benefit Plan, retirement
savings plan or bonus program. Buyer and Acquisition Sub shall assume all
responsibility for length of service, severance, damages, or pay in lieu of
notice, whether arising by contract, statute, common law or otherwise, with
respect to the transfer of the Transferred Employees' employment from Seller
Subs to Buyer or Acquisition Sub, as the case may be.
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(e) Seller's and/or Seller Subs' Employee Liabilities. Seller and/or Seller
Subs shall be responsible for:
(i) all liabilities for salary, wages, commission, any banked or
accumulated overtime, sick leave or pay, vacation leave or pay and other
compensation and all liabilities under the Employee Benefit Plan, retirement
savings plan and bonus program of Seller and/or Seller Subs, as the case may be,
relating to the employment of any and all of its employees (whether considered
employees on the Closing Date or found to be or deemed to be employees at any
time after the Closing Date) prior to the Effective Time;
(ii) the severance pay which would be payable to any of Seller's or Seller
Subs' employees (whether considered employees on the Closing Date or found to be
or deemed to be employees at any time after the Closing Date) who choose not to
accept employment with Buyer or Acquisition Sub, as the case may be, or are not
offered employment with Buyer or Acquisition Sub;
(iii) all liabilities for claims for injury, disability, death or workers'
compensation arising from or related to employment of the employees (whether
considered employees on the Closing Date or found to be or deemed to be
employees at any time after the Closing Date) prior to the Effective Time; and
(iv) all employment-related claims, penalties and assessments arising out
of matters which occurred prior to the Effective Time including, without
limitation, with respect to employment standards, human rights, workers'
compensation, Canada Customs and Revenue Agency and employment insurance claims,
penalties and assessments.
Seller and/or Seller Subs shall pay its employees (or Buyer or Acquisition Sub
in the case of the Transferred Employees) on or prior to the Closing Date the
moneys of the nature described in sections (i) and (ii) above due, accruing or
with respect to any time period prior to the Closing Date such that these
employment obligations to the employees have been fully satisfied to the Closing
Date (other than with respect to individuals found to be or deemed to be
employees at any time after the Closing Date).
28
(f) Other Employees. If there are any employees of Seller or Seller Subs
who are not Transferred Employees, Seller or Seller Subs, as the case may be,
shall be responsible to continue the employment of such employee(s), offer other
comparable employment to the employee(s) within their related corporate group,
or terminate the employment of such employee(s) on or before the Closing Date.
Each of Seller and/or Seller Subs shall be responsible for any and all damages,
claims, expenses, losses, actions, costs and liabilities of any nature and kind
whatsoever in respect of reassignment or termination of employees of Seller Subs
who are not Transferred Employees. Each of Seller and Seller Subs hereby agrees
that Buyer and/or Acquisition Sub shall not be responsible to assume employees
who are not Transferred Employees and shall not be responsible for any
liabilities or costs associated with them.
(g) Public Disclosure. No Party shall issue any press release or otherwise
make any public statement with respect to the transactions contemplated by this
Agreement without obtaining the prior written consent of the other Party(ies),
except as may be required by law. If any Party is required by law to issue a
press release relating to the transactions contemplated herein, then such
issuing Party shall provide the non-issuing Parties prior written notice of such
requirement and, if requested by any non-issuing Party to do so, shall undertake
commercially reasonable efforts to seek confidential treatment with respect to
such press release.
(h) Confidentiality. Except as otherwise expressly contemplated herein,
each of the Parties hereto agrees that it shall, and shall cause its Affiliates,
directors, officers, employees and authorized representatives of each of them
to, hold in strict confidence all data and information obtained by them from any
other Party hereto (unless such information is or becomes readily ascertainable
from public or published information) and shall not, and shall use its best
efforts to ensure that such Affiliates, directors, officers, employees and
authorized representatives do not, disclose such information to others without
the prior written consent of the Party from which such data or information was
obtained, except as required by law after consultation with counsel (provided
that any such party shall consult with the other party prior to making such
disclosure). In the event of the termination of this Agreement, each of the
Parties will return or destroy all documents, work papers and other materials
(including all copies made thereof) obtained from the other Parties pursuant
hereto.
(i) Filing of Joint Election. On the Closing Date, the Acquisition Sub and
IDR Canada will complete (in the prescribed form, containing the prescribed
information) the requisite joint election to have section 167 of the ETA apply
to the supply, transfer and sale of the Acquired Assets owned by IDR Canada. The
Acquisition Sub shall file the joint election on or before the day in which the
Acquisition Sub is required to file its GST return under Division V of the ETA
for the reporting period that includes the Closing Date.
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6. CONDITIONS TO OBLIGATION TO CLOSE
(a) Conditions to Each Party's Obligations. The respective obligations of
each Party to consummate the transactions contemplated herein are subject to the
satisfaction of the following conditions:
(i) This Agreement shall have been approved by: (A) the Seller's Board of
Directors, (B) Seller Subs' Board of Directors, (C) the Seller Shareholder, (D)
Seller Subs' shareholder, (E) the Buyer's Board of Directors, (F) the
Acquisition Sub's Board of Directors and (G) the Acquisition Sub's shareholder;
(ii) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated herein or limiting or restricting Buyer's or
Acquisition Sub's conduct or operation of the business of Buyer and/or
Acquisition Sub after the Closing shall have been issued, nor shall any
proceeding brought by any Governmental Entity, seeking any of the foregoing be
pending; nor shall there have been any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the sale
of the Acquired Assets which makes or would make the consummation of the
transactions contemplated herein illegal; and
(iii) The Parties shall have obtained all necessary consents and approvals
from all Government Entities and Third Parties, including, if necessary and
without limitation, ICANN's consent to the transfer from Seller to Buyer of
Seller's ICANN accreditation under the ICANN Agreement.
(b) Conditions to Obligation of Buyer and Acquisition Sub. The obligation
of Buyer and the Acquisition Sub to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the following
conditions:
(i) The representations and warranties of Seller, Seller Subs and Seller
Shareholder set forth in Section 3 above shall be true, correct and complete in
all material respects at and as of the Closing Date, except for representations
qualified for materiality which shall be true at and as of the Closing Date or
those that speak as of a certain date for changes to other representations which
either have not or will not be likely to give rise to a Seller Material Adverse
Effect in the aggregate;
(ii) Each of Seller, Seller Subs and/or Seller Shareholder shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;
(iii) Seller, Seller Subs and/or Seller Shareholder shall have procured all
of the Third Party consents specified in Section 5(b) above and any other
consent required to effectuate transfer of the Acquired Assets;
30
(iv) No action, suit, or proceeding shall be pending or threatened before
any Governmental Entity wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (C)
affect adversely the right of Buyer to own or receive the rights to the Acquired
Assets or operate the Business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(v) Each of Seller and Seller Subs shall have delivered to Buyer and
Acquisition Sub a certificate to the effect that each of the conditions
specified above in Sections 6(b)(i)-(iv) is satisfied in all respects;
(vi) Buyer and Acquisition Sub shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇, LLP an opinion in form and substance acceptable to Buyer and Acquisition
Sub, addressed to Buyer and Acquisition Sub, and dated as of the Closing Date
and Buyer and Acquisition Sub shall have received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP an
opinion in form and substance acceptable to Buyer and Acquisition Sub addressed
to Buyer and Acquisition Sub, and dated as of the Closing Date;
(vii) Buyer and Acquisition Sub shall have received from Seller and Seller
Subs a letter in form and substance acceptable to Buyer and Acquisition Sub,
addressed to Buyer and Acquisition Sub, and dated as of the Closing Date,
averring to the fairness of the Purchase Price;
(viii) Seller and Seller Subs shall deliver to Buyer and Acquisition Sub a
lien certificate stating that all of the Acquired Assets are free from any and
all Security Interests;
(ix) Buyer shall have received a letter from ICANN consenting to the
transfer from Seller to Buyer of Seller's ICANN accreditation under Seller's
ICANN Agreement;
(x) No Seller Material Adverse Change shall have occurred;
(xi) All actions to be taken by Seller, Seller Subs and/or Seller
Shareholder in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to Buyer;
(xii) Each of Seller and Seller Subs shall have agreed to legally change
their names from "Internet Domain Registrars Corp." and "IDR Internet Domain
Registrars Corp.", respectively, one business day following the Closing and
shall deliver proof of such name change to Buyer and Acquisition Sub;
(xiii) Each of Buyer, Acquisition Sub, Seller and Seller Subs shall have
executed the necessary Registrant Name Change Agreements, in form and substance
substantially as attached as Exhibit ___, for each domain name included in the
Acquired Assets;
31
(xiv) Buyer, Acquisition Sub, Seller and Seller Subs shall have executed a
Hosting Services Agreement in form and substance substantially as attached as
Exhibit ___;
(xv) The individuals whose names are set forth on Exhibit hereto shall have
each executed an Offer Letter with Buyer to become an employee of Buyer
immediately upon Closing;
(xvi) All of the Transferred Employees shall execute an [Employee Invention
Assignment, Non-Solicitation, and Confidentiality] in form and substance
substantially as attached as Exhibit ___;
(xvii) Within two business days from the Closing, the Buyer, the Seller
Shareholder and the Escrow Agent will execute the Escrow Agreement contemplated
by Article ____ substantially in the form attached hereto as Exhibit ____ (the
"Escrow Agreement");
(xvii) At Closing, the Buyer, Acquisition Sub, Seller, Seller Subs and
Seller Shareholder will execute the Confidentiality Agreement substantially in
the form attached hereto as Exhibit ____;
(xviii) Seller Shareholder shall have delivered an assignment of its
indemnification rights under the stock purchase agreement pursuant to which
Seller Stockholder purchased Seller;
(xix) Buyer and/or Acquisition Sub, at Buyer's discretion, shall have
received a letter from ▇▇▇▇ consenting to the transfer of Seller's [or Seller
Subs'] ▇▇▇▇ accreditation under Seller's [or Seller Subs'] [DATE] ▇▇▇▇ Registrar
Accreditation Agreement from Seller [or Seller Subs] to Buyer and/or Acquisition
Sub;
(xx) Seller shall deliver to Buyer and Acquisition Sub evidence of final
payment of $50,000 to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ pursuant to that certain June 13, 2001
Agreement and Mutual Release between Seller Shareholder and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇;
(xxi) Seller shall have delivered proof of termination and release of all
severance claims from each employee of Seller and Seller Subs who has either (a)
been terminated and is not included on the list attached hereto as Exhibit ___,
or (b) been terminated and is included on the list attached hereto as Exhibit
___ but has declined Buyer and/or Buyer Sub's offer of employment;
(xxii) Seller Subs shall have paid any and all outstanding Canadian tax
payments, including, without limitation, any taxes owing with respect to the
Canada Customs and Revenue Agency and any other Canadian Revenue Authorities,
and shall deliver proof to Buyer and Acquisition Sub of such payments;
32
(xxiii) Seller and/or Seller Subs shall have paid any and all outstanding
commission payments and shall deliver proof to Buyer and Acquisition Sub of such
payments;
(xxiv) Seller shall deliver to Buyer and Acquisition Sub evidence of final
payment of any and all amounts owing under, and release of any Lien created by,
that certain Demand Loan between Seller and Bank of Montreal (Account Number
2712-6033-801); and
(xxv) At Closing, the Buyer and/or the Acquisition Sub, the Seller and/or
the Seller Subs and Uniserve will execute the Services Agreement substantially
in the form attached hereto as Exhibit ____.
Buyer and Acquisition Sub may waive any condition specified in this Section
6(b) if they execute a writing so stating at or prior to the Closing.
(c) Conditions to Obligation of Seller, Seller Subs and Seller Shareholder.
The obligation of Seller, Seller Subs and Seller Shareholder to consummate the
transactions to be performed by them in connection with the Closing is subject
to satisfaction of the following conditions:
(i) The representations and warranties set forth in Section 4 above shall
be true and correct in all material respects at and as of the Closing Date,
except for changes which either have not or will not be likely to give rise to a
Buyer Material Adverse Effect;
(ii) Buyer and the Acquisition Sub shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(iii) No action, suit, or proceeding shall be pending or threatened before
any Government Entity wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) Buyer and the Acquisition Sub shall have delivered to Seller and
Seller Subs a certificate to the effect that each of the conditions specified
above in Section 6(c)(i)-(iii) is satisfied in all respects;
(v) Seller, Seller Subs and Seller Shareholder shall have received from
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP an opinion in form and substance acceptable
to Seller, Seller Subs and Seller Shareholder, addressed to Seller, Seller Subs,
and Seller Shareholder dated as of the Closing Date;
(vi) All actions to be taken by Buyer and Acquisition Sub in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Seller and Seller Subs; and
33
(vii) Buyer shall have delivered the Closing Payment to Seller.
Seller, Seller Subs and/or Seller Shareholder may waive any condition specified
in this Section 6(c) if they execute a writing so stating at or prior to the
Closing.
7. INTENTIONALLY OMITTED.
8. INDEMNIFICATION.
(a) Indemnification. (i) Each of Seller, Seller Subs and Seller Shareholder
shall indemnify and hold harmless the Buyer and the Acquisition Sub and its
respective officers, directors, agents and employees, and each person, if any,
who controls or may control the Buyer and/or the Acquisition Sub within the
meaning of the Securities Act (hereinafter referred to individually as "Buyer
Indemnified Person" and collectively as "Buyer Indemnified Persons") from and
against any and all losses, costs, damages, liabilities and expenses arising
from Third Party claims, demands, actions, causes of action, including, without
limitation, reasonable legal fees, net of any recoveries under existing
insurance policies, tax benefit received by the Buyer and/or the Acquisition Sub
as a result of such damages, indemnities from Third Parties or by any amount
actually recovered by the Buyer and/or the Acquisition Sub pursuant to
counterclaims made by any of them directly relating to the facts giving rise to
such claims, demands, actions, or causes of action (collectively, " Buyer
Damages") arising out of (A) any breach of any of the representations,
warranties, covenants and agreements given or made by the Seller and/or Seller
Shareholder in this Agreement, the Disclosure Letter or any Schedule or Exhibit
to this Agreement and/or (B) any Pending Litigation. Without limiting the
foregoing, each of Seller, Seller Subs and the Seller Shareholder shall, from
and after the Closing Date, indemnify and hold harmless Buyer and Acquisition
Sub from and against any and all Liabilities arising out of the following: (1)
the employment of its employees and consultants in respect of Liabilities
arising or accruing prior to the Effective Time; and (2) the employment or
termination of employment of employees in Seller's or Seller Subs' business,
other than the Transferred Employees, arising or accruing prior to or after the
Effective Time; including without limitation those Liabilities arising out of
any Employee Benefit Plan, individual employment contracts, the Employment
Standards Act R.S.B.C. 1996, the Human Rights Code R.S.B.C. 1996 and other
applicable contracts, legislation and the common law in the provinces and states
in which Seller and/or Seller Subs carries on business. The Buyer Indemnified
Persons shall act in good faith and in a commercially reasonable manner to
mitigate any Buyer Damages they may suffer.
(ii) Buyer and the Acquisition Sub shall indemnify and hold harmless the
Seller, Seller Subs and Seller Shareholder and each of their respective
officers, directors, agents and employees, and each person, if any, who controls
or may control the Seller, Seller Subs or Seller Shareholder within the meaning
of the Securities Act (hereinafter referred to individually as "Seller
Indemnified Person" and collectively as " Seller Indemnified Persons") from and
34
against any and all losses, costs, damages, liabilities and expenses arising
from Third Party claims, demands, actions, causes of action, including, without
limitation, reasonable legal fees, net of any recoveries under existing
insurance policies, tax benefit received by the Seller, Seller Subs or Seller
Shareholder as a result of such damages, indemnities from Third Parties or by
any amount actually recovered by the Seller, Seller Subs or Seller Shareholder
pursuant to counterclaims made by any of them directly relating to the facts
giving rise to such Third Party claims (collectively, "Seller Damages") arising
out of any breach of any of the representations, warranties, covenants and
agreements given or made by the Buyer and/or Acquisition Sub in this Agreement,
or any Schedule or Exhibit to this Agreement. Without limiting the foregoing,
each of Buyer and Acquisition Sub shall, from and after the Closing Date,
indemnify and hold harmless Buyer and Acquisition Sub from and against any and
all Liabilities arising out of the employment or termination of employment of
Transferred Employees, arising or accruing after the Effective Time; including
without limitation those Liabilities arising out of any Employee Benefit Plan,
individual employment contracts, the Employment Standards Act R.S.B.C. 1996, the
Human Rights Code R.S.B.C. 1996 and other applicable contracts, legislation and
the common law in the provinces and states in which Seller and/or Seller Subs
carries on business. The Seller Indemnified Persons shall act in good faith and
in a commercially reasonable manner to mitigate any Seller Damages they may
suffer.
(b) Escrow Fund. On the Closing Date, the Escrow Funds shall be deposited
with State Street Bank and Trust Company, as escrow agent (the "Escrow Agent").
The Escrow Funds deposited with the Escrow Agent shall constitute the "Escrow
Fund". The Escrow Fund shall be governed by the terms set forth herein and in
the Escrow Agreement attached hereto as Exhibit ___. The Escrow Fund shall be
subject to reduction to satisfy the obligations of the Seller and Seller
Shareholder under this Article 8. [Need to see Escrow Agreement]
(c) Notification of Claims. Notwithstanding the provisions of Section 8(a),
the Buyer may not receive any payment from the Escrow Fund unless and until an
Officer's Certificate or Certificates (as defined in Section 8(e) below)
identifying the requirements of Section 8(e) and identifying Buyer Damages has
been delivered to the Escrow Agent as provided in Section 8(e) below and such
amount is determined pursuant to this Article 8 to be payable, in which case the
Buyer shall receive cash equal in value to the full amount of Buyer Damages.
(d) Escrow Period. The "Escrow Period" shall terminate upon the close of
business on the date twelve (12) months from the Closing Date; provided,
however, that a portion of the Escrow Fund, which, in the reasonable judgment of
the Buyer, subject to the objection of the Seller Shareholder and the subsequent
resolution of the matter in the manner provided in Section 8(g) hereof, are
necessary to satisfy any unsatisfied claims specified in any Officer's
Certificate (as defined in Section 8(e)) theretofore delivered to the Escrow
Agent prior to termination of the Escrow Period with respect to facts and
circumstances existing prior to expiration of the Escrow Period, shall remain in
the Escrow Fund until such claims have been resolved. Such retained portion of
the Escrow Fund shall be retained only until the claim for indemnification
pursuant to which such portion is being retained is settled or finally
determined between Buyer and the Seller Shareholder in accordance with Section
8(g) below, but in no event longer than eighteen (18) months after Closing Date.
35
(e) Claims Upon Escrow Fund. Upon receipt by the Escrow Agent on or before
the last day of the Escrow Period of a certificate signed by any officer of the
Buyer (an "Officer's Certificate"):
(i) stating that with respect to the indemnification obligations of Seller
and/or Seller Shareholder, Buyer Damages exist in an aggregate amount greater
than fifty thousand Dollars ($50,000) have been incurred; and
(ii) specifying in reasonable detail the individual items of such Buyer
Damages included in the amount so stated, the date each such item was paid, or
properly accrued or arose, the nature of the misrepresentation, breach of
warranty or claim to which such item is related, the Escrow Agent shall, subject
to the provisions of this Article 8, deliver to the Buyer out of the Escrow
Fund, as promptly as practicable, that amount of cash equal to the amount of
such Buyer Damages with respect to the indemnification obligations of the Seller
set forth in Section 8(a). The Escrow Agent will not release any portion of the
Escrow Fund to Buyer pursuant to an Officer's Certificate until such claim has
been resolved or is uncontested in accordance with Section 8(f) below.
(f) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such Officer's Certificate
shall be delivered to the Seller Shareholder and for a period of twenty (20)
days after such delivery, the Escrow Agent shall make no delivery of cash from
the Escrow Fund pursuant to Section 8(e) hereof unless the Escrow Agent shall
have received written authorization from the Seller Shareholder to make such
delivery. After the expiration of such twenty (20) day period, the Escrow Agent
shall make delivery of cash from the Escrow Fund in accordance with Section 8(e)
hereof, provided that no such payment or delivery may be made if the Seller
Shareholder shall object in a written statement to the claim made in the
Officer's Certificate, and such statement shall have been delivered to the
Escrow Agent and to the Buyer prior to the expiration of such twenty (20) day
period.
(g) Resolution of Conflicts. (i) In case the Seller Shareholder shall so
object in writing to any claim or claims by the Buyer made in any Officer's
Certificate, the Buyer shall have twenty (20) days from receipt of a Seller
Shareholder objection under Section 8(f) to respond in a written statement to
the objection of the Seller Shareholder. If after such twenty (20) day period
there remains a dispute as to any claims, the Seller Shareholder and the Buyer
shall attempt in good faith for twenty (20) days thereafter to agree upon the
rights of the respective parties with respect to each of such claims. If the
Seller Shareholder and the Buyer should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and shall be
furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on any
such memorandum and shall distribute cash from the Escrow Fund in accordance
with the terms thereof.
(h) Third-Party Claims. In the event the Buyer becomes aware of a
third-party claim which the Buyer believes may result in a demand against the
Escrow Fund, the Buyer shall promptly notify the Seller Shareholder of such
claim, and the Seller Shareholder shall be entitled, at its own expense, to
participate in any defense of such claim. The Buyer shall have the right to
settle any such claim; provided, however, that the Buyer may not effect the
settlement of any such claim without the prior written consent of the Seller
36
Shareholder, which consent shall not be unreasonably withheld. Following notice
of any claim, the Buyer shall notify the Seller Shareholder of any discussions,
negotiations or other material developments affecting such claim and, to the
extent commercially reasonable, permit the Seller Shareholder to participate in
any such discussions or negotiations.
(i) Payment of Claims. Damages that: (i) are accepted as valid by the
Seller Shareholder; or (ii) are determined to be valid as described in this
Article 8, shall be settled by payment from the Escrow Fund.
(j) Limitation. No claim for indemnification, breach of warranty or
otherwise may be brought by the Buyer, its officers, directors, agents,
employees and Affiliates, against the Seller Shareholder after expiration of the
Escrow Period. Notwithstanding the foregoing or any other provision to the
contrary contained in this Agreement, claims for indemnification relating to
Buyer Damages arising out of any breach of Seller's representations and
warranties regarding its taxes, employee benefits, financial statements and
condition, contingent liabilities and/or intellectual property shall survive
until the latter of (i) [2] years or (ii) expiration of the relevant statute of
limitations applicable to the underlying claims giving rise to such Damages.
(k) Special Severance Escrow. Notwithstanding any provision to the contrary
contained herein, Buyer agrees to reimburse Seller or Seller Shareholder
pursuant to the terms of this Section 8(k) for 50% of severance obligations for
all of Seller's and Seller Subs' employees who are not Transferred Employees up
to a maximum of US$175,000 upon receipt of proof in form satisfactory to the
Buyer of payment by Seller and/or Seller Subs with respect to satisfaction by
them of severance obligations related to termination of employees who are not
Transferred Employees. Notwithstanding any provision to the contrary contained
herein, upon delivery to the Escrow Agent of a written agreement signed by the
Buyer and Seller Shareholder, the Escrow Agent shall be authorized to make
payment to Seller of an amount equal to fifty percent (50%) of any payments made
by Seller and/or Seller Subs with respect to their satisfaction of severance
obligations related to termination of employees who are not Transferred
Employees; provided, however, that the aggregate amount paid pursuant to this
Section 8(k) will not exceed US$175,000.
9. MISCELLANEOUS.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including all of the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, with respect to the subject matter hereof,
shall remain in existence and be binding.
37
(c) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(d) Counterparts; Facsimile Signatures. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. This Agreement may
be executed by facsimile signatures.
(e) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to Buyer/Acquisition Sub:
VeriSign, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
If to Seller, Seller Subs and/or Seller Shareholder:
Network Commerce, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
38
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the party for whom it is intended. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the
Commonwealth of Virginia, regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof; provided that issues
involving the corporate governance of any of the parties hereto shall be
governed by their respective jurisdictions of incorporation. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction of any state or
federal court within the Commonwealth of Virginia, in connection with any matter
based upon or arising out of this Agreement or the matters contemplated herein,
other than issues involving the corporate governance of any of the parties
hereto, agrees that process may be served upon them in any manner authorized by
the laws of the Commonwealth of Virginia for such persons and waives and
covenants not to assert or plead any objections which they might otherwise have
to such jurisdictions and such process. Judgment upon any award may be entered
in any court having jurisdiction.
(h) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
Parties; provided, however, that any amendment effected subsequent to the Seller
Shareholder approval shall be subject to the restrictions contained in the
Washington and/or Canadian laws, as applicable. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope or
duration of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed, provided that this Agreement shall not then
substantially deprive any Party of the bargained-for performance of another
Party.
39
(j) Expenses. Except as otherwise provided herein, all fees and expenses
(including, without limitation, legal and accounting fees and expenses and all
other expenses) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such expenses, whether
or not the transactions contemplated hereby are consummated.
(k) Construction. The Parties agree that they have been represented by
counsel during the negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the Party drafting such agreement or document. Any
reference to any federal, state, provincial, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(l) Incorporation of Exhibits, Schedules and Disclosure Letter. The
Exhibits, Schedules and Disclosure Letter identified in this Agreement are
incorporated herein by reference and made a part hereof.
40
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
VERISIGN, INC.
By:
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇▇▇▇▇.▇▇▇ ACQUISITION CORPORATION
By:
------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President & Secretary
INTERNET DOMAIN REGISTRARS CORP.
By:
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
IDR INTERNET DOMAIN REGISTRARS CORP.
By:
---------------------------------------------
Name:
---------------------------------------------
Title:
---------------------------------------------
NETWORK COMMERCE, INC.
By:
----------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ DOMAIN REGISTRATION CORP.
By:
---------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ DOMAIN REGISTRATION CORP.
By:
---------------------------------------------------
Name:
-------------------------------------------------
Title:
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