EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of August 31, 2005
by and between
PEER 1 ACQUISITION CORPORATION,
a Delaware corporation,
and
INTERLAND, INC.,
a Minnesota corporation
ARTICLE 1. SALE OF ASSETS AND CLOSING..............................1
1.1 Assets to be Transferred to Purchaser.......................1
1.2 Liabilities.................................................3
1.3 Purchase Price; Escrow; Allocation..........................4
1.4 Method of Conveyance........................................5
1.5 Closing.....................................................5
1.6 Adjustments to Purchase Price...............................5
1.7 Determination of Adjustments................................5
1.8 Further Assurances; Post-Closing Operations.................7
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER................8
2.1 Organization of Seller......................................8
2.2 Authority...................................................8
2.3 No Conflicts................................................8
2.4 No Consents.................................................8
2.5 Taxes.......................................................9
2.6 Legal Proceedings...........................................9
2.7 Legal Compliance...........................................10
2.8 ERISA Matters..............................................10
2.9 Title to Assets; Business..................................10
2.10 Intellectual Property Rights...............................10
2.11 Material Contracts.........................................12
2.12 Insurance..................................................12
2.13 Financial Statements.......................................12
2.14 Accounts Receivable........................................12
2.15 Condition of Tangible Assets...............................13
2.16 Affiliate Transactions.....................................13
2.17 Environmental Matters......................................13
2.18 Debt Instruments...........................................13
2.19 Employee Agreements........................................13
2.20 Sufficiency of Assets......................................14
2.21 Brokers....................................................14
2.22 Disclosure.................................................14
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER............15
3.1 Organization...............................................15
3.2 Authority; Non-Contravention...............................15
3.3 No Consents................................................15
3.4 Brokers....................................................15
3.5 Funds......................................................15
ARTICLE 4. COVENANTS OF SELLER....................................15
4.1 Further Actions; Consents..................................15
4.2 Covenant Not to Hire Purchaser's Other Employees...........17
4.3 Seller's Noncompetition Covenant...........................17
4.4 Subsidiaries...............................................18
4.5 Purchaser's Use of "Interland" Name and Seller's Logo......18
4.6 Cooperation with Post-Closing Audit........................18
4.7 Cooperation as to Certain Intellectual Property............18
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ARTICLE 5. COVENANTS OF PURCHASER.................................19
5.1 No Additional Representations..............................19
5.2 Employees..................................................19
5.3 Benefits Matters...........................................19
5.4 Sales and Transfer Taxes...................................20
5.5 Covenant Not to Hire Seller's Other Employees..............20
5.6 Guarantee..................................................21
ARTICLE 6. CLOSING DELIVERIES OF SELLER...........................21
6.1 Tax Affidavit..............................................21
6.2 Other Documents............................................21
ARTICLE 7. INDEMNIFICATION AND SURVIVAL...........................21
7.1 Indemnification by Seller..................................21
7.2 Indemnification by Purchaser...............................21
7.3 Notice and Defense of Third-Party Claims...................22
7.4 Limits on Indemnification..................................22
7.5 Survival of Representations and Warranties and Agreements..22
7.6 Exclusive Remedy...........................................22
7.7 Liability Limitation.......................................23
ARTICLE 8. DEFINITIONS............................................23
8.1 Definitions................................................23
ARTICLE 9. MISCELLANEOUS..........................................30
9.1 Notices....................................................30
9.2 Entire Agreement...........................................31
9.3 Expenses...................................................31
9.4 Attorneys' Fees............................................31
9.5 Public Announcements.......................................31
9.6 Confidentiality............................................32
9.7 Waiver and Amendment.......................................32
9.8 Successors and Assigns; No Third Party Beneficiaries.......32
9.9 Dispute Resolution.........................................33
9.10 Incorporation of Schedules.................................33
9.11 Headings...................................................33
9.12 Interpretation.............................................33
9.13 Governing Law..............................................34
9.14 Counterparts...............................................34
9.15 Jurisdiction; Agents for Service of Process................34
9.17 Disclosure.................................................34
9.18 Individuals................................................34
9.19 Books and Records..........................................34
9.20 Cooperation................................................35
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This ASSET PURCHASE AGREEMENT dated as of August 31, 2005, is made and
entered into by and among Peer 1 Acquisition Corporation, a Delaware corporation
("Purchaser") and INTERLAND, INC., a Minnesota corporation ("Seller").
Capitalized terms not otherwise defined herein have the meanings set forth in
Article 8.
WHEREAS, as part of its web hosting business line, Seller owns and operates
a line of products and services, including dedicated server, managed dedicated
server and complex managed dedicated server services that provide Dedicated
Hosting Services ("Business"); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Seller, all of the assets that
are necessary or incidental for the daily operation of the Business by Purchaser
following Closing, and in connection therewith, Purchaser has agreed to assume
certain enumerated liabilities of Seller relating to the Business, all on the
terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
SALE OF ASSETS AND CLOSING
1.1 Assets. (a) Assets to be Transferred to Purchaser. On the terms and
subject to the conditions set forth in this Agreement, Seller, on behalf of
itself and its Subsidiaries (as defined below in Section 1.4(b)), hereby agrees
to sell, transfer, convey, assign and deliver to Purchaser, and Purchaser hereby
agrees to purchase and pay for, at the Closing, free and clear of all Liens
other than Permitted Liens, all of Seller's and the Subsidiaries' right, title
and interest in, to and under the assets of Seller and the Subsidiaries used
primarily in the Business that are set forth on Schedule 1.1 hereto, including,
without limitation the following (collectively, together with the Intellectual
Property to be licensed or sublicensed to Purchaser pursuant to Section 1.1(b)
below, the "Assets"):
(i) All notes and accounts receivable derived from the operation of the
Business, including prepaid payments made to Seller for services to be rendered
by Purchaser post-Closing under any Contract;
(ii) All prepaid and similar items connected with the Business, including
all prepaid expenses, advance payments, security deposits, employee travel and
expense advances and other prepaid items;
(iii) All spare parts inventories of the Business set forth in Section
(a)(iii) of Schedule 1.1;
(iv) To the extent assignable, all leasehold interests used in the
operation of the Business and owned leasehold improvements pertaining to the
Leased Real Estate set forth in Section (a)(iv) of Schedule 1.1;
(v) Subject to the leases covering the Leased Real Estate, all personal
property currently owned by Seller and now or since September 1, 2004 used
exclusively in the operation of the Business wherever located, including all
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machinery and equipment, computer equipment and systems, software, materials,
furniture, office equipment, cars, trucks and other vehicles set forth in
Section (a)(v) of Schedule 1.1;
(vi) All supplier lists pertinent to the Business, and all orders,
contracts and commitments for the purchase of goods or services intended for use
in the Business, including all such items relating to the purchase of capital
assets, products and supplies, that are specifically set forth in Section
(a)(vi) of Schedule 1.1;
(vii) All customer lists applicable to the Business and all purchase
orders, contracts, commitments and proposals for the sale of goods or services
by the Business;
(viii) All other orders, contracts and commitments pertaining to the
Business, including all leases (whether or not capitalized), licenses (including
the Outbound IP Licenses (as defined in Section 2.10 below), conditional sale or
title retention agreements and guarantees, that are specifically set forth in
Section (a)(viii) of Schedule 1.1 ("Contracts");
(ix) The Intellectual Property owned by Seller or licensed by Seller from
third parties and listed on Section (a)(ix) of Schedule 1.1; provided that with
respect to licenses for third party intellectual property that are defined as
Non-Material Contracts, Purchaser is obligated to obtain any required third
party consents for assignment as set forth below;
(x) All permits, franchises, licenses, bonds, approvals, qualifications and
the like of the Business ("Permits") issued by any government or governmental
unit, agency, board, body or instrumentality, whether federal, state or local
and all applications therefor pertaining to the Business, and that are set forth
in Section (a)(x) of Schedule 1.1, all to the extent assignable without
depriving Seller of any Permit required for Seller's conduct of its retained
business following Closing;
(xi) Copies of all business books and records of the Business, including
copies of all financial, operating, inventory, personnel, payroll and customer
records and all sales and promotional literature, correspondence and files;
provided, however, that if any such books or records are subject to any legal
privilege, the Parties agree to cooperate to protect such privilege to the
extent practicable, and provided further that any such books and records shall
not include any information relating to any Affiliates of Seller except to the
extent reasonably necessary to enable Purchaser to conduct the Business as
previously conducted by Seller; and
(xii) All other assets, tangible or intangible, owned by Seller or the
Subsidiaries that are predominantly used in the Business and listed in Section
(a)(xii) of Schedule 1.1.
(b) Assets to be Licensed to Purchaser or to which Purchaser will have
Access.
(i) On the terms and subject to the conditions set forth in this Agreement
and that certain Administrative Services Agreement dated as of the date hereof
between Seller and Purchaser (the "Administrative Services Agreement"), Seller
hereby agrees to grant a royalty-free, non-exclusive licenses to the
Intellectual Property owned by Seller and listed on Section (b)(i) of Schedule
1.1 (which Intellectual Property will continue to be owned and used by Seller
following Closing), which licenses may be transferred by Purchaser in connection
with a future sale of the Business subject to the licenses to Purchaser granted
in this Section 1.1(b)(i). The license granted hereunder shall be perpetual with
respect to the software source code identified in Section (b)(i) of Schedule
1.1, provided that the perpetual license shall not apply to any third party
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products identified in Section 1.1(b)(ii) which may be embedded in such source
code. Seller is not making any representations or warranties with respect to
which portions of such source code are covered by the license; and
(ii) Pursuant to the terms of the Transition Agreements, Seller shall
provide Purchaser with access to, or the ability for its customers to use, the
third party Intellectual Property licensed by Seller from third parties listed
on Section 1.1 (b)(ii) of Schedule 1.1, to the extent permitted by such third
party licenses. Seller shall continue to retain the license to, and continue to
use, the foregoing Intellectual Property following Closing.
(c) Excluded Assets. Notwithstanding anything to the contrary contained in
Section 1.1 or elsewhere in the Agreement, the assets listed in Section (c) of
Schedule 1.1 (collectively, the "Excluded Assets") are not part of the sale and
purchase contemplated hereunder, are excluded from the Assets and shall remain
the property of Seller, or the Subsidiaries, after the Closing.
1.2 Liabilities.
(a) Assumed Liabilities. In connection with the sale, transfer, conveyance,
assignment and delivery of the Assets pursuant to this Agreement, on the terms
and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser hereby agrees to assume and to pay and perform and discharge when due
the obligations of Seller under the Contracts specifically listed on Schedules
1.1 and 2.11, excluding any obligations of Seller under such Contracts which
obligations result from Seller's violation or breach of any such Contract, and
all liabilities taken into account in the Closing Working Capital Amount that
are specifically set forth on Schedule 1.2(a) (collectively, the "Assumed
Liabilities"), and no others.
(b) Retained Liabilities. Notwithstanding any other provision of this
Agreement, except for the Assumed Liabilities, Purchaser shall not assume by
virtue of this Agreement or the transactions contemplated hereby, and shall have
no liability for, any Liabilities or obligations of Seller or its Affiliates
(including, without limitation, those related to the Business) of any kind,
character or description whatsoever, whether actual or contingent, direct or
indirect, matured or unmatured, liquidated or unliquidated, or known or unknown,
whether arising out of occurrences prior to, at or after the date of the
Agreement (the "Retained Liabilities"). Seller hereby acknowledges that it is
retaining the Retained Liabilities, and Seller agrees to pay, discharge and
perform all such liabilities and obligations promptly as and when due. Without
limiting the generality of the foregoing, Purchaser shall not assume or be
obligated to pay, perform or discharge any liabilities, obligations or
commitments of Seller or its Affiliates relating to or arising out of any of the
following, whether or not disclosed in any schedule to this Agreement:
(i) Transaction Documents. All liabilities and obligations arising out of
Seller's obligations under this Agreement and the other documents executed in
connection with the transactions contemplated herein;
(ii) Taxes. All liabilities for current and deferred federal, state and
local Taxes of Seller or its Affiliates.
(iii) Indebtedness. All liabilities and obligations to repay indebtedness
for borrowed money incurred by Seller, or any of its Affiliates including
applicable lines of credit and guarantees of third party obligations;
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(iv) Professional Fees. All liabilities and obligations of Seller or its
Affiliates for fees, costs and expenses of attorneys, independent public
accountants, investment bankers or other representatives incurred in connection
with the negotiation, preparation or consummation of this Agreement and the
transactions contemplated herein;
(v) Litigation. All liabilities and obligations of Seller or its Affiliates
relating to the Business arising out of any Action based on any state of facts
or events occurring on or prior to the Closing Date;
(vi) Employment Matters. All liabilities and obligations of Seller or its
Affiliates for any workers' compensation, Taxes or withholdings or similar items
and any wages, bonuses, commissions, sick pay or vacation payments, severance
payments or other compensation arising or accruing on or prior to the Closing
Date;
(vii) Employee Plans. All liabilities or obligations of Seller or its
Affiliates, arising prior to, on or after the Closing, to provide benefits to
former or current employees of Seller and their dependents under any employee
benefit plan of Seller and any other benefit or compensation plan, fund,
arrangement or agreement of Seller; and
(viii) Violation of Law. Any violation or non-compliance with any Laws by
Seller or its Affiliates relating to the operation of the Business prior to
Closing, and any liabilities or obligations of Seller or its Affiliates under
any Environmental Laws due to past or present actions, activities of Seller or
its Affiliates, or any, circumstances, conditions, events or incidents created
by Seller or its Affiliates, including the release, emission, discharge,
presence or disposal of any Hazardous Substance.
1.3 Purchase Price; Escrow; Allocation.
(a) Purchase Price. The purchase price for the Assets and other obligations
of Seller under this Agreement shall be Fourteen Million United States Dollars
(US $14,000,000) (the "Purchase Price"), as adjusted in accordance with the
provisions set forth in Sections 1.6 and 1.7. The Purchase Price shall be
payable as follows (subject to such adjustments):
(i) Cash Payment. At the Closing, the Purchaser shall deliver to Seller an
amount equal to the Purchase Price (as adjusted pursuant to Section 1.7(a)) less
the Escrow Amount (as defined in Section 1.3(a)(ii) below (the "Cash Payment")
by wire transfer of immediately available United States funds to such bank
account as Seller designates to Purchaser in writing.
(ii) Escrow. Concurrently with the Closing, Purchaser shall deposit an
amount equal to 20% of the Purchase Price (prior to adjustment) (the "Escrow
Amount") in escrow with a third party escrow agent mutually agreeable to Seller
and Purchaser pursuant to an escrow agreement in substantially the same form as
attached hereto as Exhibit A (the "Escrow Agreement").
(b) Allocation. The parties agree that the Purchase Price, as adjusted
hereunder, and all other amounts constituting consideration within the meaning
of Section 1060 of the Code (the "Consideration"), shall be allocated among the
Assets in accordance with Section 1060 of the Code. No later than thirty (30)
days after the determination of the Working Capital Adjustment, the Purchaser
shall cause to be prepared and delivered to the Seller a schedule allocating the
Consideration to the Assets (the "Purchase Price Allocation"). The Seller shall
have the right to review the Purchase Price Allocation and any work sheets and
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other papers prepared in connection with the Purchase Price Allocation. The
Seller will be deemed to have accepted such Purchase Price Allocation unless it
provides written notice of disagreement to the Purchaser within 15 days after
the receipt of the Purchaser's Purchase Price Allocation. If the Seller timely
provides such notice, the Purchaser and the Seller shall use commercially
reasonable efforts to resolve any dispute between them concerning the Purchase
Price Allocation. If Seller and Purchaser are able to resolve such dispute (or
if Seller has accepted or has been deemed to accept the Purchase Price
Allocation), the Purchaser and the Seller shall file or cause to be filed all
Tax Returns (including IRS Form 8594) consistent with the Purchase Price
Allocation, and neither the Purchaser nor the Seller (or any of their respective
Affiliates) will take a position inconsistent with the Purchase Price Allocation
on any Tax Return, in any proceeding before any taxing authority or otherwise.
If a taxing authority disputes the Purchase Price Allocation, the party
receiving notice of the dispute will promptly notify the other party hereto
concerning such dispute. In the event there is any Purchase Price adjustment
hereunder, the Purchaser and the Seller agree to adjust such Purchase Price
Allocation to reflect such Purchase Price adjustment and to file consistently
any Tax Returns required as a result of such Purchase Price adjustment.
Notwithstanding anything herein to the contrary, if the parties do not agree to
the Purchase Price Allocation, neither party shall be obligated to utilize the
Purchase Price Allocation of the other in the preparation of any Tax Return.
1.4 Method of Conveyance. (a) At the Closing, (i) Seller will assign and
transfer to Purchaser good and valid title in and to the Assets (free and clear
of all Liens, other than Permitted Liens) by delivery of good and sufficient
instruments of conveyance, assignment and transfer (the "Assignment
Instruments"), in form and substance reasonably acceptable to Purchaser's
counsel, as shall be effective to vest in Purchaser good and valid title to the
Assets free and clear of any Liens other than Permitted Liens; (ii) Purchaser
will assume from Seller the due payment, performance and discharge of the
Assumed Liabilities by delivery of good and sufficient instruments of
assumption, in form and substance reasonably acceptable to Seller's counsel, as
shall be effective to cause Purchaser to assume the Assumed Liabilities as and
to the extent provided in Section 1.2(a) (the "Assumption Instruments"); (iii)
Purchaser and Seller shall enter into: the several transition agreements in the
form of Exhibit B hereto (collectively the "Transition Agreements").
(b) Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge that the right, title and interest in the Assets set forth on
Schedule 1.4(b) are owned by subsidiaries of Seller listed on such schedule (the
"Subsidiaries"), which Assets shall be transferred at Closing in accordance with
Section 4.4.
1.5 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on August 31, 2005, 2005 (the "Closing Date"),
at the offices of Xxxxxx Xxxxxx Xxxxxxx LLP, Atlanta, Georgia at 10:00 a.m. The
Closing shall be deemed effective as of 11:59 p.m., Atlanta time, on the Closing
Date.
1.6 Adjustments to Purchase Price. The Purchase Price shall be (i)
increased on a dollar-for-dollar basis by the excess, if any, of the Closing
Working Capital Amount over the Target Working Capital Amount and (ii) decreased
on a dollar-for-dollar basis by the excess, if any, of the Target Working
Capital Amount over the Closing Working Capital Amount (the "Working Capital
Adjustment").
1.7 Determination of Adjustments. (a) At Closing, Seller shall deliver to
the Purchaser an officer's certificate, certifying as to (i) the estimated
Closing Working Capital Amount (the "Seller Statement of Adjustments"), as of
August 31, 2005 the "Adjustment Date", which certificate shall be accompanied by
a statement of such amount prepared in good faith from the books and records of
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the Business in accordance with the methodology used to prepare Annex A. The
Purchase Price payable at the Closing shall be determined using the Seller
Statement of Adjustments.
(b) As soon as practicable, but in any event within 60 days after the
Closing Date, the Purchaser shall cause to be prepared and delivered to the
Seller a statement (the "Purchaser Statement of Adjustments") certifying as to
the Purchaser's determination of (i) the Closing Working Capital Amount as of
the Closing Date, prepared in good faith from the books and records of the
Business in accordance with the methodology used to prepare Annex A. The
Purchaser Statement of Adjustments shall certify the amount payable by the
Seller to the Purchaser, or by the Purchaser to the Seller, pursuant to Section
1.7(e).
(c) Upon receipt of the Purchaser Statement of Adjustments, the Seller
shall have the right during the succeeding 15-day period (the "Review Period")
to examine the Purchaser Statement of Adjustments, and all books and records
used to prepare the Purchaser Statement of Adjustments. If the Seller objects to
the Purchaser's determination of the Closing Working Capital Amount, they shall
so notify the Purchaser in writing (such notice, a "Disagreement Notice") on or
before the last day of the Review Period, setting forth a specific description
of the Seller's objection and the amount of the adjustment to the Purchaser's
determination of such amounts and allocation which the Seller reasonably
believes should be made. If no Disagreement Notice is delivered within the
Review Period, the Purchaser Statement of Adjustment shall be deemed to have
been accepted by the parties hereto. The Purchaser will, and will cause the
Business to, provide the Seller full access (during normal business hours and
upon reasonable prior notice to Purchaser) to the books, ledgers, files, reports
and operating records of the Business and the then current employees of the
Business, and will fully cooperate in allowing Seller to review the Purchaser
Statement of Adjustments. Any amounts and allocation that are not in dispute
shall be paid promptly (and prior to the resolution of any amounts that are in
dispute) in accordance with Section 1.7(e) and Section 1.7(f).
(d) Dispute Resolution.
(i) In the event that a Disagreement Notice is delivered in accordance with
Section 1.7(c), the Purchaser and the Seller shall attempt to resolve the
objections set forth therein within 30 days of receipt of such Disagreement
Notice. The objections set forth in the Disagreement Notice that are resolved by
the Purchaser and the Seller in accordance with this Section 1.7(d)(i) shall
collectively be referred to herein as the "Resolved Objections." The Purchaser
Statement of Adjustments shall be adjusted to reflect any Resolved Objections.
Any amounts that constitute Resolved Objections shall be paid promptly (and in
any event no later than three (3) Business Days following such resolution in
accordance with Section 1.7(e) and Section 1.7(f)).
(ii) If the Purchaser and the Seller are unable to resolve all the
objections set forth in the Disagreement Notice within such 30-day period they
shall jointly submit such disagreement within five days of the end of such
30-day period to Deloitte & Touche LLP(Atlanta office), or another mutually
agreeable nationally recognized audit firm that has not been engaged by any of
the parties hereto (or their respective Affiliates) within a period of three
years prior to the date hereof (the "CPA Firm"). If the Purchaser and Seller
cannot agree on the appointment of the CPA Firm, then the CPA Firm shall be
drawn by lot from the names of an equal number of nationally recognized audit
firms submitted by the Purchaser and Seller hereto that have not been engaged by
any of the parties hereto (or their respective Affiliates) within a period of
three years prior to the date hereof. The CPA Firm shall review the objections
set forth in the Disagreement Notice that are not Resolved Objections
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(collectively, the "Differences"). The CPA Firm shall determine, only with
respect to Differences submitted to the CPA Firm, the Closing Working Capital
Amount prepared from the books and records of the Business in accordance with
GAAP Practices. The CPA Firm shall be instructed to make its determination
promptly after its appointment. The Purchaser and the Seller shall each pay 50%
of the fees and disbursements of the CPA Firm. The Purchaser and the Seller
shall, and the Purchaser shall cause the Business to, provide to the CPA Firm
full cooperation. The CPA Firm's resolution of the Differences shall be
conclusive and binding upon the parties, except in the case of manifest error.
The Differences as resolved by the CPA Firm in accordance with this Section
1.7(d)(ii) shall collectively be referred to herein as the "CPA-Determined
Differences."
(e) The Closing Working Capital Amount as finally determined in accordance
with Section 1.7(c) and (d), shall be used to recalculate the adjustment, if
any, to the Purchase Price initially made pursuant to the Section 1.7(a).
(f) On or before the fifth day following (or, if not a Business Day, on the
next Business Day) the latest to occur of (x) the 30th day following receipt by
the Seller of the Purchaser Statement of Adjustments, (y) the resolution by the
Purchaser and the Seller of all objections set forth in the Disagreement Notice,
if any, and (z) the resolution by the CPA Firm of all Differences, if any, the
recalculation required by Section 1.7(e) shall be made and the Purchaser shall
pay to the Seller the amount of any increase in the Purchase Price beyond that
received by the Seller in the aggregate prior thereto, or the Seller shall
return to the Purchaser the excess amount of the Purchase Price received by the
Seller in the aggregate prior thereto (in either case, a "Purchase Price
Adjustment Payment"). A Purchase Price Adjustment Payment shall be made (i) in
the case of a payment to the Purchaser, by the Seller by wire transfer of
immediately available funds to a bank account or accounts designated by the
Purchaser and (ii) in the case of a payment to the Seller, by the Purchaser by
wire transfer of immediately available funds to a bank account or accounts
designated by the Seller.
1.8 Further Assurances; Post-Closing Operations. (a) At any time or from
time to time after the Closing, at Purchaser's request and without further
consideration, Seller shall execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, all of the
Assets. Except as otherwise provided herein, after the Closing Purchaser shall
have sole and absolute discretion over the operation of the Business or as
provided in the Transition Agreements, and exploitation and disposition of the
Assets.
(b) At any time or from time to time after the Closing, Purchaser shall not
prohibit those persons who at the time of Seller's request for assistance, with
reasonable notice, are employed by Purchaser and listed on Schedule 1.8(b)
("Cooperating Employees") from assisting Seller in the defense of the law suits
listed opposite their name on Schedule 1.8(b). Purchaser shall grant those
Cooperating Employees time off from work to provide such assistance to Seller,
and Seller shall reimburse Purchaser for any reasonable expense Purchaser incurs
as a result thereof. Purchaser will also reasonably cooperate with Seller in
making available any of Purchaser's employees, who were formerly employed by
Seller, whom Seller may need to assist it in the defense of any post-Closing
litigation, provided that Seller shall reimburse Purchaser for any reasonable
expense Purchaser incurs as a result thereof.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller (for purposes of Section 2.3(c), 2.4, 2.5, 2.9, 2.10, 2.11 and
Section 2.17 only, the definition of the term "Seller" shall include the
Subsidiaries of Seller that own the Assets set forth on Schedule 1.4(b)) hereby
represents and warrants to Purchaser as follows:
2.1 Organization of Seller. Seller (i) is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Minnesota
and (ii) has full power and authority to conduct the Business as and to the
extent now conducted and to own, use and lease the Assets.
2.2 Authority. Seller has full power and authority, on behalf of itself and
its Subsidiaries, to execute and deliver this Agreement and the Operative
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby,
including without limitation to sell and transfer (pursuant to this Agreement)
the Assets. The execution and delivery by Seller of this Agreement and the
Operative Agreements to which it is a party, and the performance by Seller of
its obligations hereunder and thereunder, have been duly and validly authorized
by the board of directors of the Seller, no other corporate action on the part
of Seller or any of its stockholders being necessary. This Agreement has been
duly and validly executed and delivered by Seller and constitutes, and upon the
execution and delivery by Seller of the Operative Agreements to which it is a
party, such Operative Agreements will constitute, legal, valid and binding
obligations of Seller and its applicable subsidiaries enforceable against them,
in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws and subject to limitations imposed by general equitable
principles.
2.3 No Conflicts. The execution and delivery by Seller of this Agreement do
not, and the execution and delivery by Seller of the Operative Agreements to
which it is a party, the performance by Seller of its obligations under this
Agreement and the Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the Certificate of Incorporation (or other
comparable corporate charter documents) of Seller;
(b) conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to Seller or any of its Assets; or
(c) subject to the Consents referred to in Section 2.4 and except in
respect of Contracts relating to services to be provided pursuant to the
Transition Agreements, (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require Seller to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, or (iv) result in the creation or imposition of any Lien upon Seller or any
of its Assets under, any Material Contract or License to which Seller is a party
or by which any of its Assets is bound, which, in the case of clause (b) above
and this clause (c), would have a Material Adverse Effect on the Business or
Assets.
2.4 No Consents. No permit, consent, approval, novation, authorization or
other Order of or filing with any Governmental or Regulatory Authority or any
other Person is required with respect to Seller (or its Affiliates) in
connection with the execution, delivery and consummation of this Agreement and
the Operative Agreements, or the actions of Seller contemplated hereby, or to
8
permit Purchaser to continue to conduct the Business as it is currently
conducted following the purchase of the Assets by Purchaser pursuant hereto,
except for (a) compliance with any applicable requirements of the Securities Act
and the Exchange Act, (b) the consents to the assignment of the Material
Contracts listed on Schedule 2.4 attached hereto and (c) any other permits,
consents, approvals, novations, authorizations and other filings or orders (i)
relating to Non-Material Contracts (as defined in and subject to Section
4.1(b)(ii)) or (ii) which, if not obtained from such respective contracting
party or made, would not have individually or in the aggregate a Material
Adverse Effect on the Business or the Assets.
2.5 Taxes. Except as disclosed on Schedule 2.5, there are no pending or, to
the Knowledge of Seller threatened, actions or proceedings, assessments or
collections of Taxes of any kind with respect to the Business that could subject
Purchaser to any liability for Taxes for any period (or portion thereof) ending
or prior to the Closing Date or could impair any of the Assets.
(a) There are no Liens for Taxes upon any of the Assets or any property
with respect to the Business, except for Permitted Liens.
(b) None of the Assets is property (i) which Seller or Purchaser is or will
be required to treat as owned by another person pursuant to the provisions of
Section 168(f) of the Internal Revenue Code of 1954 (as in effect immediately
prior to the Tax Reform Act of 1986); (ii) is "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code; (iii) is property used
predominately outside the United States within the meaning of Prop. Treas. Reg.
ss. 1.168-2(g)(5); or (iv) is "tax-exempt bond financed property" within the
meaning of Section 168(g)(5) of the Code.
(c) Except as disclosed on Schedule 2.5, there are no unpaid Taxes of the
Seller for which Purchaser may become liable.
(d) Schedule 2.5 discloses all jurisdictions in which the Business is doing
business and where it is required to file Tax Returns.
(e) The Seller is not a foreign person within the meaning of Section
1445(b)(2) of the Code.
(f) Purchaser is not required to withhold from the Purchase Price any
amounts for Taxes of Seller.
2.6 Legal Proceedings. As of the date of this Agreement, except as set
forth on Schedule 2.6, there is no suit, action, hearing claim, audit,
compliance review, legal, administrative, arbitration, citation, unfair labor
practice charge, employment discrimination charge or other proceeding pending
or, to the Knowledge of Seller, threatened, nor to the Knowledge of Seller, any
investigation pending or threatened affecting the Business, Seller or any of the
Assets before any Governmental or Regulatory Authority which would have a
Material Adverse Effect on the Business or the Assets or that would reasonably
be expected to materially adversely affect the ability of Seller to consummate
the transactions contemplated hereby; and there is no judgment, decree,
injunction, ruling, award, charge, Order or writ of any Governmental or
Regulatory Authority outstanding against, binding upon or involving the Business
or the Assets. Neither Seller nor, to Seller's Knowledge, any of its directors,
officers or employees is currently charged with or, to Seller's Knowledge, is
currently under such investigation with respect to, any violation of any
provision of any legal Rule in respect of the Business.
9
2.7 Legal Compliance. Except with respect to Taxes and Environmental Laws
which are subject to Section 2.5 and 2.17, respectively, Seller is in compliance
with all Legal Rules applicable to it, except for violations which in the
aggregate would not have a Material Adverse Effect with respect to the Business
or the Assets, or materially impede Purchaser's ability to use and enjoy the
Assets in a manner substantially similar to the manner in which the Assets were
used and enjoyed by Seller in its conduct of the Business. Seller owns, holds or
possesses or lawfully uses in its operation of the Business all permits,
certificates, licenses, approvals and other authorizations ("Authorizations")
required in connection with the operation of the Business as now conducted, all
of which are valid and effective, except for those which in the aggregate, if
not obtained or valid and effective, would not have a Material Adverse Effect on
the Business or the Assets. All such Authorizations are listed and described on
Schedule 2.7. Seller shall be solely responsible for all notices and payment
obligations arising under the Worker Adjustment and Retraining Act or any
comparable state or local law with respect to the termination or layoff by
Seller of any of the employees of the Business which occurs on or before the
Closing. Seller further agrees to indemnify and hold Purchaser harmless for any
costs, legal fees, liability or damages or claims asserted against Seller
arising out of Seller's failure to provide the required notices or payments with
respect to such terminations or layoffs.
2.8 ERISA Matters. Purchaser will incur no liability with respect to, or on
account of, and Seller will retain any liability for, and on account of, any
Benefit Plan. Except as set forth on Schedule 2.8, neither Seller nor any of its
Affiliates has, since August 31, 2001, with respect to any Employee, maintained
or contributed to, or been obligated or required to contribute to, any Plan.
Seller has complied, in all material respects, with its obligations (including
obligations to make contributions) in respect of the Benefit Plans, there is no
material outstanding liability of Seller or any of its respective Affiliates to
any such Benefit Plan and all such Benefit Plans are, to the extent required by
applicable law, fully funded to meet potential claims for benefits by such
employees and any former employee. Neither Seller nor any of its Affiliates has
or has had, any liability, contingent or otherwise, (i) under a multiemployer
plan as defined in Section 3(37) of ERISA, (ii) under any Plan or arrangement
that provides post-retirement welfare benefits except as may be required under
Section 4980B of the Code, or (iii) under any Plan that is subject to Title IV
of ERISA or Section 412 of the Code.
2.9 Title to Assets; Business. Seller owns all right, title and interest
in, and has good title to, or in the case of leased Assets, a valid leasehold
interest in, all of the Assets, free and clear of any and all Liens, except for
Permitted Liens and except as set forth on Schedule 2.9. With regard to
leasehold interests in real property used in the operation of the Business
("Leased Real Estate"), Seller enjoys peaceful possession of the Leased Real
Estate. Except in respect of services to be provided pursuant to the Transition
Agreements and except as set forth on Schedule 2.9, the sale of the Assets by
Seller, including by subsidiaries of Seller set forth on Schedule 1.4(b), to
Purchaser pursuant to this Agreement will effectively convey the Assets to
Purchaser which are solely used in the Business as currently conducted and all
of the tangible and intangible property used by Seller (whether owned, leased or
held under license by Seller, by any of Seller's Affiliates or Associates or by
others) solely in connection with the conduct of the Business as currently
conducted by Seller.
2.10 Intellectual Property Rights. The Intellectual Property necessary to
the conduct of the Business as conducted by Seller immediately prior to Closing
is included in the Assets, except for the Excluded Intellectual Property (as
defined in Section 4.7). All of the Intellectual Property included in the Assets
is either the sole and exclusive property of Seller (the "Owned Intellectual
Property") as set forth in Sections 1.1(a) and 1.1(b)(i) and Schedules
1.1(a)(ix) and 1.1(b)(i) or is the subject of an appropriate license from third
parties in favor of Seller under a contract (the "Licensed Intellectual
Property") as set forth in Sections 1.1(a) and 1.1(b)(ii) and Schedules
1.1(a)(ix) and 1.1(b)(ii). Schedule 2.10 sets forth all material Intellectual
Property related to or used in the Business, including, without limitation, (1)
trademarks, service marks, trade names and the like, including all common law
marks, (2) patents, patent renewals and renewal rights, extension patents,
10
patent applications and inventions, designs and improvements described and
claimed therein, patentable inventions and other patent rights (including any
divisions, continuations, continuations-in-part, reissues, reexaminations, or
interferences thereof, whether or not patents are issued on any such
applications and whether or not any such applications are modified, withdrawn or
resubmitted). Seller has not granted any third party any license to use the
Owned Intellectual Property except for: (1) incidental licenses granted to
customers of Seller for the purpose of permitting customers to utilize the
services provided by Seller to such customers as part of the Business, (2)
incidental licenses granted to Seller's vendors who provide services to Seller's
customers and who may be deemed to have used the Owned Intellectual Property as
part of the provision of such services, and (3) such licenses as are disclosed
in Schedule 2.10 (collectively, "Outbound IP Licenses"). The Outbound IP
Licenses granted to Seller's vendors and customers are limited to use by
customers in connection with Seller's services or use by vendors in connection
with delivering services to Seller or Seller's customers. With respect to the
Owned Intellectual Property, (i) Seller has, except for the Outbound IP
Licenses, the exclusive right to use the Owned Intellectual Property included in
the Assets, (ii) all registrations with and applications to Governmental or
Regulatory Authorities required in respect of such Owned Intellectual Property
are valid and in full force and effect and, as of the Closing Date, all Taxes or
maintenance fees or the taking of any other actions by Seller required to
maintain their validity or effectiveness have been paid or taken, (iii) there
are no restrictions on the direct or indirect transfer of such Owned
Intellectual Property, (iv) Seller will deliver to Purchaser, on or within
fifteen (15) business days after the execution of this Agreement, documentation,
to the extent existing, with respect to any invention, process, design, computer
program or other know-how or trade secret included in such Owned Intellectual
Property, which documentation is accurate in all material respects, (v) Seller
has taken security measures that Seller deems reasonable to protect the secrecy,
confidentiality and value of any of its trade secrets included in the Owned
Intellectual Property, provided, however, that such security measures were, in
any event, as reasonably protective as the security measures Seller has taken
with respect to its other confidential information and trade secrets, (vi) to
the Knowledge of Seller, no such Owned Intellectual Property is being infringed
by any other Person, (vii) to the Knowledge of Seller, no third party has
asserted ownership rights in such Owned Intellectual Property, except as
disclosed in Section 2.6, and (viii) no action is pending or, to the Knowledge
of Seller, threatened, that seeks to limit, cancel or question the validity of
Seller's right to own or use such Owned Intellectual Property except as
disclosed in Schedule 2.6. With respect to the Licensed Intellectual Property
and the Outbound IP Licenses, (a) Seller's conduct of the Business prior to the
Effective Date is in material compliance with respect to any applicable contract
governing the use of such Licensed Intellectual Property or Outbound IP
Licenses, (b) Seller has received no notice from any party to an applicable
contract that it is in breach of any material obligations in such contract, (c)
to the Knowledge of Seller, there are no registrations with and applications to
Governmental or Regulatory Authorities required in respect of such Licensed
Intellectual Property or Outbound IP Licenses, (d) Seller will deliver to
Purchaser, on or within fifteen (15) business days after the execution of this
Agreement, all documentation in its possession relating to such Licensed
Intellectual Property or Outbound IP Licenses; provided that Seller makes no
representation as to the accuracy or completeness of such documentation, and (e)
to the Knowledge of Seller, no party to any license agreement relating to
Licensed Intellectual Property or Outbound IP Licenses is, or is alleged to be,
in breach or default thereunder. Except as disclosed in Schedule 2.10, the use
of the Assets and the operation of the Business does not infringe upon any
Intellectual Property right of any third party, and no former or current
employee, agent, consultant or independent contractor involved in the conception
or development of Owned Intellectual Property has a valid claim of ownership to
the Owned Intellectual Property. Except as otherwise provided in Schedule 2.6 or
2.10, Seller has not received notice that Seller is infringing any Intellectual
Property of any other Person in connection with the conduct of the Business, no
claim is pending or, to Seller's Knowledge, has been made upon Seller to such
11
effect that has not been resolved and, to Seller's Knowledge, Seller is not
infringing any Intellectual Property of any other Person in connection with the
conduct of the Business.
2.11 Material Contracts. As of the date hereof, Schedule 2.11 sets forth
those written contracts, agreements, leases, licenses or instruments relating to
the Business for which similar services and products are not readily
commercially available from providers other than the current contracting party
thereto or which are otherwise material to the operation of the Business (each a
"Material Contract" and collectively the "Material Contracts"). Each Material
Contract and, to the Knowledge of Seller, each Non-Material Contract (i) is
valid, binding, enforceable and in full force and effect in accordance with its
terms, (ii) subject to obtaining any necessary consents in respect thereto in
accordance with Section 4.1 hereof, the consummation of the transactions
contemplated herein will not affect the validity, binding nature or
enforceability thereof, (iii) the Seller is not, and to Seller's Knowledge the
other party thereto is not, in default thereof and (iv) to Seller's Knowledge,
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification or acceleration
thereunder.
2.12 Insurance. As of the date hereof, Seller holds and maintains the
liability, property, workers' compensation and other insurance policies listed
on Schedule 2.12, which are in effect and insure the Business, the Employees or
the Assets. Each such insurance policy is valid and binding and in full force
and effect, no premiums due thereunder have not been paid and Seller has not
received any written notice of cancellation or termination in respect of any
such policy or is in default thereunder. Neither Seller nor, to Seller's
Knowledge, the Person to whom such policy has been issued has received written
notice that any insurer under any policy referred to in this Section is denying
liability with respect to a claim thereunder or defending under a reservation of
rights clause. Purchaser acknowledges that effective upon the Closing none of
the insurance policies set forth on Schedule 2.12 will be transferred to
Purchaser and that from and after Closing none of such policies will cover any
of the Business, Assets or Affected Employees.
2.13 Financial Statements. Seller has made available to Purchaser copies of
(i) the unaudited pro forma financial statements of Seller, consisting of the
pro forma working capital statements for the monthly periods between June 30,
2004 and July 31, 2005 (such working capital statement as of July 31, 2005 is
referred to herein as the "Interim Working Capital Statement"), and the partial
pro forma profit and loss statement for the period from March 31, 2004 through
July 31, 2005 (together with the Interim Working Capital Statement, the
"Financial Statements"). The partial pro forma profit and loss statement
contained in the financial statements presents fairly in all material respects,
the results of operations of the Business for the period covered thereby,
subject, in the good faith belief of Seller, only to the exceptions set forth on
Schedule 2.13. The Interim Working Capital Statement, with respect to the Assets
and the Assumed Liabilities, presents fairly in all material respects, the
working capital of the Business as of its date and, to the extent possible, was
prepared on a consistent basis with the other Financial Statements.
2.14 Accounts Receivable. Except as set forth on Schedule 2.14, to Seller's
Knowledge all accounts receivable of the Business that are reflected on the
Interim Working Capital Statement (collectively, the "Accounts Receivable") to
the extent outstanding as of the Adjustment Date represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of the Business. The reserves shown in the Interim Working Capital
Statement have been calculated based on Seller's historical experience and are,
to Seller's Knowledge, adequate for the continued operation of the Business from
and after Closing in the manner conducted by Seller prior to Closing. To the
Knowledge of Seller, there is no reasonable basis for concluding that the
Accounts Receivable net of such reserve would not be collectible by Seller if
12
Seller were to continue to conduct the Business.. The Accounts Receivable aging
report attached hereto as part of Schedule 2.14 is accurate at and as of July
31, 2005, and which report shall be updated as of the Closing Date and delivered
to Purchaser within 5 days following the Closing.
2.15 Condition of Tangible Assets. All material facilities, equipment and
other material items of tangible property and assets that are included in the
Assets are in the aggregate in operating condition and repair, subject to normal
wear and maintenance, and are usable in the regular and ordinary course of
business, except any such assets which are set forth on Schedule 2.15.
2.16 Affiliate Transactions. Except as disclosed in Seller's Public Filings
and other than with respect to Seller's wholly owned subsidiaries or as
disclosed on Schedule 2.16, no officer, director, Affiliate or Associate of
Seller or any Associate of any such officer, director or Affiliate provides or
causes to be provided any assets, services or facilities used or held for use in
connection with the Business, and the Business does not provide or cause to be
provided any assets, services or facilities to any such officer, director,
Affiliate or Associate.
2.17 Environmental Matters. To Seller's Knowledge, except as set forth on
Schedule 2.17 attached hereto, the present and former activities of Seller on
all real property owned, leased or subleased related to the Business is in
material compliance with all applicable Environmental Laws, and any regulation,
order, decree, judgment or injunction entered, promulgated or approved
thereunder, and Seller has received no notice of violation regarding, and Seller
has no Knowledge of, any past or present actions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Hazardous Substance, which are reasonably likely to
form the basis of any material liabilities or obligation of or claims against
the Business under any Environmental Laws with respect to the Business. Seller
has provided to Purchaser a copy of each assessment, report, , result of
investigations or compliance audit, that is in the possession of the Seller or
its consultants or contractors regarding the environmental condition of the
Business or compliance (or noncompliance) by Seller with any Environmental Laws.
The representations and warranties in this Section 2.17 are the sole and
exclusive representations of the Seller concerning environmental matters.
2.18 Debt Instruments. Seller has no debentures, notes, mortgages,
indentures, guarantees, capitalized leases or other instruments related to the
Business under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed, in each case to which Seller is
currently a party, has or may acquire rights or may become subject to any
Liability or obligation or by which it or the Assets are bound. Seller is not a
guarantor or otherwise indirectly or collaterally liable for any Liability
related to the Business of any other Person. None of the Liabilities of the
Business or of Seller incurred in connection with the conduct of the Business is
guaranteed by or subject to a similar contingent obligation of any other Person.
2.19 Employee Agreements. Except as set forth on Schedule 2.19 and except
for Xxxxx Xxxxx, no Employee has a written contract guaranteeing a term of
employment or restricting Seller's right to terminate employment subject to
applicable Laws. Except as set forth on Schedule 2.19, Employees are parties to
a written agreement (a "Confidentiality Agreement"), under which each such
person or entity (i) is obligated to disclose and transfer to Seller, without
the receipt by such person of any additional value therefore (other than normal
salary or fees for consulting services), all inventions, developments and
discoveries which, during the period of employment with or performance of
services for Seller, he or she makes or conceives of either solely or jointly
with others, that relate to any subject matter with which his or her work for
Sellers may be concerned, or relate to or are connected with the Business,
products or projects of Seller, or involve the use of the time, material or
facilities of Seller, and (ii) is obligated to maintain the confidentiality of
13
proprietary information of Seller. Except for the Confidentiality Agreements,
Seller's severance policy and except as to Xxxxx Xxxxx and as set forth on
Schedule 2.19, there are no written or, to Seller's Knowledge, oral, contracts
of employment between Seller and any Employee. To Seller's Knowledge, no
Employee is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would conflict with
their obligation to promote the interests of Seller with regard to the Business
or the Assets or that would conflict with the Business or the Assets. Neither
the execution nor the delivery of this Agreement, nor the carrying on of the
Business by its Employees, will, to Seller's Knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such Employee is
now obligated. To Seller's Knowledge, it is currently not necessary for Seller
to utilize in the Business any inventions of any Employee made or owned prior to
their employment by or affiliation with Seller, nor, to Seller's Knowledge, is
it necessary to utilize any other assets or rights of any Employee made or owned
prior to their employment with or engagement by Seller, in violation of any
registered patents, trade names, trademarks or copyrights or any other
limitations or restrictions to which any such Employee is a party or to which
any of such assets or rights may be subject. To Seller's Knowledge, none of
Seller's Employees, that has had knowledge or access to information relating to
the Assets has taken, removed or made use of any proprietary documentation,
manuals, products, materials, or any other tangible item from his or her
previous employer which has resulted in Seller's access to or use of such
proprietary items included in the Assets, and Seller will not gain access to or
make use of any such proprietary items in the Business, except to the extent
that any such activities would not have a Material Adverse Effect on Seller, the
Assets or the Business. As of the date of this Agreement, Seller is not a party
to a collective bargaining agreement with any trade union, none of Seller's
employees are members of a trade union certified as a bargaining agent with
Seller and no proceedings to implement any such collective bargaining agreement
or certifications are pending. Except as set forth on Schedule 2.19, there are
no policies or agreements between Seller and any Employee with respect to
payments to such Employee upon any change of control of Seller.
2.20 Sufficiency of Assets. Except as set forth in Schedule 2.20, the
Assets constitute all of the assets necessary, in conjunction with Purchaser's
assets immediately prior to Closing, including those constituting Purchaser's
corporate overhead, to operate the Business in the manner presently operated by
the Seller.
2.21 Brokers. Seller has no Liability, directly or indirectly, to pay any
fees, commissions or other amounts to any of Seller's directors, officers or
employees in connection with this Agreement or the transactions contemplated
hereby or in connection with any sale of the Assets. Seller has no Liability,
directly or indirectly, to pay any fees, commissions or other amounts to any
broker, finder or agent with respect to this Agreement or the transactions
contemplated hereby or in connection with any sale of the Assets, except to
Mirus Securities. Seller agrees to indemnify and hold harmless Purchaser for any
such Liability.
2.22 Disclosure. No representation or warranty made by Seller in this
Agreement or in any of the Schedules or Exhibits appended hereto contains any
untrue statement of a material fact or omits a material fact necessary to make
each statement contained herein or therein, in light of the circumstances in
which they were made, not materially misleading.
14
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full corporate power and authority to own and/or lease all of its properties and
assets, and to carry on its business as now being conducted.
3.2 Authority; Non-Contravention. This Agreement, the Operative Agreements
and the other agreements contemplated hereby to be executed by the Purchaser and
Guarantor (as defined in Section 5.7) pursuant hereto have been duly executed
and delivered by Purchaser and Guarantor, and constitute valid and binding
obligations of Purchaser and Guarantor enforceable against it in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws and subject to
limitations imposed by general equitable principles. The Purchaser and Guarantor
have full power and authority to execute and deliver and perform its obligations
under this Agreement, the Operative Agreements and the other agreements
contemplated herein to be executed by each of Purchaser and Guarantor. The
execution and delivery by Purchaser and Guarantor of this Agreement does not,
and the execution and delivery by Purchaser of the Operative Agreements to which
it is a party, the performance by Purchaser and Guarantor of their obligations
under this Agreement and the Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
a violation or breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Purchaser and Guarantor.
3.3 No Consents. No permit, consent, approval, novation, authorization or
other Order of or filing with any Governmental or Regulatory Authority or any
other Person is required in connection with the execution, delivery and
consummation of this Agreement and the other agreements contemplated hereby to
be executed by Purchaser or Guarantor, as appropriate, or the actions of the
Purchaser and Guarantor contemplated hereby.
3.4 Brokers. Purchaser has no Liability, directly or indirectly, to pay any
fees, commissions or other amounts to any broker, finder or agent with respect
to this Agreement or the transactions contemplated hereby. Purchaser agrees to
indemnify and hold harmless Seller from any such liability.
3.5 Funds. Purchaser has sufficient financial resources and credit
available on market terms to enable it to consummate the transactions
contemplated by this Agreement.
ARTICLE 4.
COVENANTS OF SELLER
4.1 Further Actions; Consents. Notwithstanding its inclusion in this
Article 4, this Section 4.1 includes covenants of both Seller and Purchaser.
(a) Except as otherwise provided in this Section 4.1, Sections 5.2, 5.3,
5.4, 5.5 and 5.6, or in the Transition Agreements, each of the parties hereto
shall execute such documents and other instruments and take such further actions
as may be reasonably required or desirable to carry out the provisions hereof
and consummate the transactions contemplated hereby. Upon the terms and subject
15
to the conditions hereof, each of the parties hereto shall use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents,
including specifically consents to the assignment of Material Contracts, and
approvals and to effect all necessary registrations and filings.
(b) Notwithstanding the foregoing, in respect of the Contracts (in each
case other than leases related to the Leased Real Estate):
(i) the parties acknowledge that prior to the date hereof, Seller has
obtained and delivered to Purchaser consent to the assignment of those Material
Contracts identified on Schedule 4.1(b);
(ii) the parties acknowledge that some or all of the Contracts other than
the Material Contracts (collectively, "Non-Material Contracts") may require the
consent, approval or waiver of the other party thereto to such assignment;
(iii) the parties agree that notwithstanding any such requirement as to
consent to assignment of the Non-Material Contracts, Purchaser hereby waives the
requirement that any such consent to assignment be obtained;
(iv) Seller shall, during the 90-day period immediately following the
Closing, use its commercially reasonable efforts, with the reasonable
cooperation of Purchaser, to obtain consents in respect of the Non-Material
Contracts. "Commercially reasonable efforts", for this purpose shall mean
Seller's sending written consents, keeping Purchaser apprised of the results and
otherwise reasonably cooperating with Purchaser and shall not include any
action, amendment to, or the payment of any amount of money except as expressly
required by the terms of, the Non-Material Contract;
(v) the parties agree that to the extent that Seller has not obtained any
consent to a Non-Material Contract during such 90-day period (A) Seller may
terminate such Non-Material Contract in accordance with the terms thereof and
pay all termination fees required in connection therewith and (B) Purchaser
shall be solely responsible for obtaining replacement goods or services in
respect thereof commencing from and after the Closing Date (provided that
Purchaser shall indemnify Seller against any liability in any case where the
consent to assignment of a customer contract is not obtained and the customer
does not cancel the Contract and looks to Seller for performance ("Customer
Claims"), in which case Purchaser shall perform such Contracts as an agent for
Seller; and further provided that as to contracts associated with the operation
of Seller's network, Purchaser shall be responsible for termination fees which
could have been avoided by timely notification by Purchaser of its determination
that such Contracts should terminate); and
(vi) the parties agree that if the consent to the assignment of any
Non-Material Contract is obtained but does not contain an express full release
of Seller from Seller's direct and indirect obligations from and after the
Closing under such Non-Material Agreement, to Seller's reasonable satisfaction,
then Purchaser shall indemnify Seller in respect of any Losses incurred by
Seller from and after the Closing Date in respect of any such Non-Material
Contract.
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(vii) Notwithstanding the foregoing, with respect to the Leased Real Estate
located in Fremont, California, the Purchaser and Seller shall concurrently
herewith enter into the Rental Fund Escrow Agreement in substantially the form
attached hereto as Exhibit C.
(d) Seller and Purchaser covenant and agree that any customer who contacts
Purchaser desiring Shared Hosting Services will be referred by Purchaser to
Seller; and any customer who contacts Seller desiring Dedicated Hosting Services
will be referred by Seller to Purchaser, provided that in the case of Seller,
that Seller is not violating the terms of the Section 4.3 of this Agreement, and
provided that in the case of Purchaser, that Purchaser is not Competing.
(e) Seller and Purchaser covenant and agree that they will jointly attempt
to categorize those internal support servers that are included in the Assets as
either exclusive or non-exclusive to the Business. With respect to any internal
support servers that are non-exclusive to the Business, either Party may, at its
sole expense and to the extent allowed by any third party licenses, create a
duplicate server for their own exclusive use.
4.2 Covenant Not to Hire Purchaser's Other Employees. Seller hereby agrees
with Purchaser that, except as otherwise agreed to in writing between Purchaser
and Seller, for an eighteen (18) month period following the Closing Date, except
with Purchaser's written consent, Seller shall not hire any person employed by
Purchaser or its Affiliates in any capacity, except as provided in the
Administrative Services Agreement. The foregoing, however, shall not in any way
limit the ability of Seller to hire any person to become an employee of Seller
if such person has been terminated by Purchaser at least six months prior to the
date such person is hired by Seller.
4.3 Seller's Noncompetition Covenant.
(a) In consideration of the purchase of the Assets by Purchaser, Seller
agrees that, from and after the Closing until the first anniversary of the of
the Closing Date, Seller shall not and shall cause its Affiliates not to, within
any area in which the Business is currently conducted, directly or indirectly,
provide Dedicated Hosting Services to its customers, or, acquire, own, manage,
operate, control, be employed by or participate in the ownership, management,
operation or control of, except on behalf of Purchaser (pursuant to the
Transition Agreements or otherwise), or be connected in any manner with, any
business advertising managed and/or unmanaged dedicated hosting services of the
type and character engaged in and competitive with the Business conducted by
Seller on the Closing Date ("Competitive Dedicated Hosting Services"). For these
purposes, ownership of securities of 1% or less of any class of securities of a
Person engaged in the business of providing Competitive Dedicated Hosting
Services shall not be considered to be competition with the Purchaser;
(b) In consideration of the purchase of the Assets by Purchaser, Seller
agrees that, from and after the Closing until the second anniversary of the
Closing Date, Seller shall not and shall cause its Affiliates not to, except on
behalf of Purchaser (pursuant to the Transition Agreements or otherwise),
directly or indirectly start, acquire, own, manage, operate, control, be
employed by or participate in the ownership, management, operation or control
of, or be connected in any manner with, any business advertising Competitive
Dedicated Hosting Services through marketing and sales efforts in which Seller
uses the "Interland" name or other brand;
(c) In consideration of the purchase of the Assets by Purchaser, Seller
agrees that, from and after third anniversary of the Closing Date, Seller shall
not and shall cause its Affiliates not to, within any area in which the Business
is currently conducted, except on behalf of Purchaser (pursuant to the
Transition Agreements or otherwise), directly or indirectly solicit the
customers of the Business that were customers of the Business on the Closing
Date;
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(d) Notwithstanding the foregoing, Purchaser acknowledges that (i) Seller
owns and will continue to operate its business of Shared Hosting Services and
that the provision of such services by Seller and its Affiliates shall not be
deemed to constitute a violation of this Section 4.3; (ii) it shall not
constitute a violation of this Section 4.3 if (A) Seller acquires a business
that incidentally, and not as its principal business activity, provides
Dedicated Hosting Services, provided that Seller has offered Purchaser the
opportunity to acquire the customers receiving the Dedicated Hosting Services at
the price at which it acquired such customer accounts, which offer shall be
accepted or declined within sixty (60) days; or (B) if Seller is acquired,
whether by stock sale, merger or other business combination, or sale of its
assets, to a Person engaged in whole or in part in the business of providing
Dedicated Hosting Services;
(e) Notwithstanding the foregoing, Purchaser acknowledges and agrees that
Seller may act as a reseller for Purchaser, when an enterprise distribution
partner of Seller refers to Seller a customer who is seeking Dedicated Hosting
Services or collocation service. Purchaser shall provide Seller with a 25%
discount off of its standard rate for the applicable service provided to Seller
pursuant to this Section 4.3(e).
4.4 Subsidiaries. Seller covenants and agrees that it shall cause the
Subsidiaries to transfer any and all interest in the Assets to Purchaser at
Closing.
4.5 Purchaser's Use of "Interland" Name and Seller's Logo. Purchaser shall
be entitled to use the name "Interland" and Seller's logo only in accordance
with the applicable provisions of the Administrative Services Agreement
constituting a part of the Transition Agreement.
4.6 Cooperation with Post-Closing Audit. Following the Closing, the Seller,
and its Affiliates, shall reasonably cooperate with the audit of the Business
conducted by the accounting firm of KPMG, or other accounting firm selected by
the Purchaser, and provide such accounting firm with the information reasonably
requested by such accounting firm, to the extent such information is in the
possession of the Seller or its Affiliates without material expense or burden,
in order for Purchaser and its accounting firm to create audited financial
statements of the Business as a stand alone entity in compliance with GAAP
(which audit Purchaser anticipates completing within forty-five (45) days
following the Closing Date). All fees and expenses of the accounting firm and
other third parties engage by Purchaser in connection with the audit shall be
paid by Purchaser.
4.7 Cooperation as to Certain Intellectual Property. Following Closing,
Seller shall cooperate, which cooperation shall not require Seller to incur any
expense, with Purchaser as reasonably requested by Purchaser in acquiring from
third parties rights to use: (i) the intellectual property licensed by Seller
from third parties identified in Section 1.1(b)(ii), and (ii) the intellectual
property licensed by Seller from third parties listed on Schedule 4.7, which
intellectual property will not be assigned or sublicensed to Purchaser
(collectively, the "Excluded Intellectual Property"). Seller agrees to provide
up to one hundred (100) hours of consulting time (including, if requested by
Purchaser, the time of Xxxx Xxxxxxx or other Seller personnel reasonably
selected by Purchaser) in order to consult with Purchaser with respect to
appropriate back office systems, which may include consulting with respect to
Seller's current back office systems. Such consulting shall be at no cost to
Purchaser.
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ARTICLE 5.
COVENANTS OF PURCHASER
5.1 No Additional Representations. Purchaser acknowledges that neither
Seller nor any other person or entity acting on behalf of Seller or any
Affiliate of Seller has made any representation or warranty, express or implied,
as to the accuracy or completeness of any information regarding the Business,
except as expressly set forth in the Agreement.
5.2 Employees. Purchaser and Seller acknowledge and agree that Purchaser
will not offer employment to any Employees on or prior to the Closing Date.
Purchaser may, however, offer employment "at will" on or before ninety (90) days
following the Closing Date to each of the Employees listed on Schedule 5.2
attached hereto (each employee receiving such offer, an "Offeree") with benefits
described in Section 5.3, provided that each such Employee successfully
completes Purchaser's pre-employment process which shall include but not be
limited to testing for controlled substances and background screening. In the
event any Affected Employee is terminated without Cause within one year after
the Closing Date, Purchaser shall pay severance to such terminated employee in
accordance with Seller's current severance policy as described on Schedule 5.3
attached hereto. As of the date hereof, none of the Employees listed on Schedule
5.2 is on a leave of absence pursuant to Seller's written leave of absence
policy.
5.3 Benefits Matters. (a) Purchaser shall, and shall cause its Affiliates
to (if applicable), give the Affected Employees full credit for all purposes
(including without limitation for purposes of eligibility to participate,
eligibility to commence benefits and vesting, as applicable but not for purposes
of benefit accrual under a Plan that is a defined benefit pension plan, if any)
under any Plans, policies, practices or arrangements maintained by Purchaser or
its Affiliates, for the Affected Employees' service with the Seller and its
Affiliates and their respective predecessors to the same extent recognized by
the Seller or its Affiliates, as applicable, immediately prior to the Closing.
(b) Following the Closing, to the extent permitted by Purchasers' insurance
carriers (after good faith negotiations by Purchaser with such carriers) and
permitted by law, Purchaser shall ensure, and shall cause its Affiliates to
ensure (if applicable), that:
(i) no limitations or exclusions as to preexisting conditions, evidence of
insurability or good health, or waiting periods are applicable to any Affected
Employees or their dependents or beneficiaries under any welfare benefit plans
in which such Affected Employees may be eligible to participate; and
(ii) any costs or expenses incurred by Affected Employees (and their
dependents or beneficiaries) during the calendar year in which the Closing
occurs, up to and including the Closing Date, shall be taken into account for
purposes of satisfying applicable deductible, co-payment, coinsurance, maximum
out-of-pocket provisions and like adjustments or limitations on coverage under
any welfare benefit plans in which the Affected Employees may be eligible to
participate.
(c) Purchaser shall and shall cause its Affiliates (if applicable) (i) to
extend coverage to the Affected Employees under Plans and arrangements of
Purchaser or its Affiliates on the same terms and conditions that such coverage
is provided to similarly situated employees of Purchaser or its Affiliates, as
applicable, and (ii) on the Closing Date, provide Affected Employees salary,
commissions and bonus opportunities substantially equivalent to those provided
to Affected Employees by Seller or its Affiliates immediately prior to Closing,
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provided however, that Purchaser reserves the right to adjust such salary,
commissions and bonus opportunities thereafter.
(d) Accrued Time Off. Schedule 5.3 sets forth a complete list of the
accrued vacation and other earned time off for each Offeree as of the Closing
Date. Each Affected Employee shall be credited under Purchaser's (or Purchaser's
Affiliate's) vacation and other earned time off policy with the full amount of
vacation and earned time off accrued by such Affected Employee but unused as of
the Closing under the vacation policies of Seller applicable to such Affected
Employee.
(e) 401(k) Plans.
(i) Purchaser hereby covenants that, as soon as practicable, but not later
than ninety (90) days following the Closing (i) it shall take all steps
reasonably necessary to effect the adoption of a tax-qualified retirement plan
that provides eligible employees of Purchaser (including the Affected Employees)
the opportunity to defer compensation pursuant to Section 401(k) of the Code (a
"401(k) Plan"), and (ii) all Affected Employees shall be granted service credit,
for purposes of eligibility and vesting under the Purchaser's 401(k) Plan, to
the same extent that such Affected Employees were credited with service under
the Seller's 401(k) Plan.
(ii) Affected Employees who are participants in the Seller's 401(k) Plan
shall, effective as of the date they become Affected Employees, cease to be
eligible to participate in Seller's 401(k) Plan, and such Affected Employees
shall have a fully vested and non-forfeitable interest in their account balances
thereunder. As soon as practicable following the date that is ninety (90) days
following the Closing, and following (A) delivery by Seller to Purchaser of the
most current IRS determination letter regarding the tax-qualified status of
Seller's 401(k) Plan and (B) delivery by Purchaser to Seller a favorable
determination letter regarding the tax-qualified status of Purchaser's 401(k)
Plan (or, if the Purchaser adopts a prototype or volume submitter 401(k) plan, a
copy of the IRS opinion letter issued with respect to such prototype or volume
submitter plan), Seller shall cause the trustee of Seller's 401(k) Plan to
transfer to the Purchaser's 401(k) Plan all of the assets and liabilities of the
Seller's 401(k) Plan that are attributable to Affected Employees. Unless
otherwise agreed by Seller and Purchaser, the assets to be transferred shall be
cash or promissory notes for loans made to Affected Employees under the terms of
the Seller's 401(k) Plan. In the event the plan to plan transfer has not
occurred by the first anniversary of the Closing Date, Affected Employees who
are participants in Seller's 401(k) Plan may transfer their account balances in
any manner permitted by Seller's 401(k) Plan.
5.4 Sales and Transfer Taxes. Purchaser shall pay only the first One
Hundred Thousand U.S. Dollars (US$100,000) of any sales, use, excise or gains
taxes, documentary stamps or transfer taxes payable by reason of the transfer
and conveyance of the Assets hereunder. Seller shall be responsible for payment
of any additional such taxes. .
5.5 Covenant Not to Hire Seller's Other Employees. Upon the consummation of
the transactions contemplated hereby, Purchaser agrees with Seller that, for an
eighteen (18) month period following the Closing Date, except with Seller's
written consent, Purchaser shall not hire any person employed by Seller or its
Affiliates in any capacity other than the Employees set forth on Schedule 5.2.
The foregoing, however, shall not in any way limit the ability of Purchaser to
hire any person to become an employee of Purchaser if such person has been
terminated by Seller at least six months prior to the date such person is hired
by Purchaser.
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5.6 Guarantee. Peer 1 Network Enterprises, Inc. ("Guarantor") hereby
unconditionally guarantees the full and timely payment and performance by
Purchaser of all obligations of Purchaser arising under this Agreement and all
agreements delivered pursuant hereto.
ARTICLE 6.
CLOSING DELIVERIES OF SELLER
In addition to the other Closing deliveries required elsewhere in this
Agreement.
6.1 Tax Affidavit. At Closing, Seller shall deliver to Purchaser an
affidavit of Seller's Chief Financial Officer, in form reasonably satisfactory
to Purchaser, stating under penalties of perjury such Seller's United States
taxpayer identification number and that such Seller is not a foreign person
within the meaning of section 1445(b)(2) of the Code.
6.2 Other Documents. Seller shall have furnished Purchaser with such other
and further documents and certificates, including certificates of each of
Seller's officers and others, as Purchaser shall reasonably request to evidence
compliance with the conditions set forth in this Agreement.
ARTICLE 7.
INDEMNIFICATION AND SURVIVAL
7.1 Indemnification by Seller. On and after the Closing Date, Seller shall
defend, indemnify and hold harmless Purchaser, each of its Affiliates and each
of their respective Affiliates, officers, directors, employees, agents,
successors and assigns (collectively, "Purchaser's Indemnified Persons"), and
shall reimburse Purchaser's Indemnified Persons, for, from and against, each and
every demand, claim (including Customer Claims and other third party claims),
fine, fee, penalty, deficiency, loss (which shall include any diminution in
value), liability, judgment, and damage (including interest, costs and expenses,
including court costs, fines, penalties, fees of accountants and other experts
and other expenses of litigation, reasonable attorneys' fees) (each a "Loss,"
and collectively, "Losses") imposed on or incurred by Purchaser's Indemnified
Persons, directly or indirectly, relating to, resulting from or arising out of
any breach of any representation or warranty in any respect, whether or not
Purchaser's Indemnified Persons relied thereon or had knowledge thereof, or any
breach or nonfulfillment of any covenant, agreement or other obligation of
Seller under this Agreement, or any certificate or other document delivered or
to be delivered pursuant hereto or relating to, resulting from or arising out of
any Retained Liability or for any Taxes of the Seller for any period ending on
or before the Closing.
7.2 Indemnification by Purchaser. On and after the Closing Date, Purchaser
shall defend, indemnify and hold harmless Seller and its Affiliates, officers,
employees, agents, successors and assigns (Sellers and such other Persons,
collectively "Seller Indemnified Persons") and shall reimburse Seller
Indemnified Persons for, from and against all Losses imposed on or incurred by
Seller Indemnified Persons, directly or indirectly, relating to, resulting from
or arising out of any breach of any representation or warranty in any respect,
whether or not Seller Indemnified Persons relied thereon or had knowledge
thereof, or any breach or nonfulfillment of any covenant, agreement or other
obligation of Purchaser under this Agreement or any certificate or other
document delivered or to be delivered pursuant hereto, including without
limitation Losses relating to, resulting from or arising out of any Assumed
Liability.
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7.3 Notice and Defense of Third-Party Claims. If any action, claim or
proceeding shall be brought or asserted by a third party against an indemnified
party or any successor thereto (the "Indemnified Person") in respect of which
indemnity may be sought under this Article 7 from an indemnifying person or any
successor thereto (the "Indemnifying Person"), the Indemnified Person shall give
prompt written notice of such action or claim to the Indemnifying Person who
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Person and the payment of all expenses; except
that any delay or failure to so notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the extent, if at all,
that it is prejudiced by reason of such delay or failure. The Indemnified Person
shall have the right to employ separate counsel in any of the foregoing actions,
claims or proceedings and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless both the Indemnified Person and the Indemnifying Person are named as
parties and the Indemnified Person shall in good faith determine that the
representation by the same counsel is inappropriate.
7.4 Limits on Indemnification. No claim may be made against Seller for
indemnification hereunder unless the aggregate of all Purchaser Losses under the
Agreement incurred exceed One Hundred Thousand Dollars (US $100,000) (the
"Aggregate Basket"), at which time all amounts in excess of the Aggregate Basket
may be claimed in full. In no event shall the Seller be required to indemnify
Purchaser for Purchaser Losses under this Agreement which in the aggregate
exceed sixty percent (60%) of the Purchase Price. Any claim by Seller for
indemnification against a third party claim based on conduct of Purchaser
following Closing shall not be subject to the limitations contained in this
Section 7.4.
7.5 Survival of Representations and Warranties and Agreements. The
representations and warranties made by the parties in this Agreement or in any
document, certificate or instrument executed and delivered pursuant hereto
(including those made in the Schedules and Exhibits hereto) shall survive the
Closing hereunder and shall not merge in the performance of any obligation by
any party hereto, and will remain in full force through the eighteenth (18th)
full month following Closing, without regard to any investigation made by any of
the parties; provided, however, that (i) the representations and warranties set
forth in Sections 2.5 (Tax Matters), 2.8 (ERISA Matters) and 2.10 (Intellectual
Property) will survive until 30 days after the expiration of the applicable
statute of limitations (with extensions), (ii) the representation and warranties
set forth in 2.17 (Environmental Matters) will survive until three (3) years
following the Closing Date, and (iii) the representation and warranties of the
parties set forth in Sections 2.2 (Authorization), 2.9 (Title to Assets;
Business), 3.1 (Organization) and 3.2 (Authorization) will survive indefinitely.
Any claim (whether or not fixed as to liability or liquidates as to amount)
pending on the expiration date of the applicable survival period set forth above
for which a claim notice has been given in accordance with this Article VII on
or before such expiration date may continue to be asserted and indemnified
against until finally resolved. All covenants and obligations undertaken by the
parties in this Agreement or in any document, certificate or instrument executed
and delivered pursuant hereto (including those made in the Schedules or Exhibits
hereto) shall survive in accordance with their terms.
7.6 Exclusive Remedy. From and after the Closing, no party hereto shall be
liable or responsible in any manner whatsoever to the other parties, whether for
indemnification or otherwise, except for indemnity as expressly provided in this
Article 7 and elsewhere in this Agreement which provides the exclusive remedies
and causes of action of the parties hereto with respect to any matter arising
out of or in connection with the Agreement or any Schedule hereto or any opinion
or certificate delivered in connection herewith; provided that the limitations
contained in this Article 7 shall not apply to any claims arising out of the
fraud of any party. After the Closing, Purchaser shall not be entitled to a
rescission of the sale of the Assets. Notwithstanding anything to the contrary
contained herein, the rights and remedies set forth in the Transition Agreements
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shall be the sole and exclusive source of rights and remedies in respect thereto
and the parties' respective rights thereunder shall not be governed or limited
by any provision contained herein.
7.7 Liability Limitation. Notwithstanding anything to the contrary
contained herein, in no event shall any party be liable for any punitive,
special, incidental or consequential damages, including lost profits, arising
out of any breach of representations, warranties, covenants or other provisions
of this Agreement.
ARTICLE 8.
DEFINITIONS
8.1 Definitions. (a) Defined Terms. As used in this Agreement, the
following defined terms have the meanings indicated below:
"401(k) Plan" has the meaning ascribed to it in Section 5.3
"AAA" has the meaning ascribed to it in Section 9.9.
"Accounts Receivable" has the meaning ascribed to it in Section 2.14.
"Administrative Services Agreement" has the meaning ascribed to it in
Section 1.1(b)(i).
"Affected Employees" means those Offerees who accept an offer of employment
pursuant to Section 5.2 hereof.
"Affiliate" means any Person that directly, or indirectly through one of
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Aggregate Basket" has the meaning ascribed to it in Section 7.4.
"Agreement" means this Asset Purchase Agreement and the Schedules and
Exhibits hereto, as the same shall be amended from time to time.
"Assets" has the meaning ascribed to it in Section 1.1.
"Assignment Instruments" has the meaning ascribed to it in Section 1.4(a).
"Associate" means, with respect to any Person, any corporation or other
business organization of which such Person is an officer or partner or is the
beneficial owner, directly or indirectly, of ten percent (10%) or more of any
class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Assumed Liabilities" has the meaning ascribed to it in Section 1.2(a).
"Assumption Instruments" has the meaning ascribed to it in Section 1.4(a).
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"Benefit Plan" means any Plan established by Seller, or any predecessors or
Affiliates of Seller, existing since August 31, 2001 to which Seller contributes
or has contributed or under which Seller or any of its Affiliates has, or since
August 31, 2001 had, an obligation to contribute, on behalf of any employee,
former employee or director, or under which any employee, former employee or
director of Seller or any dependent or beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"Business" has the meaning ascribed to it in the forepart of this
Agreement.
"Business Day" means a day other than Saturday, Sunday or any day on which
banks located in the State of New York are authorized or obligated to close.
"Cash Payment" has the meaning ascribed to it in Section 1.3(a)(i).
"Cause" means termination of an Affected Employee's employment by Purchaser
for one or more of the following reasons: (a) Affected Employee has breached or
threatens to breach a fiduciary duty owed to the Purchaser; (b) Affected
Employee has engaged or threatens to engage in dishonesty, fraud, gross
negligence, willful malfeasance or other acts of misconduct in the performance
of Affected Employee's duties or during the course of Affected Employee's
employment; (c) upon the willful and continued failure by Affected Employee to
substantially perform his or her duties with the Purchaser, or excessive or
unreasonable absence from the performance of his or her duties with the
Purchaser for any reason, other than for authorized vacation or sick leave; or
(d) Affected Employee has willfully violated or threatens to violate Purchaser
policies, or has willfully violated or threatens to violate any law, rule or
regulation (other than traffic violations or similar offenses) which result in
material injury to Purchaser.
"Closing" means the closing of the transactions contemplated by Section
1.5.
"Closing Date" has the meaning set forth in Section 1.5.
"Closing Working Capital Amount" shall mean the amount of Working Capital
of the Business as of the Adjustment Date.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Competing" means Purchaser directly or indirectly owning, managing,
operating, controlling, being employed by or participating in the ownership,
management, operation or control of, or being connected in any manner with, any
business providing Shared Hosting Services of the type and character engaged in
and competitive with the business conducted by Seller on the Closing Date.
Notwithstanding the foregoing, Seller acknowledges that Purchaser shall not
be deemed to be "Competing" (a) solely by virtue of the fact that Purchaser
provides collocation, bandwidth and/or Dedicated Hosting Services to customers
which directly sell Shared Hosting Services; (b) if Purchaser acquires a
business that incidentally, and not as its principal business activity, provides
Shared Hosting Services; or (c) if Purchaser is acquired, whether by stock sale,
merger or other business combination, or sale of its assets, by a Person engaged
in whole or in part in the business of providing Shared Hosting Services. For
these purposes, ownership of securities of one percent (1%) or less of any class
of securities of a Person engaged in the business of providing Shared Hosting
Services shall not be considered to be "Competing" with the Seller.
"Competitive Dedicated Hosting Services" has the meaning ascribed to it in
Section 4.3(a).
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"Confidentiality Agreement" has the meaning ascribed to it in Section 2.19.
"Confidential Information" has the meaning ascribed to it in Section 9.6.
"Consideration" has the meaning ascribed to it in Section 1.3(b).
"Contracts" has the meaning ascribed to it in Section 1.1(a)(viii).
"Cooperating Employees" has the meaning ascribed to it in Section 1.8(b).
"CPA-Determined Differences" has the meaning ascribed to it in Section
1.7(d)(ii).
"CPA Firm" has the meaning ascribed to it in Section 1.7(d)(ii).
"Customer Claims" has the meaning ascribed to it in Section 4.1(b)(v).
"Dedicated Hosting Services" means that form of web hosting service where
the customer purchases the exclusive use of one (but not less than one) or more
web servers and specifically excludes Shared Hosting Services, and virtual
private servers.
"Differences" has the meaning ascribed to it in Section 1.7(d)(ii).
"Disagreement Notice" has the meaning ascribed to it in Section 1.7(c).
"Employee" means each employee, officer or consultant of Seller engaged
primarily in the conduct of the Business and identified on Schedule 8.1 attached
hereto.
"Environmental Laws" means the following laws as the same have been amended
from time to time: (i) Clean Air Act (42 U.S.C. ss. 7401, et seq.); (ii) Clean
Water Act (33 U.S.C. ss. 1251, et seq.); (iii) Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901, et seq.); (iv) Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601, et seq.); (v) Safe
Drinking Water Act (42 U.S.C. ss. 300f, et seq.); (vi) Toxic Substances Control
Act (15 U.S.C. ss. 2601, et seq.); (vii) Rivers and Harbors Act (33 U.S.C. ss.
401, et seq.); (viii) Emergency Planning and Community Right to Know Act;
together with all other Legal Rules regulating emissions, discharges, releases
or threatened releases of any Hazardous Substance into ambient air, land,
surface water, groundwater, personal property or structures, or otherwise
regulating the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, discharge or handling of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Escrow Agreement" has the meaning ascribed to it in Section 1.3(a)(ii).
"Escrow Amount" has the meaning ascribed to it in Section 1.3(a)(ii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning ascribed to it in Section 1.1(c).
"Excluded Intellectual Property" has the meaning ascribed to it in Section
4.7.
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"GAAP" means U.S. generally accepted accounting principles applied on a
consistent basis during the relevant periods.
"GAAP Practices" means GAAP applied on a basis consistent with the past
practices of Seller.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States or any state, county, city or other political subdivision
thereof.
"Guarantor" has the meaning ascribed to it in Section 5.7.
"Hazardous Substance" means any matter that is regulated as a pollutant,
contaminant, hazardous or toxic substance, material, constituent or waste or
pollutant under any Environmental Health and Safety Law by any Governmental or
Regulatory Authority and includes, without limitation, asbestos and
asbestos-containing materials and any material or substance that is: (i)
designated as a "hazardous substance" pursuant to section 307 of the Federal
Water Pollution Control Act, 33 U.S.C. section 1251, et seq. (33 U.S.C. ss.
1317); (ii) defined as a "hazardous waste" pursuant to section 1004 of the
Federal Solid Waste Disposal Act, 42 U.S.C. section 6901, et seq. (42 U.S.C. ss.
6903); (iii) defined as a "hazardous substance" pursuant to section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
section 9601, et seq. (42 U.S.C. ss. 9601); or (iv) so designated or defined
under any other applicable Legal Rule.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases, but not any real estate leases, and (v) in the nature
of guarantees of the obligations described in clauses (i) through (iv) above of
any other Person.
"Indemnified Person" has the meaning ascribed to it in Section 7.3.
"Indemnifying Person" has the meaning ascribed to it in Section 7.3.
"Intellectual Property" means all patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
xxxx rights, service names and service name rights, brand names, domain names,
inventions, processes, formulae, copyrights and copyright rights, trade dress,
business and product names, logos, slogans, trade secrets, industrial models,
processes, designs, methodologies, computer programs (including all source
codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how, all pending applications for and
registrations of patents, trademarks, service marks and copyrights and (other
than with respect to the name "Interland") all goodwill pertaining to the
forgoing.
"Interim Working Capital Statement" has the meaning ascribed to it in
Section 2.13.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Seller" means the actual knowledge of Xxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxx Piterlo, Xxx
Xxxxx, Xxxx Xxxxx, Xxxxx Xxxxxxxx, and Xxxxx Xxxxxxx, each of whom have reviewed
Article 2 and the corresponding Schedules.
26
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, or any state,
county, city or other political subdivision, or any Governmental or Regulatory
Authority.
"Leased Real Estate" has the meaning ascribed to it in Section 2.9.
"Licensed Intellectual Property" has the meaning assigned to it in Section
2.10.
"Legal Rules" means the requirements of all laws, codes, statutes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations of all Governmental or Regulatory Authorities
with jurisdiction.
"Liabilities" means all Indebtedness, obligations and other liabilities of
a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether
due or to become due).
"Licensed Intellectual Property" has the meaning ascribed to it in Section
2.10.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale contract, title retention contract or other contract to give
any of the foregoing.
"Loss" and "Losses" have the meanings ascribed to them in Section 7.1
"Material Adverse Effect" and "Material Adverse Change" mean any Loss in
excess of $25,000 resulting from a breach of an individual representation,
warranty or covenant.
"Material Contract" and "Material Contracts" have the meanings ascribed to
them in Section 2.11.
"NASDAQ" has the meaning ascribed to it in Section 9.5.
"Non-Material Contracts" has the meaning ascribed to it in Section
4.1(b)(ii).
"Offeree" has the meaning ascribed to it in Section 5.2.
"Operative Agreements" means, collectively, the Assignment Instruments and
the Assumption Instruments.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Outbound IP Licenses" has the meaning ascribed to it in Section 2.10.
"Owned Intellectual Property" has the meaning assigned to it in Section
2.10.
"Panel" has the meaning ascribed to it in Section 9.9.
27
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP Practices, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) those
liens identified on Schedule 2.9.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA or a multiemployer
plan within the meaning of Section 3(37) of ERISA.
"Purchase Price" has the meaning ascribed to it in Section 1.3(a).
"Purchase Price Adjustment Payment" has the meaning ascribed to it in
Section 1.7(f).
"Purchase Price Allocation" has the meaning ascribed to it in Section
1.3(b).
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Purchaser Representatives" means Purchaser's officers, employees, counsel,
advisors and representatives.
"Purchaser's Indemnified Persons" has the meaning ascribed to it in Section
7.1.
"Purchaser Statement of Adjustments" has the meaning ascribed to it in
Section 1.7(b).
"Representatives" means officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives.
"Resolved Objections" has the meaning ascribed to it in Section 1.7(d)(i).
"Retained Liabilities" has the meaning ascribed to it in Section 1.2(b).
"Review Period" has the meaning ascribed to it in Section 1.7(c).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" has the meaning ascribed to it in the forepart of this Agreement,
except for the exception noted in, Article 2 for the purpose of Section 2.9.
"Seller Indemnified Persons" has the meaning ascribed to it in Section 7.2.
28
"Seller's Public Filings" means all material forms, reports, schedules,
statements and other documents (including all exhibits and schedules thereto and
documents incorporated by reference therein), in each case as amended, filed by
Seller with the SEC.
"Seller Representative" means Seller's officers, directors, employees,
counsel, advisors and representatives.
"Seller Statement of Adjustments" has the meaning ascribed to it in Section
1.7(a).
"Shared Hosting Services" means that form of web hosting service where the
customer purchases the non-exclusive use of a web server and which the web
server is also available for the non-exclusive use of other customers and
includes (i) offering for sale to a reseller the capability of selling Shared
Hosting Services even if such capability involves providing the reseller the
exclusive use of one or more web servers, and (ii) versions of Shared Hosting
Services in which the end-user has root control, or near-root control, of less
than all of the server, sometimes described as a "virtual private server" and
(iii) the service sold by Seller under the name "Accelerator" prior to the
Closing Date.
"Subsidiaries" has the meaning ascribed to it in Section 1.4(b).
"Target Working Capital Amount" means negative One Million Two Hundred
Sixty-Nine Thousand Dollars ( - $1,269,144.85).
"Tax" and "Taxes" mean any Governmental or Regulatory Authority income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs, 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, fee, charge, lien impost or assessment of any
kind whatsoever, including any interest, penalty, or addition thereto.
"Tax Returns" 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.
"Transition Agreements" has the meaning ascribed to it in Section 1.4(a).
"Working Capital" shall mean the aggregate current assets of the Business
less the aggregate current liabilities of the Business, determined in accordance
with the methodology utilized in the preparation of pro forma calculation and
Working Capital attached as Annex A hereto.
"Working Capital Adjustment" has the meaning ascribed to it in Section 1.6.
(b) Construction of Certain Terms and Phrases. Unless the context of this
Agreement otherwise requires, (i) words of any gender include each other gender;
(ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement and (v) the phrases "ordinary course of business" and "ordinary course
of business consistent with past practice" refer to the business and practice of
Seller in connection with the Business. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified.
29
ARTICLE 9.
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission (which is acknowledged by other means)
or mailed (first class postage prepaid) to the parties at the following
addresses or facsimile numbers:
If to Purchaser, to:
Peer 1 Network Enterprises, Inc.
Suite 1600
555 West Hastings Street
Vancouver, British Columbia
Canada V6B 4NS
Attention: Xxxxxxxx Xxxxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Seller, to:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, LLP
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
30
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt as of such time as
receipt is acknowledged by other than automatic means, and (iii) if delivered by
mail in the manner described above to the address as provided in this Section,
be deemed given upon receipt (in each case regardless of whether such notice,
request or other communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
9.2 Entire Agreement. This Agreement (including the Recitals, Schedules and
Exhibits hereto) and the other agreements and instruments, the execution and
delivery of which are provided for herein, constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and terminates and supersedes any and all prior agreements, arrangements and
understandings, both oral and written, among the parties hereto concerning the
subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PURCHASER
NOR SELLER MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR
OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.3 Expenses. Subject to Section 9.4 and except as otherwise expressly
provided herein, Purchaser and Seller will pay its own respective costs and
expenses in connection with the negotiation, preparation, execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, attorneys' fees, accountants' fees and other
professional fees and expenses.
9.4 Attorneys' Fees. If a legal proceeding is brought to enforce or
interpret the provisions of this Agreement or any other agreement or instrument
provided for herein or as to the rights or obligations of any party to this
Agreement or such other agreement or instrument, the prevailing party in such
action shall be entitled to recover as an element of such party's costs of suit,
and not as damages, a reasonable attorneys' fee to be fixed by the court. The
prevailing party shall be the party who is entitled to recover its costs of suit
as ordered by the court or by applicable law or court rules. A party not
entitled to recover its costs shall not recover attorneys' fees.
9.5 Public Announcements. Except as otherwise required by Law or the rules
and regulations of the Nasdaq National Market ("NASDAQ"), neither Seller nor
Purchaser will issue or make any reports, statements or releases to the public
or generally to the employees, customers, suppliers or other Persons to whom
Seller sells goods or provides services in connection with the Business or with
whom Seller otherwise has significant business relationships in connection with
the Business with respect to this Agreement or the transactions contemplated
hereby without the consent of the other, which consent shall not be unreasonably
withheld. If either party is unable to obtain the approval of its public report,
statement or release from the other party and such report, statement or release
is required by Law or NASDAQ, then such party may make or issue the legally
required report, statement or release and promptly furnish the other party with
31
a copy thereof. Seller and Purchaser will also obtain the other party's prior
approval of any press release to be issued immediately following the Closing
announcing the consummation of the transactions contemplated by this Agreement,
except as otherwise required by law, NASDAQ, the TSX Venture Exchange, or the
British Columbia Securities Commission.
9.6 Confidentiality. Each party hereto will hold, and will use its best
efforts to cause its Affiliates, and their respective Representatives to hold,
in strict confidence from any Person (other than any such Affiliate or
Representative), all documents and information concerning the other party or any
of its Affiliates and their respective customers furnished to it by the other
party or such other party's Representatives, or obtained in the course of its
performance of this Agreement or the Transition Agreements (the "Confidential
Information"), except to the extent that such documents or information can be
shown to have been (a) previously known by the party receiving such documents or
information, (b) in the public domain (either prior to or after the furnishing
of such documents or information hereunder) through no fault of such receiving
party or (c) later acquired by the receiving party from another source if the
receiving party is not aware that such source is under an obligation to another
party hereto to keep such documents and information confidential; provided that
following the Closing the foregoing restrictions will not apply to Purchaser's
use of documents and information concerning the Business, the Assets or the
Assumed Liabilities furnished by Seller hereunder but will continue to apply to
documents and information, if any, solely concerning the Seller, but not
relating to the Business, Assets or Assumed Liabilities. Notwithstanding the
foregoing sentence, the restrictions contained in this Section 9.6 shall not
bind a party if such party is (i) compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law, or (ii) if such Confidential Information is disclosed in an
Action or Proceeding brought by a party hereto in pursuit of its rights or in
the exercise of its remedies hereunder,
9.7 Waiver and Amendment. No waiver, amendment, modification or change of
any provision of this Agreement shall be effective unless and until made in
writing and signed by Purchaser (by a duly authorized officer other than any
former employee or direct or indirect owner of Seller) and Seller. No waiver,
forbearance or failure by any party of its right to enforce any provision of
this Agreement shall constitute a waiver or estoppel of such party's right to
enforce any other provision of this Agreement or a continuing waiver by such
party of compliance with any provision.
9.8 Successors and Assigns; No Third Party Beneficiaries. This Agreement
shall not be assigned or assignable by Seller without the prior written consent
of Purchaser or by Purchaser without the prior written consent of Seller;
provided, however, that Purchaser may assign without the consent of Seller, but
with not less than ten Business Days advance notice to Seller, its rights
hereunder to any Affiliate of which Purchaser owns at least 80% of the issued
and outstanding equity thereof; in which event all references herein to
Purchaser shall be deemed references to such assignee, except that all
representations and warranties made herein with respect to Purchaser as of the
date of this Agreement shall be deemed representations and warranties also to be
made with respect to such assignee to the extent applicable as of the date of
such designation. No such assignment shall relieve Purchaser of any obligation
hereunder. Any purported assignment in violation of this Agreement will be void
ab initio. Subject to the preceding sentence, each term and provision of this
Agreement shall be binding upon and enforceable against and inure to the benefit
of any successors or assigns of Purchaser and any successors or assigns of
Seller. Nothing in this Agreement, expressed or implied, is intended to confer
on any Person other than the parties and their respective successors and assigns
any rights or remedies under or by reason of this Agreement. Notwithstanding the
foregoing, Purchaser may assign its rights and remedies with respect to the
representations, warranties, covenants, and indemnities of Seller as collateral
32
security for any borrowings, but in any action brought by an assignee of such
rights and remedies, Seller may assert any defense, counterclaim or setoff it
could have asserted had such action been brought by Purchaser and no such
assignment shall, without the further consent of Seller (which consent shall not
be unreasonably withheld), constitute a permitted delegation of Purchaser's
duties.
9.9 Dispute Resolution. Other than as provided in Section 1.7(d) and only
as to disputes seeking only monetary damages (and not equitable relief) in an
amount not greater than $500,000, in the event of any dispute or disagreement
between Seller and Purchaser as to the interpretation of any provision of this
Agreement and the Operative Agreements (or the performance of obligations
thereunder), the matter, upon written request of either party, shall be referred
to representatives of the parties for decision. The representatives shall
promptly meet in a good faith effort to resolve the dispute. If the
representatives do not agree upon a decision within thirty (30) calendar days
after reference of the matter to them, any controversy, dispute or claim arising
out of or relating in any way to this Agreement or the transactions arising
hereunder shall be settled exclusively by arbitration in the City of Atlanta,
Georgia. Such arbitration shall be administered by the American Arbitration
Association ("AAA") in accordance with its then prevailing rules, by a panel of
three (3) independent and impartial arbitrators selected in accordance with such
rules (the "Panel"). Notwithstanding anything to the contrary provided in
Section 9.13 hereof, the arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. ss. 1 et seq. The fees and expenses of the AAA and the
Panel shall be shared equally by Purchaser and Seller and advanced by them from
time to time as required; provided that at the conclusion of the arbitration,
the Panel shall award costs and expenses (including the costs of the arbitration
previously advanced and the fees and expenses of attorneys, accountants and
other experts) to the prevailing party. No pre-arbitration discovery shall be
permitted, except that the Panel shall have the power in its sole discretion, on
application by any party, to order pre-arbitration examination solely of those
witnesses and documents that any other party intends to introduce in its
case-in-chief at the arbitration hearing. Purchaser and Seller shall instruct
the Panel to render its award within thirty (30) days following the conclusion
of the arbitration hearing. The Panel shall not be empowered to award to any
party equitable relief of any kind or any damages of the type not permitted to
be recovered under Section 7.7 of this Agreement in connection with any dispute
between or among the parties arising out of or relating in any way to this
Agreement or the transactions arising hereunder, and each party hereby
irrevocably waives any right to recover such damages. Notwithstanding anything
to the contrary provided in this Section 9.9 and without prejudice to the above
procedures, either party may apply to any court of competent jurisdiction for
temporary injunctive or other provisional judicial relief if such action is
necessary to avoid irreparable damage or to preserve the status quo until such
time as the Panel is selected and available to hear such party's request for
temporary relief. The award rendered by the Panel shall be final and not subject
to judicial review and judgment thereon may be entered in any court of competent
jurisdiction.
9.10 Incorporation of Schedules. All Schedules hereto are by this reference
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
9.11 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect
any of the provisions hereof.
9.12 Interpretation. The provisions of this Agreement are intended to be
interpreted and construed in a manner so as to make such provisions valid,
binding and enforceable. In the event that any provision of this Agreement is
determined to be partially or wholly invalid, illegal or unenforceable, then
such provision shall be deemed to be modified or restricted to the extent
necessary to make such provision valid, binding and enforceable, or, if such
provision cannot be modified or restricted in a manner so as to make such
provision valid, binding and enforceable, then such provision shall be deemed to
be excised from this Agreement and the validity, binding effect and
33
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any manner. Nothing in this Agreement shall be
interpreted or construed as creating, expressly or by implication, a
partnership, joint venture, agency relationship or employment relationship
between the parties hereto or any of their respective officers, directors,
agents, employees or representatives.
9.13 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Illinois applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
9.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
9.15 Jurisdiction; Agents for Service of Process. Subject to Section 9.9,
any judicial proceeding brought against any of the parties to this Agreement on
any dispute arising out of this Agreement or any matter related hereto shall be
brought in the District Court for the Northern District of Illinois, and, by
execution and delivery of this Agreement, each of the parties accepts the
exclusive jurisdiction of such court, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The foregoing
consents to jurisdiction shall not constitute general consents to jurisdiction
in the State of Illinois for any purpose except as provided above and shall not
be deemed to confer rights on any third party. The prevailing party or parties
in any such litigation shall be entitled to receive from the losing party or
parties all costs and expenses, including reasonable counsel fees, incurred by
the prevailing party or parties. Each party agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's address set
forth in Section 9.1 shall be effective service of process for any action, suit
or proceeding in Illinois with respect to any matters for which it has submitted
to jurisdiction pursuant to this Section 9.15.
9.16 Disclosure. Any matter set forth in any section of the Schedules shall
be deemed set forth in all other sections of the Schedules to the extent that
such matter could reasonably be responsive to such other sections of the
Schedules whether or not a specific cross-reference appears. The inclusion of
any information (including dollar amounts) in any section of the Schedules shall
not be deemed to be an admission or acknowledgment by the Seller that such
information is required to be listed in such section or is material to or
outside the ordinary course of the business of the Seller, nor shall such
information be deemed to establish a standard of materiality (and the actual
standard of materiality may be higher or lower than the matters disclosed by
such information). In addition, matters reflected in the Schedules are not
necessarily limited to matters required by this Agreement to be reflected in the
Schedules. Such additional matters are set forth for informational purposes only
and do not necessarily include other matters of a similar nature. The
information contained in this Agreement, the Schedules and Exhibits is disclosed
solely for purposes of this Agreement, and no information contained herein or
therein shall be deemed to be an admission by any party hereto to any Third
Party of any matter whatsoever (including any violation of applicable Law or
breach of contract).
9.17 Individuals. Each party agrees that each individual acting solely in
his or her capacity as an officer or employee of his or her respective
principal, which is a party hereto, will in no event be personally responsible
for acts taken reasonably believed to be taken within the scope of his/her
employment and each party covenants not to xxx any such individual for acts
reasonably believed to be taken within his/her employment.
9.18 Books and Records. The Purchaser agrees from and after the Closing to
and to cause the Purchaser Representatives to give Seller and the Seller
Representatives reasonable access, upon reasonable notice and during normal
business hours, to the offices and other facilities and to the books and records
34
of the Purchaser relating to the Business for periods prior to Closing,
provided, that such access shall not unreasonably disrupt the operations of the
Purchaser. Notwithstanding anything to the contrary contained in this Agreement,
the Purchaser will not be required to provide any information or access that it
reasonably believes could violate applicable Law or Purchaser's obligations to a
third party under any confidentiality agreement or cause forfeiture of
attorney/client privilege.
9.19 Cooperation. The Purchaser and Seller each acknowledge that after the
Closing each party will employ certain persons who have detailed and unique
knowledge of aspects of the other party's business including general accounting
issues with respect to pre-Closing periods, Closing matters and past, current
and future claims relating to claims and litigation described on Schedule 2.6,
and other litigation, arbitrations, investigations or mediations in which such
party or its Affiliates are now or hereafter will be engaged. Each party shall
cooperate with the other party in all reasonable respects in connection with
pre-Closing general accounting issues, Closing matters and the prosecution,
defense and resolution of any claim retained by such party, including making
records available relating to such claim and furnishing, to such party and/or
its counsel, such employees (without expense to the party to whom such employee
is being furnished); provided, however that any such cooperation shall not
unduly or unreasonably interrupt the operation of the business of either
Purchaser or Seller, as the case may be.
[Signature Pages to Follow]
35
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.
PURCHASER:
Peer 1 Acquisition Corporation
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
GUARANTOR:
Peer 1 Network Enterprises, Inc.
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
SELLER:
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
36
List of Schedules, Exhibits and Annexes
Schedules
---------
Schedule 1.1 List of Assets of the Business
Schedule 1.2(a) Assumed Liabilities
Schedule 1.4(b) Assets Owned by Seller Subsidiaries
Schedule 1.8(b) Cooperating Employees
Schedule 2.4 Consents
Schedule 2.5 Taxes
Schedule 2.6 Legal Proceedings
Schedule 2.7 Authorizations
Schedule 2.8 List of Plans
Schedule 2.9 Assets used by the Business that will not be Transferred
Schedule 2.10 Intellectual Property Rights
Schedule 2.11 Material Contracts
Schedule 2.12 Insurance Policies
Schedule 2.13 Financial Statements
Schedule 2.14 Accounts Receivable and Aging Report
Schedule 2.15 Condition of Tangible Assets
Schedule 2.16 Certain Affiliated Transactions
Schedule 2.17 Environmental Matters
Schedule 2.19 Employee Matters
Schedule 4.1(b) Further Actions; Consents
Schedule 4.7 Excluded Intellectual Property
Schedule 5.2 Offerees
Schedule 5.3 Certain Benefits
Schedule 8.1 Employees
Exhibits
--------
Exhibit A Escrow Agreement
Exhibit B Form of Transition Services Agreements
Exhibit C Rental Fund Escrow Agreement
Annexes
-------
Annex A Pro Forma Working Capital Calculation
37
DISCLOSURE SCHEDULES
Asset Purchase Agreement
Between
Interland, Inc.
And
Peer 1 Acquisition Corporation
August 31, 2005
LIST OF SCHEDULES
Schedule 1.1 List of Assets of the Business
Schedule 1.2 Assumed Liabilities
Schedule 1.4(b) Assets Owned by Seller Subsidiaries
Schedule 1.8(b) Post-Closing Employee Litigation Assistance
Schedule 2.4 Consents
Schedule 2.5 Taxes
Schedule 2.6 Legal Proceedings
Schedule 2.7 Legal Compliance - Authorizations
Schedule 2.8 List of Plans
Schedule 2.9 Liens
Schedule 2.10 Intellectual Property Rights
Schedule 2.11 Material Contracts
Schedule 2.12 Insurance Policies
Schedule 2.13 Financial Statements
Schedule 2.14 Accounts Receivable
Schedule 2.15 Condition of Tangible Assets
Schedule 2.16 Affiliate Transactions
Schedule 2.17 Environmental Matters
Schedule 2.19 Employee Matters
Schedule 2.20 Sufficiency of Assets
Schedule 4.1(b) Material Contract Consents
Schedule 4.7 Excluded Intellectual Property
Schedule 5.2 Offerees
Schedule 5.3 Certain Benefits
Schedule 8.1 Employees
SCHEDULE 1.2
ASSUMED LIABILITIES
ACCRUED
EXPENSES ($000)
----------------
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL OUTLOOK
-------- -------- ------- -------- ------- -------- ---------
GL ACCT VENDOR DESCRIPTION FEB-05 MAR-05 APR-05 MAY-05 JUN-05 JUL-05 AUG-05
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
Dedicated
22250 Accrued Commissions portion only 69 106 71 80 52 51 -
Accrued Compensated Dedicated
22300 Absences employees only 171 171 171 163 163 163 -
Accrued Personal
22600 Property Taxes Derick's help - - - - - - -
Accrued software
22730 licenses 232 203 200 204 199 197 -
Accrued Bandwidth
22740 Expense 79 79 79 79 79 79 -
22875 Accrued Advertising 236 293 289 300 195 100 -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
TOTAL 786 852 809 825 689 590 -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
22250 Accrued Commissions
---------------- ----------------------
Dedicated Spiffs
Moved to
Spiffs Commissions - - - - - -
Dedicated Sales
Dedicated Sales Reps Force 61 95 63 73 46 41
Dedicated
Dedicated Mgmnt Management 8 12 8 7 7 9
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
69 106 71 80 52 51 -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
Accrued software
22730 licenses
---------------- ----------------------
Ensim 24 - 2 3 2 3
SW Soft / Plesk 8 - - - - -
Microsoft 188 189 183 186 182 179
Red Hat Enterprise 12 14 15 15 15 15
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
TOTAL 232 203 200 204 199 197 -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
Accrued Bandwidth
22740 Expense
---------------- ----------------------
AT&T 39 39 39 39 39 39
BellSouth - - - - - -
Quest Communications 40 40 40 40 40 40
SBC - - - - - -
Switch and Data - - - - - -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
TOTAL 79 79 79 79 79 79 -
---------------- ---------------------- ------------------ -------- -------- ------- -------- ------- -------- ---------
SCHEDULE 2.4
CONSENTS
Material Contracts:
Lease dated July 15, 1999, as amended, between Limar Realty Corp. #24, a
California corporation, as Landlord, and Maxim Computer Systems, a California
corporation, as Tenant, with respect to certain premises more specifically
described therein and located at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000.
Lease dated June 2, 2000, as amended, between Hill Properties LLC, an Illinois
limited liability company, as Landlord, and iNNERHOST, Inc., a Florida
corporation, as Tenant, with respect to certain premises more specifically
described therein and located at 0000 X.X. 00xx Xxxxx, Xxxxx, Xxxxxxx 00000.
SCHEDULE 2.5
TAXES
In June 2005, the Georgia Department of Revenue ("GDOR") initiated a Georgia
Corporate Income Tax audit for tax years 8/01 - 8/03 and such audit is currently
ongoing. As of the Closing Date, the GDOR has made no audit findings and
consequently no adjustments are currently required for Georgia corporate income
tax purposes.
Seller has been notified by the applicable taxing authority in Georgia that it
plans to conduct a Georgia Unclaimed Property Tax audit, which will commence in
November 2005.
SCHEDULE 2.6
LEGAL PROCEEDINGS
This Schedule 2.6 incorporates by reference all of the legal proceedings listed
in Part II, Item 1 Legal Proceedings of the Interland, Inc. Form 10-Q, filed
with the United States Securities and Exchange Commission dated May 31, 2005
attached hereto.
This Schedule 2.6 incorporates by reference all of the Claims identified in
Schedule 2.10.
PART II
Item 1. Legal Proceedings
Interland is defending a case entitled Novell, Inc. v. Micron Electronics,
Inc. filed in August 1999 in state court in Utah County, Utah. Novell
claims that it was underpaid for royalties on sales of several versions of
its NetWare software purportedly distributed by Interland's predecessor,
Micron Electronics, between 1996 and 1998. In addition, Novell also
believes it is entitled to additional royalties for sales of the software
purportedly distributed by NetFrame between 1993 and 1997. Micron
Electronics acquired NetFrame in 1997. Novell is seeking an accounting of
royalties and damages. Interland believes it has meritorious defenses to
Novell's claims. The litigation is still in the discovery phase.
In February 2004, the Company, through its Hostcentric subsidiary,
initiated a lawsuit in United States District Court for Southern District
of New York against the landlord for that subsidiary's Farmingdale, New
York facility. The Company sought a declaratory judgment that the landlord
had acquiesced in Hostcentric's abandonment of the lease. The landlord
filed counterclaims. In late 2004, the Company believes that it and the
landlord reached an agreement to settle the litigation under which
Interland would pay approximately $755,000 in cash and allow the landlord
to keep the deposit of approximately $60,000 as full settlement of all of
the landlord's claims. Because Interland believes the landlord subsequently
reneged on a legally-binding settlement agreement, Interland petitioned the
court to enforce the settlement agreement. In a written report and
recommendation entered on June 9, 2005 the magistrate judge in that action
found in favor of Interland, stating that the settlement agreement should
be enforced by the court. The district court may accept, reject, or modify
the proposed findings or recommendations of the magistrate judge, and even
if the district court adopts the report and recommendation of the
magistrate judge, the order of the district court will be subject to an
appeal to the court of appeals. Accordingly, there can be no assurance that
the district court will adopt the magistrate judge's report and
recommendation, or that the district court's ruling, when and if one is
issued, will be upheld on appeal. Nevertheless, Interland believes that it
is probable that the settlement will be upheld, and therefore, based on its
current estimates, the Company adjusted its reserves, resulting in a
contribution to pre-tax income in the third fiscal quarter of 2005 of $0.2
million.
In February 2004, the Company initiated a lawsuit in the United States
District Court for the Northern District of Georgia against the
representatives of the former shareholders of Hostcentric (the "Hostcentric
Shareholders"), seeking a declaratory judgment that it will be entitled to
reimbursement from the escrow fund established as part of the Hostcentric
acquisition for any amounts over $180,000 that it may be required to pay to
the landlord for the leased facility in Farmingdale, New York, in
accordance with the acquisition agreement between the Company and
Hostcentric and its shareholders. The representatives of the Hostcentric
Shareholders denied Interland's claims and asserted various counterclaims.
The Company has, in turn, brought additional claims based on facts learned
in discovery. Correspondence between the parties has also discussed the
possibility of other claims, but those claims had not yet been added to the
litigation. In June 2005, the parties reached an agreement in principle to
settle this case in which the Hostcentric Shareholders would pay Interland
$545,000 in cash in settlement of all claims and counterclaims, and the
parties would agree to full, complete releases of all claims or potential
claims as well as a dismissal with prejudice of all pending claims and
counterclaims and Interland would agree to release the balance of the
escrow funds. The parties have notified the district court of their
settlement in principle, and the district court has stayed further
proceedings in the case until July 5, 2005. The Company will record the
results of this settlement upon final execution of the settlement
agreement, which is expected to occur in the fourth quarter.
In February of 2003, the Company filed a lawsuit in Xxxx County, Georgia
against Xx. Xxxxxxx Xxxxxx, one of the former principals of Interland's
subsidiary, XxxxxxxXxxx.Xxx, Inc. ("Communitech"), which was acquired by
Interland in February 2002. The Company's lawsuit claims, among other
things, that Xx. Xxxxxx breached certain covenants under his employment
agreement and also demands payment of two promissory notes made by Xx.
Xxxxxx (one of which was "non-recourse" while the other was "recourse"). In
March 2004, Interland foreclosed upon and retired the 273,526 shares of
stock held as collateral and wrote off the $2,000,000 non-recourse
promissory note, which had been carried as Stockholders' Equity. The other
$735,000 full recourse promissory note (also carried as Stockholders'
Equity) remains outstanding and continues to be a subject of the Xxxx
County litigation. Xx. Xxxxxx has asserted various counterclaims in
response.
In February 2003, Xx. Xxxxxxx, also a former principal of Interland's
subsidiary Communitech, and Xx. Xxxxxx filed a lawsuit against Interland,
its Chief Executive Officer, Xx. Xxxx Xxxxxx, and Communitech, in Xxxxxxx
County, Missouri claiming, among other things, that Interland acted
unreasonably and thereby breached the Merger Agreement under which
Interland acquired all of the stock of Communitech by failing to have the
S-3 registration statement declared effective by the SEC on a timely basis
and further claiming that Interland and/or Xx. Xxxxxx made inaccurate
disclosures in connection with Interland's acquisition of Communitech. The
complaint seeks compensatory and punitive damages in an unspecified amount.
Interland believes that these claims are without merit and will not have a
material adverse effect on Interland and is vigorously defending the
claims.
Interland is defending another case in Xxxxxxx County, Missouri arising out
of the shutdown of five unregistered servers at the Communitech data center
in February 2003. An entity called Bent Axis and its principal Xxxxx Xxxx,
a former employee of Communitech, have filed suit against the Company and
its General Counsel, Xxxxxxxx Xxxxxx, alleging a variety of contract and
tort claims. In its first complaint, Plaintiffs asserted that they owned
the five servers in question. They later amended their pleading to assert a
different theory: that Bent Axis was using the servers by permission of
certain Interland personnel including Xxxxxxx Xxxxxx. Plaintiffs claim that
they were damaged when the Company disconnected the servers in question. To
date Plaintiffs have produced no documentary evidence that Bent Axis ever
generated a profit (a requirement for the recovery of damages) or that it
had any legal right to the free use of the servers in competition with
Interland. The Company is vigorously defending the suit and believes that
it will not have a material adverse effect on Interland.
Interland is the defendant in a case involving the Telephone Consumer
Protection Act ("TCPA") in state court in Allegheny County, Pennsylvania. A
competing web hosting company, PairNetworks, filed this case in December
2001 as a putative class action, claiming that Interland's distribution of
a facsimile on November 15, 2001 to market domain name registration
services violated the TCPA. Several years later, two additional plaintiffs
joined in the action. The plaintiffs have conceded that all of the putative
class members were customers of Interland. Federal Communications
Commission regulations in effect at the time provided that the distribution
of facsimiles to persons with whom the sender had an "established business
relationship" did not amount to a violation of the TCPA. Interland has
asked the court to deny class certification and a ruling on that motion is
pending along with a motion for summary judgment seeking dismissal of the
named plaintiffs' claims. If the court denies class certification,
Interland's damages, even were it were liable, cannot exceed $1,500 for
each of the three named plaintiffs. Interland believes that the plaintiffs'
claims are without merit, plans to continue to contest the matter
vigorously and believes that no material adverse effect on Interland will
occur as a result of this litigation. Conversely, if the class is
certified, its size may exceed 50,000.
The Company is defending a case in The United States District Court for the
Southern District of Florida arising out of the management of a co-located
server by its predecessor company, Worldwide Internet Publishing
Corporation. The suit alleges that the Company is responsible for the loss
of Plaintiff's internet search engine that occurred after the resignation
of the officer managing the server, Xxxx Xxxxxx, in October 1999. Interland
believes it followed the instructions of Xx. Xxxxxx, and, among other
reasons, Interland consequently believes the plaintiff's claims are without
merit, and plans to continue to contest the matter vigorously. The Company
believes that no material adverse effect on Interland will occur as a
result of this litigation.
On January 23, 2004, Xxxxxxx Xxxxxxx, an individual, sued Interland and its
predecessor HostPro claiming that he was entitled to money as a result of
his alleged involvement in brokering Interland's acquisition of accounts
from AT&T in January 2002. The case is pending in state court in Los
Angeles. The Plaintiff claims that he is due 20% of the revenue that
Interland has received from the acquired accounts. Interland believes it
has meritorious defenses, including that HostPro's contract with Xx.
Xxxxxxx specifically excludes compensation for the very sort of transaction
on which he is seeking to be paid a fee. Interland believes the plaintiff's
claims are without merit, plans to continue to contest the matter
vigorously, and believes that no material adverse effect on Interland will
occur as a result of this litigation.
In May 2004, Interland was served with a suit filed by Net Global Marketing
against Interland and its predecessor, Dialtone, asserting claims for lost
data. Interland had cancelled Net Global's web hosting accounts in October
2002 and again in January 2003 as a result of complaints that the servers
were being used to send spam, and Interland has asserted counterclaims
arising from these incidents. Interland filed a motion to dismiss in favor
of arbitration which was denied, and Interland has appealed that decision
to the Ninth Circuit Court of Appeals. Interland believes that, even if the
litigation proceeds, it has adequate defenses including provisions in the
contract with the plaintiff that shield Dialtone from damages for "erasure"
and "loss of data" and generally prohibit recovery of the kind of damages
sought by plaintiff. Interland believes that the plaintiff's claims are
without merit, plans to continue to contest the matter vigorously and
believes that no material adverse effect on Interland will occur as a
result of this litigation.
Periodically, the Company is made aware that technology it has used may
have infringed on intellectual property rights held by others. The Company
evaluates all such claims and, if necessary and appropriate, obtains
licenses for the use of such technology. If the Company or its suppliers
are unable to obtain licenses necessary to use intellectual property in the
applicable products or processes, it may be forced to defend legal actions
taken against it relating to allegedly protected technology. The Company
evaluates all such claims and accrues a liability for the estimated costs
of settlement or adjudication of claims for alleged infringement as of the
respective dates of the balance sheets included in this report.
The Company is also a defendant in a number of other lawsuits seeking
lesser amounts, and which the Company regards as unlikely to result in any
material payment. The outcome of litigation may not be assured, and despite
management's views of the merits of any litigation, or the reasonableness
of its estimates and reserves, the Company's cash balances could
nonetheless be materially affected by an adverse judgment. In accordance
with SFAS No. 5 "Accounting for Contingencies," the Company believes it has
adequately reserved for the contingencies arising from the above legal
matters where an outcome was deemed to be probable and the loss amount
could be reasonably estimated. As such, the Company does not believe that
the anticipated outcome of the aforementioned proceedings will have a
materially adverse impact on its results of operations, its financial
condition or its cash flows.
SCHEDULE 2.7
LEGAL COMPLIANCE - AUTHORIZATIONS
--------------- ---------------------------------------- ----------------------- ------------------------------------
LOCATION DOCUMENT / PERMIT ASSIGNED ID AGENCY
--------------- ---------------------------------------- ----------------------- ------------------------------------
Atlanta Diesel Fuel Storage Tank Registration 003404 City of Atlanta Fire Dept
--------------- ---------------------------------------- ----------------------- ------------------------------------
Spill Pervention, Control &
Atlanta Countermeasures Plan (SPCC) Street Address Code of Fed Reg. (40 CFR 112)
--------------- ---------------------------------------- ----------------------- ------------------------------------
Hazardous Substances Registration State Emergency Response
Atlanta (Tier Two) Street Address Commission (SERC)
--------------- ---------------------------------------- ----------------------- ------------------------------------
--------------- ---------------------------------------- ----------------------- ------------------------------------
Hazardous Substances Registration
Fremont (CUPA) Street Address City of Fremont Fire Dept
--------------- ---------------------------------------- ----------------------- ------------------------------------
--------------- ---------------------------------------- ----------------------- ------------------------------------
Miami Diesel Fuel Storage Tank Registration 9803785 Dept of Enviroment Protection
--------------- ---------------------------------------- ----------------------- ------------------------------------
Certification of Financial
Miami Resprosibility (Spill Insurance) 9803785 Dept of Enviroment Resource Mgmt
--------------- ---------------------------------------- ----------------------- ------------------------------------
Miami Passenger Elevator Inspection EL-0643 Dade Elevator Inspections
--------------- ---------------------------------------- ----------------------- ------------------------------------
Miami Permanent Certificate of Occupancy 3530330070190 Miami-Dade Building Department
--------------- ---------------------------------------- ----------------------- ------------------------------------
Spill Pervention, Control &
Miami Countermeasures Plan (SPCC) Street Address Code of Fed Reg. (40 CFR 112)
--------------- ---------------------------------------- ----------------------- ------------------------------------
State Emergency Response
Miami Hazardous Substances Registration Street Address Commission (SERC)
--------------- ---------------------------------------- ----------------------- ------------------------------------
--------------- ---------------------
LOCATION RENEWAL
--------------- ---------------------
Atlanta Annual-June
--------------- ---------------------
Atlanta W/Site Changes
--------------- ---------------------
Atlanta Annual-March
--------------- ---------------------
--------------- ---------------------
Fremont Annual-March
--------------- ---------------------
--------------- ---------------------
Miami Annual-June
--------------- ---------------------
Miami Annual-June
--------------- ---------------------
Miami Annual-April
--------------- ---------------------
Miami W/Site Changes
--------------- ---------------------
Miami W/Site Changes
--------------- ---------------------
Miami Annual-March
--------------- ---------------------
SCHEDULE 2.8
LIST OF PLANS
1. Humana Health Plan
2. Humana Dental Plan
3. VSP Vision Plan
4. Cafeteria (125) Plan
5. Health Flexible Spending Account Plan
6. Dependent Care Flexible Spending Account Plan
7. Hartford Life Insurance and Accidental Death and Dismemberment Plan
8. UNUM Voluntary Life Insurance and Accidental Death and Dismemberment Plan
9. Hartford Long and Short Term Disability Plans
10. Fidelity 401(k) Plan
11. EAP Consultants Employee Assistance Plan
12. Employee Stock Purchase Plan
13. Employee Stock Option Plan
14. Severance Plan
15. Welfare Benefits Plan (Form 5500 "Wrap" Plan)
16. College Assistance Program
17. Employee Web Hosting Accounts Program
18. Paid Time Off Program (vacation, sick time, and personal time)
19. Leave Program (FMLA, personal, bereavement, jury duty, and military leaves
of absence)
20. Flexible Work Arrangement Program
21. Telecommuting Program
22. Monthly XXXXX Card Program
23. Parking / Transportation Reimbursement Program
24. Guaranteed Ride Home Program
Seller also has a commission plan and an executive bonus plan, which plan will
not be transferred to Purchaser.
Seller makes no representation or warranty about any Plans that were acquired in
connection with any acquisition that were terminated by Seller or merged with
one of the Plans listed above following such acquisition.
SCHEDULE 2.9
LIENS
None.
SCHEDULE 2.10
INTELLECTUAL PROPERTY CLAIMS
On or about December 19, 2003 Seller received a letter from SCO Systems alleging
that SCO Systems owned certain intellectual property rights in certain versions
of the Linux operating system and that Seller may have been operating computers
that used the indicated versions of the Linux operating system. SCO Systems sent
several additional letters making similar claims in the first few months of
2004. Contemporaneous reports in the public media indicated that SCO Systems had
sent nearly identical form letters to more than one thousand companies in the
U.S. making substantially the same allegation. Seller did not provide SCO
Systems a written response and has received no further written communications
from SCO Systems since April 2004.
From time to time third parties deliver to Seller, both orally and in writing,
various claims (each, a "Claim") that purport to allege that some aspect of
Seller's business violates applicable law or some other right of the claimant,
or that certain of Seller's customers may be violating applicable law or some
other right of the claimant and that such violation amounts to a violation on
the part of Seller. Seller maintains internal communication and control systems
to ensure that such Claims are handled in a manner that mitigates Seller's
liability and in a manner intended to notify Seller's senior management in the
event of a Claim that might reasonably be expected to be significant.
As of the Closing Date, Seller's senior management is not aware of any such
Claim involving or pertaining to the Assets or the Business which it expects to
be significant.
The Intellectual Property Assets set forth in Schedules 1.1(a)(ix), 1.1(b)(i)
and 1.1(b)(ii) are hereby incorporated into this Schedule 2.10 by reference.
SCHEDULE 2.17
ENVIRONMENTAL MATTERS
Prior to 2005, the Seller made no regulatory filings or prepared any spill plans
with regard to the storage of fuel in above-ground storage tanks or the presence
of lead-acid batteries at its facilities.
Seller has recently prepared all spill preparations and countermeasure control
plans required for its above-ground storage tanks. In 2005, Seller made all
filings required under ss.311 of the Emergency Planning and Community Right to
Know Act ("EPCRA"), 42 U.S.C. ss.11021.
SCHEDULE 4.1(B)
MATERLIAL CONTRACT CONSENTS
Lease dated July 15, 1999, as amended, between Limar Realty Corp. #24, a
California corporation, as Landlord, and Maxim Computer Systems, a California
corporation, as Tenant, with respect to certain premises more specifically
described therein and located at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000.
Lease dated June 2, 2000, as amended, between Hill Properties LLC, an Illinois
limited liability company, as Landlord, and iNNERHOST, Inc., a Florida
corporation, as Tenant, with respect to certain premises more specifically
described therein and located at 0000 X.X. 00xx Xxxxx, Xxxxx, Xxxxxxx 00000.
SCHEDULE 4.7
EXCLUDED INTELLECTUAL PROPERTY
Urchin
Microsoft
Red Hat
EXHIBIT B
EXECUTION COPY
PEER 1 NETWORK SERVICES AGREEMENT
This Peer 1 Network Services Agreement (the "Agreement") is entered into,
by and between Interland, Inc., ("Customer"), a Minnesota corporation and Peer 1
Acquisition Corporation, a Delaware corporation ("Provider"). Provider and
Customer may each be referred to individually as a "Party" or collectively
referred to as "Parties."
RECITALS
A. Customer has sold, assigned and delivered to Purchaser, its successors
and assigns, substantially all of the assets related to the Business pursuant to
that certain Asset Purchase Agreement, dated as of August 31, 2005, between
Provider and Customer (the "Purchase Agreement").
B. This Agreement is entered into pursuant to the Purchase Agreement.
C. Capitalized terms not otherwise defined in this Agreement will have the
meanings assigned to them in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Interland and Purchaser hereby
agree as follows:
1. Scope of Agreement. This Agreement governs Customer's (including any of its
Affiliates) purchase and use, in any manner, of the services provided by
Provider as described below. This Agreement includes the schedules, and the
Acceptable Use Policy attached hereto as Schedule 1A, the Privacy Policy
attached hereto as Schedule 1B , the Service Level Agreement attached hereto as
Schedule 1C, and the Globals Procedure attached hereto as Schedule 1D
(collectively, the "Provider Policies"), which are hereby incorporated by
reference.
2. Scope of Service.
2.1 Network Services. During the Term (as defined below), Provider will
manage all hardware, software, contracts, and vendor relationships required to
ensure Customer's equipment located in the Facilities is accessible from the
Internet (the "Network Services"). Customer acknowledges and agrees that
Provider, in its sole discretion, may utilize subcontractors and third party
providers to provide the Network Services.
2.2 Service Changes or Additions. Any changes to the scope of Network
Services must be mutually agreed upon in writing by the Parties. The Parties
acknowledge that a change in the scope of Network Services may result in
additional fees
being imposed on the Customer, and Customer shall accept responsibility for any
such additional fees through a mutually agreed upon amendment by the Parties to
Schedule 2.3 hereto.
2.3 Fees. During each calendar month of the Term, the parties agree pay the
fees as set forth in Schedule 2.3.
3. Warranties and Obligations.
3.1 Warranties. Each Party warrants that neither the execution and delivery
of this Agreement nor the performance of its obligations hereunder will
constitute a violation of, be in conflict with, or constitute a default under,
any agreement or commitment to which it is bound, or any judgment, decree,
order, regulation, or rule of any court or governmental authority or any statute
or law.
3.2 Financial Responsibility. Customer warrants that it will be financially
responsible for the use of its account. Customer is responsible for payment of
the total amounts due to Provider regardless of whether Customer is paid by its
customers.
4. Term and Termination.
4.1 Term. The Agreement will take effect on the Termination Date, as
defined in the Interland Network Services Agreement and shall terminate on the
same date as the Collocation Services Agreement, unless terminated earlier
pursuant to this Section 4.
4.2 Termination. In the event of any non-monetary breach under this
Agreement by Provider or Customer, and except as outlined in the Schedules
attached hereto, the nonbreaching party will provide written notice to the other
party setting forth in reasonable detail the nature and extent of the breach.
The breaching party will then have a period of thirty (30) days in which to cure
such non-monetary breach, provided that the breaching party diligently pursues
such cure during such thirty (30) day period, and such thirty (30) day period
will be extended if necessary to implement the cure provided that the breaching
party diligently pursues such cure during any such extension period. In the
event of a monetary breach under this Agreement that is not being disputed in
accordance with Section 12(j) hereof, if the breaching party has not cured such
breach within five (5) business days after written notice of such breach is
given to the breaching party, the breaching party shall be in default hereunder
and the other party shall be entitled to terminate this Agreement immediately
upon notice to the breaching party. Provider shall have the right to terminate
this Agreement, or at its option its provision of any Service, in the event that
any amounts owed to it pursuant to this Agreement are not paid when due, giving
effect to the cure period set forth in Section 2(b) hereof, or in the event
Customer has breached any of the other provisions of this Agreement and has
failed to cure such breach in accordance with the terms hereof.
4.3 Termination by Provider for Financial Condition of Customer. Upon
notice to Customer, Provider may terminate this Agreement if Customer shall file
an involuntary petition in bankruptcy or similar proceeding seeking its
reorganization, liquidation or the appointment of a receiver, trustee or
liquidator for it or for all or substantially all of its assets, whereupon such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or if Customer shall (i) apply for or consent in writing to the appointment of a
receiver, trustee or liquidator of all or substantially all of its assets, (ii)
file a voluntary petition or admit in writing its inability to pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or an answer seeking reorganization or an arrangement with
its creditors or take advantage of any insolvency law with respect to itself as
debtor, or (v) file an answer admitting the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency proceedings or
any similar proceedings.
4.4 Termination for Breach of Transition Agreements. Either party may
immediately terminate this Agreement by giving written notice thereof to the
other party hereto if (i) such other party has breached the terms of any of the
other Transition Agreements and has failed to cure such breach in accordance
with the terms thereof, and (ii) the notice of default given in connection with
such other Transition Agreement expressly states the intention, upon the failure
to cure such default, to so terminate this Agreement.
4.5 Suspension or Termination by Provider. (a) Provider may suspend or
terminate the Network Services or this Agreement upon providing written notice
to Customer: (i) if the provision of Network Services may cause Provider to
violate any law, rule, regulation or governmental code, order or policy ("Law");
(ii) if any change in applicable Law that, in any way, prohibits the provision
of, or requires alteration of the Network Services provided hereunder; or (iii)
any cessation of a third-party subcontractor or vendor relationship with
Provider or discontinuance of equipment or a component of Network Services
necessary to continue the provision of such, except that Provider will use
commercially reasonable efforts to continue to provide comparable Network
Services, component of the Network Services or equipment through another vendor
under comparable terms and conditions.
4.6 Effect of Termination. Termination of the Agreement will not relieve
Customer of any obligations to pay fees and costs accrued prior to the
Termination Date and, except if terminated by Customer pursuant to Section
4.2(a), all fees and costs that would be owed for the remainder of the Term.
Upon the expiration or termination of this Agreement, (a) Customer will
immediately cease using the Network Services; (b) any and all payment
obligations of Customer under this Agreement will become due immediately; (c)
all licenses and rights granted under this Agreement will terminate immediately.
5. Payment for Network Services
5.1 Charges. Customer will be responsible for the payment of all federal,
state, and local sales, use, value added, excise, duty and any other taxes
assessed with respect to the Network Services, other than taxes based on
Provider's net income.
5.2 Payment. Provider will invoice Customer in advance for all charges
hereunder. Payment for all recurring monthly fees, charges and expenses will be
due and payable on or prior to the first day of the month for which such Network
Services will be provided. In the event Customer disputes any billing by
Provider, Customer shall notify Provider in writing, such notice shall include
the amount disputed and an explanation for the dispute. Customer may withhold
payment of the amount in dispute, provided that Customer must pay a minimum an
amount equal to the average of the previous three (3) months' invoices within
the payment period specified above. The parties will cooperate in good faith to
resolve any such disputes within a thirty (30) day period after the dispute is
submitted to Provider. If the dispute is not resolved during this period, then
either party may seek resolution of the dispute in accordance with Sections 9.9
and 9.15 of the Purchase Agreement. Any payment not received by the applicable
due date will accrue interest at a rate of the lesser of one and one-half per
cent (1.5%) per month or the maximum allowable under applicable law. In
addition, Customer's failure to fully pay any undisputed charges and expenses
within five (5) business days of Provider's providing notice to customer of such
delinquency, will justify Provider's suspension of its performance of the
Network Services and/or termination of the Agreement pursuant to Section 4.2 of
this Agreement. Subject to the terms set forth in the preceding sentence,
Provider may, without prejudice to any other remedy or right it may have,
suspend delivery of the Network Services to Customer until such failure is
cured. Any such suspension or termination would not relieve Customer from paying
any fees due plus interest. In the event of collection enforcement, Customer
will be liable for any costs associated with such collection, including, without
limitation, reasonable attorneys' fees, court costs and collection agency fees.
5.3 Disclosure Rights. If legally compelled to disclose pursuant to court
order, judicial process, or as otherwise required by law, Provider may access
and, to the extent required disclose any requested information. Provider also
reserves the right to report any activity that it reasonably suspects violates
any law or regulation or the intellectual property rights of third parties to
appropriate law enforcement officials, regulators, or such third parties.
6. Intellectual Property Rights. Intellectual property rights in all software,
information, technology or data whatsoever supplied or made available by
Provider under this Agreement ("Intellectual Property Rights") will remain the
property of Provider or its vendors, as applicable. Except as expressly set
forth herein, Provider does not grant Customer any license, sublicense or other
right in or to such Intellectual Property Rights.
7. Force Majeure.
7.1 Provider shall not be responsible for the failure or delay in
performance hereunder if Provider is prevented from complying herewith due to
any law or governmental order, act of God, act of civil or military authority,
rebellion, riot, insurrection, acts of terrorism, quarantine, civil disturbance,
war, fire, flood, epidemic, embargo, shortage or unavailability of supplies,
strikes and labor interruption, accident, fire or other catastrophes or similar
events which are beyond its reasonable control (each, a "Force Majeure Event")
7.2 Upon the occurrence of a Force Majeure Event, Provider shall
promptly give notice to Customer of the occurrence or circumstance upon which it
intends to rely to excuse its performance. The duties and obligations of the
parties hereunder shall be suspended for the duration of the Force Majeure Event
and Provider shall resume the performance of its obligations hereunder as soon
as reasonably practicable after removal of the Force Majeure Event.
8. Limitation of Liability; Indemnification.
8.1 Notwithstanding anything to the contrary contained herein, in no event
will Provider, or any of its officers, directors, employees, shareholders or
representatives (collectively, "Provider Parties") be liable for any punitive,
special, incidental or consequential damages, including lost profits, in any way
relating to this Agreement or the Network Services provided hereunder.
8.2 As to any claim by Customer with respect to the Network Services, in no
event will the Provider Parties have any liability for any damages to Customer,
except for claims of gross negligence or willful misconduct on the part of any
of the Provider Parties.
8.3 Customer agrees to indemnify and hold the Provider Parties harmless
from and against any claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) arising from any claim by a third party in
connection with the Network Services provided by Provider to Customer pursuant
to this Agreement, other than claims of gross negligence or willful misconduct
on the part of any of the Provider Parties.
8.4 The parties agree that the limitations of liability and indemnification
set forth in this section shall survive and continue in full force and effect
despite any termination or expiration of this Agreement, and are independent of
Article 7 of the Purchase Agreement.
8.5 Each party agrees that each individual acting solely in his or her
capacity as an officer or employee of his or her respective principal, which is
a party hereto, will in no event be personally responsible for acts reasonably
believed to be taken within the scope of his/her employment and each party
covenants not to xxx any such individual for acts reasonably believed to be
taken within his/her employment.
9. Confidentiality.
9.1 The parties each agree that all Confidential Information communicated
to it by the other has been communicated in confidence and will be used only for
the purposes of this Agreement. Each party agrees to disclose such Confidential
Information only to those directors, officers, employees or consultants who have
a need to access the other party's Confidential Information for the purposes of
this Agreement, and each party will not use the other party's Confidential
Information to compete with such other party and will not disclose such
Confidential Information to any third party without the prior written consent of
the other party except as permitted under this Agreement. Exceptions to
Confidential Information include (a) information in the public domain, (b)
information known to a party prior to the time of disclosure by the disclosing
party or information developed independently by a party without reference to
information disclosed under this Agreement, or (c) information received from a
third party without restriction and/or breach of this Agreement or a similar
agreement. It will not be a violation of this provision to disclose Confidential
Information in compliance with any legal, accounting or regulatory requirement
beyond the control of either party. Upon the termination of this Agreement and
upon written request of the disclosing party, each party will promptly return
all Confidential Information of the other party. This provision will survive the
termination of this Agreement for two (2) years.
9.2 The parties to this Agreement understand and agree that the terms and
conditions of this Agreement and all documents referenced herein (including
invoices provided pursuant to this Agreement) are confidential as between
Provider, Customer and each party's affiliates and will not be disclosed by
either party to any party other than the directors, officers, employees, agents
and financial investors (conducting due diligence) of such party who have a need
to know such information, except as may be required by law or a court of
competent jurisdiction. Notwithstanding the foregoing, each party may provide an
original or a copy of this Agreement to investors and potential investors who
have a need to know in connection with such disclosing party's capital raising
transaction and to other parties who have a need to know with respect to other
major corporate transactions of such disclosing party provided the parties
receiving such information are bound by confidentiality restrictions no less
strict than those contained herein.
10. Miscellaneous Provisions.
10.1 Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations among the
parties regarding the subject matter of this Agreement, except for the Purchase
Agreement insofar as it is applicable hereto.
10.2 Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing sent via first-class, postage prepaid, registered
or certified mail (return receipt requested), or by overnight delivery service
or facsimile transmission addressed as follows:
If to Customer:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, LLP 000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Provider:
Peer 1 Network Enterprises, Inc.
Suite 1600
555 West Hastings Street
Vancouver, British Columbia
Canada V6B 4NS
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
A party may change the address to which the communications are to be directed to
it by giving notice to the other party in the manner provided in this Section.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, receipt of which is acknowledged by non-automatic
means, be deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt.
10.3 Transfer and Assignment; Successors. Without the other party's written
consent, which consent shall not be unreasonably withheld, this Agreement and
the rights and obligations hereunder will not be assignable by any party,
including, without limitation, by means of the merger, consolidation or other
reorganization of such party, or the sale of all or substantially all of the
assets or the sale or transfer of greater than a majority of the capital stock
or other equity interests of such party. This Agreement will be binding upon,
and inure to the benefit of, the respective successors and permitted assigns of
each of the parties hereto.
10.4 Headings. The headings in this Agreement are for reference purposes
only and will not in any way affect the meaning or interpretation of this
Agreement.
10.5 Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Georgia, without giving effect to the
conflict of laws principles thereof.
10.6 Amendments. This Agreement cannot be terminated, altered or amended
except pursuant to an instrument in writing signed by the parties hereto.
10.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
10.8 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties hereto and nothing herein expressed or implied shall give or be
construed to give to any person or entity, other than the parties hereto and
their respective successors and permitted assigns, any legal or equitable rights
hereunder.
10.9 Waiver. The terms of this Agreement may be waived only by a written
instrument signed by the party or parties waiving compliance. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise provided. No delay on the part
of any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
10.10 Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved pursuant to Sections 9.9 and 9.15 of the Purchase
Agreement.
[Signature pages to follow]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
PEER 1 ACQUISITION CORPORATION
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
Attachments
Schedule 1A Acceptable Use Policy and Privacy Policy
Schedule 1B Privacy Policy
Schedule 1C Service Level Agreement
Schedule 1D Globals Procedure
Schedule 2.3 Fees
EXECUTION COPY
SERVER SUPPORT AGREEMENT
THIS SERVER SUPPORT AGREEMENT (this "Agreement") is entered into as of
August 31, 2005, between Peer 1 Acquisition Corporation, a Delaware corporation,
("Peer 1") and Interland, Inc., a Minnesota corporation ("Interland").
RECITALS:
WHEREAS, Interland and Peer 1 have entered into that certain Asset Purchase
Agreement dated August 31, 2005 between Peer 1 and Interland (the "Purchase
Agreement"), under which all of the assets owned or operated by Interland and
used exclusively in the operation of the Business were sold to Peer 1 as of the
date hereof (the "Sale"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Purchase Agreement or the
Collocation Services Agreement dated August 31, 2005 between Peer 1 and
Interland (the "Collocation Services Agreement"), as applicable. (For purposes
of this Agreement, capitalized terms not otherwise defined in this Agreement
will have the meanings assigned to them in the Purchase Agreement);
WHEREAS, the equipment not purchased by Peer 1 and listed on Exhibit A
attached hereto (the "Legacy Equipment") continues to be owned and operated by
Interland and used in providing the Shared Hosting Services and certain
corporate services to Interland, and is located and operating at the Atlanta
data center at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx outside of the Customer
Space, as defined below, (the "Atlanta Facility"), the Miami data center at 0000
X.X. 00xx Xx, Xxxxx, XX 00000 (the "Miami Facility"), and the Fremont data
center at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "Fremont Facility"). (For
the purposes of this Agreement, the Miami Facility, the Atlanta Facility and the
Fremont Facility are sometimes referred to collectively as the "Facilities");
WHEREAS, Peer 1 will operate the Facilities as of the Sale and Interland
will become a collocation customer of Peer 1 in a portion of the Atlanta
Facility described in the Collocation Services Agreement (the "Customer Space");
WHEREAS, the Legacy Equipment located in the Atlanta Facility, which is not
located in the Customer Space, is currently intermingled with the Business
equipment in the portion of the Atlanta Facility other than the Customer Space
(the "Atlanta Peer 1 Space"). (For the purposes of this Agreement only, the
Miami Facility, the Fremont Facility and the Atlanta Peer 1 Space are referred
to collectively as the "Supported Equipment Space");
WHEREAS, Peer 1 is willing to provide the Services, as defined below, to
Interland in order to support the Legacy Equipment and the Interland managed
network hardware listed on Exhibit B attached hereto, and the Interland internal
support servers used solely for the Shared Hosting Services listed on Exhibit C
attached hereto, all located in the Supported Equipment Space (collectively, the
"Supported Equipment"), according to the terms and conditions contained in this
Agreement; and
WHEREAS, Interland intends prior to August 31, 2006, to either remove the
Supported Equipment, from the Atlanta Facility, to entered into an additional
Collocation services agreement with Peer 1, or to enter into an Colocated
Unmanaged Dedicated agreement with Peer 1 covering such Supported Equipment
(collectively, the "Migration");
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT:
1. CONSULTING.
Peer 1 shall provide, upon request, consulting services to Interland
related to the planning, preparation and implementation of the Migration.
2. OPERATION OF FACILITIES.
While the Supported Equipment is located in the Supported Equipment Space,
Peer 1 shall operate, manage and maintain the Facilities in order to enable the
provision of services to Interland's customers who use Shared Hosting Services
in substantially the same manner in which such customers were serviced
immediately prior to the Sale. Peer 1 will continue therefore to provide server
support services, including Internet connectivity, network maintenance and
security, space, power and cooling and other services described herein (the
"Services") in substantially the same manner in which Interland provided the
Supported Equipment immediately prior to the Sale. Interland shall be
responsible for the maintenance of the Supported Equipment. Except as specified
in this Agreement (i) all Services and Migration Assistance (defined in section
5) provided under this Agreement are on an "AS IS" basis, (ii) Peer 1 does not
represent or warrant that the Services or the Migration Assistance will be
uninterrupted or error free, and (iii) Peer 1 does not make any warranty,
guarantee or representation, either expressed or implied, regarding the fitness
for a particular purpose of any service provided under this Agreement.
Interland and Peer 1 will each nominate a representative to act as the
primary contact person with respect to the accomplishment of the transactions
contemplated by this Agreement (the "Service Coordinators"). The Service
Coordinators shall be Xxx Xxxxx and Xxxxx Xxxxxx for Interland and Xxxx Xxxxxxx
for Peer 1, or such other individuals as the applicable party may designate in
writing delivered to the other party hereto. Unless Interland and Peer 1
otherwise agree, Interland and Peer 1 agree that all communications relating to
this Agreement and the Services shall be directed to the Service Coordinators in
accordance with Section 16(b) hereof.
The Service Coordinators shall regularly consult regarding the operation of
the Facilities. In the event Interland experiences an issue with the Services,
Interland will report such issue to Peer 1 and the parties agree to follow the
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process described in the Global Procedures outlined in Exhibit D attached hereto
and incorporated herein by reference.
3. OPERATION OF LEGACY EQUIPMENT.
Interland will operate, manage and maintain the Supported Equipment in a
manner that will not unreasonably interfere with the operations of the
Facilities or with the dedicated hosting customers of Peer 1. Interland agrees
that it will not take any action or fail to take any action that requires Peer 1
operate the Business or manage and maintain the Facilities in a manner
materially different from the manner in which the Business and Facilities were
operated, managed or maintained prior to the Sale, except that the parties
acknowledge that Interland will be performing the Migration which may require
certain additional actions from Peer 1.
4. ADDITIONAL EQUIPMENT
Interland may not add new servers, other than replacement servers, to
operate its Supported Equipment without the prior written consent of Peer 1,
which consent shall not be unreasonably withheld by Peer 1. Notwithstanding the
forgoing sentence, in order to accommodate Interland's incremental growth Peer 1
will allow Interland to add up to a total of one hundred (100) new servers to
the Atlanta Peer 1 Space, subject to the terms and conditions of this Agreement.
In any case, Interland must provide written notice to Peer 1, regarding
Interland's intention to add new servers to the Atlanta Peer 1 Space, at least
48 hours prior to the installation of new servers.
5. REMOVAL OF EQUIPMENT.
Subject to Section 10 (a) of this Agreement, Interland agrees to remove all
of the Supported Equipment from the Supported Equipment Space on or before
August 31, 2006. The Migration from Supported Equipment Space to the Customer
Space shall be the sole responsibility of Interland, however, Peer 1 agrees to
consult with and assist Interland in formulating a comprehensive plan for the
Migration, and in facilitating the execution of such plan with the equipment,
software, or contractual relationship that is under the sole control of Peer
(the "Migration Assistance"), upon such terms and conditions as the parties may
mutually agree, provided that such Migration Assistance is provided solely at
Interland's expense and does not impair or otherwise adversely affect Peer 1's
business or any vendor relationships enjoyed by Peer 1, or result in a
requirement that additional fees or other compensation be paid to any vendor by
Peer 1, and provided further that Peer 1 shall advise Interland's Service
Coordinator of anticipated expenses that Interland shall incur as a result of
any Migration Assistance provided by Peer 1 pursuant to this Section 5 prior to
commencement of such Migration Assistance.
6. STATUS OF FACILITY OPERATIONS.
The business conducted by Interland using the Supported Equipment at the
Facilities is the sole responsibility of Interland. Consequently, Interland is
solely responsible for the service provided to Interland customers and is solely
responsible to providers of goods or services to the Shared Hosting servers or
to other third parties affected by the Shared Hosing Services. Notwithstanding
the foregoing sentence, Peer 1 shall be responsible for maintaining the
Facilities and providing systems (e.g. HVAC and security) and third party
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service providers to the Facility (e.g. electric utilities). Peer 1 shall
perform the Services described herein as an independent contractor engaged by
Interland solely for the benefit of Interland. Interland agrees that it will not
operate any business other than the Shared Hosting Services at the Facilities.
7. RISK OF LOSS, INSURANCE AND LESSOR LIABILITY.
(a) Interland assumes all of the risk of loss regarding the Supported
Equipment and the Shared Hosting Services, whether or not any such loss arises
out of the operations contemplated by this Agreement. If required by any lease
of the Facilities, Interland covenants that neither Interland nor any insurer or
other party whose rights derive from Interland shall bring any claim for a loss
to the Supported Equipment or relating to the Shared Hosting Services against
the lessor of the Facilities. Notwithstanding the foregoing, Peer 1 shall be
responsible for any loss to the Supported Equipment arising out of the gross
negligence or willful misconduct of Peer 1 or any of its employees or agents,
provided that Peer 1's liability will be limited to the actual replacement cost
of the Equipment which is damaged or lost as a result of Peer 1's gross
negligence or willful misconduct.
(b) Interland agrees to insure the Equipment in an amount equivalent to the
actual replacement cost of the Equipment against risk of physical damage or loss
under the terms of a standard commercial insurance policy for fire and extended
coverage. Such insurance shall include a waiver of subrogation for any claim
against Peer 1 and the landlord of the Facilities and shall provide proof of
such insurance and waiver.
8. TAXES.
Interland shall promptly pay when due any personal property taxes, use
taxes, income taxes or any other tax or fee relating to the Supported Equipment
or the Shared Hosting Business.
9. ACCESS TO FACILITIES.
Interland shall have access to its Supported Equipment subject to Peer 1's
controlled access procedures, which procedures shall be mutually agreed upon
between Interland and Peer 1 after the date hereof. Interland and Peer 1 agree
that such access is intended to allow Interland to reasonably service and
support the Supported Equipment consistent with the parties' respective duties
hereunder. Furthermore, Interland and Peer 1 agree that in order for Interland
to maintain such levels of service and support in the Atlanta Peer 1 Space, a
limited number of key Interland employees (which list of Interland key employees
shall be identified and agreed upon mutually by the Peer 1 and Interland Service
Coordinators) shall be permitted limited access (subject to the Peer 1 access
procedures) to the Atlanta Peer 1 Space.
10. FEES AND EXPENSES.
(a) As consideration for the Services provided by Peer 1 to Interland under
this Agreement, Interland agrees to pay: (a) $15.00 per each item of Supported
Equipment located in the Atlanta Peer 1 Space per month, or any part thereof,
4
from the date of the Sale through the termination of the Interland Network
Services Agreement, (b) $25.00 per each item of Supported Equipment per month,
or any part thereof, in the Atlanta Peer 1 Space, from the Effective Date of the
Peer 1 Network Services Agreement through March 31, 2006, and $25.00 per each
item of Supported Equipment in the Miami Facility and Freemont Facility per
month, or any part thereof, from the date of the Sale through March 31, 2006.
The price that Interland agrees to pay per item of Supported Equipment per month
shall increase to $30.00 per item of Supported Equipment during the month, or
any part thereof, of April 2006, and shall increase to $35.00 per item of
Supported Equipment during the month, or any part thereof, of May 2006, and
shall increase to $40.00 per item of Supported Equipment during the months, or
any part thereof, of June, July and August 2006.
For purposes of calculating the number of items of Supported Equipment in
the Supported Equipment Space per month, designated representatives of Peer 1
and Interland will conduct an inventory of Supported Equipment on the first day
of each month beginning on the fist day of the month following the Sale. Peer 1
shall send an invoice to Interland based on the count of the items of Supported
Equipment within two (2) business days of such count. Interland shall make
payments to Peer 1 no later than ten (10) business days after receipt of such
invoice. All of the fees described herein are in United States Dollars.
On or before August 31, 2006, Interland shall have either: (i) moved the
Supported Equipment at Interland's expense out of the Supported Equipment Space,
(ii) moved the Supported Equipment from the Supported Equipment Space at
Interland's expense into the Customer Space, (iii) entered into a new
collocation services agreement with Peer 1 covering such Supported Equipment, or
(iv) entered into a Colocated Unmanaged Dedicated agreement with Peer 1 covering
such Supported Equipment.. If none of these have happened, and if the Supported
Equipment remains in the Supported Equipment Space after August 31, 2006, then
Peer 1 will have the right to remove, relocate, store, or dispose of the
Supported Equipment at Interland's expense without liability to Interland.
(b) Peer 1 will provide the SAN, NAS or Tape backup (the "Backup") that is
currently in use by Interland for the term of this Agreement at a flat rate of
$32,257 per month. At the request of either party, the parties will review this
flat rate on a quarterly basis and may agree to adjust the rate charged per
month based on the volume of Backup utilized by each party and changes to the
factors used to calculate the initial monthly flat rate. Interland may terminate
the Tape backup service upon 30 days written notice to Peer 1.
(c) In consideration of Peer 1 providing One (1) locked office and Eight
(8) cubicles on the 5th floor of the Atlanta Facility Interland will pay
$3,600.00 per month to Peer 1 by the 10th day of each calendar month following
the month in which Closing occurs. Notwithstanding the foregoing sentence,
Interland may terminate this arrangement for the One (1) locked office and Eight
(8) cubicles upon 30 days written notice to Peer 1
(d) Except as set forth in Section 10(a), Peer 1 will invoice Interland
monthly in advance for any other amounts due hereunder and Interland shall pay
the amount invoiced within five business days of Interland's receipt of the
invoice.
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11. TERM.
Each party's obligations pursuant to this Agreement shall terminate on the
earlier to occur of the removal of all of the Supported Equipment from the
Supported Equipment Space according to the provisions of Article 5 of this
Agreement or twelve months after the execution of this Agreement. Any request
for change, or extension of this Agreement, must be agreed to in writing no
later than 30 days prior to the end of the twelve month term.
12. TERMINATION.
(a) In the event of any non-monetary breach under this Agreement by Peer 1
or Interland, the nonbreaching party will provide written notice to the other
party setting forth in reasonable detail the nature and extent of the breach.
The breaching party will then have a period of thirty (30) days in which to cure
such non-monetary breach, provided that the breaching party diligently pursues
such cure during such thirty (30) day period, and such thirty (30) day period
will be extended if necessary to implement the cure provided that the breaching
party diligently pursues such cure during any such extension period. In the
event of a monetary breach under this Agreement that is not being disputed in
accordance with Section 16(j) hereof, if the breaching party has not cured such
breach within five (5) days after written notice of such breach is given to the
breaching party, the breaching party shall be in default hereunder and the other
party shall be entitled to terminate this Agreement immediately upon notice to
the breaching party. Peer 1 shall have the right to terminate this Agreement, or
at its option its provision of any Service, in the event that any amounts owed
to it pursuant to this Agreement are not paid when due, giving effect to the
cure period set forth in this Section 12(a), or in the event Interland has
breached any of the other provisions of this Agreement and has failed to cure
such breach in accordance with the terms hereof.
(b) Upon notice to Interland, Peer 1 may terminate this Agreement if
Interland shall file an involuntary petition in bankruptcy or similar proceeding
seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within sixty (60) days after the
filing thereof, or if Interland shall (i) apply for or consent in writing to the
appointment of a receiver, trustee or liquidator of all or substantially all of
its assets, (ii) file a voluntary petition or admit in writing its inability to
pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or an answer seeking reorganization
or an arrangement with its creditors or take advantage of any insolvency law
with respect to itself as debtor, or (v) file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency proceedings or any similar proceedings.
(c) Either party may immediately terminate this Agreement by giving written
notice thereof to the other party hereto if (i) such other party has breached
the terms of any of the other Transition Agreements and has failed to cure such
breach in accordance with the terms thereof, and (ii) the notice of default
given in connection with such other Transition Agreement expressly states the
intention, upon the failure to cure such default, to so terminate this
Agreement.
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13. FORCE MAJEURE.
Peer 1 shall not be responsible for the failure or delay in performance
hereunder if Peer 1 is prevented from complying herewith due to any law or
governmental order, act of God, act of civil or military authority, rebellion,
riot, insurrection, acts of terrorism, quarantine, civil disturbance, war, fire,
flood, epidemic, embargo, shortage or unavailability of supplies, strikes and
labor interruption, accident, fire or other catastrophes or similar events which
are beyond its reasonable control (each, a "Force Majeure Event")
Upon the occurrence of a Force Majeure Event, Peer 1 shall promptly give
notice to Interland of the occurrence or circumstance upon which it intends to
rely to excuse its performance. The duties and obligations of the parties
hereunder shall be suspended for the duration of the Force Majeure Event and
Peer 1 shall resume the performance of its obligations hereunder as soon as
reasonably practicable after removal of the Force Majeure Event.
14. LIMITATION OF LIABILITY; INDEMNIFICATION.
Notwithstanding anything to the contrary contained herein, in no event will
Peer 1, or any of its officers, directors, employees, shareholders or
representatives (collectively, "Peer 1 Parties") be liable for any punitive,
special, incidental or consequential damages, including lost profits, in any way
relating to this Agreement or the Services provided hereunder.
As to any claim by Interland with respect to the Services, in no event will
the Peer 1 Parties have any liability for any damages to Interland, except for
claims of gross negligence or willful misconduct on the part of any of the Peer
1 Parties.
Interland agrees to indemnify and hold the Peer 1 Parties harmless from and
against any claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) arising from any claim by a third party in
connection with the Services provided by Peer 1 to Interland pursuant to this
Agreement, other than claims of gross negligence or willful misconduct on the
part of any of the Peer 1 Parties.
The parties agree that the limitations of liability and indemnification set
forth in this section shall survive and continue in full force and effect
despite any termination or expiration of this Agreement, and are independent of
Article 7 of the Purchase Agreement.
Each party agrees that each individual acting solely in his or her capacity
as an officer or employee of his or her respective principal, which is a party
hereto, will in no event be personally responsible for acts reasonably believed
to be taken within the scope of his/her employment and each party covenants not
to xxx any such individual for acts reasonably believed to be taken within
his/her employment.
15. CONFIDENTIALITY.
7
The parties each agree that all Confidential Information communicated to it
by the other has been communicated in confidence and will be used only for the
purposes of this Agreement. Each party agrees to disclose such Confidential
Information only to those directors, officers, employees or consultants who have
a need to access the other party's Confidential Information for the purposes of
this Agreement, and each party will not use the other party's Confidential
Information to compete with such other party and will not disclose such
Confidential Information to any third party without the prior written consent of
the other party except as permitted under this Agreement. Exceptions to
Confidential Information include (a) information in the public domain, (b)
information known to a party prior to the time of disclosure by the disclosing
party or information developed independently by a party without reference to
information disclosed under this Agreement, or (c) information received from a
third party without restriction and/or breach of this Agreement or a similar
agreement. It will not be a violation of this provision to disclose Confidential
Information in compliance with any legal, accounting or regulatory requirement
beyond the control of either party. Upon the termination of this Agreement and
upon written request of the disclosing party, each party will promptly return
all Confidential Information of the other party. This provision will survive the
termination of this Agreement for two (2) years.
The parties to this Agreement understand and agree that the terms and
conditions of this Agreement and all documents referenced herein (including
invoices provided pursuant to this Agreement) are confidential as between Peer
1, Interland and each party's affiliates and will not be disclosed by either
party to any party other than the directors, officers, employees, agents and
financial investors (conducting due diligence) of such party who have a need to
know such information, except as may be required by law or a court of competent
jurisdiction. Notwithstanding the foregoing, each party may provide an original
or a copy of this Agreement to investors and potential investors who have a need
to know in connection with such disclosing party's capital raising transaction
and to other parties who have a need to know with respect to other major
corporate transactions of such disclosing party provided the parties receiving
such information are bound by confidentiality restrictions no less strict than
those contained herein.
16. MISCELLANEOUS PROVISIONS.
(a) Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations among the
parties regarding the subject matter of this Agreement, except for the Purchase
Agreement insofar as it is applicable hereto.
(b) Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing sent via first-class, postage prepaid, registered
or certified mail (return receipt requested), or by overnight delivery service
or facsimile transmission addressed as follows:
8
If to Interland:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, LLP 000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Peer 1:
Peer 1 Network Enterprises, Inc.
Suite 1600
555 West Hastings Street
Vancouver, British Columbia
Canada V6B 4NS
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
A party may change the address to which the communications are to be
directed to it by giving notice to the other party in the manner provided in
this Section. All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, receipt of which is acknowledged by
non-automatic means, be deemed given upon receipt, and (iii) if delivered by
mail in the manner described above to the address as provided in this Section,
be deemed given upon receipt.
(c) Transfer and Assignment; Successors. Without the other party's written
consent, which consent shall not be unreasonably withheld, this Agreement and
the rights and obligations hereunder will not be assignable by any party,
9
including, without limitation, by means of the merger, consolidation or other
reorganization of such party, or the sale of all or substantially all of the
assets or the sale or transfer of greater than a majority of the capital stock
or other equity interests of such party. This Agreement will be binding upon,
and inure to the benefit of, the respective successors and permitted assigns of
each of the parties hereto.
(d) Headings. The headings in this Agreement are for reference purposes
only and will not in any way affect the meaning or interpretation of this
Agreement.
(d) Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Georgia, without giving effect to the
conflict of laws principles thereof.
(e) Amendments. This Agreement cannot be terminated, altered or amended
except pursuant to an instrument in writing signed by the parties hereto.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) No Third-Party Beneficiaries. This Agreement is for the sole benefit of
the parties hereto and nothing herein expressed or implied shall give or be
construed to give to any person or entity, other than the parties hereto and
their respective successors and permitted assigns, any legal or equitable rights
hereunder.
(h) Waiver. The terms of this Agreement may be waived only by a written
instrument signed by the party or parties waiving compliance. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise provided. No delay on the part
of any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
(i) Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved pursuant to Section 9.9 of the Purchase Agreement.
[Signature pages to follow]
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Interland, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
PEER 1 ACQUISITION CORPORATION
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
Attachments
Schedule 1A Acceptable Use Policy and Privacy Policy
Schedule 1B Privacy Policy
Schedule 1C Service Level Agreement
Schedule 1D Globals Procedure
Schedule 2.3 Fees
11
INTERLAND NETWORK SERVICES AGREEMENT
This Interland Network Services Agreement (the "Agreement") is entered into
as of this 31st day of August, 2005 (the "Effective Date"), by and between
Interland, Inc., ("Provider"), a Minnesota corporation and Peer 1 Acquisition
Corporation, a Delaware corporation ("Customer"). Provider and Customer may each
be referred to individually as a "Party" or collectively referred to as
"Parties."
RECITALS
A. Provider has sold, assigned and delivered to Customer, its successors
and assigns, substantially all of the assets related to the Business pursuant to
that certain Asset Purchase Agreement, dated as of August 31, 2005, between
Provider and Customer (the "Purchase Agreement").
B. This Agreement is entered into pursuant to the Purchase Agreement.
C. Capitalized terms not otherwise defined in this Agreement will have the
meanings assigned to them in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Interland and Purchaser hereby
agree as follows:
1. Scope of Agreement. This Agreement governs Customer's (including any of its
Affiliates) purchase and use, in any manner, of the services provided by
Provider as described below. This Agreement includes the schedules, and the
Acceptable Use Policy attached hereto as Schedule 1A, the Privacy Policy
attached hereto as Schedule 1B , the Service Level Agreement attached hereto as
Schedule 1C, and the Globals Procedure attached hereto as Schedule 1D
(collectively, the "Provider Policies"), which are hereby incorporated by
reference.
2. Scope of Service.
2.1 Network Services. During the Term (as defined below), Provider will
manage all hardware, software, contracts, and vendor relationships required to
ensure Customer's equipment located in the Facilities is accessible from the
Internet (the "Network Services"). Customer acknowledges and agrees that
Provider, in its sole discretion, may utilize subcontractors and third party
providers to provide the Network Services.
2.2 Service Changes or Additions. Any changes to the scope of Network
Services must be mutually agreed upon in writing by the Parties. The Parties
acknowledge that a change in the scope of Network Services may result in
additional fees being imposed on the Customer, and Customer shall accept
responsibility for any such additional fees through a mutually agreed upon
amendment by the Parties to Schedule 2.3 hereto.
2.3 Fees. During each calendar month of the Term, the parties agree pay the
fees as set forth in Schedule 2.3.
3. Warranties and Obligations.
3.1 Warranties. Each Party warrants that neither the execution and delivery
of this Agreement nor the performance of its obligations hereunder will
constitute a violation of, be in conflict with, or constitute a default under,
any agreement or commitment to which it is bound, or any judgment, decree,
order, regulation, or rule of any court or governmental authority or any statute
or law.
3.2 Financial Responsibility. Customer warrants that it will be financially
responsible for the use of its account. Customer is responsible for payment of
the total amounts due to Provider regardless of whether Customer is paid by its
customers.
4. Term and Termination.
4.1 Term. The Agreement will take effect on the Effective Date and will
continue until the termination date of the last Transit Provider agreement, as
defined in Schedule 2.3. Within a reasonable time following the date on which
Provider determines the termination date of the last Transit Provider agreement,
Provider will provide notice to Customer of such date, provided that failure to
provide such notice shall not be deemed a breach of this agreement and
termination of this Agreement shall not be contingent upon such notice.
4.2 Termination. In the event of any non-monetary breach under this
Agreement by Provider or Customer, and except as outlined in the Schedules
attached hereto, the nonbreaching party will provide written notice to the other
party setting forth in reasonable detail the nature and extent of the breach.
The breaching party will then have a period of thirty (30) days in which to cure
such non-monetary breach, provided that the breaching party diligently pursues
such cure during such thirty (30) day period, and such thirty (30) day period
will be extended if necessary to implement the cure provided that the breaching
party diligently pursues such cure during any such extension period. In the
event of a monetary breach under this Agreement that is not being disputed in
accordance with Section 12(j) hereof, if the breaching party has not cured such
breach within five (5) business days after written notice of such breach is
given to the breaching party, the breaching party shall be in default hereunder
and the other party shall be entitled to terminate this Agreement immediately
upon notice to the breaching party. Provider shall have the right to terminate
this Agreement, or at its option its provision of any Service, in the event that
any amounts owed to it pursuant to this Agreement are not paid when due, giving
effect to the cure period set forth in Section 2(b) hereof, or in the event
2
Customer has breached any of the other provisions of this Agreement and has
failed to cure such breach in accordance with the terms hereof.
4.3 Termination by Provider for Financial Condition of Customer. Upon
notice to Customer, Provider may terminate this Agreement if Customer shall file
an involuntary petition in bankruptcy or similar proceeding seeking its
reorganization, liquidation or the appointment of a receiver, trustee or
liquidator for it or for all or substantially all of its assets, whereupon such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or if Customer shall (i) apply for or consent in writing to the appointment of a
receiver, trustee or liquidator of all or substantially all of its assets, (ii)
file a voluntary petition or admit in writing its inability to pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or an answer seeking reorganization or an arrangement with
its creditors or take advantage of any insolvency law with respect to itself as
debtor, or (v) file an answer admitting the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency proceedings or
any similar proceedings.
4.4 Termination for Breach of Transition Agreements. Either party may
immediately terminate this Agreement by giving written notice thereof to the
other party hereto if (i) such other party has breached the terms of any of the
other Transition Agreements and has failed to cure such breach in accordance
with the terms thereof, and (ii) the notice of default given in connection with
such other Transition Agreement expressly states the intention, upon the failure
to cure such default, to so terminate this Agreement.
4.5 Suspension or Termination by Provider. (a) Provider may suspend or
terminate the Network Services or this Agreement upon providing written notice
to Customer: (i) if the provision of Network Services may cause Provider to
violate any law, rule, regulation or governmental code, order or policy ("Law");
(ii) if any change in applicable Law that, in any way, prohibits the provision
of, or requires alteration of the Network Services provided hereunder; or (iii)
any cessation of a third-party subcontractor or vendor relationship with
Provider or discontinuance of equipment or a component of Network Services
necessary to continue the provision of such, except that Provider will use
commercially reasonable efforts to continue to provide comparable Network
Services, component of the Network Services or equipment through another vendor
under comparable terms and conditions.
4.6 Effect of Termination. Termination of the Agreement will not relieve
Customer of any obligations to pay fees and costs accrued prior to the
Termination Date and, except if terminated by Customer pursuant to Section
4.2(a), all fees and costs that would be owed for the remainder of the Term.
Upon the expiration or termination of this Agreement, (a) Customer will
immediately cease using the Network Services; (b) any and all payment
obligations of Customer under this Agreement will become due immediately; (c)
all licenses and rights granted under this Agreement will terminate immediately.
3
5. Payment for Network Services
5.1 Charges. Customer will be responsible for the payment of all federal,
state, and local sales, use, value added, excise, duty and any other taxes
assessed with respect to the Network Services, other than taxes based on
Provider's net income.
5.2 Payment. Provider will invoice Customer in advance for all charges
hereunder. Payment for all recurring monthly fees, charges and expenses will be
due and payable on or prior to the first day of the month for which such Network
Services will be provided. In the event Customer disputes any billing by
Provider, Customer shall notify Provider in writing, such notice shall include
the amount disputed and an explanation for the dispute. Customer may withhold
payment of the amount in dispute, provided that Customer must pay a minimum an
amount equal to the average of the previous three (3) months' invoices within
the payment period specified above. The parties will cooperate in good faith to
resolve any such disputes within a thirty (30) day period after the dispute is
submitted to Provider. If the dispute is not resolved during this period, then
either party may seek resolution of the dispute in accordance with Sections 9.9
and 9.15 of the Purchase Agreement. Any payment not received by the applicable
due date will accrue interest at a rate of the lesser of one and one-half per
cent (1.5%) per month or the maximum allowable under applicable law. In
addition, Customer's failure to fully pay any undisputed charges and expenses
within five (5) business days of Provider's providing notice to customer of such
delinquency, will justify Provider's suspension of its performance of the
Network Services and/or termination of the Agreement pursuant to Section 4.2 of
this Agreement. Subject to the terms set forth in the preceding sentence,
Provider may, without prejudice to any other remedy or right it may have,
suspend delivery of the Network Services to Customer until such failure is
cured. Any such suspension or termination would not relieve Customer from paying
any fees due plus interest. In the event of collection enforcement, Customer
will be liable for any costs associated with such collection, including, without
limitation, reasonable attorneys' fees, court costs and collection agency fees.
5.3 Disclosure Rights. If legally compelled to disclose pursuant to court
order, judicial process, or as otherwise required by law, Provider may access
and, to the extent required disclose any requested information. Provider also
reserves the right to report any activity that it reasonably suspects violates
any law or regulation or the intellectual property rights of third parties to
appropriate law enforcement officials, regulators, or such third parties.
6. Intellectual Property Rights. Intellectual property rights in all software,
information, technology or data whatsoever supplied or made available by
Provider under this Agreement ("Intellectual Property Rights") will remain the
property of Provider or its vendors, as applicable. Except as expressly set
forth herein, Provider does not grant Customer any license, sublicense or other
right in or to such Intellectual Property Rights.
4
7. Force Majeure.
7.1 Provider shall not be responsible for the failure or delay in
performance hereunder if Provider is prevented from complying herewith due to
any law or governmental order, act of God, act of civil or military authority,
rebellion, riot, insurrection, acts of terrorism, quarantine, civil disturbance,
war, fire, flood, epidemic, embargo, shortage or unavailability of supplies,
strikes and labor interruption, accident, fire or other catastrophes or similar
events which are beyond its reasonable control (each, a "Force Majeure Event")
7.2 Upon the occurrence of a Force Majeure Event, Provider shall promptly
give notice to Customer of the occurrence or circumstance upon which it intends
to rely to excuse its performance. The duties and obligations of the parties
hereunder shall be suspended for the duration of the Force Majeure Event and
Provider shall resume the performance of its obligations hereunder as soon as
reasonably practicable after removal of the Force Majeure Event.
8. Limitation of Liability; Indemnification.
8.1 Notwithstanding anything to the contrary contained herein, in no event
will Provider, or any of its officers, directors, employees, shareholders or
representatives (collectively, "Provider Parties") be liable for any punitive,
special, incidental or consequential damages, including lost profits, in any way
relating to this Agreement or the Network Services provided hereunder.
5
8.2 As to any claim by Customer with respect to the Network Services, in no
event will the Provider Parties have any liability for any damages to Customer,
except for claims of gross negligence or willful misconduct on the part of any
of the Provider Parties.
8.3 Customer agrees to indemnify and hold the Provider Parties harmless
from and against any claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) arising from any claim by a third party in
connection with the Network Services provided by Provider to Customer pursuant
to this Agreement, other than claims of gross negligence or willful misconduct
on the part of any of the Provider Parties.
8.4 The parties agree that the limitations of liability and indemnification
set forth in this section shall survive and continue in full force and effect
despite any termination or expiration of this Agreement, and are independent of
Article 7 of the Purchase Agreement.
8.5 Each party agrees that each individual acting solely in his or her
capacity as an officer or employee of his or her respective principal, which is
a party hereto, will in no event be personally responsible for acts reasonably
believed to be taken within the scope of his/her employment and each party
covenants not to xxx any such individual for acts reasonably believed to be
taken within his/her employment.
9. Confidentiality.
9.1 The parties each agree that all Confidential Information communicated
to it by the other has been communicated in confidence and will be used only for
the purposes of this Agreement. Each party agrees to disclose such Confidential
Information only to those directors, officers, employees or consultants who have
a need to access the other party's Confidential Information for the purposes of
this Agreement, and each party will not use the other party's Confidential
Information to compete with such other party and will not disclose such
Confidential Information to any third party without the prior written consent of
the other party except as permitted under this Agreement. Exceptions to
Confidential Information include (a) information in the public domain, (b)
information known to a party prior to the time of disclosure by the disclosing
party or information developed independently by a party without reference to
information disclosed under this Agreement, or (c) information received from a
third party without restriction and/or breach of this Agreement or a similar
agreement. It will not be a violation of this provision to disclose Confidential
Information in compliance with any legal, accounting or regulatory requirement
beyond the control of either party. Upon the termination of this Agreement and
upon written request of the disclosing party, each party will promptly return
all Confidential Information of the other party. This provision will survive the
termination of this Agreement for two (2) years.
9.2 The parties to this Agreement understand and agree that the terms and
conditions of this Agreement and all documents referenced herein (including
invoices provided pursuant to this Agreement) are confidential as between
Provider, Customer and each party's affiliates and will not be disclosed by
6
either party to any party other than the directors, officers, employees, agents
and financial investors (conducting due diligence) of such party who have a need
to know such information, except as may be required by law or a court of
competent jurisdiction. Notwithstanding the foregoing, each party may provide an
original or a copy of this Agreement to investors and potential investors who
have a need to know in connection with such disclosing party's capital raising
transaction and to other parties who have a need to know with respect to other
major corporate transactions of such disclosing party provided the parties
receiving such information are bound by confidentiality restrictions no less
strict than those contained herein.
10. Miscellaneous Provisions.
10.1 Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations among the
parties regarding the subject matter of this Agreement, except for the Purchase
Agreement insofar as it is applicable hereto.
10.2 Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing sent via first-class, postage prepaid, registered
or certified mail (return receipt requested), or by overnight delivery service
or facsimile transmission addressed as follows:
If to Provider:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, LLP 000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Customer:
Peer 1 Network Enterprises, Inc.
Suite 1600
555 West Hastings Street
Vancouver, British Columbia
7
Canada V6B 4NS
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
A party may change the address to which the communications are to be directed to
it by giving notice to the other party in the manner provided in this Section.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, receipt of which is acknowledged by non-automatic
means, be deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt.
10.3 Transfer and Assignment; Successors. Without the other party's written
consent, which consent shall not be unreasonably withheld, this Agreement and
the rights and obligations hereunder will not be assignable by any party,
including, without limitation, by means of the merger, consolidation or other
reorganization of such party, or the sale of all or substantially all of the
assets or the sale or transfer of greater than a majority of the capital stock
or other equity interests of such party. This Agreement will be binding upon,
and inure to the benefit of, the respective successors and permitted assigns of
each of the parties hereto.
10.4 Headings. The headings in this Agreement are for reference purposes
only and will not in any way affect the meaning or interpretation of this
Agreement.
10.5 Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Georgia, without giving effect to the
conflict of laws principles thereof.
10.6 Amendments. This Agreement cannot be terminated, altered or amended
except pursuant to an instrument in writing signed by the parties hereto.
10.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
10.8 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties hereto and nothing herein expressed or implied shall give or be
construed to give to any person or entity, other than the parties hereto and
8
their respective successors and permitted assigns, any legal or equitable rights
hereunder.
10.9 Waiver. The terms of this Agreement may be waived only by a written
instrument signed by the party or parties waiving compliance. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise provided. No delay on the part
of any party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
10.10 Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved pursuant to Sections 9.9 and 9.15 of the Purchase
Agreement.
[Signature pages to follow]
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
PEER 1 ACQUISITION CORPORATION
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
Attachments
Schedule 1A Acceptable Use Policy and Privacy Policy
Schedule 1B Privacy Policy
Schedule 1C Service Level Agreement
Schedule 1D Globals Procedure
Schedule 2.3 Fees
10
[PEER 1 NETWORK LOGO]
EXECUTION COPY
COLLOCATION SERVICES AGREEMENT
PEER 1 ACQUISITION CORPORATION INTERLAND, INC"
"SUPPLIER" "CUSTOMER"
ADDRESS: 1600 - 000 XXXX XXXXXXXX ADDRESS: 000 XXXXXXXXX XXXXXX XXXXXX
XXXXXXXXX, XX X0X 0X0 XXXXX 000
XXXXXXX, XX 00000
CONTACT: CONTACT:
TELEPHONE: (000) 000-0000 TELEPHONE: 000-000-0000
FAX: (000) 000-0000 FAX: 000-000-0000
EMAIL: EMAIL:
This Collocation Services Agreement dated as of August 31, 2005 (the
"Agreement") sets forth the terms under which Supplier and Customer (each
individually a "party" and collectively the "parties") agree that Supplier will
provide Customer with collocation services ("Services") as defined below for the
space commonly known as the "West Wing" excluding the space commonly known as
the network room ("Customer Space") located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx (the "Premises").
RECITALS
A. Provider has sold, assigned and delivered to Customer, its successors
and assigns, substantially all of the assets related to the Business pursuant to
that certain Asset Purchase Agreement, dated as of August 31, 2005, between
Supplier and Customer (the "Purchase Agreement").
B. This Agreement is entered into pursuant to the Purchase Agreement.
C. Capitalized terms not otherwise defined in this Agreement will have the
meanings assigned to them in the Purchase Agreement.
SERVICES AND PAYMENT
1. Services. Supplier agrees to supply the Services In accordance with the
terms of this Agreement. Customer agrees to receive the Services from
Supplier in accordance with the terms of this Agreement.
2. Term. The term of this Agreement will commence on the date hereof (the
"Effective Date"), and will continue for 1 year thereafter. Neither party
will have the right to extend or modify this existing Agreement unless both
parties mutually agree in writing to the terms and conditions proposed.
3. Payment.
3.1 Customer will pay Supplier for Services rendered on a monthly basis (1)
one month in advance. Any Service that is measured, such as additional
non-UPS power, will be metered and billed in arrears within 15 days of
receipt of xxxx from utility provider.
3.2 All one-time installation fees for additional Service will be payable
by Customer in advance and due at the time the additional Service is
ordered. Supplier shall xxxx Customer for its actual cost, plus a 10%
administration fee.
3.3 Any payment not made when due will be subject to interest of one
percent (1.5%) per month compounded monthly (equivalent to an annual
interest rate of 18%), or the maximum allowable by law.
4. Default.
a. Default For Nonpayment. If Customer is in default of any of its
payment obligations under this Agreement and such default is not cured
within 5 business days of Customer's receipt of written notice of such
breach, then Supplier may in its sole discretion do any or all of the
1
following: (i) suspend access to the Customer Space or the premises,
or (ii) terminate this Agreement upon notice to Customer. If Supplier
terminates this Agreement pursuant to (ii) then after such termination
is effective, Supplier may remove the Customer Equipment from the
Customer Space, store the Customer Equipment at another location at
Customer's expense, and license the Customer Space to a third party.
b. General Default. If either party is in breach of this Agreement and
such breach is not cured within thirty (30) days of notice of such
breach, such party may terminate this Agreement upon notice to the
other party.
c. Default of Service Levels. If Supplier fails to meet the service
levels as defined in Section 8, and fails to cure such condition
within the permitted cure period, Customer may terminate this
Agreement upon notice to Supplier without any financial penalty.
d. Transition Agreements. Either party may immediately terminate this
Agreement by giving written notice thereof to the other party hereto
if (i) such other party has breached the terms of any of the other
Transition Agreements and has failed to cure such breach in accordance
with the terms thereof, and (ii) the notice of default given in
connection with such other Transition Agreement expressly states the
intention, upon the failure to cure such default, to so terminate this
Agreement.
5. Quality of Service. EXCEPT AS SPECIFIED IN THIS AGREEMENT (I) ALL SERVICES
PROVIDED UNDER THIS AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS, (II)
SUPPLIER DOES NOT REPRESENT OR WARRANT THAT THE SERVICES WILL BE
UNINTERRUPTED OR ERROR FREE, AND (III) SUPPLIER DOES NOT MAKE AND WARRANTY,
GUARANTEE OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, REGARDING THE
FITNESS FOR A PARTICULAR PURPOSE OF ANY SERVICE PROVIDED UNDER THIS
AGREEMENT. EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SUPPLIER
MAKES NO REPRESENTATION, WARRANTY OR CONDITION, EXPRESS OR IMPLIED, AND
EXPRESSLY EXCLUDES ALL IMPLIED OR STATUTORY WARRANTIES OR CONDITIONS OF
MERCHANTABILITY, MERCHANTABLE QUALITY, DURABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR TITLE OR NON-INFRINGEMENT AND THOSE ARISING BY
STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE.
COLLOCATION TERMS AND CONDITIONS
6. Grant of License. Subject to the terms of this Agreement, Supplier hereby
grants to Customer, as of the Effective Date, an exclusive license to
install, operate, replace, remove and maintain web hosting and other
communications equipment, cabling, connections, associated hardware and
accessions (the " Customer Equipment") in the Customer Space during the
term of this Agreement. The license granted in this Agreement is a license
of space only, and does not create an ownership interest or property rights
of any nature in Supplier's real or personal property.
7. Installation and Requirements. Customer will be responsible for the
delivery and installation of the Customer Equipment and the connection of
the Customer Equipment to telecommunications lines and power.
8. Maintenance and Use of Premises. Customer, at its own cost and expense,
will protect, maintain and keep in good order the Customer Space and any
Customer Equipment in such space. Supplier will manage and maintain, in its
best and reasonable efforts, the Service and support equipment located
within the confines of the Customer Space including, but not limited to:
The CRAC Units, the AC UPS System, the main utility transfer switching
gear, known as the ATS, and the Generator. Additional equipment may be
recognized and or added by Supplier from time to time, at any time, to
increase the reliability of this space. Supplier will supply Customer with
notice of all scheduled maintenance of this equipment at least 48 hours in
advance of such scheduled maintenance. The following minimum service levels
("Service Levels") shall apply to The Customer Space.
Temperature and Humidity. Supplier will assist Customer in the
determination of size and placement of AC necessary to support Customer's
planned use of the Collocation Space. HVAC will be installed to meet
Supplier's standards. Supplier will be responsible for the purchase cost of
any such HVAC units and Customer shall be responsible for any and all
installation costs associated with such HVAC units. Supplier will maintain
the Customer Space within 3 degrees of 75 degrees Fahrenheit and within a
normal humidity range.
In the event of failure of a HVAC unit, Supplier will provide fans and/or
stand alone AC units until the HVAC units are repaired and ambient
temperature returns to required levels. Stand Alone AC units will be
provided only if repair of the HVAC unit is projected to take more than 6
hours. Supplier will provide fans within 1 business hour of request and
stand alone AC units within 6 business hours of request. In the event
Customer's power usage exceeds design specifications, the requirements of
this Section 8 as to temperature and humidity shall be void until either
power is reduced or sufficient HVAC is installed in the space. If Supplier
fails to provide fans or stand along AC units within the time specified
above on three (3) or more occasions during any 90 day period, Supplier
will install sufficient HVAC unit(s) to ensure that a single HVAC failure
will not cause temperatures to increase above 78 degrees Fahrenheit.
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AC UPS. Supplier will assure that power will be available from UPS sources
that will be backed up by generator power. In the event the Customer Space
loses power on three (3) or more occasions in any thirty (30) day period or
five (5) or more occasions in any one year period, Customer may terminate
this Agreement upon notice to Supplier.
Global. The parties hereto agree to use the procedures set forth on Exhibit
A attached hereto in the event of emergency situations.
9. Immediate Threats. If, in the reasonable determination of Supplier, the
Customer Equipment poses an immediate threat to the physical integrity of
the Premises or the physical integrity or performance of the equipment of
Supplier or any other user of the Premises, or poses an immediate threat to
the safety of any person, then Supplier may perform such work and take such
other actions that it may reasonably consider necessary without prior
notice to Customer and without liability for damage to the Customer
Equipment or for any interruption of Customer's (or its clients')
businesses. As soon as practicable, Supplier will advise Customer in
writing of the work performed or the action taken.
10. Intervention. If any part of the Customer Equipment is placed or maintained
in a way that interferes with Supplier's ability to perform its obligations
hereunder or puts Supplier in violation of any applicable state, federal or
local law, and customer fails to correct the violation within 7 days after
receipt of written notice thereof from Supplier, then Supplier may, at its
option, without further notice to Customer, correct the deficiency at
Customer's expense without liability for damages to the Customer Equipment
or interruption of Customer's (or its clients') businesses. As soon as
practicable thereafter, Supplier will advise Customer in writing of the
work performed or action taken. Customer will immediately reimburse
Supplier for all expenses reasonably incurred by Supplier associated with
any work or action performed by Supplier with respect thereto.
11. Periodic Inspections. Supplier reserves the right (upon reasonable prior
notice to customer) to make periodic inspections of any part of the
Customer Space or Customer Equipment; provided that Customer will have the
right to have one or more of its employees or representatives present
during any such inspection, provided any such inspection will not interfere
with Customer's ongoing operations.
12. Insurance. During the term of this Agreement, each party will maintain for
the Premises, at its own expense, (i) comprehensive general liability
insurance protecting Supplier as an additional insured in an amount not
less than five million dollars ($5,000,000.00) per occurrence for bodily
injury or property damage, and (ii) worker's compensation coverage in an
amount not less than that prescribed by statutory limits. At Supplier's
request, Customer shall provide Supplier with certificates of insurance or
other satisfactory evidence that the insurance required in this section has
been obtained. Such insurance shall include a waiver of subrogation for any
claim against Supplier and the landlord of the Facilities and shall provide
proof of such insurance and waiver. Under no circumstances will Supplier be
obligated to provide insurance coverage for any Customer Equipment in the
Premises.
13. Access. Subject to the terms of this Agreement and compliance with payment
terms as outlined in section 4.a., Customer will have unrestricted access
to the Premises during the term. Customer will cause its employees, agents,
contractors or invitees who have access to the Premises to conform to all
Supplier rules and regulations agreed to by Supplier and Customer.
14. Collocation Facility Rules and Regulations. Supplier may vary these rules
and regulations from time to time in its sole discretion, and Customer will
comply with all such changes and all other reasonable security requirements
that Supplier may impose from time to time, provided that Customer has been
given 30 days notice in writing.
14.1.All Customer employees, agents, contractors or invitees ("Customer
Persons") having access to the Premises must be approved by Supplier.
Approval by Supplier does not release Customer from its
responsibilities pursuant to this Agreement, nor by approving such
Customer Persons does Supplier waive its right to be indemnified by
Customer.
14.2.Customer must provide Supplier with identifying information on each
Customer Person, including a current photograph of each Customer
Person, before that Customer Person is given access to the Premises.
15. Removal of Customer Equipment. Customer may, from time to time, at any
time, remove Customer Equipment from the Customer Space after they have
filled out the requisite equipment removal form provided by Supplier. Upon
termination or expiration of this Agreement, Customer will remove the
Customer Equipment from the Premises. Unless the parties otherwise agree in
writing, in the event the Customer Equipment has not been removed within
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ten (10) business days following the termination or expiration of this
Agreement, Supplier will notify Customer and will have the right to remove,
relocate, or otherwise store the Customer Equipment at Customer's expense
without liability to Supplier. If after 30 days of such storage by Supplier
Customer has not retrieved the Customer Equipment, Supplier may dispose of
the Customer Equipment in its sole discretion and with no liability to
Customer.
16. Ownership of Customer Equipment. Customer represents and warrants that it
either owns all Customer Equipment or has all necessary rights to locate
the Customer Equipment in the Premises.
17. Consent to Video Monitoring. Customer acknowledges, agrees and hereby
consents under applicable privacy laws that supplier may monitor the
Premises by way of closed circuit television or other monitoring device for
the purposes of maintaining the safety and security of the Premises, any
Customer Equipment in the Premises, and any persons using or present in the
Premises from time to time.
18. Pricing for collocation: During the term, Supplier will xxxx Customer ten
dollars ($10.00) per rentable square foot per month. The Customer Space
constitutes approximately 2,550 rentable square feet.
19. Pricing for power: Customer will buy 120 VAC UPS power in no less than 20
amp breakered circuits for $8.00 per amp per month. Customer may buy, if
needed, 208 VAC UPS power in no less than 20 amp breakered circuits for
$20.00 per month.
20.
TECHNICAL SUPPORT AND SERVICES PRICING
IN THE EVENT CUSTOMER REQUESTS ANY OF THE FOLLOWING TECHNICAL OR ADDITIONAL
SERVICES, SUPPLIER WILL XXXX CUSTOMER FOR SUCH SERVICES AT THE FOLLOWING RATES:
------------------------------------------------------------------------------------------------------------------------------
NETWORK OPERATIONS SUPPORT (REMOTE HANDS)
---------------------------------------------------------------- ----------------------- -------------------------------------
Network Operations Support (8am - 5pm Mon - Fri) Eastern Time $150.00/hour billed in 30 minute increments
---------------------------------------------------------------- ----------------------- -------------------------------------
Network Operations Support (Outside Business Hours) $250.00/hour billed in 30 minute increments
---------------------------------------------------------------- ----------------------- -------------------------------------
NETWORK OPERATIONS SUPPORT (REMOTE HANDS)
-------------------------------------------------------------- ---------------------------------------------------------------
24 hr. systems monitoring $100.00/month/IP
-------------------------------------------------------------- ---------------------------------------------------------------
Primary & secondary DNS $50.00/year/domain
-------------------------------------------------------------- ---------------------------------------------------------------
Domain name changes $10.00/domain
------------------------------------------------------------------------------------------------------------------------------
OTHER
------------------------------------------ --------------------------------------------- -------------------------------------
Additional Access Cards (replacements $50.00/card
for, or cards in excess of those
provided to Customer as of the Effective
Date) (key included)
------------------------------------------ --------------------------------------------- -------------------------------------
GENERAL TERMS AND CONDITIONS
21. Limitation of Liability. The limit of Supplier's liability in contract,
tort (including negligence) or by statute or otherwise to Customer (or its
clients) concerning performance or non-performance in any manner related to
this Agreement, for any and all claims will not, in the aggregate, exceed
the total fees paid by Customer to Supplier under this Agreement in the
immediately preceding 2 months from the date the claim arose. In no event
will Supplier be liable for any lost profits, special, indirect,
consequential, incidental or punitive damages. However the limitations
contained in this section shall not apply to gross negligence or willful
misconduct.
22. Force Majeure. Neither party will be liable for any delay, interruption or
failure in the performance of its obligations beyond the reasonable control
of the party affected, including acts of God, war, declared or undeclared,
fire, flood, storm, slide, earthquake, terrorism, or other similar event
("Force Majeure"). If any Force Majeure occurs, the party claiming the
Force Majeure will promptly notify the other. The party claiming the Force
Majeure will use commercially reasonable efforts to eliminate or remedy the
Force Majeure. This section will not apply to excuse a failure to make any
payment when due; however payment shall not be due for costs which are not
incurred by Supplier during the Force Majeure period.
23. Miscellaneous.
23.1.NOTICES. Every notice, approval, request, authorization, direction or
other communication under this Agreement will be given in writing to
the party at the address first set forth above for such party, sent to
the attention of the Chief Executive Officer, and will be deemed to
have been delivered and given for all purposes (i) on the delivery
date, if delivered personally; (ii) one business day after deposit
with a commercial overnight carrier, with written verification of
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receipt, if sent by courier; or (iii) upon completion of transmission,
if sent via facsimile with a confirmation of successful transmission
by other than automatic means. A copy of all notices to Customer
hereunder shall be sent to the address listed below. A party may
change the address to which the communications are to be directed to
it by giving notice to the other party in the manner provided in this
section.
If to Customer:
Xxxxxx Xxxxxx Xxxxxxx, LLP
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Supplier:
Xxxxxxx Xxxxxx & Xxxxxxx LLC
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
23.2.COMPLIANCE WITH LAWS. Each Party will comply with all applicable
laws, regulations, and ordinances.
23.3.TRANSFER AND ASSIGNMENT, SUCCESSORS. Without the other party's
written consent, which consent shall not be unreasonably withheld,
this Agreement and the rights and obligations hereunder, will not be
assignable by any party, including, without limitation, by means of
the merger, consolidation or other reorganization of such party, or
the sale of all or substantially all of the assets or the sale or
transfer of greater than a majority of the capital stock or other
equity interests of such party. This Agreement will be binding upon,
and inure to the benefit of the respective successors and permitted
assigns of each of the parties hereto.
23.4.SURVIVAL. The provisions set forth in Sections 3, 21, and 23 of this
Agreement will survive termination or expiration of this Agreement.
23.5.RESERVATION OF RIGHTS. Each party reserves all rights not
specifically granted herein.
23.6.ENTIRE AGREEMENT. This Agreement supersedes all previous Agreements
and Service Agreement Addendums between the parties. This Agreement,
the Schedule, and any subsequent Service Agreement Addendums
constitute the entire Agreement between the parties regarding the
subject matter hereof and supersede all proposals and prior
discussions and writings between the parties with respect thereto.
23.7.MODIFICATIONS. This Agreement May not be altered, amended or
modified, except in writing signed by both parties.
00.0.XX WAIVER. The terms of this Agreement may be waived only by a
written instrument signed by the party or parties waiving compliance.
No waiver of any provision of this agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless
otherwise provided. No delay on the part of any party hereto in
exercising any right, power, or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege
hereunder. No failure or delay in enforcing any right or exercising
any remedy will be deemed a waiver of any right or remedy.
23.9.SEVERABILITY AND REFORMATION. If any portion of this Agreement is
determined to be or becomes unenforceable or illegal, such portion
will be reformed to the minimum extent necessary in order for this
agreement to remain in effect in accordance with its terms as modified
by such reformation.
23.10. REMEDIES NOT EXCLUSIVE. Any dispute arising out of or relating to
this agreement shall be resolved pursuant to sections 9.9 and 9/15 of
the Purchase Agreement.
23.11. RELATIONSHIP. The relationship of Supplier to Customer will be that
of an independent contractor, and neither Supplier nor any employee of
Supplier will be deemed to be an agent or employee of Customer.
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23.12. CHOICE OF LAW. This Agreement will be governed and interpreted by
the laws of the jurisdiction where the Premises are located, without
regard to its conflicts of law provisions.
23.13. FURTHER ASSURANCES. Each of the parties will promptly execute and
deliver to the other at the cost of the other such further documents
and assurances and take such further actions as the other may from
time to time request in order to more effectively carry out the intent
and purpose of this Agreement and to establish and protect the rights,
interests and remedies intended to be created in favor of the other.
23.14. LIENS AND ENCUMBRANCES. Customer (and its clients) will not have the
power, authority or right to create and will not permit any lien or
encumbrance, including without limitation, tax liens, mechanics'
liens, builders liens or other license or encumbrances with respect to
work performed, in connection with the Supplier equipment or use of
the Customer Space.
23.15. HEADINGS. The headings in this Agreement are for reference purposes
only, and will not in any ay affect the meaning or interpretation of
this Agreement.
23.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
23.17. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole benefit
of the parties hereto and nothing herein expressed or implied shall
give or be construed to give any person or entity, other than the
parties hereto and their respective successors and permitted assigns,
any legal or equitable rights hereunder.
AGREED TO BY:
PEER 1 ACQUISITION CORPORATION CUSTOMER: INTERLAND, INC.
By: /s/ X.X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------- ------------------------------------
(Signature) (Signature)
X.X. Xxxxxxx Xxxxx X. Xxxxxxx
----------------------------------------- ------------------------------------
(Name typed or printed) (Name typed or printed)
President President
----------------------------------------- ------------------------------------
(Title) (Title)
8/31/05 8/31/05
----------------------------------------- ------------------------------------
(Date) (Date)
Attachments
Exhibit A Global Procedure
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ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") dated as of August
31, 2005, is made and entered into by and between INTERLAND, INC., a Minnesota
corporation ("Interland"), and PEER 1 ACQUISITION CORPORATION, a Delaware
corporation ("Purchaser"). Interland and Purchaser are each individually
referred to herein as a "Party," and collectively as the "Parties."
RECITALS
A. Interland has sold, assigned and delivered to Purchaser, its successors
and assigns, all of the assets related to the Business pursuant to that certain
Asset Purchase Agreement, dated as of the date hereof, between Interland and
Purchaser (the "Purchase Agreement").
B. This Agreement is entered into pursuant to the Purchase Agreement.
C. Capitalized terms not otherwise defined in this Agreement will have the
meanings assigned to them in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Interland and Purchaser hereby
agree as follows:
1. Services.
(a) Subject to the terms and conditions contained herein and on Exhibit A
attached hereto and incorporated by reference herein, for the term described in
Section 4 below, Interland will provide, or cause to be provided, to Purchaser
and/or its designated Affiliates those specified services, as appropriate, set
forth on Exhibit A (collectively, the "Services") at the fee or cost that is set
forth opposite each of the Services set forth on Exhibit A.
(b) Interland and Purchaser acknowledge that during the term of this
Agreement, Purchaser will be arranging to transfer the Services from Interland's
control to Purchaser's control. The Parties agree that, at Purchaser's
reasonable request made to the Interland Service Coordinator (as defined in
Section 3 below), Interland shall provide reasonable assistance to Purchaser in
such transfer ("Transfer Assistance"), upon such terms and conditions as the
Parties may agree, provided that such Transfer Assistance is provided solely at
Purchaser's expense, as mutually agreed upon by the Parties, and does not impair
or otherwise adversely affect Interland's business or any vendor relationships
enjoyed by Interland, or result in a requirement that additional fees or other
compensation be paid to any vendor by Interland, and provided further that
Interland shall advise Purchaser's Service Coordinator of anticipated expenses
that Purchaser shall incur as a result of any Transfer Assistance provided by
Interland pursuant to this Section 1(b) prior to commencement of such Transfer
Assistance.
(c) Subject to the terms and conditions contained herein and on Exhibit A
attached hereto and incorporated by reference herein, for the term described in
Section 4 below, Purchaser will provide, or cause to be provided, to Interland
the Purchaser Provided Services (as defined in Exhibit A) set forth on Exhibit A
at the fee or cost that is set forth opposite each of the Purchaser Provided
Services on Exhibit A.
2. Quality of Services.
(a) Interland represents that the Services will be of substantially the
same quality and performed in substantially the same manner for Purchaser as
such Services were performed immediately prior to the Closing Date in connection
with Interland's operation of the Business, and that Interland shall not take
any actions to intentionally interrupt its provision of the Services hereunder.
Notwithstanding the foregoing, Purchaser understands and acknowledges that the
demand for Services may exceed the available capacity of Interland to provide
such services, making it necessary for Interland to prioritize requests for such
services or take other steps necessary to efficiently manage its delivery of the
Services. Purchaser will reasonably cooperate with Interland to facilitate
Interland's performance hereunder.
(b) Purchaser represents that the Purchaser Provided Services will be of
substantially the same quality and performed in substantially the same manner
for Interland as such Purchaser Provided Services were performed immediately
prior to the Closing Date in connection with Interland's operation of the
Business, and that Purchaser shall not take any actions to intentionally
interrupt its provision of the Purchaser Provided Services hereunder.
Notwithstanding the foregoing, Interland understands and acknowledges that the
demand for Purchaser Provider Services may exceed the available capacity of
Purchaser to provide such services, making it necessary for Purchaser to
prioritize requests for such services or take other steps necessary to
efficiently manage its delivery of the Purchaser Provider Services. Interland
will reasonably cooperate with Purchaser to facilitate Purchaser's performance
hereunder.
(c) In the event of any non-monetary breach under this Agreement by
Interland or Purchaser, the nonbreaching Party will provide written notice to
the other Party setting forth in reasonable detail the nature and extent of the
breach. The breaching Party will then have a period of thirty (30) days in which
to cure such non-monetary breach, provided that the breaching Party diligently
pursues such cure during such thirty (30) day period, and such thirty (30) day
period will be extended if necessary to implement the cure provided that the
breaching Party diligently pursues such cure during any such extension period.
In the event of a monetary breach under this Agreement that is not being
disputed in accordance with Section 12(j) hereof, if the breaching Party has not
cured such breach within five (5) days after written notice of such breach is
given to the breaching Party, the breaching Party shall be in default hereunder
and the other Party shall be entitled to terminate this Agreement immediately
upon notice to the breaching Party.
(d) EXCEPT AS OTHERWISE SPECIFIED IN THIS AGREEMENT (i) ALL SERVICES,
PURCHASER PROVIDED SERVICES AND TRANSFER ASSISTANCE PROVIDED UNDER THIS
AGREEMENT ARE PROVIDED ON AN "AS IS" BASIS, (ii) NEITHER PARTY REPRESENTS OR
WARRANTS THAT THE SERVICES, THE PURCHASER PROVIDED SERVICES OR TRANSFER
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ASSISTANCE WILL BE UNINTERRUPTED OR ERROR FREE, AND (iii) NEITHER PARTY MAKES
ANY WARRANTY, GUARANTEE OR REPRESENTATION EITHER EXPRESS OR IMPLIED REGARDING
THE FITNESS FOR A PARTICULAR PURPOSE OF ANY SERVICE, PURCHASER PROVIDED SERVICE
OR TRANSFER ASSISTANCE PROVIDED UNDER THIS AGREEMENT.
3. Service Coordinators. Interland and Purchaser will each nominate a
representative to act as the primary contact person with respect to the
accomplishment of the transactions contemplated by this Agreement (the "Service
Coordinators"). The Service Coordinators shall be Xxxxx Xxxxxx and Xxx Xxxxx for
Interland and Xxxx Xxxxxxx for Purchaser, or such other individuals as the
applicable Party may designate in writing delivered to the other Party hereto.
Unless Interland and Purchaser otherwise agree, Interland and Purchaser agree
that all communications relating to this Agreement, the Services and the
Purchaser Provided Services shall be directed to the Service Coordinators in
accordance with Section 12(b) hereof.
4. Term and Termination of the Services.
(a) With respect to each of the Services and each of the Purchaser Provided
Services set forth on Exhibit A, the term of this Agreement as related thereto
will be for a period commencing as of the Closing Date and continuing until the
"termination date" indicated for such Service or Purchaser Provided Service in
Exhibit A (the "Termination Date"), unless earlier terminated as provided
herein.
(b) Purchaser shall have the right to terminate any Service upon thirty
(30) days prior written notice, provided that it must pay to Interland all
noncancelable third-party fees related to Interland's expected provision of such
cancelled Service until the Termination Date. Interland acknowledges and agrees
that a termination by Purchaser with respect to any particular Service will in
no event affect Interland's obligation to perform any other Service hereunder,
provided that such termination of a Service does not adversely impact
Interland's ability to provide any other Service. Interland shall have the right
to terminate any Purchaser Provided Service upon thirty (30) days prior written
notice, provided that it must pay to Purchaser all noncancelable third-party
fees related to Purchaser's expected provision of such cancelled Purchaser
Provided Service until the Termination Date. Purchaser acknowledges and agrees
that a termination by Interland with respect to any particular Purchaser
Provided Service will in no event affect Purchaser's obligation to perform any
other Purchaser Provided Service hereunder, provided that such termination of a
Purchaser Provided Service does not adversely impact Purchaser's ability to
provide any other Purchaser Provided Service.
(c) Either Party shall have the right to terminate this Agreement, or at
its option its provision of any service hereunder, in the event that any amounts
owed to it pursuant to this Agreement are not paid when due, giving effect to
the cure period set forth in Section 2(b) hereof, or in the event the other
Party has breached any of the other provisions of this Agreement and has failed
to cure such breach in accordance with the terms hereof.
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(d) Either Party may cease providing a service hereunder to the other Party
if it is no longer able to provide such service to the other Party due to the
failure of a third-party contractor on whom it is dependent to provide such
service and such failure is not due to a payment default by it of amounts due to
such third-party contractor or other intentional breach.
(e) Upon notice to the other Party, a Party may terminate this Agreement if
the other Party shall file an involuntary petition in bankruptcy or similar
proceeding seeking its reorganization, liquidation or the appointment of a
receiver, trustee or liquidator for it or for all or substantially all of its
assets, whereupon such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other Party shall (i) apply for or consent
in writing to the appointment of a receiver, trustee or liquidator of all or
substantially all of its assets, (ii) file a voluntary petition or admit in
writing its inability to pay its debts as they become due, (iii) from and after
the Closing, make a general assignment for the benefit of creditors, (iv) file a
petition or an answer seeking reorganization or an arrangement with its
creditors or take advantage of any insolvency law with respect to itself as
debtor, or (v) file an answer admitting the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency proceedings or
any similar proceedings.
(f) Either party may immediately terminate this Agreement by giving written
notice thereof to the other party hereto if (i) such other party has breached
the terms of any of the other Transition Agreements and has failed to cure such
breach in accordance with the terms thereof, and (ii) the notice of default
given in connection with such other Transition Agreement expressly states the
intention, upon the failure to cure such default, to so terminate this
Agreement.
(g) The Parties agree that the termination of this Agreement shall not
affect the rights of the Parties hereto to receive monies collected for the
benefit of such Parties by the other Party hereto. Following the termination of
this Agreement by either or both of the Parties hereto, the Parties shall
cooperate in good faith to mutually agree upon the manner in which such monies
will be remitted to the Party that is owed, and the payment of costs that will
be incurred by the remitting Party and reimbursed by the Party receiving such
remittances.
5. Billing and Payment for the Services.
(a) Leased Employee Services. Interland, through its payroll processing
vendor (the "Payroll Vendor"), pays its employees, including the Leased
Employees (as defined in Exhibit A), on a bi-weekly basis (every other Friday;
referred to herein as a "Pay Day"). Prior to each Pay Day, the Payroll Vendor
notifies Interland of the amount needed to fund its payroll account in order to
make such payment (the "Leased Employee Amount"), which amount includes labor
costs, benefits costs, taxes and administration cost. Purchaser agrees to
either: (i) not later than the Thursday preceding each Pay Day, wire transfer to
an account designated by Interland, an amount equal to the Leased Employee
Amount, which amount will be communicated by Interland to Purchaser not later
than the Tuesday before each Pay Day or (ii) not later than the date specified
by the Payroll Vendor, fund the Leased Employee Amount for each Pay Day directly
to the Payroll Vendor pursuant to an arrangement established between Purchaser
and the Payroll Vendor.
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(b) Other Services. Interland will xxxx Purchaser for all other Services
provided hereunder on a monthly basis in accordance with Exhibit A, and such
invoice shall indicate for each such other Service the number of hours of
non-leased employee time plus Interland's internal and third party fees and
costs that are to be reimbursed by Purchaser except for such services for which
the Parties have agreed to a flat cost, and shall further show as a credit
against the amount due to Interland the fees and costs due to Purchaser related
to the Purchaser Provided Services. The Parties may from time to time agree to
amend Exhibit A to provide for itemized or flat costs as they shall mutually
deem convenient. Purchaser agrees that any future increases in reimbursable fees
or costs imposed by third parties related to the provision of Services which are
not billable as a flat charge shall be the sole responsibility of Purchaser.
Interland agrees that any future increases in reimbursable fees or costs imposed
by third parties related to the provision of Purchaser Provided Services which
are not billable as a flat charge shall be the sole responsibility of Interland.
(c) Third Party Fees; Taxes.
(i) Purchaser will acquire at its sole cost and expense any and all
licenses, and pay any and all fees, that may be required by any software or
database vendor or other third party so as to enable Interland to be able to
provide the Services. Purchaser shall be solely responsible for any Taxes or
penalties assessed by reason of any claim that an applicable Tax was not paid on
a Service provided hereunder, and shall defend, indemnify and hold Interland
harmless from and against any and all such claims. For avoidance of doubt,
Purchaser shall not be responsible for any income taxes of Interland.
(ii) Interland will acquire at its sole cost and expense any and all
licenses, and pay any and all fees, that may be required by any software or
database vendor or other third party so as to enable Purchaser to be able to
provide the Purchaser Provided Services. Interland shall be solely responsible
for any Taxes or penalties assessed by reason of any claim that an applicable
Tax was not paid on a Purchaser Provided Service provided hereunder, and shall
defend, indemnify and hold Purchsaser harmless from and against any and all such
claims. For avoidance of doubt, Interland shall not be responsible for any
income taxes of Purchaser.
(d) Late Fee. Any amount payable by a Party pursuant to the terms hereof
that is not paid when due shall be subject to a late fee computed daily at a
rate equal to 1.5% per month (or the highest rate allowed by law, whichever is
less) beginning from the date first due until paid in full and such Party agrees
to pay the other Party's reasonable attorneys' fees and other costs incurred in
collection of any amounts owed to such other Party hereunder and not paid when
due.
(e) Audit Rights. Purchaser shall have the right to examine all books and
records of Interland used to prepare the invoices delivered to Purchaser
pursuant to this Section 5. Interland will provide Purchaser full access (during
normal business hours and upon reasonable prior notice to Interland) to the
books, ledgers, files, reports and operating records of Interland and the then
current employees of Interland to the extent necessary to allow Purchaser to
audit the invoices in the manner described in the immediately preceding
sentence. Purchaser will provide full access (during normal business hours and
upon reasonable prior notice to Purchaser) to the books, ledgers, files, reports
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and operating records of Purchaser to the extent necessary to allow Interland to
audit the fees and costs related to the Purchaser Provided Services.
6. Status of Parties. The Parties hereto are independent contractors and
neither Party is an employee, partner or joint venturer of the other. Under no
circumstances shall any of the employees of a Party hereto be deemed to be
employees of the other Party for any purpose. Neither Party shall have the right
to bind the other to any agreement with a third party nor to represent itself as
a partner or joint venturer of the other.
7. Consents. Each Party shall cooperate with and assist the other Party in
obtaining the third party consents or contract amendments required for the
performance of the Services and the Purchaser Provided Services hereunder. In
the event the Parties are unable to obtain any of the required consents or
amendments, they shall negotiate in good faith reasonable modifications of the
Services and the Purchaser Provided Services, as the case may be, such that such
consents or modifications are not required; provided, however, that each Party
acknowledges and agrees that if such modifications are not possible, neither
Party shall have liability for its inability to provide such Services or such
Purchaser Provided Services, as the case may be.
8. Force Majeure.
(a) Neither Party shall be responsible for the failure or delay in
performance hereunder if it is prevented from complying herewith due to any law
or governmental order, act of God, act of civil or military authority,
rebellion, riot, insurrection, acts of terrorism, quarantine, civil disturbance,
war, fire, flood, epidemic, embargo, shortage or unavailability of supplies,
strikes and labor interruption, accident, fire or other catastrophes or similar
events which are beyond its reasonable control (each, a "Force Majeure Event").
(b) Upon the occurrence of a Force Majeure Event, a Party shall promptly
give notice to the other Party of the occurrence or circumstance upon which it
intends to rely to excuse its performance. The duties and obligations of the
Parties hereunder shall be suspended for the duration of the Force Majeure Event
and the Parties shall resume the performance of its obligations hereunder as
soon as reasonably practicable after removal of the Force Majeure Event.
9. Limitation of Liability; Indemnification.
(a) Notwithstanding anything to the contrary contained herein, in no event
will Interland, or any of its officers, directors, employees, shareholders or
representatives (collectively, "Interland Parties") be liable for any punitive,
special, incidental or consequential damages, including lost profits, in any way
relating to this Agreement or the Services or Transfer Assistance provided
hereunder. Notwithstanding anything to the contrary contained herein, in no
event will Purchaser, or any of its officers, directors, employees, shareholders
or representatives (collectively, "Purchaser Parties") be liable for any
punitive, special, incidental or consequential damages, including lost profits,
in any way relating to this Agreement or the Purchaser Provided Services
provided hereunder.
(b) As to any claim by Purchaser with respect to the Services or Transfer
Assistance, in no event will the Interland Parties have any liability for any
damages to Purchaser, except for claims of gross negligence or willful
6
misconduct on the part of any of the Interland Parties. As to any claim by
Interland with respect to the Purchaser Provided Services, in no event will the
Purchaser Parties have any liability for any damages to Interland, except for
claims of gross negligence or willful misconduct on the part of any of the
Purchaser Parties.
(c) Purchaser agrees to indemnify and hold the Interland Parties harmless
from and against any claims, damages, liabilities, costs and expenses (including
reasonable attorneys' fees) arising from any claim by a third party in
connection with the Services or Transfer Assistance provided by Interland to
Purchaser pursuant to this Agreement, other than claims of gross negligence or
willful misconduct on the part of any of the Interland Parties. Interland agrees
to indemnify and hold the Purchaser Parties harmless from and against any
claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) arising from any claim by a third party in connection with the
Purchaser Provided Services provided by Purchaser to Interland pursuant to this
Agreement, other than claims of gross negligence or willful misconduct on the
part of any of the Purchaser Parties.
(d) It is the intention of the Parties that each Party shall be ultimately
liable for its own respective actions with regard to the Leased Employees.
Accordingly, in the event that either Party is subject to claims or damages
arising out of such actions, the Parties respectively agree to indemnify one
another such that the responsible Party shall bear any liability.
(e) The Parties agree that the limitations of liability and indemnification
set forth in this section shall survive and continue in full force and effect
despite any termination or expiration of this Agreement, and are independent of
Article 7 of the Purchase Agreement.
(f) Each Party agrees that each individual acting solely in his or her
capacity as an officer or employee of his or her respective principal, which is
a Party hereto, will in no event be personally responsible for acts reasonably
believed to be taken within the scope of his/her employment and each Party
covenants not to xxx any such individual for acts reasonably believed to be
taken within his/her employment.
10. Branding Services.
(a) Initial Period. Subject to the terms and conditions of this Agreement,
Interland hereby grants Purchaser the nonexclusive, nontransferable right to use
the name "Interland" and the logo set forth on Exhibit B attached hereto (the
"Logo") in connection with the following activities related to the operation of
the dedicated hosting business acquired by Purchaser pursuant to the Purchase
Agreement: support services related to current dedicated hosting customers,
sales to new dedicated hosting customers, billing of dedicated hosting
customers, banner and search engine advertising of the dedicated hosting
business, and signage related to the acquired business (such activities, the
"Approved Activities"). Notwithstanding the foregoing: (i) Purchaser shall not
use the name "Interland" as permitted in the immediately preceding sentence
unless such name is used in conjunction with the word "Dedicated;" (ii)
Purchaser shall in no event use the name "Interland" in conjunction with the
7
word "Incorporated" or any abbreviation thereof; and (iii) Purchaser shall not
be permitted to use the name "Interland" in any manner on letterhead, business
cards or printed telephone listings or advertisements appearing in printed
telephone directories. Purchaser further agrees that, notwithstanding clauses
(i), (ii) and (iii) of this Section 10(a), any printed or electronic use of the
name "Interland" pursuant to this Section 10 shall include a reasonable legal
notice which states that "Interland is a registered trademark of Interland, Inc.
and is used by written permission." Notwithstanding clauses (i) and (ii) of this
Section 10(a), Purchaser shall be permitted to use the name "Interland, Inc."
(not in conjunction with the word "Dedicated") solely on invoices and credit
card billing information, and only for so long as Interland's credit card
processing vendor and/or internal accounting systems require the use of such
name. The restrictions on the use of the name "Interland" set forth in this
Section 10(a) shall apply equally to the usage of such name by representatives
of Purchaser in telephone calls made or received by such representatives. In
using the Logo as permitted pursuant to this Section 10(a), Purchaser shall not
alter such Logo except that Purchaser may add its own logo or graphics to the
Logo, provided that such addition to the Logo is consistent with the Interland
style guide attached hereto as Exhibit B and has been approved by Interland in
accordance with Section 10(e) below. Purchaser shall have no right to use the
Logo, and shall not use the Logo, in the operation of its business from and
after that date that is ninety (90) days after the Closing Date. The provisions
of this Section 10(a), and the rights granted hereunder, shall commence on the
Closing Date and shall terminate ninety (90) days thereafter, in the case of all
usage of the Logo and all usage of the name "Interland" other than in connection
with the billing of dedicated hosting customers, and upon termination of the
OASIS support services provided pursuant to Section B of Exhibit A, in the case
of all usage of the name "Interland" in connection with the billing of dedicated
hosting customers (such period is referred to herein as the "Initial Period").
(b) Secondary Period. The Parties hereto acknowledge and agree that during
the period commencing upon the expiration of the Initial Period and continuing
for ninety (90) days thereafter (such period, the "Secondary Period"), Purchaser
shall only use the name "Interland" as part of the phrase "formerly Interland
Dedicated" which may appear only in association with the trade name used by
Purchaser in the operation of the dedicated hosting business, and then only in
connection with Approve Activities. The restrictions on the use of the name
"Interland" set forth in this Section 10(b) shall apply equally to the usage of
such name by representatives of Purchaser in telephone calls made or received by
such representatives. Except as provided in Section 10(c), upon expiration of
the Secondary Period, Purchaser shall have no right to use the name "Interland,"
and shall not use such name, in the operation of its business.
(c) Billing Extension Period. It is the intention of the Parties that
Purchaser shall have the opportunity to use the name "Interland" in conjunction
with the brand name of Purchaser (in either order), solely on invoices and
credit card billing information, for no less than ninety (90) days. In the event
that as of the end of the Secondary Period Purchaser has not had such
opportunity because of the limitations of Interland's billing system, then
following the Secondary Period, Purchaser shall have such opportunity for a
period no longer than ninety (90) days, which period shall be shortened by the
number of days Purchaser had such opportunity during the Secondary Period.
(d) Quality Control.
(i) Purchaser agrees not to do nor permit to be done any act or thing that
might impair the goodwill or other rights of Interland in the name "Interland,"
the Logo or the Interland Domain Names, or that might otherwise prejudice or
damage the reputation of Interland, the name "Interland," the Logo, or the
8
products and services sold under such name or Logo or through use of the
Interland Domain Names (defined in Section 10(i) below).
(ii) Purchaser agrees that the products or services sold under the name
"Interland" or the Logo or through use of the Interland Domain Names shall be of
a quality that is at least equal to the quality of the goods and services sold
by Interland to its dedicated hosting customers immediately prior to the Closing
Date.
(e) Approval of Materials. Purchaser shall not disseminate materials (in
physical or electronic form) that use the name "Interland" or the Logo as
contemplated by Sections 10(a), 10(b) and 10(c) above (including website content
and scripted sales or support telephone calls) unless Purchaser has submitted
such materials to Interland for, and has received, its prior written approval,
which approval shall not be unreasonably withheld. Interland shall use its
commercially reasonable efforts to respond to any such request for approval
within three (3) business days of its receipt of such request, provided that
such request is submitted to Interland's Vice President of Marketing, or such
other person as is designated by Interland in writing.
(f) Rights of Inspection. To ensure compliance with the usage guidelines
set forth in Sections 10(a) and 10(b) above and the quality controls set forth
in Section 10(d) above, Interland shall have the right to inspect printed or
electronic materials disseminated to Purchaser's customers or prospective
customers, and to monitor sales or support calls received by Purchaser's
representatives, in a manner that does not unreasonably interfere with
Purchaser's operation of the dedicated hosting business. Interland shall notify
Purchaser in writing of any failure to comply with such usage restrictions or
quality controls, and if Purchaser fails to cure such breach within five (5)
days of receipt of such written notice, Interland shall have the right to
immediately terminate the provisions of this Section 10 by giving written notice
thereof to Purchaser.
(g) Notice to Interland Customers. The Parties acknowledge and agree that
on or after the Closing Date, Interland and Purchaser shall jointly send notice
(either by written or electronic means) to those persons or entities that are
Interland's dedicated hosting customers immediately prior to the Closing Date,
informing such customers of the consummation of Purchaser's acquisition of the
Interland dedicated hosting business. Such notice shall be consistent with the
content of the press release to be issued by the Parties.
(h) Websites. During the period beginning on the Closing Date and ending on
that date that is ninety (90) days thereafter, Interland shall maintain a link
on the Xxxxxxxxx.xxx website not less than 120x90 pixels in size that will
redirect potential dedicated hosting customers or dedicated hosting inquiries to
a URL designated in writing by Purchaser (the "Dedicated Website"), which
Dedicated Website may prominently display the Logo. The Parties agree that the
initial URL for the Dedicated Website shall be
"xxxxxxxxxxxxxxxxxxxxxxxxx.xxx/xxx," which is licensed to Purchaser pursuant to
Section 10(i) hereof. During the period beginning on the Closing Date and ending
upon the expiration of the Secondary Period, the Dedicated Website shall
prominently display the words "Not Affiliated with Interland, Inc." in a font
9
size that is no smaller than fifty percent (50%) of that used for Purchaser's
own name. In the event Purchaser desires to change the URL for the Dedicated
Website, Purchaser shall give Interland at least five (5) business days prior
written notice thereof so that Interland can make the necessary change to the
link maintained on the Xxxxxxxxx.xxx website.
(i) Domain Names. During the period beginning on the Closing Date and
ending upon the expiration of the Secondary Period, subject to the provisions of
Sections 10(d) and 10(f) above, Interland hereby grants Purchaser the
nontransferable right to use the domain names listed on Exhibit C attached
hereto (the "Interland Domain Names") in its operation of the Business. At the
end of such period, Purchaser shall discontinue all use of such Interland Domain
Names for any purpose.
11. Confidentiality.
(a) The Parties each agree that all Confidential Information communicated
to it by the other has been communicated in confidence and will be used only for
the purposes of this Agreement. Each Party agrees to disclose such Confidential
Information only to those directors, officers, employees or consultants who have
a need to access the other Party's Confidential Information for the purposes of
this Agreement, and each Party will not use the other Party's Confidential
Information to compete with such other Party and will not disclose such
Confidential Information to any third party without the prior written consent of
the other Party except as permitted under this Agreement. Exceptions to
Confidential Information include (a) information in the public domain, (b)
information known to a Party prior to the time of disclosure by the disclosing
Party or information developed independently by a Party without reference to
information disclosed under this Agreement, or (c) information received from a
third Party without restriction and/or breach of this Agreement or a similar
agreement. It will not be a violation of this provision to disclose Confidential
Information in compliance with any legal, accounting or regulatory requirement
beyond the control of either Party. Upon the termination of this Agreement and
upon written request of the disclosing Party, each Party will promptly return
all Confidential Information of the other Party. This provision will survive the
termination of this Agreement for two (2) years.
(b) The Parties to this Agreement understand and agree that the terms and
conditions of this Agreement and all documents referenced herein (including
invoices provided pursuant to this Agreement) are confidential as between
Interland, Purchaser and each Party's affiliates and will not be disclosed by
either Party to any Party other than the directors, officers, employees, agents
and financial investors (conducting due diligence) of such Party who have a need
to know such information, except as may be required by law or a court of
competent jurisdiction. Notwithstanding the foregoing, each Party may provide an
original or a copy of this Agreement to investors and potential investors who
have a need to know in connection with such disclosing Party's capital raising
transaction and to other parties who have a need to know with respect to other
major corporate transactions of such disclosing Party provided the parties
receiving such information are bound by confidentiality restrictions no less
strict than those contained herein.
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12. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the Parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations among the
Parties regarding the subject matter of this Agreement, except for the Purchase
Agreement insofar as it is applicable hereto.
(b) Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing sent via first-class, postage prepaid, registered
or certified mail (return receipt requested), or by overnight delivery service
or facsimile transmission addressed as follows:
If to Interland:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Purchaser:
Peer 1 Network Enterprises, Inc.
Suite 1600
555 West Hastings Street
Vancouver, British Columbia
Canada V6B 4NS
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
A Party may change the address to which the communications are to be directed to
it by giving notice to the other Party in the manner provided in this Section
11
12(b). All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, receipt of which is acknowledged by non-automatic
means, be deemed given upon receipt, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt.
(c) Transfer and Assignment; Successors. Without the other Party's written
consent, which consent shall not be unreasonably withheld, this Agreement and
the rights and obligations hereunder will not be assignable by any Party,
including, without limitation, by means of the merger, consolidation or other
reorganization of such Party, or the sale of all or substantially all of the
assets or the sale or transfer of greater than a majority of the capital stock
or other equity interests of such Party. This Agreement will be binding upon,
and inure to the benefit of, the respective successors and permitted assigns of
each of the Parties hereto.
(d) Headings. The headings in this Agreement are for reference purposes
only and will not in any way affect the meaning or interpretation of this
Agreement.
(e) Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Georgia, without giving effect to the
conflict of laws principles thereof.
(f) Amendments. This Agreement cannot be terminated, altered or amended
except pursuant to an instrument in writing signed by the Parties hereto.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(h) No Third-Party Beneficiaries. This Agreement is for the sole benefit of
the Parties hereto and nothing herein expressed or implied shall give or be
construed to give to any person or entity, other than the Parties hereto and
their respective successors and permitted assigns, any legal or equitable rights
hereunder.
(i) Waiver. The terms of this Agreement may be waived only by a written
instrument signed by the Party or Parties waiving compliance. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise provided. No delay on the part
of any Party hereto in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
(j) Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved pursuant to Sections 9.9 and 9.15 of the Purchase
Agreement.
[Signature pages to follow]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
Peer 1 Acquisition Corporation
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: X.X. Xxxxxxx
-----------------------------------
Title: President
-----------------------------------
Attachments
Exhibit A
Exhibit A-1 Leased Employees
Exhibit A-2 Interland Project Request Process
Exhibit A-3 Revenue and Receivables Procedures
Exhibit B Interland Logo and Style Guide
Exhibit C Domain Names
(Administrative Services Agreement)
13
EXECUTION COPY
EXHIBIT C
RENTAL FUND ESCROW AGREEMENT
THIS RENTAL FUND ESCROW AGREEMENT (this "Agreement") is dated as of August
31, 2005 (the "Effective Date"), by and between INTERLAND, INC., a Minnesota
corporation, (the "Seller"), Peer 1 Acquisition Corporation, a Delaware
corporation (the "Purchaser"), and SunTrust Bank, solely in its capacity as
Escrow Agent as is set forth herein (the "Escrow Agent"). Capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Asset Purchase Agreement (defined below).
R E C I T A L S
A. WHEREAS, concurrently with the execution of this Agreement, the
Purchaser will acquire certain assets of the Seller pursuant to that certain
Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of August 31,
2005 by and among the Seller and the Purchaser; and
B. WHEREAS, pursuant to the Asset Purchase Agreement, Purchaser is,
effective as of the date hereof, the assignee of the interest of Tenant (as
defined below) under that certain Standard NNN Lease dated July 15, 1999, as
amended, between Limar Reality Corp. #24, a California corporation ("Landlord")
and Hostcentric Technologies, Inc., a California corporation wholly owned by
Seller and the successor in interest to Maxim Computer Systems, a California
corporation ("Tenant") with respect to certain premises more specifically
described therein and located at 00000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000
(the "Lease"); and
C. WHEREAS, this Agreement is entered into pursuant to Section 4.1(b)(vii)
of the Asset Purchase Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises set forth above and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Purchaser, the Seller and the Escrow Agent agree as follows:
1. Appointment of Escrow Agent.
(a) The Escrow Agent is hereby appointed escrow agent in accordance with
the instructions set forth in this Agreement to hold the funds deposited by
Purchaser (the "Rental Escrow Fund") and to make disbursements thereof all in
accordance with the terms hereof and Escrow Agent hereby agrees to act as the
Escrow Agent under this Agreement. The Escrow Agent shall have no duty to
enforce any provision hereof requiring performance by any other party hereunder.
(b) The Escrow Agent shall not have any interest in the Escrow Fund, but
shall serve as escrow holder only and have only custody thereof. The Escrow Fund
shall be maintained separately by, and shall be under the exclusive dominion and
1
control of the Escrow Agent. The Escrow Agent expressly waives any right to set
off and appropriate any amounts in the Escrow Fund.
2. Payment into Rental Escrow Fund. On the 1st day of each calendar month
following the date hereof through and including the 1st day of July, 2008 (the
"Final Payment Date"), Purchaser shall pay to Escrow Agent, for deposit into
escrow hereunder as part of the Rental Escrow Fund, $30,000 (each collectively a
"Monthly Payment") to be held and disbursed by Escrow Agent in accordance with
the terms hereof.
3. Disbursement of Rental Escrow Fund.
(a) General. Subject to Section 10 hereof, (i) through the Final Payment
Date all net profits resulting from, and interest and income produced by
investments of, the Rental Escrow Fund ("Earnings") shall be payable monthly by
wire transfer for the account of Purchaser ; and (ii) on the 1st day of each
calendar month beginning on August, 2008 (the first full calendar month
following the Final Payment Date) and continuing until the 1st day of June, 2011
(the "Final Disbursement Date"), Escrow Agent shall automatically (i) pay by
wire transfer for the account of Landlord as provided below, an amount equal to
$30,000 and (ii) pay by wire transfer for the account of Purchaser all Earnings
on the Rental Escrow Fund accrued on the Rental Escrow Fund but not previously
paid to Purchaser hereunder (the payments made in accordance with clauses (i)
and (ii) immediately above in respect of each such month are hereinafter
referred to as the "Monthly Disbursement").
(b) Claims/Disputes. Notwithstanding the foregoing, claims and disputes as
to disbursements from the Rental Escrow Fund shall be effected as follows:
(i) Notice of Claim. If Seller is called upon by Landlord to make any
payment under the Lease and Seller makes such payment to Landlord ("Lease
Payment"), Seller shall have the right to deliver with reasonable
promptness a written notice to the Escrow Agent and Purchaser (the "Seller
Notice") stating that Seller is entitled to a portion of the Rental Escrow
Fund equal to the Lease Payment and setting forth evidence of Seller having
made the Lease Payment at the request or demand of the Landlord. Unless
Purchaser objects in writing to such disbursement as provided below, which
objection is received by the Escrow Agent within the Objection Period
(defined below), the Escrow Agent shall disburse to Seller an amount equal
to (A) if the Escrow Agent does not receive written objection to such
disbursement within the Objection Period, the amount claimed in the Seller
Notice, or (B) if the Escrow Agent receives written objection to such
disbursement during the Objection Period, then the amount determined when
the dispute is resolved in the manner contemplated in Section 9(i) hereof.
(ii) Notice of Dispute. If the Purchaser's written objection (the
"Objection Notice") to the disbursement of any portion of the Rental Escrow
Fund is received by the Escrow Agent within fifteen (15) days from the
Escrow Agent's receipt of the Seller Notice (the "Objection Period"), then
2
there shall be no disbursement from the Escrow Fund with respect thereto
until the Escrow Agent receives either (i) a final nonappealable order of a
court of competent jurisdiction directing delivery of the amount of the
Rental Escrow Fund in dispute or the written arbitration award rendered as
provided in Section 9.9 of the Asset Purchase Agreement directing delivery
of the amount of the Rental Escrow Fund in dispute or (ii) written
instructions jointly executed by the Seller and the Purchaser directing
delivery of the amount of the Escrow Fund in dispute, ("Final Resolution"),
in which event the Escrow Agent shall deliver the amount of the Escrow Fund
in dispute in accordance with such Final Resolution. Any court order
referred to in clause (i) above shall be accompanied by a legal opinion by
counsel for the presenting party reasonably satisfactory to the Escrow
Agent to the effect that said order or determination is final and
nonappealable. The Escrow Agent shall be entitled to rely conclusively and
without inquiry and shall act upon any such arbitration award or court
order and legal opinion without further question and shall have no duty to
determine whether any such arbitration award or court order is authentic or
conforms to the requirements of the Asset Purchase Agreement. The Objection
Notice shall set forth in reasonable detail the amount disputed in the
Seller Notice and the Purchaser's basis therefor.
(c) Investment.
(i) So long as the Rental Escrow Fund is held in escrow, it shall be
invested and reinvested by the Escrow Agent solely in Investments, pursuant
to written instructions signed by the Purchaser and the Seller. None of the
Escrow Agent, the Purchaser, or the Seller shall be liable or responsible
for any loss resulting from any investment or reinvestment made pursuant to
this Section 3. All investments of the Escrow Fund shall be held by, or
registered in the name of, the Escrow Agent or its nominee.
As used herein "Investments" means:
(A) direct obligations of, or obligations fully guaranteed by,
the United States of America or any agency thereof with any residual
amount being invested in the Federal Treasury Obligations Money Market
Fund;
(B) any publicly traded money market fund, such as the STI
Classic U.S. Treasury Securities Money Market Fund; or
(C) certificates of deposit whether negotiable or nonnegotiable,
issued by any bank, trust company or national banking association,
including the Escrow Agent, provided that such certificates of deposit
shall be fully insured by the Federal Deposit Insurance Corporation.
Unless instructed otherwise in writing, the Escrow Agent shall invest all funds
in the Escrow Fund in the STI classic U.S. Treasury Securities Money Market
fund. Each of the Purchaser and Seller shall provide to the Escrow Agent a
completed Form W-9. Notwithstanding anything to the contrary herein provided,
3
the Escrow Agent shall have no duty to prepare or file any Federal or state tax
report or return with respect to the Rental Escrow Fund or any income earned
thereon.
(ii) Maturities or unexpired terms of maturities of instruments in which
the Escrow Fund is invested shall not exceed sixty (60) days. The Escrow Agent
is authorized to sell any such Investments as may be required to make any
payment required to be made under this Agreement, and the Escrow Agent shall not
be liable for any loss due to early redemption.
(iii) At the prior written request of either the Purchaser or the Seller at
any time, the Escrow Agent shall deliver to the Purchaser and the Seller such
information as shall be reasonably requested with respect to the Escrow fund and
any interest earned thereon or payments made therefrom.
4. Indemnity. The Purchaser and the Seller jointly and severally agree to
indemnify and hold harmless the Escrow Agent and each of the Escrow Agent's
officers, directors, agents and employees (the "Indemnified Parties") from and
against any and all losses, liabilities, claims, damages, expenses and costs
(including attorneys' fees) of every nature whatsoever which any such
Indemnified Party may incur and which arise directly or indirectly from this
Agreement or which arise directly or indirectly by virtue of the Escrow Agent's
undertaking to serve as Escrow Agent hereunder; provided, however, that no
Indemnified Party shall be entitled to indemnity in case of such Indemnified
Party's gross negligence or willful misconduct. The provisions of this section
shall survive the termination of this Agreement and any resignation or removal
of the Escrow Agent. Solely as between the Purchaser and the Seller, all amounts
payable to the Escrow Agent pursuant to this Section 4 shall be apportioned
equally between them.
5. Fees and Expenses. The Escrow Agent shall be entitled to compensation
for its services as stated in the schedule attached as Annex 1, which
compensation shall be paid one-half by the Purchaser and one-half by the Seller.
The fee agreed upon the services rendered hereunder is intended as full
compensation for the Escrow Agent's services as contemplated by this Agreement.
6. The Escrow Agent.
(a) The Escrow Agent shall not be bound in any way by, or be deemed to have
knowledge of, or any duty under, the Asset Purchase Agreement or any other
agreement between or among the parties hereto, other than this Agreement. The
Escrow Agent shall have no duties other than those expressly imposed on it
herein and shall not be liable with respect to any action taken by it, or any
failure on its part to act, except to the extent that such actions constitute a
breach of this Agreement, bad faith, fraud, gross negligence or willful
misconduct. In no event shall the Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages. The Escrow Agent shall
have no liability with respect to the transfer or distribution of any funds
effected by the Escrow Agent pursuant to wiring or transfer instructions
provided to the Escrow Agent by any party to this Agreement. The Escrow Agent
shall not be obligated to take any legal action or to commence any proceedings
in connection with this Agreement, or to appear in, prosecute or defend in any
such legal action or proceedings.
4
(b) The Escrow Agent makes no representations and has no responsibility as
to the validity, genuineness or sufficiency of any of the documents or
instruments delivered to it hereunder. The Escrow Agent (i) shall be entitled to
rely upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof and (ii) may act in reliance upon any instrument
or signature reasonably believed by it to be genuine and may assume that any
person purporting to give notice, receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so. The Escrow Agent may act in reliance upon the advice of
counsel satisfactory to it in reference to any matter in connection with this
Agreement and shall no incur any liability for any action taken in good faith in
accordance with such advice.
(c) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Rental
Escrow Fund, or in the event that the Escrow Agent in good faith is in doubt as
to what action it should take hereunder, the Escrow Agent shall be entitled to
refrain from acting until the Escrow Agent shall have received a court order,
arbitration award, or joint instructions constituting a Final Resolution, in
which event the Escrow Agent shall deliver the amount of the Rental Escrow Fund
in dispute in accordance with such Final Resolution. In addition, in the event
of any dispute or disagreement relating to this Agreement or concerning the
duties of the Escrow Agent hereunder, the Rental Escrow Agent shall have the
right to deposit all property held under this Agreement into the registry of any
court of competent jurisdiction and notify the parties hereto of such deposit,
and thereupon the Escrow Agent shall be discharged from all further duties and
responsibilities as Escrow Agent under this Agreement.
7. Resignation; Removal.
(a) The Escrow agent may resign upon sixty (60) days advance written notice
to the parties. Upon receipt of such notice of resignation from the Escrow
Agent, the Purchaser and the Seller shall use their commercially reasonable
efforts jointly to appoint a successor escrow agent. The Escrow Agent shall
deposit all of the Rental Escrow Fund with the successor escrow agent appointed
in writing by the Purchaser and the Seller. If a successor escrow agent is not
appointed by the mutual agreement of the Purchaser and the Seller within the
sixty (60) day period following such notice, the Escrow Agent may tender into
the registry or custody of any court of competent jurisdiction any part or all
of the Escrow fund and thereupon the Escrow Agreement shall be discharged from
all further duties and responsibilities as Escrow Agent under this Agreement.
(b) The Escrow Agent shall be entitled to its compensation earned prior to
its resignation hereunder.
(c) The Purchaser and the Seller may, at any time substitute a new escrow
agent by giving thirty (30) days written notice thereof to the existing Escrow
Agent and paying all fees and expenses of such Escrow agent incurred to the date
of the substitution. Upon the effective date of the substitution of a successor
5
escrow agent, the Escrow Agent shall promptly account for and deposit all of the
Escrow Fund with such successor.
8. Tax Reporting. Any payments of income from the Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. For federal and state income tax purposes, all interest earned on the
Escrow fund shall be considered the currently reportable income of the party who
receives the distribution with respect thereto. The Escrow Agent shall file
annually all information returns with the Internal Revenue Service and other
governmental authorities documenting such interest income.
9. Miscellaneous Provisions.
(a) Severability. If any provision of this Agreement is prohibited by the
laws of any jurisdiction as those laws apply to this Agreement, that provision
shall be ineffective to the extent of such prohibition and/or shall be modified
to conform with such laws, without invalidating the remaining provisions hereof.
(b) Modification ad Waiver. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by the
Purchaser, the Seller and the Escrow Agent. No attempted waiver of any provision
hereof shall be binding on the other parties unless reduced to writing and
signed by the waiving party. Unless specifically provided otherwise herein or
agreed to by the Purchaser, the Seller and the Escrow Agent in writing, no
modification, waiver, termination, rescission, discharge or cancellation of this
Agreement shall affect the right of the parties hereto to enforce any claim,
whether or not liquidated, which accrued prior to the date of such modification,
waiver, termination, rescission, discharge, or cancellation of this Agreement,
and no waiver of any provision or of any default under this Agreement shall
affect the right of any party to enforce such provision or to exercise any right
or remedy in the event of any other default, whether or not similar.
(c) Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties; provided, however, that
the Purchaser may assign without the consent of the Seller, but with no less
than ten Business Days advance notice to the Seller and the Escrow Agent, its
rights hereunder to any Affiliate of which the Purchaser owns at least 80% of
the issued and outstanding equity thereof; in which event all references herein
to the Purchaser shall be deemed references to such assignee, except that all
representations and warranties made herein with respect to the Purchaser as of
the date of this Agreement shall be deemed representations and warranties also
to be made with respect to such assignee to the extent applicable as of the date
of such designation. No such assignment shall relieve the Purchaser of any
obligation hereunder. Any purported assignment in violation of this agreement
will be void ab initio. Subject to the preceding sentence, each term and
provision of this Agreement shall be binding upon and enforceable against and
inure to the benefit of any successors or assigns of the Purchaser and any
successors or assigns of the Seller. Nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties and their
respective successors and assigns any rights or remedies under or by reason of
6
this Agreement. In the event of any such proposed assignment, an amendment to
this Agreement, in form and substance reasonably acceptable to the Escrow Agent,
shall be executed and delivered in the event the Escrow Agent deems such an
amendment to be necessary or desirable.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, with the same effect as
if the signatures thereto were in the same instrument. This Agreement shall be
effective and binding on all parties when all parties have executed and
delivered a counterpart of this Agreement.
(e) Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to the Purchaser, to:
Peer 1 Acquisition Corp.
x/x Xxxx 0 Xxxxxxx Xxxxxxxxxxx, Xxx.
Xxxxx 0000
555 West Hastings Street
Vancouver, British Columbia
Canada V6B 4NS
Attention: Xxxxxxxx Xxxxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Seller, to:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: President, and with a copy to
General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
7
with a copy to:
Xxxxxx Xxxxxx Xxxxxxx, LLP
000 00xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Escrow Agent, to:
SunTrust Bank
Corporate Trust Department
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon acknowledgement of receipt by the
recipient by other than automatic means, and (iii) if delivered by mail in the
manner described above to the address as provided in this Section, be deemed
given upon receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
(f) Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes any and all other prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, is not intended to confer upon any person other than
the Purchaser and the Seller any rights or remedies hereunder.
(g) Construction. Within this Agreement the singular shall include the
plural and the plural shall include the singular and any gender shall include
all other genders, all as the meaning and context of this Agreement shall
require. The section headings as herein used are for convenience only and shall
not be deemed to vary the content of this Agreement or limit the scope of any
provision hereof. Unless otherwise specified, a reference herein to a schedule,
an annex or an exhibit refers to a schedule, annex or exhibit hereof.
8
(h) Choice of Law. This Agreement and all documents executed in connection
herewith shall be governed by, and construed in accordance with, the laws of the
State of Georgia, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
(i) Dispute Resolution. Solely as between Purchaser and Seller, all
disputes, controversies or claims arising out of or relating to distribution of
the Rental Escrow Fund shall be resolved pursuant to the arbitration provisions
of Section 9.9 of the Asset Purchase Agreement without regard to the amount in
controversy.
(j) Expenses. Solely as between Purchaser and Seller, all legal and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
10. Termination. This Agreement may only be terminated by written consent
signed by all parties or upon the earliest to occur of: (a) disbursement or
release of the entire Rental Escrow Fund by the Escrow Agent in accordance with
this Agreement or a Final Resolution with respect to the entire Rental Escrow
Fund (b) a written instruction signed by Seller directing disbursement of the
entire Rental Escrow Fund to Purchaser, or (c) delivery to Escrow Agent by
Seller of a written release of Seller by Landlord from all liabilities and
obligations under the Lease (or receipt by Escrow Agent of an order of a court
of competent jurisdiction to the effect that Seller is so released).
IN WITNESS WHEEOF, the Seller, the Purchaser, and the Escrow Agent have
executed and delivered this Agreement as of the date first written above.
SELLER:
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
Its: President
Federal Tax ID Number: 00-0000000
PURCHASER:
PEER 1 ACQUISITION CORPORATION
By: /s/ X.X. Xxxxxxx
------------------------------------
Its: President
------------------------------------
Federal Tax ID Number: ________________
9
ESCROW AGENT:
SUNTRUST BANK
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx
Its: First Vice President
-----------------------------------
(Rental Fund Escrow Agreement)
10
A-1
ANNEX I
ESCROW AGENT FEE SCHEDULE
The annual administration fee of $2,500.00 for administering this Escrow
Agreement is payable in advance at the time of closing and, if applicable, will
be invoiced each year to the appropriate party(ies) on the anniversary date of
the closing of the Escrow Agreement. Also, a one-time legal review fee of
$500.00 is payable in advance at the time of closing.
Out of pocket expenses such as, but not limited to, postage, courier, overnight
mail, insurance, money wire transfer, long distance telephone charges,
facsimile, stationery, travel, legal or accounting, etc., will be billed at
cost.
These fees do not include extraordinary services which will be priced according
to time and scope of duties. The fees shall be deemed earned in full upon
receipt by the Escrow Agent, and no portion shall be refundable for any reason,
including without limitation, termination of the Escrow Agreement.
It is acknowledged that the schedule of fees shown above is acceptable for the
services mutually agreed upon.
Note: This fee schedule is based on the assumption that the escrowed funds will
be invested in SunTrust's cash sweep account, STI Classic U.S. Treasury
Securities Money Market Fund.
A-1
