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VRSN » Topics » COVENANTS PRIOR TO CLOSING

This excerpt taken from the VRSN 10-K filed Mar 16, 2005.

COVENANTS PRIOR TO CLOSING

 

10.1 In the period between the SIGNING DATE and the CLOSING DATE, except as otherwise contemplated or permitted by this AGREEMENT or approved by the PURCHASER in writing, SELLERS shall use their best efforts to cause that the COMPANY and its SUBSIDIARIES will:

 

  10.1.1 Conduct the business operation of the COMPANY and its SUBSIDIARIES, and maintain the ASSETS related to their business, in the usual and ordinary course consistent with past practice except as expressly otherwise provided in this AGREEMENT;

 

  10.1.2 Use their best efforts to preserve their relationships with employees, customers, clients, suppliers and others having material business dealings with the COMPANY and its SUBSIDIARIES;

 

  10.1.3 Be available upon request to discuss with the PURCHASER on a regular basis the general status of essential ongoing operations of the COMPANY and its SUBSIDIARIES;

 

  10.1.4 Keep in full force and effect insurance comparable in amount and scope of coverage to insurance carried by the COMPANY as of the date of this AGREEMENT;

 

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  10.1.5 Pay accounts payable in a manner consistent with prior practice and pay other obligations (including, without limitation, any amounts in respect of TAXES) when they become due and payable in the ordinary course of business of the COMPANY and its SUBSIDIARIES, subject to any such accounts payable or other obligations being disputed in good faith;

 

  10.1.6 Maintain their books of account and records in a manner consistent with applicable laws and IAS;

 

  10.1.7 Not amend any organizational documents or agreements (i.e. articles of association (Satzung), partnership agreements, etc.), except with the written consent of the PURCHASER and not take any shareholders’ resolutions regarding distribution of profits, capital increases, capital reductions, issuance of convertible bonds, participation rights, stock options or other securities or create rights or claims for the issuance of any shares or other securities or make any withdrawals;

 

  10.1.8 Not merge or consolidate with, or agree to merge or consolidate with, or purchase substantially all of the assets of, or otherwise acquire any business or other business organization or division thereof;

 

  10.1.9 Not settle any tax audit in a manner that could result in a material adverse consequence to PURCHASER or COMPANY or its SUBSIDIARIES after the CLOSING DATE;

 

  10.1.10 Not sell, transfer or otherwise dispose of any material assets;

 

  10.1.11 Not increase the current compensation or benefits granted and not make severance, termination or bonus payments to any of its EMPLOYEES except in connection with the bonus payment totaling USD 1,708,309 approved in the minutes of the management board dated 23 May 2004, which are attached as APPENDIX 10.1.11 and which may neither be amended nor revoked, and except in the ordinary course of business consistent with past practice or as required by law, common practice (betriebliche Übung) or contracts or agreements in effect prior to the date of this AGREEMENT;

 

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  10.1.12 Not execute any agreements with the SELLERS or a company affiliated with SELLERS or the COMPANY;

 

  10.1.13 Not execute, change or terminate an IMPORTANT AGREEMENT within the meaning of Section 5.1.31 without the approval of the PURCHASER, provided that, in case the respective IMPORTANT AGREEMENT is defined as such in Section 5.1.31 by a EUR threshold with respect to liabilities and obligations, the approval of the PURCHASER for such execution, change or termination is only required if the liabilities or obligations exceed a threshold of EUR 25,000;

 

  10.1.14 Not acquire any fixed assets for a purchase price exceeding EUR 25,000 in the individual case other than in the ordinary course of business consistent with past practice;

 

  10.1.15 Not make any capital expenditure which is not provided for as a capital expenditure in the annual budget and exceeding an amount of EUR 25,000 or incur liabilities exceeding an amount of EUR 75,000;

 

  10.1.16 Amend the articles of association of the COMPANY in Sections 4 (2) to 4 (9) to convert the preferred shares (Vorzugsaktien) back into common shares (Stammaktien);

 

  10.1.17 Not pay any dividend to any shareholder except those dividend payments set forth in APPENDIX 10.1.17;

 

  10.1.18 Not issue, grant or approve any issuance of stock options or shares to employees and holders of STOCK OPTIONS or modify any existing terms relating to STOCK OPTIONS, including but not limited to the STOCK OPTION PLAN of the COMPANY dated March 2001, except for the envisaged waiver of the STOCK OPTION PLAN as contemplated by the agreement attached in APPENDIX 11.6;

 

  10.1.19 Grant the PURCHASER and the PURCHASER’s auditor and tax advisor all necessary assistance and give access to personnel and all relevant documentation of the COMPANY for the purpose of reviewing the INTERIM ACCOUNTS;

 

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  10.1.20 Grant the PURCHASER and the PURCHASER’s auditor and tax advisor all necessary assistance and give access to personnel and all relevant documentation of the COMPANY and its auditor, including the working papers of the Auditors for the purpose of reviewing the 2003 ACCOUNTS.

 

10.2 The SELLERS shall indemnify and hold harmless (freistellen) the PURCHASER or, at the PURCHASER’s absolute discretion, the COMPANY or its SUBSIDIARIES, irrespective of SELLERS having used their best efforts to cause the COMPANY or its SUBSIDIARIES to comply with Section 10.1 or not, from and against any and all damages and losses on part of the PURCHASER, the COMPANY or its SUBSIDIARIES, arising from or in connection with a non-compliance by the COMPANY or its SUBSIDIARIES with any of the covenants set forth in Section 10.1 hereof, irrespective of whether the COMPANY or its SUBSIDIARIES acted intentionally or not. The liability of the SELLERS shall be limited pro rata (im Verhältnis) of their INDIVIDUAL PURCHASE PRICE PORTION compared to the PURCHASE PRICE.

 

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