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VRSN » Topics » SPECIAL STOCK TRANSFER RESTRICTIONS

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

SPECIAL STOCK TRANSFER RESTRICTIONS

 

8.1 Of the PURCHASE PRICE that is to be paid and delivered to Akazien GmbH in accordance with its INDIVIDUAL PURCHASE PRICE PORTION (the “AKAZIEN PURCHASE PRICE PORTION”), a percentage of 25% shall have attached special transfer restrictions for a period of up to five (5) years following the CLOSING DATE (the “SPECIAL TRANSFER RESTRICTION”). The SPECIAL TRANSFER RESTRICTION shall apply to the VERISIGN COMMON STOCK that is to be delivered to Akazien GmbH in accordance with its INDIVIDUAL PURCHASE PRICE PORTION under Section 3.2 lit. b) (the “RESTRICTED VERISIGN COMMON STOCK”). Akazien GmbH shall be the legal and beneficial owner of and shall have any and all voting rights and rights to receive distributions and dividends payable with respect to the RESTRICTED VERISIGN COMMON STOCK. Immediately following its receipt of the RESTRICTED VERISIGN COMMON STOCK, Akazien GmbH shall deliver such shares to an account at a bank to be agreed upon by Akazien GmbH and PURCHASER (the “RESTRICTED ACCOUNT”) in order to keep such shares in custody for the period of the SPECIAL TRANSFER RESTRICTION. Promptly following the fifth anniversary of the CLOSING DATE, such bank shall, pursuant to written instructions signed by PURCHASER and Akazien GmbH deliver the RESTRICTED VERISIGN COMMON STOCK with the legend removed to Akazien GmbH; provided that if the legend is removed with respect to any of the RESTRICTED VERISIGN COMMON STOCK pursuant to Section 8.2, PURCHASER and Akazien GmbH shall promptly deliver written instructions to such bank to deliver such shares promptly to Akazien GmbH.

 

8.2 The RESTRICTED VERISIGN COMMON STOCK shall be registered in the name of Akazien GmbH and shall bear a legend which restricts any sale, transfer; assignment, pledge or other disposition for a period of five years from the CLOSING DATE; provided, however, that

 

  (i) on the 1st anniversary of the CLOSING DATE, the legend will be removed as to a number of shares of the RESTRICTED VERISIGN COMMON STOCK equal to an amount of USD 3,645,165 (valued at the REFERENCE PRICE) if there has been no termination for CAUSE

 

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     of the service agreement (Dienstvertrag) of either of the SAMWER BROTHERS and neither of the SAMWER BROTHERS has terminated his employment with the COMPANY for other than GOOD REASON; and

 

  (ii) on the 2nd anniversary of the CLOSING DATE, the legend will be removed as to a number of shares of the RESTRICTED VERISIGN COMMON STOCK equal to an amount of USD 5,467,747 (valued at the REFERENCE PRICE) if there has been no termination for CAUSE of the service agreement (Dienstvertrag) of either of the SAMWER BROTHERS and neither of the SAMWER BROTHERS has terminated his employment with the COMPANY for other than GOOD REASON.

 

8.3 “CAUSE” shall include only one or more of the following: (1) any material breach by one of the SAMWER BROTHERS of any of the terms and conditions contained in his service or any other written agreement entered into after the SIGNING DATE between one of the SAMWER BROTHERS, the PURCHASER or VERISIGN or any of its affiliates, provided however that the breach constitutes an important reason in the meaning of § 626 para. 1 German Civil Code (BGB); (2) intentional failure and/or refusal to perform lawful duties for the COMPANY; (3) commission of an act of dishonesty (including but not limited to any acts of embezzlement or misappropriation of funds) or fraud; (4) serious dereliction of fiduciary obligation; (5) commission of an act of moral turpitude; (6) material violation of any VERISIGN regulation or policy; (7) commission of any act materially adverse to the interests of VERISIGN, provided however that the act constitutes an important reason in the meaning of § 626 para. 1 German Civil Code (BGB); (8) any material breach of one of the SAMWER BROTHERS regarding the bylaws of the management board (Geschäftsordnung des Vorstands) or the articles of association (Satzung) of the COMPANY; and (9) any other important reason (wichtiger Grund) within the meaning of Section 626 para. 1 German Civil Code or Section 84 para. 3 sentence 1 German Stock Corporation Act, however excluding a vote of mistrust by the shareholder meeting of the COMPANY (Vertrauensentzug duch die Hauptversammlung); provided, however, that CAUSE shall not be found to exist based on (1), (2), (4), (6) and (8) above unless VERISIGN has provided the respective SAMWER BROTHER with written notice of the conduct constituting CAUSE which notice specifies in reasonable detail the nature of the conduct constituting CAUSE and the respective SAMWER BROTHER has failed to cure such inappropriate conduct within ten (10) business days from the date notice is delivered to him; and further provided that with respect to (8) above, no such notice requirement shall apply in

 

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   the event of one of the SAMWER BROTHERS acting without approval from the supervisory board of the COMPANY where required by the bylaws of the management board or the articles of association of the COMPANY.

 

8.4 The following only shall constitute “GOOD REASON” for TERMINATION of one of the SAMWER BROTHERS: (i) recurring or permanent assignment of duties inconsistent with the duties of a member of the management board and the respective service agreement; (ii) failure of the COMPANY to provide compensation in accordance with the terms of his service agreement, (iii) relocation of his office more than 50 miles from its location on the CLOSING DATE, in each case without his consent, or (iv) the death or mental or physical disability (as determined by a physician appointed by the supervisory board) of such SAMWER BROTHER; provided, however, that the respective SAMWER BROTHER shall notify the supervisory board of the COMPANY in writing within twenty one days of the occurrence of any event they believe constitutes Good Reason (the “Good Reason Notice”); provided, however that failure to do so shall be deemed a waiver of the right to assert that there has been GOOD REASON. The COMPANY shall have fifteen days from the receipt of the GOOD REASON NOTICE to dispute it or to cure the events which the respective SAMWER BROTHER asserts constitutes GOOD REASON.

 

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