Exhibit 10.1
THIS ASSET PURCHASE
AGREEMENT is made as of the 5 th day of May,
2008, between
HOSTOPIA.COM INC.,
a company incorporated under the laws of the State of Delaware
(hereinafter “ HOSTOPIA ”)
OF THE FIRST
PART
- and -
TUCOWS.COM CO. , a
corporation incorporated under the laws of Nova Scotia (hereinafter
“ TUCOWS ”)
OF THE SECOND
PART
WHEREAS TUCOWS
provides its customers with shared web hosting and related services
through the URL http://www.domaindirect.com and otherwise;
AND WHEREAS duly
authorized representatives of the parties hereto signed a letter of
intent dated April 8, 2008 with respect to the proposed sale
of certain of TUCOWS’ assets to HOSTOPIA;
AND WHEREAS
HOSTOPIA wishes to purchase from TUCOWS, and TUCOWS wishes to sell,
certain of the assets of the Shared Webhosting Business (as defined
below).
NOW THEREFORE ,
HOSTOPIA agrees to purchase from TUCOWS, and TUCOWS agrees to sell
to HOSTOPIA, the Purchased Assets (as hereinafter defined) on the
following terms and conditions:
1.
Defined Terms
In
this Agreement and in the schedules hereto, the following terms and
expressions will have the following meanings and capitalized terms
not defined below will have the meanings ascribed to them in the
body of this Agreement:
“ Closing ” has the meaning
ascribed thereto in Section 7;
“ Closing Date ” has the
meaning ascribed thereto in Section 7;
“ Deferred Revenue ” has the
meaning ascribed thereto in Section 4;
“ Domain Direct End-Users ”
means end-users that receive Domain Direct Services from TUCOWS and
that are currently hosted on HOSTOPIA’s servers, but excludes
all customers to whom the Services are provided in conjunction with
Trellix products and services.
“ Domain Direct Services ”
means the webhosting services offered by TUCOWS at domaindirect.com
and related websites, but excludes any “Web Identity”
accounts or services .
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“ Encumbrances ” means
all mortgages, charges, pledges, security interests, liens,
encumbrances, actions, claims, demands and equities of any nature
whatsoever or howsoever arising and any rights or privileges
capable of becoming any of the foregoing;
“ End-Users ” means
the customers of the Shared Webhosting Business who are the
end-users of the Services and includes Domain Direct End-Users, IYD
End-Users and Net Identity End-Users, but excludes all customers to
whom the Services are provided in conjunction with Trellix products
and services;
“ End-User Agreements
” means all services agreements between TUCOWS and End-Users
relating to the Shared Webhosting Services, the current form of
which is attached as Schedule A;
“ End-Users Information
” means all information possessed by TUCOWS identifying and
describing the End-Users, including, but not limited to, all
customer lists, email addresses, addresses, phone numbers, credit
card information, billing information, user ID’s and
passwords, as set out in Schedule B;
“ Financial Information ”
means the financial information relating to the revenues of the
Shared Webhosting Business, as set out in Schedule C;
“ GAAP ” means United States
generally accepted accounting principles;
“ Governmental Charges ”
means all taxes, customs duties, rates, levies, assessments,
reassessments and other charges, together with all penalties,
interest and fines with respect thereto, payable to any federal,
state, municipal, local or other government or governmental agency,
authority, board, bureau or commission, domestic or
foreign;
“ Intellectual Property ”
means any intellectual property essential to the Shared Webhosting
Business, including any software licenses owned or used by TUCOWS
with respect to the Shared Webhosting Business, as more fully
described in Schedule D;
“ IYD End-Users ” means
end-users that receive IYD Services from TUCOWS.
“ IYD Services ” means the
webhosting services offered by TUCOWS at iyd.com and related
websites;
“ Interim Period ” has the
meaning ascribed thereto in Section 11;
“ Migrated End-Users ” means
the Net Identity End-Users and IYD End-Users that are not currently
hosted upon HOSTOPIA’s servers, and which are hosted on
HOSTOPIA’s servers on or before the date that is 90 days
following the Closing Date, as further described in Schedule
E.
“ Net Identity End-Users ”
means end-users that receive Net Identity Services from TUCOWS at
netidentity.com and related websites.
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“ Net Identity Services ”
means web hosting services offered by TUCOWS at netidentity.com and
related websites.
“ Pre-Closing Annualized
Revenue ” has the meaning ascribed thereto in
Section 4.
“ Purchased Assets ” has the
meaning ascribed thereto in Section 2 of this
Agreement;
“ Purchase Price ” has the
meaning ascribed thereto in Section 4;
“ Services ” means the
Domain Direct Services, IYD Services and Net Identity Services,
;
“ Shared Webhosting Business
” means the business associated with the sale of the Services
to the End Users, as of the date herein.
2.
Purchased Assets
HOSTOPIA will purchase from TUCOWS the
following assets used in connection with the Shared Webhosting
Business (the “ Purchased Assets ”), free and
clear of all Encumbrances, for the purchase price as set forth
below:
(a)
The right to host End-Users’ websites in accordance with the
End-User Agreements;
(b)
TUCOWS’ contractual rights and obligations relating to the
delivery of Services to End-Users, including those arising under
all End-User Agreements;
(c)
The End-Users Information; and
(d)
All causes of action, lawsuits, judgments, deposits, refunds,
rebates, choses in action, rights of recovery, rights of set-off,
rights of recoupment, claims and demands of any nature available to
or being pursued by TUCOWS with respect to the Shared Webhosting
Business or ownership, use, function or value of any of the
Purchased Assets or Assumed Liabilities.
3.
Excluded Assets
For
greater certainty, the Purchased Assets do not include any tangible
assets of TUCOWS or any other assets used in connection with any
business of TUCOWS other than the Shared Webhosting
Business.
4.
Purchase Price and Adjustment
(a)
Purchase Price . The aggregate purchase price (the “
Purchase Price ”) for the Purchased Assets shall,
subject to the Adjustment, be an amount equal to [X — Y - Z],
where X and Y are defined as follows:
X =
1.3 x Pre-Closing Annualized Revenue
Y =
.15 x Deferred Revenue
Z =
.28 x Net Identity Deferred Revenue
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The
calculation of the Purchase Price is set out in Schedule
C.
(b)
Purchase Price Payment . Payment of the Purchase Price shall
be as follows:
(i)
Twenty percent (20%) of the Purchase Price shall be paid by
HOSTOPIA to TUCOWS upon signing the Definitive Agreement; and
(ii)
Eighty percent (80%) of the Purchase Price shall be paid by
HOSTOPIA to TUCOWS on the Closing Date.
All payments shall
be made by certified cheque, wire transfer of immediately available
funds, or as may otherwise be mutually agreed by the
parties.
(c)
Adjustment . TUCOWS shall pay HOSTOPIA an amount equal to
the Adjustment, no later than 90 days following the Closing
Date.
“ Adjustment ” means an
amount equal to:
(a)
the aggregate of all fees for the Services received by TUCOWS, if
any, during the 90 day period following the Closing Date from
Domain Direct End-Users; plus
(b)
the aggregate of all fees for the Services received by TUCOWS, if
any, during the 90 day period following the Closing Date from IYD
End-Users; plus
(c)
the aggregate of all fees for the Services received by TUCOWS, if
any, during the 90 day period following the Closing Date from Net
Identity End-Users, less the Billing Allowance, Customer Service
Allowance and Hosting Allowance on a pro-rata basis (all as defined
below); plus
(d)
the amount that HOSTOPIA has paid TUCOWS for the IYD End-Users and
Net Identity End-Users in accordance with this Agreement to the
extent that the number of Migrated End-Users is less than the
number of IYD End-Users and Net Identity End-Users ; provided that
if the number of Migrated End-Users is greater than the number of
IYD End-Users and Net Identity End-Users, TUCOWS shall be credited
with the amount that HOSTOPIA would have been obligated to pay
TUCOWS for such Migrated End-Users in accordance with this
Agreement; plus
(e)
the amount that HOSTOPIA has paid TUCOWS for the End-Users in
accordance with this Agreement to the extent that HOSTOPIA is
unable to collect any fees for the Services from the End-Users
after exercising commercially reasonable efforts to collect such
fees provided that in the case of i) End-Users who pay for the
Services monthly, such End-Users have not, prior to Closing, paid
TUCOWS for at least 2 months and, ii) in the case of End-Users who
pay for the Services annually, such End-Users have not paid TUCOWS
for at least 1 year prior to Closing.
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“ Billing Allowance ” means,
so long as TUCOWS continues to invoice and collect fees from Net
Identity End-Users, an amount equal to 10% of the fees received by
TUCOWS from Net Identity End-Users;
“ Customer Service Allowance
” so long as TUCOWS continues to provide customer service and
support to Net Identity End-Users, an amount equal to 30% of the
fees received by TUCOWS or HOSTOPIA during the period of time that
customer service and support was provided to Net Identity
End-Users;
“Deferred
Revenue” means the aggregate of all amounts
previously invoiced by TUCOWS to Domain Direct End-Users and IYD
End-Users for the Services, which, as of the last day of the most
recently completed fiscal quarter of TUCOWS (being the quarterly
period ending March 31, 2008), had not been recognized as
revenue in accordance with GAAP, as set out in Schedule C.
“ Hosting Allowance ” means
so long as TUCOWS continues to host Net Identity End-Users on its
servers, an amount equal to 20% of the fees received by TUCOWS or
HOSTOPIA during the period of time that hosting services were
provided to Net Identity End-Users;
“ Net Identity Deferred
Revenue” means the aggregate of all amounts previously
invoiced by TUCOWS to Net Identity End-Users for the Services,
which, as of the last day of the most recently completed fiscal
quarter of TUCOWS (being the quarterly period ending March 31,
2008), had not been recognized as revenue in accordance with GAAP,
as set out in Schedule C.
“Pre-Closing Annualized
Revenue” means A) all revenues (less all taxes,
refunds or adjustments) earned by TUCOWS in relation to providing
the Services to the End-Users, as such revenues were recognized by
TUCOWS in accordance with GAAP during TUCOWS’ most recently
completed fiscal quarter (being the quarterly period ending
March 31, 2008), multiplied by B) 4, as set out in Schedule
C.
5.
Assumed Liabilities
HOSTOPIA will not assume any of the liabilities
or obligations of TUCOWS of any nature or kind whatsoever,
contingent or otherwise, other than liabilities of TUCOWS related
to the Purchased Assets expressly assumed by HOSTOPIA herein
(“ Assumed Liabilities ”). For
greater certainty, the Assumed Liabilities shall include all
obligations of TUCOWS to be performed after the Closing Date under
the End-User Agreements.
6.
Non-Solicitation/Non-Competition
During the period
beginning on the Closing Date and ending three years following the
termination of the Shared Hosting Marketing Agreement (as defined
below), unless otherwise agreed in writing:
(a)
neither HOSTOPIA nor TUCOWS will directly or indirectly solicit or
hire any employees of the other party (or such other party’s
affiliates or subsidiaries) for employment, or any undertaking with
which such party is associated;
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(b)
TUCOWS shall not alone, through any subsidiary, affiliate or joint
venture or as a member, partner, or agent of any partnership, or as
an agent, member, stockholder (except stockholder of not more than
five percent (5%) of the outstanding stock of any company listed on
a national securities exchange or traded over the counter) or as an
investor in any corporation or other person or entity of any kind
whatsoever, directly or indirectly, sell or market to End-Users
services that are competitive with the Services of the Shared
Webhosting Business. Notwithstanding the foregoing, TUCOWS
shall be permitted to market webhosting services on behalf of
HOSTOPIA and refer customers to HOSTOPIA in accordance with the
Shared Hosting Marketing Agreement during its term.
7.
Closing
The parties intend that the closing of the
transaction provided for in this Agreement (“
Closing ”) will occur on May 15, 2008 (the
“ Closing Date ”) or another date mutually
satisfactory to both HOSTOPIA and TUCOWS, subject to the fulfilment
of all of the conditions precedent set out in Section 9.
8.
Closing Deliveries
The
parties shall take such actions and execute such documents as are
required to complete the transactions contemplated by this
Agreement at the Closing, including those set forth below:
TUCOWS’ Closing
Deliveries. On or before the Closing Date, TUCOWS shall
deliver or cause to be delivered to HOSTOPIA the following:
(a)
a certificate of good standing or similar certificate with respect
to TUCOWS, dated as of the Closing Date, such certificate to be
issued by the Province of Nova Scotia, which certificate shall
indicate that TUCOWS is in good standing;
(b)
a general conveyance and assumption of liabilities agreement
substantially in the form of Schedule F duly executed by TUCOWS,
together with such other bills of sale or instruments of
conveyance, assignment or transfer as may be reasonably required by
HOSTOPIA, including assignment of the End-User Agreements in form
acceptable to HOSTOPIA;
(c)
consents to the assignment of any contract under which consent is
required executed by all persons whose consent is required in form
acceptable to HOSTOPIA;
(d)
a certificate of the President or other senior officer of TUCOWS
dated as of the Closing Date in the form of Schedule G;
(e)
a certificate of the Secretary or other officer of TUCOWS in the
form of Schedule H;
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(f)
the shared hosting marketing agreement (the “ Shared
Hosting Marketing Agreement ”) duly executed by
TUCOWS attached hereto as Schedule I.
(g)
the trade-mark license agreement (“Trade-Mark License
Agreement ”) duly executed by TUCOWS attached hereto as
Schedule J;
(h)
the license agreement relating to Net Identity Services (“
Net Identity License Agreement ”) attached hereto as
Schedule K.
(i)
good and marketable title to and exclusive possession of the
Purchased Assets, free and clear of any and all Encumbrances;
and
(j)
all deeds of conveyance, bills of sale, assurances, transfers,
assignments, consents, and such other agreements, documents and
instruments as may be reasonably required by HOSTOPIA to complete
the transactions provided for in this Agreement.
HOSTOPIA’s Closing
Deliveries . At the Closing, HOSTOPIA shall deliver or
cause to be delivered to TUCOWS the following:
(a)
payment to TUCOWS of the amounts due on Closing pursuant to
Section 4;
(b)
a general conveyance and assumption of liabilities agreement
substantially in the form of Schedule F duly executed by HOSTOPIA;
and
(c)
the Shared Web Hosting Marketing Agreement duly executed by
HOSTOPIA attached hereto as Schedule I.
9.
Conditions of Closing
The
closing of this transaction is subject to the following conditions
precedent in favour of HOSTOPIA, which conditions may be waived by
HOSTOPIA in its sole discretion:
(a)
HOSTOPIA shall be satisfied with its due diligence investigations,
provided that this condition shall be deemed to be waived by
HOSTOPIA unless HOSTOPIA otherwise notified TUCOWS on or before
May 9, 2008;
(b)
All Purchased Assets shall have been sold, assigned and transferred
to HOSTOPIA by TUCOWS free and clear of all Encumbrances;
(c)
To the extent that any websites, data or information of End-Users
are required to be hos
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