EXHIBIT 10.1
EXECUTION COPY
EXHIBIT A
ESCROW AGREEMENT
THIS 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,
Section 1.3(a)(ii) of the Asset Purchase
Agreement requires
that the Purchaser deposit with the Escrow Agent an
amount equal to $2,800,000
(the "Escrow Fund"), to be held by Escrow Agent and
distributed as provided in
this 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 and 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) Concurrently with the execution hereof, the Purchaser shall deposit
with the Escrow Agent an amount equal to the
Escrow Fund in cash to be held and
distributed by Escrow Agent pursuant to the
terms of this Agreement. The Escrow
Agent hereby acknowledges receipt of the
Escrow Fund.
(c) 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
control of the Escrow Agent. The Escrow Agent expressly waives
any right to set
off and appropriate any amounts in the
Escrow Fund.
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2. Distribution
of Escrow Fund.
(a) General. The Escrow Fund shall be held by the Escrow Agent as a
non-exclusive source of payment to the
Purchaser for any amounts owed by the
Seller to Purchaser Indemnified Persons pursuant to Section 7.1 of the
Asset
Purchase Agreement ("Section 7.1 Claim"). The Escrow Fund shall be the
sole
source of payment for any such amounts owed
until such time as the entire Escrow
Fund has been disbursed. Thereafter, claims may be made directly
against the
Seller to the extent permitted by Article 7
of the Asset Purchase Agreement.
(b) Escrow Fund
Payment Date. Within five (5) Business Days after the first
(1st) anniversary of the date hereof (the
"Escrow Fund
Payment Date"), the
Escrow Agent shall release to the Seller,
the balance of the
Escrow Fund, less
the aggregate amount of any claims to the
Escrow Fund evidenced by pending
Purchaser Notices (defined below), if any. Following the Escrow Fund
Payment
Date, within five (5) Business
Days following Final Resolution (as defined
below) of any pending Purchaser Notice, the Escrow Agent shall release to
the
Seller all amounts that are ultimately
determined not to be payable to Purchaser
on behalf of any Purchaser Indemnified Persons in respect of such pending
Purchaser Notice.
(c) Claims/Disputes. Notices of claims, notices of disputes, and
disbursements from the Escrow Fund shall be
effected as follows:
(i) Notice of Claim. If a Purchaser's Indemnified Person determines
in
good faith that
it is entitled to all
or a portion of the Escrow Fund as a
result
of one or more
Section 7.1 Claims to which it is entitled to
indemnification
under Article 7 of the Asset Purchase Agreement, the
Purchaser
shall have the right
to deliver with
reasonable
promptness
a
written notice
to the Escrow Agent and the Seller (the "Purchaser Notice")
stating that the
Purchaser, on behalf
of any Purchaser
Indemnified Person
is entitled to
all, or such portion
of, the Escrow Fund,
as the case may
be, setting
forth the amount thereof and stating such claim with reasonable
particularity
and with a
statement in reasonable detail of the factual
basis therefor.
Unless the Seller
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
the Purchaser an amount equal to (A) if the
Escrow Agent does not receive
written
objection within the
Objection Period,
the amount claimed in
the
Purchaser
Notice, (B) if the Escrow Agent receives
written objection to a
portion of the
amount claimed in the Purchaser Notice during the Objection
Period,
the amount
that is undisputed in the Purchaser Notice and the
amount
determined when the
dispute is resolved in the manner contemplated
in Section 9(i) hereof or (C) if the Escrow Agent receives written
objection to
such disbursement
during the Objection
Period in full,
then
the amount determined when the dispute is resolved in the manner
contemplated in
Section 9(i) hereof.
(ii) Notice
of Dispute. If the Seller's written objection (the
"Objection
Notice") to the
disbursement of any
portion of the Escrow Fund
is received by
the Escrow Agent
within fifteen (15) days from the
Escrow
Agent's
receipt of the
Purchaser Notice (the
"Objection
Period"), then
there shall be no disbursement from the Escrow Fund with respect to
disputed
amounts until the Escrow Agent receives (i) either a final
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nonappealable
order of a court of competent jurisdiction directing delivery
of the amount of
the 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 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 order or instructions.
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 rely
conclusively
and without
inquiry
and act on such
court order and legal opinion without further
questions and
shall have no duty to determine whether any 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
Purchaser Notice and
the Seller's basis
therefor.
(d) Disbursement
Notices. The Escrow Agent shall promptly notify the Seller
and the Purchaser in writing of the
occurrence and amount
of each
disbursement
of the Escrow Fund ("Disbursement
Notice").
3.
Administration of Escrow.
(a) So long as
the 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:
(i) 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;
(ii) any publicly
traded money market
fund, such as the STI
Classic
U.S. Treasury
Securities Money Market Fund; or
(iii) 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,
the Escrow Agent shall have no duty to
prepare or file any Federal or state tax
report or return with respect to the Escrow
Fund or any income earned thereon.
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(b) 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.
(c) 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.
(d) Subject to
Section 5 hereof, net
profits resulting
from, and interest
and income produced by investments
of, the Escrow Fund
("Earnings")
shall be
deemed a part of the Escrow Fund and
reinvested by the Escrow Agent.
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 arising
directly or indirectly
from this Agreement
or arising 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 provisio
