Asset Purchase Agreement

EXHIBIT 10.1


ASSET PURCHASE AGREEMENT


among:

EBAY INC., a Delaware corporation,

PAYPAL, INC.,

a Delaware corporation,


PAYPAL INTERNATIONAL LIMITED,

a company incorporated in the Republic of Ireland,


and

VERISIGN, INC.,

a Delaware corporation


Dated as of October 10, 2005


TABLE OF CONTENTS PAGE
1. SALE OF TRANSFERRED ASSETS; RELATED TRANSACTIONS 1 1.1 Sale of Transferred Assets 1 1.2 Excluded Assets 3 1.3 Agreements Relating to Transfer of Transferred Assets 4 1.4 Purchase Price 7 1.5 Assumption of Liabilities 7 1.6 Sales Taxes 8 1.7 Allocation 9 1.8 Closing 9 2. REPRESENTATIONS AND WARRANTIES OF SELLER 9 2.1 Due Organization 10 2.2 Equipment; Fixed Assets 10 2.3 Financial Statements; Customers; Services 10 2.4 Title to Certain Transferred Assets 11 2.5 Intellectual Property 11 2.6 Contracts 15 2.7 Compliance with Legal Requirements 16 2.8 Governmental Authorizations 16 2.9 Proceedings; Orders 16 2.10 Employee and Labor Matters 17 2.11 Tax Matters 18 2.12 Authority; Binding Nature of Agreements 18 2.13 Non-Contravention; Consents 19 2.14 Sufficiency of Transferred Assets 19 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT 20 3.1 Due Organization 20 3.2 Authority 20 3.3 Binding Nature of Agreements 20 3.4 Financing 20 3.5 Proceedings; Orders 20 3.6 Non-Contravention; Consents 20 3.7 SEC Filings; Financial Statements 21 3.8 Valid Issuance 22


i.

TABLE OF CONTENTS (CONTINUED)

PAGE
4. PRE-CLOSING COVENANTS 22 4.1 Access and Investigation 22 4.2 Operation of Business 22 4.3 Filings and Consents 24 4.4 Notification of Certain Matters 25 4.5 No Negotiation 25 4.6 Reasonable Efforts 25 4.7 Registration Rights Agreement; Investor Certification 25 4.8 Termination of Certain Agreements 25 4.9 Registration 25 4.10 Amendment of Certain Contracts 26 5. CONDITIONS PRECEDENT TO PARENT' S AND PURCHASERS' OBLIGATION TO CLOSE 26 5.1 Accuracy of Representations 26 5.2 Performance of Obligations 26 5.3 Consents 26 5.4 No Business Material Adverse Effect 26 5.5 Antitrust Matters 27 5.6 Documents 27 5.7 No Proceedings 28 5.8 No Prohibition 28 5.9 Employees 28 5.10 Termination of Contracts 28 6. CONDITIONS PRECEDENT TO SELLER' S OBLIGATION TO CLOSE 29 6.1 Accuracy of Representations 29 6.2 Performance of Obligations 29 6.3 Antitrust Matters 29 6.4 Documents 29 6.5 No Proceedings 30 6.6 No Prohibition 30 6.7 Listing 30 6.8 Freely Tradable Shares 30 7. TERMINATION 30 7.1 Termination Events 30 7.2 Termination Procedures 31


ii.

TABLE OF CONTENTS (CONTINUED)

PAGE
7.3 Effect of Termination 32 8. INDEMNIFICATION, ETC 32 8.1 Survival of Representations, Etc. 32 8.2 Indemnification by Seller 33 8.3 Indemnification by Parent and Purchaser 34 8.4 Defense of Third Party Claims 35 9. POST-CLOSING MATTERS 37 9.1 Employee Matters 37 9.2 Tax Cooperation; Allocation of Taxes 40 9.3 Merchant Contracts and Merchant and Consumer Data 40 9.4 Australian Arrangements 42 10. MISCELLANEOUS PROVISIONS 42 10.1 Further Actions 42 10.2 Continuing Access to Information 42 10.3 Publicity 43 10.4 Fees and Expenses 43 10.5 Attorneys' Fees 44 10.6 Notices 44 10.7 Headings 45 10.8 Counterparts and Exchanges by Electronic Transmission or Facsimile 45 10.9 Governing Law; Venue 46 10.10 Successors and Assigns; Parties in Interest 46 10.11 Remedies Cumulative; Specific Performance 47 10.12 Waiver 47 10.13 Amendments 47 10.14 Severability 47 10.15 Entire Agreement 47 10.16 Disclosure Schedule 48 10.17 Construction 48


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ASSET PURCHASE AGREEMENT


THIS ASSET PURCHASE AGREEMENT is entered into as of October 10, 2005, by and among: VERISIGN, INC., a Delaware corporation (" Seller" ); EBAY INC. , a Delaware corporation (" Parent" ); PAYPAL, INC. , a Delaware corporation (" Purchaser" ) and wholly owned subsidiary of Parent; and PAYPAL INTERNATIONAL LIMITED , a company incorporated in the Republic of Ireland and a wholly owned subsidiary of Purchaser (" International" and together with Purchaser, " Purchasers" ). Certain capitalized terms used in this Agreement are defined in Exhibit A .

RECITAL

Seller and Purchasers wish to provide for the sale of the Transferred Assets (as defined in Section 1.1) to Purchasers and/or an affiliate of Purchasers and assumption of the Assumed Liabilities (as defined in Section 1.5) by Purchaser on the terms set forth in this Agreement.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as follows:


1. SALE OF TRANSFERRED ASSETS; RELATED TRANSACTIONS.


1.1 Sale of Transferred Assets. Subject to Section 1.2, Seller shall cause to be sold, assigned, transferred, conveyed and delivered to Purchasers and/or (at Purchaser' s discretion) an affiliate of Purchasers, at the Closing, the following properties, rights, interests and tangible and intangible assets, whether existing as of the date of this Agreement or acquired during the Pre-Closing Period and whether owned by Seller or a Subsidiary of Seller (the " Transferred Assets" ), on the terms and subject to the conditions set forth in this Agreement:


(a) Patents and Patent Applications : All of the patents, patent applications and patent rights to inventions that are identified on Schedule 1.1(a) , and any counterparts, reissues, divisions, extensions, continuations and continuations in part of, and any other patents claiming priority from, any of the foregoing, in each case in any jurisdiction in the world (the patents, patent applications, patent rights to inventions, counterparts, reissues, divisions, extensions, continuations and continuations in part of, and any other patents claiming priority from, any of the foregoing referred to in this Section 1.1(a) being referred to in this Agreement as the " Transferred Patents" ).


(b) Trademarks, Tradenames and Service Marks : All of the tradenames, trademarks, service marks and other marks (including brand names, product names, logos, and slogans) and applications therefor that are identified on Schedule 1.1(b) and all rights therein (the tradenames, trademarks and service marks and rights therein referred to in this Section 1.1(b) being referred to as the " Transferred Marks" ).

(c) Domain Names : All of the domain name registrations and uniform resource locators (" URLs" ) that are identified on Schedule 1.1(c) and all rights therein (the domain name registrations, URLs and rights therein referred to in this Section 1.1(c) being referred to as the " Transferred Domain Names" ).

(d) Other Intellectual Property and Intellectual Property Rights : All of the Intellectual Property and Intellectual Property Rights (other than: (i) patents, patent applications, patent rights and rights in patentable inventions; (ii) tradenames, trademarks, service marks and other marks (including brand names, product names, logos, and slogans) and applications therefor and rights therein; and (iii) domain names, URLs and rights therein) that are owned by Seller or any Subsidiary of Seller and necessary for the conduct of, or that are primarily used in or held for use for, the Business, including the Intellectual Property and Intellectual Property Rights referred to in Schedule 1.1(d) (the Transferred Patents, Transferred Marks and Transferred Domain Names, together with the Intellectual Property and Intellectual Property Rights referred to in this Section 1.1(d), being referred to in this Agreement as the " Transferred IP" ).

(e) Customer/Merchant Base : All contact information, files and other data possessed by Seller or any of Seller' s Subsidiaries to the extent related to the direct customers, merchants, reseller partners and processors of the Business that have not Opted Out and all Cleansed Data (but not any other information or data) contained or included in Seller' s Pay 1 database (whether or not the direct customer, merchant, reseller partner or processor linked to such Cleansed Data has Opted Out).


(f) Fixed Assets : All computer equipment and other tangible assets of Seller or any Subsidiary of Seller identified on Schedule 1.1(f) (the tangible assets referred to in this Section 1.1(f) being referred to in this Agreement as the " Transferred Fixed Assets" ); provided, however , that unless the Seller Contract identified in item #1 on Schedule 4.10 has been amended as set forth on Schedule 4.10 prior to the Closing, the tangible assets identified in Part 2.4 of the Disclosure Schedule (the " Australian Fixed Assets" ) shall not be included in the Transferred Fixed Assets.


(g) Contracts : All rights of Seller or any Subsidiary of Seller under: (i) the Seller Contracts identified on Schedule 1.1(g)(i) (the " Shared Seller Contracts" ) to the extent that such rights relate to the Business or any Business Offering; (ii) the Seller Contracts related to the Business that are merchant agreements and that Seller or any Subsidiary of Seller has entered into pursuant to the corresponding Standard Form Agreement (as defined in Section 2.5(b)), other than the Shared Seller Contracts (the " Standard Merchant Agreements" ); (iii) the Seller Contracts related to the Business that are confidentiality agreements, employee proprietary information and invention assignment agreements or similar agreements, to the extent that such rights relate to the Business or the Transferred Assets; (iv) the Seller Contracts identified on Schedule 1.1(g)(iv) (the " Other Business Contracts" ); (v) the Seller Contracts related to the Business that are entered into by Seller or any Subsidiary of Seller during the Pre-Closing Period in compliance with Sections 4.2(d) and 4.2(e); (vi) the Seller Contracts related to the Business that are entered into by Seller or any Subsidiary of Seller during the Pre-Closing Period that, in the timeframe contemplated by the parenthetical clause at the end of Section 1.2(d), Purchaser notifies Seller at any time (either before or after the Closing) are to be included in the Transferred Assets; (vii) if and only if the Seller Contract identified in item #1 on Schedule 4.10 has been amended as set forth on Schedule 4.10 prior to the Closing, the Seller Contracts identified on Schedule 1.1(g)(vii) to the extent that such rights relate to the Business or any Business Offering (the " Australian Contracts" ); and (viii) the Seller Contracts, if any, and to the extent the rights under such Seller Contracts are assignable in whole or in part without further payment, liability or obligation on behalf of Seller, that are either (A) license agreements for the operating systems on the data center hardware and development and quality assurance hardware that are included in the Transferred Fixed Assets, or (B) service contracts, extended warranties, and other similar agreements for the data center hardware and development and quality assurance hardware that are included in the Transferred Fixed Assets.


(h) Claims : All Claims (including Claims for past infringement of Transferred IP) of Seller or any Subsidiary of Seller against other Persons relating to the Transferred Assets (regardless of whether or not such Claims have been asserted by Seller or any Subsidiary of Seller), and all rights of indemnity, warranty rights, rights of contribution, rights to refunds, rights of reimbursement and other rights of recovery related to the Transferred Assets possessed by Seller or any Subsidiary of Seller (regardless of whether such rights are currently exercisable).


(i) Promotional Materials, Records, Etc. : All advertising and promotional materials, and all books (including log books), records, files, data, notebooks, research reports, computer databases, and computer email archives, including programming diagrams, development documentation, specifications and specification negotiations, written customer configurations, written financial arrangements, security documentation and certifications, and related third party information (collectively, " Records" ), in each case that are necessary for the conduct of, or are primarily used in or held for use for, the Business and in each case excluding personally identifiable data for any Transferred Customer (as defined in Section 9.3(a)) that has Opted Out (the " Transferred Records" ).

(j) Post-Closing Revenue : All rights of Seller or any Subsidiary of Seller to recognize revenues following the Closing Date under or pursuant to any Seller Contract that is assumed by Purchaser hereunder.


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(k) Goodwill : All goodwill of the Business.

1.2 Excluded Assets. Notwithstanding anything to the contrary contained in this Agreement, the parties agree that neither Seller nor any Subsidiary of Seller is selling, assigning, transferring, conveying or delivering (nor does Seller or any such Subsidiary have any obligation to assign, transfer, convey or deliver) to Purchasers or an affiliate of Purchasers, and the Transferred Assets shall not include, any assets that are not Transferred Assets (the " Excluded Assets" ). For greater clarity, the Excluded Assets include:

(a) the assets specifically identified on Schedule 1.2(a) ;


(b) all rights, interests and claims of Seller under this Agreement, the Transactional Agreements to which Seller is a party and any other agreements between Seller and any of its Subsidiaries and Parent or Purchaser and any of its affiliates;

(c) all corporate minutes and stock books of account of Seller and its Subsidiaries, blank stock certificates, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals and other documents relating to the organization, maintenance and existence of Seller and its Subsidiaries as a corporation;

(d) all Seller Contracts relating to the Business entered into during the Pre-Closing Period in violation of Section 4.2(d) or Section 4.2(e), unless, prior to the Closing, Purchaser notifies Seller in writing that such Seller Contract is a Transferred Asset (it being understood that if during the Pre-Closing Period Seller or any Subsidiary of Seller enters into a Seller Contract relating to the Business in violation of Section 4.2(d) or Section 4.2(e), then notwithstanding this clause " (d)" or clause " (e)" of this Section 1.2, Purchaser shall be entitled (but not required) to designate such Seller Contract as a Transferred Asset at any time (either before or after the Closing) within 10 days after Seller provides Purchaser with a copy of such Seller Contract and notifies Purchaser that such Seller Contract was entered into during the Pre-Closing Period in violation of Section 4.2(d) or Section 4.2(e));

(e) all contracts, agreements, arrangements, commitments and undertakings to which Seller or its Subsidiaries are a party or is bound or to which its assets are subject that are not described in Section 1.1(g);


(f) any cash, cash equivalents, receivables or amounts invoiced (other than amounts invoiced in advance of the scheduled billing date therefor) that have not yet been recorded as receivables of Seller relating to the Business that exist or are accrued prior to or as of the Closing Date;


(g) all rights of recovery related to the receivables and other amounts described in Section 1.2(f);

(h) all assets or rights that relate to the Employee Plans of Seller;


(i) any Contracts, assets or rights that are necessary for the conduct of, or that are primarily used in or held for use for, Seller' s payment and billing services as part of Seller' s prepaid, postpaid and content business within Seller' s communications business, other than any Contracts, assets or rights included in the Seller Business Software that is included in the Transferred Assets, the Transferred Patents, the Transferred Marks, the Transferred Domain Names, the Transferred Fixed Assets, the Shared Seller Contracts, the Standard Merchant Contracts, the Other Business Contracts or the Australian Contracts;


(j) all Governmental Authorizations; and


(k) if the Seller Contract identified in item #1 on Schedule 4.10 has not been amended as set forth on Schedule 4.10 prior to the Closing, the Australian Contracts and the Australian Fixed Assets.


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1.3 Agreements Relating to Transfer of Transferred Assets.

(a) Seller shall electronically transfer all of the Transferred IP to Purchasers or an affiliate of Purchasers promptly following the Closing and shall not deliver any Transferred IP to Purchasers or any affiliate of Purchasers on any tangible medium. In the event any tangible Transferred Asset is inadvertently transferred to Purchasers together with any Transferred IP, such tangible asset shall be returned to Seller, the Transferred IP thereon shall be removed by Seller, Seller shall transfer such tangible Transferred Asset back to Purchasers without such Transferred IP, and Purchasers shall irretrievably remove such Transferred IP that was originally acquired on a tangible medium from Seller' s computers or other electronic media. Promptly following any electronic transmission of any Transferred IP, Seller shall execute and deliver to Purchaser a certificate in a form reasonably acceptable to Purchaser and containing, at a minimum, the following information: (i) the date of transmission; (ii) the time the transmission was commenced and concluded; (iii) the name of the individual who made the transmission; (iv) the signature of such individual; (v) a general description of the nature of the items transmitted sufficient to distinguish the transmission from other transmissions; and (vi) a certification that no Transferred IP was transferred to Purchasers or any affiliate of Purchasers on any tangible personal property.


(b) Except as expressly set forth in Section 1.3(c), Purchaser and Seller shall cooperate and work together to transfer promptly the Transferred Assets to Purchasers and shall take all other steps reasonably required to enable Purchasers to obtain possession of and good and valid title to, the Transferred Assets. Within five days after the Closing, each party will appoint a representative from its organization with appropriate technical expertise for the purpose of evaluating and transferring the Transferred Assets to Purchaser. Such individuals will consult with other members of each party' s organization as needed to accomplish such evaluation and transfer.


(c) For the avoidance of doubt, Seller may retain possession of the following Transferred Assets:

(i) subject to the parenthetical clause at the end of this sentence, any Transferred Assets that are necessary for the performance by Seller of its obligations under the Transition Services Agreement (as defined in Section 5.6(a)), solely for the use permitted under the Transition Services Agreement and only for the term of the Transition Services Agreement (it being understood that Seller shall deliver all such Transferred Assets to Purchasers promptly following the end of the term of the Transition Services Agreement and, subject to clauses " (ii)," " (iii)" and " (iv)" below, Seller shall promptly destroy any and all copies of such Transferred Assets that remain in the Seller' s possession following such delivery to Purchasers);

(ii) subject to the parenthetical clause at the end of this sentence, a copy of the Transferred IP that is expressly licensed by Purchaser to Seller pursuant to the terms of the License Agreement, solely for the use permitted under the License Agreement and only for the term of the License Agreement (it being understood that, subject to clause " (iii)" below, promptly following the end of the term of the License Agreement, Seller shall destroy any and all copies of such Transferred IP);

(iii) a copy of all contact information, files and other data possessed by Seller or any of Seller' s Subsidiaries solely to the extent related to the customers, merchants, reseller partners and processors of any of Seller' s businesses other than the Business and solely to the extent currently used in any of Seller' s businesses other than the Business (it being understood that: (A) subject to clause " (B)" of this sentence, any such information, files or other data may be used only to the extent necessary for the operation of Seller' s businesses other than the Business; and (B) any such information, files or other data that prior to the Closing was maintained as confidential information by Seller or any Subsidiary of Seller will be continued to be maintained as confidential information of Seller or any Seller Subsidiary following the Closing using the same standard of care and protection regarding non-disclosure as Seller and its Subsidiaries used prior to the Closing but in any event no less than a reasonable standard of care;

(iv) subject to the parenthetical clause at the end of this sentence, a copy of all Transferred Records that are financial records or information, financial files and other financial data related to the


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customers, merchants, reseller partners and processors of the Business solely to the extent necessary for (and for use solely for): (A) the preparation of tax returns and financial statements which are the responsibility of Seller; (B) the management and handling of any tax audits and tax disputes; (C) complying with any audit request; or (D) satisfying liabilities related to the Business that are not Assumed Liabilities (it being understood that: (1) such Transferred Records will only be accessible by financial and legal employees and advisors of Seller and its Subsidiaries having a need to access such Transferred Records to perform the obligations set forth above, and (2) with respect to any such Transferred Records that prior to the Closing were maintained as confidential information by Seller or any Subsidiary of Seller will be continued to be maintained as confidential information of Seller or any Seller Subsidiary following the Closing using the same standard of care and protection regarding non-disclosure as Seller and its Subsidiaries used prior to the Closing but in any event no less than a reasonable standard of care; and


(v) subject to the parenthetical clause at the end of this sentence, a copy of all Transferred Records applicable to (and for use solely for) complying with any subpoena or other investigative demand by any Governmental Body or for any civil litigation, provided that: (A) with respect to any Transferred Records that include, embody, incorporate, are derived from or relate to any of the Transferred IP, any such Transferred Records may be: (1) subject to clause " (3)" of this sentence, retained and available only to the internal and external legal counsel to Seller; (2) used solely for the defense of the legal proceedings referred to in Part 2.5(h) of the Disclosure Schedule or any other legal proceedings that may arise after the Closing; and (3) disclosed to a third party in connection with any legal proceedings referred to in this clause " (v)" only if: (w) Seller provides Purchaser with at least five business days prior notice of such proposed disclosure; (x) at the request of Purchaser, seeks a protective order or other appropriate protection with respect to such Transferred Records; (y) uses its reasonable best efforts to limit the disclosure of such Transferred Records to the greatest extent possible; and (z) uses its reasonable best efforts to cause such Transferred Records to be treated confidentially by each Person to whom they are disclosed; and (B) with respect to any other Transferred Records: (1) subject to clause " (2)" of this sentence, retained and available only to the internal and external legal counsel to Seller; and (2) disclosed to a third party only in connection with the legal proceedings referred to in this clause " (v)" and only if: (x) Seller provides Purchaser with at least five business days prior notice of such proposed disclosure; (y) Seller uses its reasonable best efforts to limit the disclosure of such Transferred Records to the greatest extent possible; and (z) Seller uses its reasonable best efforts to cause such Transferred Records to be treated confidentially by each Person to whom they are disclosed.

1.4 Purchase Price.

(a) As consideration for the sale, assignment, transfer, conveyance and delivery of the Transferred Assets pursuant to this Agreement:


(i) subject to Section 1.4(b), at the Closing, Purchaser shall pay (or cause to be paid) to Seller, in cash, an amount equal to $370,000,000 (the " Consideration" ), by wire transfer to an account number provided to Purchaser by Seller prior to the Closing; and


(ii) at the Closing, Purchaser shall assume the Assumed Liabilities (as defined in Section 1.5(b)) by delivering to Seller a Bill of Sale and Assignment and Assumption Agreement substantially in the form of Exhibit B (the " Bill of Sale and Assignment and Assumption Agreement" ).


(b) Notwithstanding anything to the contrary contained in this Agreement, Purchaser may, at any time after December 1, 2005, but prior to the Closing Date, elect to have Parent issue shares of Parent Common Stock to Seller in lieu of all or any portion of the Consideration (such election being referred to as the " Stock Payment Election" ); provided, however, that Purchaser may not make the Stock Payment Election: (i) unless the shares of Parent Common Stock issuable to Seller are covered by an effective registration statement on Form S-3 and are not subject to restrictions on public resale under applicable U.S. securities laws; (ii) unless the shares of Parent Common Stock to be issued in the Transactions shall have been approved for listing (subject to notice of issuance) on the NASDAQ National Market; (iii) if all of the conditions set forth in Sections 5 and 6 have been satisfied or waived on or prior to December 1, 2005; and (iv) there shall not have occurred (and there shall not be reasonably likely to occur) any effect, change, event or other circumstance relating to Parent that could result in a


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suspension of the use of the Registration Statement (as defined in the Registration Rights Agreement) or any prospectus or prospectus supplement relating thereto. In the event that Purchaser makes the Stock Payment Election, at the Closing, Purchaser shall, in lieu of the cash payment set forth in Section 1.4(a)(i):


(i) pay (or cause to be paid) to Seller an amount in cash equal to the Consideration less the portion of the Consideration to which the Stock Payment Election applies (such portion being referred to as the " Stock Payment Amount" ); and

(ii) cause Parent to issue to Seller the number of shares of Parent Common Stock (rounded down to the nearest whole share) equal to the quotient of the Stock Payment Amount divided by the Parent Average Stock Price.


1.5 Assumption of Liabilities.


(a) Except as set forth in Section 1.5(b), neither Purchaser nor any affiliate of Purchaser shall assume any Liabilities of Seller or any Subsidiary of Seller (whether or not related to the Business or the Transferred Assets), including, but not limited to: (i) any Tax Liabilities of Seller or any Subsidiary of Seller; (ii) any Liabilities of Seller or any Subsidiary of Seller relating to accounts payable, accrued liabilities, indebtedness, legal services, accounting services, financial advisory services, investment banking services or other professional services performed in connection with the sale of the Transferred Assets; (iii) any wages or salaries or other Liabilities relating to any employee of Seller or any Subsidiary of Seller, including the Retained Employment Liabilities (as defined in Section 9.1(c)) but excluding any Post-Hiring Date Employment Liabilities; (iv) any Liability of Seller or any Subsidiary of Seller under the Shared Seller Contracts; and (v) any other Liabilities of Seller or any Subsidiary of Seller.


(b) Notwithstanding Section 1.5(a), Purchaser and/or (at Purchaser' s discretion) an affiliate of Purchaser shall assume the following obligations and liabilities (the " Assumed Liabilities" ): (i) the obligations of Seller or, if applicable, the applicable Subsidiary of Seller, under the Standard Merchant Agreements and ...