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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 6, 1998
NETWORK SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 0-22967 52-1146119
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
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505 Huntmar Park Drive, Herndon, Virginia 20170
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 742-0400
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ITEM 5. OTHER EVENTS.
On October 6, 1998, Network Solutions, Inc., a Delaware corporation
(the "Company"), announced that it had entered into an amendment (the
"Amendment") to the Company's Cooperative Agreement with the United States
Department of Commerce. (The authority to administer the Cooperative
Agreement, previously held by the National Science Foundation (the "NSF"), was
transferred by the NSF to the Department of Commerce on September 9, 1998.)
A copy of the Amendment is attached hereto as Exhibit 99.1. A copy of
the Company's press release, dated October 6, 1998, announcing the Amendment is
attached hereto as Exhibit 99.2 and incorporated by reference herein.
This report and the Company's press release attached hereto contain
forward looking statements that involve risks and uncertainties, including,
without limitation, those relating to competition and Internet governance.
More information about potential factors which could affect the Company's
financial results is included in the Company's annual report on Form 10-K for
the year ended December 31, 1997, including, without limitation, under the
captions, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Risk Factors," "Competition" and "Relationship with
the NSF; Recent Developments in Internet Governance," and the Company's
quarterly report on Form 10-Q for the period ended June 30, 1998, which are on
file with the Securities and Exchange Commission (http://www.sec.gov).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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Exhibit Description
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99.1 Amendment No. 11 to the Cooperative Agreement dated October 6, 1998.
99.2 Text of Press Release dated October 6, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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NETWORK SOLUTIONS, INC.
Date: October 9, 1998 By: /s/ Gabriel A. Battista
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Gabriel A. Battista
Chief Executive Officer
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NETWORK SOLUTIONS, INC.
INDEX TO EXHIBITS
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Exhibit Description
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99.1 Amendment No. 11 to the Cooperative Agreement dated October 6, 1998.
99.2 Text of Press Release dated October 6, 1998.
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EXHIBIT 99.1
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FORM CD-451 U.S. DEPARTMENT OF COMMERCE [ ] GRANT [X] COOPERATIVE AGREEMENT
(REV 10/98)
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AMENDMENT TO ACCOUNTING CODE
FINANCIAL ASSISTANCE AWARD N/A
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AWARD NUMBER
NCR 92-18742
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RECIPIENT NAME AMENDMENT NUMBER
Network Solutions, Incorporated Eleven (11)
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STREET ADDRESS EFFECTIVE DATE
505 Huntmar Park Drive October 7, 1998
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CITY, STATE, ZIP CODE EXTEND WORK COMPLETION TO
Herndon, Virginia 22070 September 30, 2000
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DEPARTMENT OF COMMERCE OPERATING UNIT
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
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COSTS ARE REVISED AS PREVIOUS ADD DEDUCT TOTAL
FOLLOWS : N/A ESTIMATED COST ESTIMATED COST
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FEDERAL SHARE OF COST $ $ $ $
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RECIPIENT SHARE OF COST $ $ $ $
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TOTAL ESTIMATED COST $ $ $ $
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REASON(S) FOR AMENDMENT
In accordance with the Memorandum of Agreement entered into under the authority of the National Science
Foundation Act of 1950, as amended, 42 U.S.C. Sec. 1861-75, and specifically 42 U.S.C. Sec. 1870(c), (j),
and 42 U.S.C. 1862(a) (4), (h), the flexibility period of the Cooperative Agreement is extended at no
additional cost to the Government.
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This Amendment approved by the Grants Officer is issued in triplicate and constitutes an obligation of
Federal funding. By signing the three documents, the Recipient agrees to comply with the Amendment
provisions checked below and attached, as well as previous provisions incorporated into the Award. Upon
acceptance by the Recipient, two signed Amendment documents shall be returned to the Grants Officer and the
third document shall be retained by the Recipient. If not signed and returned without modification by the
Recipient within 30 days of receipt, the Grants Officer may unilaterally terminate this Amendment.
[X] Special Award Conditions
[ ] Line Item Budget
[ ] Other(s)
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SIGNATURE OF DEPARTMENT OF COMMERCE GRANTS OFFICER DATE
Joseph Levine /s/ Joseph Levine 10/06/98
Acting Grants Officer
Office of Executive Assistance Management
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TYPED NAME, TYPED TITLE, AND SIGNATURE OF AUTHORIZED RECIPIENT OFFICIAL DATE
David M. Graves /s/ D M Graves 10/06/98
Director, Business Affairs
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SPECIAL AWARD CONDITIONS
NCR-9218742
Amendment No. 11
Parties: Department of Commerce (USG), Network Solutions, Inc.
(NSI)
Effective Date: October 7, 1998
Purpose: This agreement facilitates the stable evolution of
the Internet domain name system (DNS) in accordance
with the provisions of the Statement of Policy on DNS
administration, "Management of Internet Names and
Addresses," 63 Fed. Reg. 31741 (1998)(hereinafter
"Statement of Policy" or "White Paper") by: (1)
providing for recognition by NSI of NewCo when
recognized by the USG in accordance with the
provisions of the Statement of Policy; (2) amending
the Cooperative Agreement No. NCR-9218742; (3)
authorizing NSI's continued operation of the primary
root server during the transition; and (4) providing
for the development, deployment and licensing by NSI
of a mechanism that allows multiple registrars to
accept registrations for the generic top level
domains (gTLDs) for which NSI acts as a registry.
Term and
Transition: This agreement extends the Cooperative Agreement
through September 30, 2000; provided, however, that
as the USG transitions DNS responsibilities to NewCo,
corresponding obligations under the Cooperative
Agreement as amended will be terminated and, as
appropriate, covered in a contract between NSI and
NewCo.
General
Definition of
NewCo: For purposes of this agreement, NewCo is the
not-for-profit corporation described in the Statement
of Policy and recognized by the USG in accordance
with the provisions of the Statement of Policy for so
long as the USG continues its recognition of NewCo.
COMPETITION
Shared Registry: In order to create an environment conducive to the
development of robust competition among domain name
registrars, NSI will, either directly or by contract,
develop a protocol and associated software supporting
a system that permits multiple registrars to provide
registration services within the gTLDs for which NSI
now acts as a registry (Shared Registration System).
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Development of the Shared Registration System shall
reflect the following agreed upon time line, which
assumes that the USG does not request changes in the
specifications:
1. By November 1, 1998, NSI shall
provide functional and interface specifications for
the Shared Registration System and a milestone
schedule for its development and implementation.
2. By December 1, 1998, NSI shall create
a focused input technical advisory group consisting
of not more than 10 individuals designated by NewCo
to comment on the design of and participate in
testing of the Shared Registration System.
3. By March 31, 1999, NSI will establish
a test bed supporting actual registrations in .com,
.net and .org by 5 registrars accredited by NewCo
(Accredited Registrars). (Phase 1)
4. By June 1, 1999, the Shared
Registration System will be deployed by NSI and
available to support multiple licensed Accredited
Registrars offering registration services within the
gTLDs for which NSI now acts as a registry. (Phase 2)
5. By October 1, 1999, NSI will have
completed reengineering of NSI's registry/registrar
interface and back end systems so as to assure that
NSI, acting as registry, shall give all licensed
Accredited Registrars (including NSI acting as
registrar) equivalent access ("equal access") to
registry services through the Shared Registration
System. (Phase 3)
The functional and interface specifications of the
Shared Registration System shall describe a protocol
and associated software able to: (1) provide
security and authentication protocols and procedures
for requests from registrars; and (2) permit second
level domain name holders to change registrars within
the same registry without changing domain names.
NSI agrees to license the Shared Registration System
protocol, associated documentation, and reference
implementation to Accredited Registrars, on
reasonable terms and conditions approved by the USG,
such approval not to be unreasonably withheld, that
are designed to promote the development of robust
competition for the provisions of registrar services.
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Enhanced
Searchable
Database: Not later than November 1, 1998, NSI shall provide
the USG with a written description of its proposed
enhancements to the existing WhoIs database(s).
Within 60 days after the publication by the World
Intellectual Property Organization (WIPO) of
recommended characteristics of an enhanced searchable
database containing domain name registration data,
NSI will provide a report to the USG regarding how
and under what conditions such a database might be
designed and implemented in the gTLDs for which NSI
now acts as the registry.
Pricing: Commencing upon the Phase 1 deployment of the Shared
Registration System, and for the term of this
agreement, NSI's prices for registry services through
the Shared Registration System in the gTLDs for which
NSI now acts as the registry, will be no more than a
dollar amount per registration/year to be specified
in a further amendment reflecting NSI's costs and a
reasonable return on its investment. This price cap
will be adjusted via an amendment to the Cooperative
Agreement to reflect demonstrated changed costs of
NSI arising from newly enacted legislation, NewCo
fees, inflation, regulations, standards, costs of new
litigation (including settlements and judgments) in
excess of NSI's operating plan or changes in the
operation of the registry, or to fund specific
additional activities in the event such activities
are reflected in an amendment to the Cooperative
Agreement.
Existing NSI
Customers: Commencing upon the Phase 1 deployment of the Shared
Registration System, and for a period of 18 months
thereafter, NSI shall permit any customer with whom
it has a contract pursuant to which NSI provides
registration services that is either facially or
effectively exclusive as to registration services, to
terminate the registration provisions of such
contract (following payment of all amounts due up
through the time of such termination) and obtain
registration services from other registrars;
provided, however, that NSI may enter into agreements
pursuant to which NSI's counterparty agrees not to
utilize proprietary intellectual property or
confidential proprietary information provided by NSI
to the counterparty pursuant to their agreement.
New Contracts: Commencing on the effective date of this agreement,
and for a period of 18 months after the Phase 1
deployment of the Shared Registration System, NSI
will not enter into an agreement with any other party
that
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limits in any way that party's ability to serve as a
registrar or to operate a registry; provided,
however, that (1) NSI may enter into agreements
pursuant to which NSI's counterparty agrees not to
utilize proprietary intellectual property or
confidential proprietary information provided by NSI
to the counterparty pursuant to their agreement; and
(2) the mere provision by NSI, on a nonexclusive
basis, of registration services to a party shall not
be deemed to limit that party's ability to serve as a
registrar or operate a registry.
Separation of
Registry/Registrar
Services: Following the Phase 1 deployment of the Shared
Registration System, NSI shall make a certification
to the USG every six months designed to demonstrate
by means of objective criteria, which shall be agreed
upon between USG and NSI, that NSI is providing all
licensed Accredited Registrars with equal access to
its registry services. NSI also will by February 1,
1999, employ appropriate safeguards, approved by the
USG, to ensure that revenues and assets of the
registry are not utilized to financially advantage
NSI's registrar activities to the detriment of other
registrars.
DATA, KNOW HOW, TECHNICAL ASSISTANCE, ETC.
Software and Data: Not later than 30 days after the date of this
agreement, NSI shall submit to the USG an electronic
copy of all software and data generated under the
Cooperative Agreement through September 30, 1998.
Not later than 60 days after the date of this
agreement, NSI shall submit to the USG all existing
documentation for such software and data generated
through September 30, 1998.
The USG will take appropriate measures, including the
development and execution of confidentiality
agreements acceptable to NSI, to protect the
confidentiality of such data, software and
documentation so delivered. To the extent any such
software, data or documentation need to be made
available to any agent, contractor or project partner
of the USG, the USG will promptly so notify NSI and
will require such agent, contractor or project
partner to comply with similar appropriate
confidentiality requirements; provided, however,
that, except as otherwise expressly provided herein,
nothing in this paragraph is intended to alter any
intellectual property rights of the USG or NSI
established in the Cooperative Agreement.
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Assistance to NewCo: If NewCo has a technical question or a need to access
appropriate intellectual property of NSI, and the
answer to such question or such access is reasonably
necessary for NewCo to carry out its responsibilities
as described in the "Coordinated Functions", the
"Purpose" and the "Transition" sections of the
Statement of Policy (NewCo's Responsibilities), and
provided that NewCo shall have agreed to protect the
confidentiality and security of any such information
under a confidentiality agreement mutually acceptable
to NSI and NewCo, NSI shall provide such answer or
access and shall not assert any of its intellectual
property rights or its desire to protect
confidentiality or security as a basis to deny such
requests; provided, however, that NSI shall not be
required to expend excessive time or resources in
answering such questions or fulfilling such requests
unless it receives reasonable compensation for such
expenditures; and provided further, that, except as
otherwise expressly provided herein, nothing in this
paragraph is intended to alter any intellectual
property rights of the USG or NSI established in the
Cooperative Agreement.
RECOGNITION OF NEWCO
NewCo: As provided in the Statement of Policy, the USG will
effect the transition of its DNS responsibilities
through an agreement with NewCo. That agreement will
(i) require NewCo to exercise the responsibilities
delineated in the Statement of Policy in a
transparent, non-arbitrary, and reasonable manner,
(ii) prohibit NewCo from acting unjustifiably and
arbitrarily to injure particular persons or entities
or particular categories of persons or entities, and
(iii) require NewCo to subject registrars to
consistent requirements designed to promote a stable
and robustly competitive DNS, as set forth in the
Statement of Policy. Following the finalization of
the agreement between the USG and NewCo, NSI will
recognize NewCo pursuant to a contract between NSI
and NewCo.
NSI acknowledges that NewCo will have the authority,
consistent with the provisions of the Statement of
Policy and the agreement between the USG and NewCo,
to carry out NewCo's Responsibilities.
Nothing in this agreement, apart from NSI's
recognition of NewCo pursuant to this section of this
agreement, shall limit NSI's rights to operate as a
registry or registrar in TLDs other than .com, .net,
.org, .edu, or to participate in any other lawful
business pursuit.
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MISCELLANEOUS
Root Servers: NSI agrees to continue to function as the
administrator for the primary root server for the
root server system and as a root zone administrator
until such time as the USG instructs NSI in writing
to transfer either or both of these functions to
NewCo or a specified alternate entity.
While NSI continues to operate the primary root
server, it shall request written direction from an
authorized USG official before making or rejecting
any modifications, additions or deletions to the root
zone file. Such direction will be provided within
ten (10) working days and it may instruct NSI to
process any such changes directed by NewCo when
submitted to NSI in conformity with written
procedures established by NewCo and recognized by the
USG.
Modification
Of Cooperative
Agreement: Except as modified by this Amendment, the terms and
conditions of the Cooperative Agreement, as
previously amended, remain unchanged.
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EXHIBIT 99.2
US GOVERNMENT EXTENDS NETWORK SOLUTIONS
COOPERATIVE AGREEMENT THROUGH SEPTEMBER 2000
HERNDON, VA., OCTOBER 6, 1998 - Network Solutions, Inc. (NASDAQ: NSOL) and
officials from the Department of Commerce's National Telecommunications and
Information Administration (NTIA) have agreed to a two-year extension of the
Cooperative Agreement between the US Government and Network Solutions with
provisions to transition relevant US Government authority to a new non-profit
corporation for coordination of some domain name system functions. As part of
the agreement, Network Solutions and NTIA have agreed to a plan for the
transition to a shared registration system in a phased approach beginning March
31, 1999 with full implementation by June 1, 1999. Network Solutions will
build a shared registration system to support multiple licensed, accredited
registrars offering registration services. Network Solutions and other domain
name registrars will function as retailers of domain name registration services
through Network Solutions' shared registration system. Network Solutions will
also continue in its role as the registry -- or wholesaler -- of .com, .net and
.org domain name registrations. Network Solutions has registered more than 2.3
million domain names, or Web addresses, in .com, .net , .org and .edu.
Network Solutions has worked with the US Government pursuant to a five
year Cooperative Agreement to develop and maintain some of the key
administrative functions of the Internet including the domain name registration
system. This new amendment extends the Cooperative Agreement through September
30, 2000.
Other highlights from the extension include the following:
- - Network Solutions will submit a copy of all software and data generated
under the Cooperative Agreement through September 30, 1998 to the US
Government.
- - Once a shared registration system is implemented, pricing for Network
Solutions' shared registry services for .com, .net, .org and .edu will be a
specific dollar amount per registration, per year, and will be specified in
a further amendment reflecting Network Solutions' costs and a reasonable
return on its investment.
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- - Following the finalization of the US Government's agreement with a new
non-profit corporation - also known as Newco -- that will act as a
coordinating body for domain name system administrative functions, Network
Solutions will negotiate a contractual relationship with Newco.
- - Network Solutions will continue to function as the administrator for the
primary root server -- known as root server A -- for the root server
system and as a root zone administrator until such time as the US
Government instructs Network Solutions to transfer either or both of these
functions to Newco or a specific alternate entity.
Founded in 1979, Network Solutions, Inc. (NASDAQ: NSOL) pioneered the
development of registering Web addresses ending in .com, .net, .org and .edu.
Network Solutions also provides enterprise network consulting services,
focusing on network engineering, network security and network management
solutions for commercial customers. For more information, see the
www.networksolutions.com Web site.
Contact: For Media, Christopher Clough, [email protected] (703) 742-4706, for
Investor Relations, Bob Korzeniewski, [email protected], (703) 742-4741.
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