EXHIBIT 10.2
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is made and entered into as of
March 15, 2002, by and between DOUBLE B HOLDINGS, LLC. ("DOUBLE B"), a Utah
limited liability company having its principal place of business at 0000 Xxxx
Xxxxxxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000 and i5ive COMMUNICATIONS INC.
("i5ive"), a British Columbia corporation, having its principal place of
business at 0000 Xxxxxxxx Xxxxxx - Xxxxx 000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx X0X 0X0.
PREMISES
DOUBLE B wishes to acquire, and i5ive wishes to sell to DOUBLE B, an Option
to purchase the Website Assets of i5ive (as defined herein) on the terms and
conditions mutually agreed by the Parties and set out in this Agreement.
i5ive has developed a Website, related links, content and other materials
which includes, among other things, an "Enabling Platform" of producing and
distributing author-generated materials over the Internet, an Internet-based
community, and educational materials by users of the i5ive Website. This
Internet content includes a Website, links, content and other materials referred
to as "Suite U".
During the term of the Option, DOUBLE B desires to evaluate the market
potential of the Suite U business concept, for use and access by users in
conjunction with the Website and links heretofore developed by the founders of
DOUBLE B, and the ability of DOUBLE B to develop revenues from and commercial
applications for the business concept of integrating access to Suite U by a link
from the DOUBLE B website to Suite U in accordance with the business plan
attached hereto as Exhibit P-1.
NOW, THEREFORE, in consideration of the premises and the mutual warranties,
representations, covenants and agreements set forth in this Agreement, the
Parties agree as follows:
ARTICLE 1
OPTION
1.1 GRANT OF OPTION.
For and in consideration of DOUBLE B's payment of the Initial Option
Payment pursuant to Article 1.2, i5ive grants DOUBLE B an option to purchase the
Website Assets of I5ive, upon the terms and conditions set out in this Agreement
(the "Option").
1.2 OPTION PAYMENT.
For and in consideration of i5ive's grant of the Option pursuant to Article
1.1, DOUBLE B agrees to pay to i5ive (i) (US) $15,000 (Fifteen Thousand United
States Dollars) (the "Initial Option Payment") concurrently with the execution
of this Agreement, and (ii) provided DOUBLE B gives notice to i5ive of its
election to extend this Option as provided in Article 1.5 hereof, (US) $30,000
(Thirty Thousand United States Dollars) (the "Extension Option Payment")
concurrently with the giving of such notice. All such payments shall be made by
wire transfer of funds or other immediately available funds. Both the Initial
Option Payment and the Extension Option Payment are non-refundable in the event
the Option is not exercised.
1.3 TERM OF OPTION.
DOUBLE B shall be entitled to exercise the Option for a period expiring at
midnight (i) thirty (30) days from the date hereof, or (ii) provided DOUBLE B
has given the notice to i5ive of its election to extend the term of the Option
in accordance with Article 1.5 hereof and paid the Extension Option Payment, in
accordance with Article 1.2 hereof, sixty (60) days from the date hereof (herein
such period, including the extension, is referred to as the "Option Period"),
unless this Agreement is earlier terminated pursuant to the terms of Article 9.
If DOUBLE B does not exercise the Option during the Option Period, this
Agreement shall terminate and be of no further force or effect except as
provided in Article 9.2. Time is of the essence in calculating the Option
Period.
1.4 EXERCISE OF OPTION.
DOUBLE B shall be entitled to exercise the Option at any time during the
Option Period by delivering to i5ive a notice of exercise in substantially the
form of Exhibit 1.4 (the "Notice of Exercise"). DOUBLE B's decision to exercise
or not exercise the Option shall be entirely at DOUBLE B's discretion.
1.5 EXTENSION OF OPTION
DOUBLE B shall be entitled to extend the Option Period by (i) delivering to
i5ive not later than thirty (30) days from the date hereof a notice
substantially in the form of Exhibit 1.5 (the "Notice of Extension") of its
decision to extend the Option Period, and (ii) paying to i5ive the Extension
Option Payment as provided in Article 1.2 hereof. Upon delivery of the Notice of
Extension and making payment of the Extension Option Payment, the Option Period
shall be extended as provided in Article 1.3 hereof. Failure of DOUBLE B to
deliver to i5ive the Notice of Extension and pay the Extension Option Payment
not later than thirty (30) days from the date hereof shall result in the Option
Period terminating on the date determined in accordance with Article 1.4(i)
hereof.
ARTICLE 2
PURCHASE AND SALE OF WEBSITE ASSETS
2.1 PURCHASE AND SALE OF WEBSITE ASSETS.
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Upon DOUBLE B's exercise of the Option, and subject to the terms and
conditions of this Agreement, at the Closing i5ive, in exchange for DOUBLE B's
payment of the Purchase Price, shall sell, assign, transfer, convey, and deliver
to DOUBLE B all of i5ive's right, title, and interest in and to the Website
Assets, free and clear of any and all Liens.
2.2 PURCHASE PRICE.
In consideration for the sale, transfer, conveyance, assignment and
delivery of the Website Assets by i5ive to DOUBLE B, and in reliance upon the
representations, warranties, covenants, and agreements made in this Agreement by
i5ive, at the Closing DOUBLE B shall pay i5ive:
(a) (U.S.) $155,000 (One Hundred Fifty Five Thousand United States
Dollars), less the Initial Option Price and, if paid by DOUBLE B
to i5ive, the Extension Option Price.
(b) A membership interest in DOUBLE B equal to 26% of the total
membership interests of DOUBLE B following the Closing.
(c) A number of shares of capital stock of Blue Frogg, equal to 5% of
the shares of capital stock of Blue Frogg issued and outstanding
following the Closing.
2.3 ASSIGNMENT AND ASSUMPTION OF CONTRACTS.
(a) i5ive agrees to use its best endeavors to obtain the consent of
B&N to the assignment to DOUBLE B of all of the rights and obligations
under each of the B&N Contracts.
(b) In the event that i5ive, despite its best endeavors, is unable to
obtain the consent of B&N to the assignment of any B&N Contract to
DOUBLE B as contemplated by Article 2.3(a): (i) i5ive agrees to the
extent permitted under the B&N Contract to sub-contract the
performance of each B&N Contract to DOUBLE B and to act as DOUBLE B's
agent in the collection of any payments due under each such
sub-contract; and (ii) DOUBLE B agrees to perform each such
sub-contract and to hold i5ive harmless from any loss or liability
arising out of DOUBLE B's performance of it.
(c) Except as otherwise stated in Exhibit 2.3, DOUBLE B agrees to
assume as of the Closing Date all of the obligations of i5ive (i)
under the agreements listed on Exhibit 2.3 hereto, and (ii) subject to
B&N consenting to the assignment of the B&N Contracts, under the B&N
Contracts. DOUBLE B agrees to indemnify and hold i5ive, its officers,
Directors, agents and Representatives harmless from any
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liability claim, damages, or loss arising out of or asserted on the
basis of any of the contracts assumed by DOUBLE B hereunder.
ARTICLE 3
CLOSING
3.1 TIME AND PLACE OF CLOSING.
The closing of the purchase and sale of the Website Assets (the "Closing")
will take place at 10:00 A.M. (local time) on the Closing Date at the offices of
i5ive, or such other place as may be mutually agreed upon by the Parties.
3.2 CLOSING DATE.
The Closing Date shall occur as soon as possible following DOUBLE B's
exercise of the Option pursuant to Article 1.4 but no later than five (5)
business days following the date on which the last of the conditions set forth
in Article 8 (except for any condition involving the delivery of certificates on
the Closing Date) is satisfied or waived.
3.3 DOCUMENTS DELIVERED BY I5IVE AT CLOSING.
At Closing, i5ive shall deliver or cause to be delivered to DOUBLE B the
following documents:
(a) Good and sufficient bills of sale, assignments, and any other
instruments of sale, conveyance, transfer, or assignment, dated as of
the Closing Date, required or deemed reasonably necessary by DOUBLE B
in order to vest fully and effectively in DOUBLE B good and marketable
title to the Website Assets free of all Liens;
(b) A certificate from the Chief Executive Officer of i5ive attesting
that each of the representations and warranties of i5ive set out in
Article 4 of this Agreement is accurate in all material respects as of
the dates provided in this Agreement;
(c) Such other documents or certificates as shall be reasonably
requested by DOUBLE B.
3.4 DOCUMENTS DELIVERED BY DOUBLE B AT CLOSING.
At Closing, DOUBLE B shall deliver or cause to be delivered to i5ive the
following:
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(a) Payment of the cash portion of the Purchase Price by wire
transfer or other immediately available funds;
(b) A certificate for the membership interest of DOUBLE B, determined
as provided in Article 2.2(b);
(c) A certificate for a number of shares of the capital stock of Blue
Frogg, determined as provided in Article 2.2(c);
(d) A certificate of a duly authorized officer of DOUBLE B attesting
that each of the representations and warranties of DOUBLE B set forth
in Article 5 of this Agreement is accurate in all material respects as
of the date of this Agreement and as of the Closing Date;
(e) Such other documents or certificates as shall be reasonably
requested by i5ive;
(f) Such assumption and other agreements as may be reasonably
requested by i5ive pursuant to Article 2.3(c) hereof; and
(g) The agreements of the members of DOUBLE B pursuant to Article 7.4
hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF I5IVE
i5ive represents and warrants to DOUBLE B, as of the date hereof, as
follows:
4.1 ORGANIZATION, STANDING, AND CAPITAL STRUCTURE.
i5ive is a corporation duly organized, validly existing, and in good
standing under the Laws of the Province of British Columbia, and has the power
and authority to carry on its business as now conducted.
4.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) i5ive has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated by it. The execution,
delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, have been, or at the Closing
Date will have been, duly and validly authorized by all necessary
corporate action on the part of i5ive, and this Agreement will at the
Closing Date represent a legal, valid, and binding obligation of
i5ive, enforceable against i5ive in accordance with its terms.
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(b) Neither the execution and delivery of this Agreement by i5ive,
nor the consummation by i5ive of the transactions contemplated hereby,
nor compliance by i5ive with any of the provisions hereof, will: (i)
conflict with or result in a breach of any provision of i5ive's
Certificate of Incorporation or Bylaws; (ii) constitute or result in a
default under, or require any consent pursuant to any Contract or
Permit of i5ive, except as to the assignment of the B&N Contracts; or
(iii) violate any Law or Order applicable to i5ive or the Website
Assets.
4.3 TITLE TO WEBSITE ASSETS.
i5ive has, or will have on the Closing Date, and as a result of the
transactions contemplated by this Agreement DOUBLE B will receive,
good and marketable title to all of the Website Assets free and clear
of any Liens.
4.4 INTELLECTUAL PROPERTY.
Exhibit 4.4 hereto contains a true and complete list of i5ive's patents,
trademarks, service marks, trade names, copyrights, and applications or
registrations therefor. All licenses whereby i5ive is the licensee of any
Intellectual Property are in full force and effect and constitute legal, valid,
and binding obligations of their respective parties; there have not been and
there currently are not any defaults under those licenses by any party; and no
event has occurred which would constitute a default thereunder. Except as
disclosed in Exhibit 4.4 hereto, i5ive has all title, rights, and interest in
the Intellectual Property free and clear of all assignments, licenses,
restrictions, encumbrances, charges, or claims of infringement, and i5ive has
received no written claim or notice from any third party, including any employee
of i5ive, that such third party has any interest in such rights. To the
knowledge of i5ive, none of the Intellectual Property applications, trademark or
service xxxx registrations, trade names, or copyrights and related rights as
used by i5ive infringes upon or otherwise violates the rights of any other
Person nor has any Person asserted to i5ive a written claim of such infringement
or other violation except as disclosed in Exhibit 4.4 hereto. Except as
disclosed in Exhibit 4.4 hereto, i5ive is not obligated to pay any royalties for
the Intellectual Property to any Person.
4.5 COMPUTER SOFTWARE AND DATABASES.
Exhibit 4.5 hereto accurately identifies all computer software and
databases owned, licensed, leased, internally developed or otherwise used in
connection with the Website Assets. i5ive has, and upon consummation of the
transactions contemplated by this Agreement on the Closing Date, i5ive will
deliver to DOUBLE B and DOUBLE B will have, all computer software and databases
and all rights to use all computer software and databases that are necessary to
operate the Website Assets as presently operated by i5ive and all documentation
relating to all such computer software and databases. All
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such computer software and databases perform substantially in accordance with
the documentation related thereto or used in connection therewith. Except as
disclosed in Exhibit 4.5 hereto, all software developed internally, or
externally, for use with the Website Assets was developed initially by i5ive
employees or has been assigned, including all copyrights therein, to i5ive.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DOUBLE B
DOUBLE B represents and warrants to i5ive as follows:
5.1 ORGANIZATION, STANDING, AND POWER.
DOUBLE B is a limited liability company duly organized, validly existing,
and in good standing under the Laws of Utah, and has the power and authority to
carry on its business as now conducted.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) DOUBLE B has the power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated by it. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated in it have been, and the exercise of the
Option by DOUBLE B will be, duly and validly authorized by all
necessary action in respect thereof on the part of DOUBLE B. This
Agreement represents a legal, valid, and binding obligation of DOUBLE
B, enforceable against DOUBLE B in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by DOUBLE B,
nor the consummation by DOUBLE B of the transactions contemplated by
it, nor compliance by DOUBLE B with any of the provisions of this
Agreement will: (i) conflict with or result in a breach of any
provision of DOUBLE B's articles of organization or operating
agreement; (ii) constitute or result in a default under, or require
any consent pursuant to any Contract or Permit of DOUBLE B; or (iii)
violate any Law or Order applicable to DOUBLE B or its assets.
5.3 CAPITALIZATION OF DOUBLE B
The capitalization of DOUBLE B consists of 100 units of membership interest
("Units"), of which 74 Units are issued and outstanding and none of which are
reserved for issuance, except for the Units that may be issued to i5ive upon
consummation of the transactions herein contemplated. No other class of
membership
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interest or equity ownership is authorized. All of the issued and outstanding
Units were duly and validly issued and are fully paid and non-assessable. None
of the outstanding Units has been issued in violation of any preemptive rights
of the current or past Unitholders of Double B. Except as described above, there
are no outstanding options, warrants or rights to subscribe for, or commitments
of any character whatsoever relating to, or securities or rights convertible
into or exchangeable for, Units of DOUBLE B or Contracts, commitments,
understandings or arrangements by which DOUBLE B is or may be obligated to issue
additional Units or options, warrants, or rights to purchase or acquire any
additional Units or other equity ownership interests. All the Units of DOUBLE B
to be issued to i5ive pursuant to this Agreement will be, when issued and
delivered, fully paid, validly issued and non-assessable. Double B has no
outstanding indebtedness.
5.4 CAPITALIZATION OF BLUE FROGG
Blue Frogg has authorized capital stock consisting of 25,000,000 shares of
common stock, of which, as of the date hereof, there are 10,000,000 shares
issued and outstanding, and 5,000,000 shares of preferred stock, of which, as of
the date hereof, there are no shares issued and outstanding. No other class of
capital stock is authorized. All of the issued and outstanding shares of capital
stock were duly and validly issued and are fully paid and non-assessable. None
of the outstanding shares of capital stock has been issued in violation of any
preemptive rights of the current or past stockholders of Blue Frogg. As of the
date hereof, Blue Frogg has reserved for issuance an aggregate of 500,000 shares
of common stock issuable Under its 2001 Stock Option and Purchase Rights Plan.
Except as described above, there are no outstanding options, warrants or rights
to subscribe for, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of Blue Frogg or Contracts, commitments, understandings or arrangements by
which Blue Frogg is or may be obligated to issue additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. All the shares of capital stock of Blue
Frogg to be issued to i5ive pursuant to this Agreement will be, when issued and
delivered, fully paid, validly issued and non-assessable.
5.5 TITLE TO BLUE FROGG SHARES.
DOUBLE B has, or will have on the Closing Date, and as a result of the
transactions contemplated by this Agreement I5IVE will receive, good and
marketable title to all of the shares of common stock of Double Frogg to be
transferred to i5ive pursuant to Article 2.2(c) hereof free and clear of any
Liens.
ARTICLE 6
COVENANTS
6.1 CONDUCT OF I5IVE'S BUSINESS PENDING CONSUMMATION.
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(a) AFFIRMATIVE COVENANTS. i5ive covenants and agrees with DOUBLE B
that, from the date of execution of this Agreement until the earlier
of the Closing Date or the expiration or termination of this
Agreement, i5ive shall:
(i) Operate and maintain the Website Assets only in the usual,
regular, and ordinary course and in accordance with past
practices, ordinary wear and tear excepted, subject to the
Management and Operating Services Agreement dated February 15,
2002 (the "Management and Operating Services Agreement") with
Creative Marketeam Canada Ltd.;
(ii) Promptly advise DOUBLE B in writing of any matter arising
or discovered after the date of this Agreement that has or is
reasonably expected to have a material adverse effect on the
Website Assets; and
(iii) Keep DOUBLE B advised of all material developments relevant
to the Website Assets and to the consummation of the transactions
contemplated by this Agreement.
(iv) Continue in full force and effect for the Option Period the
Management and Operating Services Agreement and make or cause to
be made all monthly payments required to be made to Creative
Marketeam Canada, Ltd. pursuant to the terms of that Agreement.
(b) NEGATIVE COVENANTS. i5ive covenants and agrees with DOUBLE B
that, from the date of execution of this Agreement until the earlier
of the Closing Date or the expiration or termination of this
Agreement, i5ive will not do or agree or commit to do, any of the
following without the prior written consent of the chief executive
officer of DOUBLE B:
(i) Voluntarily permit or allow any of the Website Assets to be
subjected to any Lien;
(ii) Dispose of or voluntarily permit to lapse any previously
unexpired right to the use of any of the Intellectual Property
used in conjunction with the operation of the Website Assets or
dispose of or disclose to any person any of the Intellectual
Property that is used exclusively or primarily in connection with
the operation of the Website Assets and that is not theretofore
in public knowledge;
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(iii) Take any action that would prevent either Party from
performing its covenants and agreements under this Agreement;
(iv) liquidate, merge, or otherwise terminate its corporate
existence; or
(v) directly or through any officer, director, agent or other
Person, solicit or initiate any proposal or offer from any Person
relating to any purchase of the Website Assets or any material
portion thereof.
6.2 COVENANTS OF DOUBLE B.
DOUBLE B covenants and agrees with i5ive that except as required by Law,
from the date of this Agreement until the earlier of the Closing Date or the
expiration or termination of this Agreement, DOUBLE B shall not take any action
that would materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 AGREEMENT AS TO EFFORTS TO CONSUMMATE.
Subject to the terms and conditions of this Agreement, each Party agrees to
use its reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper, or advisable under
applicable Laws to consummate and make effective, as soon as practicable after
the date of this Agreement, the transactions contemplated by this Agreement,
including using its reasonable best efforts to lift or rescind any Order
adversely affecting its ability to consummate the transactions contemplated
herein and to cause to be satisfied the conditions referred to in Article 8 of
this Agreement. This Article 7.1 shall not, however, be construed to require
DOUBLE B to exercise the Option.
7.2 CONFIDENTIALITY.
Each Party shall, and shall cause its officers, directors, employees,
Representatives, advisers and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party concerning the
Website Assets, the i5ive community publishing procedures and protocols, its
businesses, operations, and financial position and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to
Closing, each Party shall promptly return or certify the destruction of all
documents and
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copies thereof, and all work papers containing confidential information received
from the other Party and shall thereafter maintain and not use for any purpose
any of the confidential information theretofore provided. This Article 7.2 shall
not, however, be construed to require i5ive to disclose to DOUBLE B during the
Option Period prior to the Closing any information i5ive considers to be
confidential.
7.3 NOTIFICATION OF CERTAIN EVENTS.
Each Party shall promptly notify the other Party as soon as practicable
after it has knowledge of (a) the occurrence, or failure to occur, of any event
that would, or would be likely to cause, either Party's representations or
warranties in this Agreement to be untrue or incorrect in any material respect,
or (b) any failure on its part or the part of any of its officers, directors,
employees, Representatives, or agents to comply with or satisfy in any material
respect any covenant, condition, or agreement in this Agreement.
7.4 ELECTION OF i5IVE DESIGNEE AS DIRECTOR OF DOUBLE B
At the Closing, DOUBLE B shall deliver to i5ive the agreement of the
members of DOUBLE B (other than i5ive) to the effect that so long as i5ive shall
remain the holder of the shares of capital stock issued to i5ive at the Closing,
such persons will vote and take such other steps as may be necessary to elect
one person designated by i5ive, or any person to whom i5ive may transfer not
less than all of such shares, to be a Director (or equivalent management
position) of DOUBLE B.
7.5 CONTINUAL FUNDING OF MANAGEMENT AND OPERATING SERVICES AGREEMENT AFTER
CLOSING
i5ive agrees that in the event the Option is exercised and the Closing is
consummated, it will, at the Closing, pay to DOUBLE B a sum equal to the
difference between $155,000 and the aggregate of all payments to Creative
Marketeam Canada, Ltd. under the terms of the Management and Operating Services
Agreement (excluding such amount as was paid on account of receipts from B&N)
during the period March 1, 2002 through the Closing. Thereafter, i5ive shall
have no further funding obligation either under this Agreement or the Management
and Operating Services Agreement.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE THE PURCHASE AND SALE OF THE WEBSITE ASSETS
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.
The respective obligations of each Party to consummate the purchase and
sale of the Website Assets pursuant to Article 2 are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Article
11.5 of this Agreement:
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(a) EXERCISE OF OPTION.
DOUBLE B shall have exercised the Option pursuant to Article 1.3
during the Option Period.
(b) LEGAL PROCEEDINGS.
No court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent)
or taken any other action which prohibits, restricts or makes illegal
consummation of the transactions contemplated by this Agreement and no
action which may result in such Law or Order shall have been commenced
or threatened by any Person.
9.2 CONDITIONS TO OBLIGATIONS OF DOUBLE B.
The obligations of DOUBLE B to consummate the purchase and sale of the
Website Assets pursuant to Article 2 are subject to the satisfaction of the
following conditions, unless waived by DOUBLE B pursuant to Article 11.5(a) of
this Agreement:
(a) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of i5ive set forth or referred to
in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had been
made on and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS.
Each and all of the agreements and covenants of i5ive to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to Closing shall have been duly performed
and complied with in all material respects.
(c) DELIVERY OF DOCUMENTS.
i5ive shall have delivered to DOUBLE B each of the documents specified
in Article 3.3.
8.3 CONDITIONS TO OBLIGATIONS OF I5IVE.
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The obligations of i5ive to consummate the purchase and sale of the Website
Assets pursuant to Article 2 are subject to the satisfaction of the following
conditions, unless waived by i5ive, pursuant to Article 11.5(b) of this
Agreement:
(b) PAYMENT OF PURCHASE PRICE.
DOUBLE B shall have paid the Purchase Price in accordance with the
terms of Article 2.2.
(c) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of DOUBLE B set forth in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of Closing Date with the same effect as
though all such representations and warranties had been made on and as
of Closing Date.
(d) PERFORMANCE OF AGREEMENTS AND COVENANTS.
Each and all of the agreements and covenants of DOUBLE B to be
performed and complied with pursuant to this Agreement prior to
Closing shall have been duly performed and complied with in all
material respects.
(e) DELIVERY OF DOCUMENTS.
DOUBLE B shall have delivered to i5ive each of the documents specified
in Article 3.4.
ARTICLE 9
TERMINATION
9.1 TERMINATION.
This Agreement may be terminated as provided in Article 1.3 or at any time
prior to the Closing:
(a) By mutual consent of the Parties;
(b) By the Board of Directors of either Party in the event of a
material breach by the other Party of any representation, warranty,
covenant, or agreement contained in this Agreement which cannot be or
has not been cured within ten (10) days after the giving of written
notice to the other Party of such breach; or
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9.2 EFFECT OF TERMINATION.
In the event of the termination or expiration of this Agreement pursuant to
Articles 1.3 or 9.1:
(a) This Agreement shall become void and have no effect, except that:
(i) the provisions of Articles 1.4, 7.2 and 9 of this Agreement shall
survive any such termination or expiration, and (ii) a termination
pursuant to Article 9.1(b) shall not relieve the breaching Party from
liability for an uncured willful breach of a representation, warranty,
covenant, or agreement giving rise to such termination; and
(b) Each Party shall pay the costs and expenses incurred by it in
connection with this Agreement, provided that, if termination is the
direct or indirect result of an uncured willful breach of a
representation, warranty, covenant or agreement, the breaching Party
shall be fully liable to the non-breaching Party for such default.
ARTICLE 10
GOVERNING LAW; DISPUTE RESOLUTION
10.1 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
Laws of the State of Delaware applicable to contracts executed and wholly
performed within that State.
10.2 ARBITRATION.
(a) AMERICAN ARBITRATION ASSOCIATION RULES.
Any controversy or claim arising out of or relating to this Agreement shall
be determined by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "Rules"); provided, however, that
no controversy or claim may be deemed to arise out of or relate to this
Agreement that is based solely or in part upon any decision by DOUBLE B not to
exercise its Option under this Agreement.
(b) COMPOSITION OF ARBITRAL TRIBUNAL.
The arbitration shall be held before a panel of three arbitrators, one of
whom, who shall serve as chairman, shall be nominated by the American
Arbitration Association in accordance with the Rules, one of whom shall be
nominated by DOUBLE B, and one of whom shall be nominated by i5ive.
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(c) JUDICIAL ASSISTANCE.
The award of the arbitrators shall be final and binding. The Parties waive
any right to appeal the award, to the extent a right to appeal may be lawfully
waived. Each Party retains the right to seek judicial assistance: (i) to compel
arbitration; (ii) to obtain interim measures of protection pending arbitration;
and (iii) to enforce any decision of the arbitrators, including the final award.
ARTICLE 11
MISCELLANEOUS
11.1 ENTIRE AGREEMENT.
This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated under this Agreement and supersedes all prior
arrangements or understandings with respect thereto, written or oral.
11.2 AMENDMENTS.
This Agreement may be amended only by a subsequent writing signed by each
of the Parties.
11.3 EXPENSES.
Each of the Parties shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
under this Agreement.
11.4 BROKERS AND FINDERS.
Each of the Parties represents and warrants that neither it nor any of its
officers, directors, employees, or affiliates has employed any broker or finder
or incurred any liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated by it.
11.5 WAIVERS.
(a) Prior to or at Closing, DOUBLE B, acting through its manager or
managers, shall have the right to waive any default in the performance
of any term of this Agreement by i5ive, to waive or extend the time
for the compliance or fulfillment by i5ive of any and all of its
obligations under this Agreement, and to waive any or all of the
conditions
15
precedent to the obligations of DOUBLE B under this Agreement, except
any condition which, if not satisfied, would result in the violation
of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of DOUBLE B.
(b) Prior to or at Closing, i5ive, acting through its Board of
Directors, chief executive officer or other authorized officer, shall
have the right to waive any default in the performance of any term of
this Agreement by DOUBLE B, to waive or extend the time for the
compliance or fulfillment by DOUBLE B of any and all of its
obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of i5ive under this Agreement,
except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of i5ive.
(c) The failure of any Party to require performance of any provision
of this Agreement shall in no manner affect the right of such Party at
a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed
to be or construed as a further or continuing waiver of such condition
or breach or a waiver of any other condition or of the breach of any
other term of this Agreement.
11.6 ASSIGNMENT.
This Agreement and the rights, interests or obligations under this
Agreement may be assigned (whether by operation of Law or otherwise) by a Party
only to an affiliate of that Party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by
the Parties and their respective successors and assigns.
11.7 NOTICES.
All notices or other communications which are required or permitted under
this Agreement shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided under this Agreement), and shall be
deemed to have been delivered as of the date so delivered:
i5ive Communications Inc.:
0000 Xxxxxxxx Xxxxxx - Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
16
Telecopy Number: (000) 000-0000
Attention:
DOUBLE B HOLDINGS, LLC:
0000 Xxxx Xxxxxxxxx - Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
11.8 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11.9 CAPTIONS.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
11.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
ARTICLE 12
DEFINITIONS
12.1 DEFINITIONS.
The following terms shall, whenever capitalized in this Agreement, have the
meanings ascribed below:
"AGREEMENT" shall mean this Agreement, including the Exhibits delivered pursuant
to this Agreement and incorporated in it by reference.
17
"BLUE FROGG" shall mean Blue Frogg Enterprises, Inc., a Delaware corporation.
"B&N" shall mean XXXXXXXXXXXXXX.XXX, LLC.
"B&N" Contracts" shall mean the contracts dated May 30, 2001 and August 8, 2001
between Xxxxx000.xxx, Inc., a Delaware corporation, and B&N relating to
introduction writing and proofreading services, respectively.
"CLOSING DATE" shall mean the date determined in accordance with Article 3.2
hereof on which the Closing shall occur.
"CONSENT" shall mean any consent, approval, estoppel, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or permit.
"CONTRACT" shall mean any written or oral agreement, license, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, assets or business.
"INTELLECTUAL PROPERTY" shall mean all patents, trade secrets, inventions,
formulae, know-how, and processes, whether trade secrets or not, trade names,
trademarks, service marks, brand names, design rights, and copyrights, and the
registrations and applications thereof, which are used exclusively or primarily
in connection with the operation of the Website Assets.
"LAW" shall mean any code, law, ordinance, regulation, reporting or licensing
requirement, rule, or statute applicable to a Person or its assets, liabilities
or business, including those promulgated, interpreted or enforced by any
regulatory authority.
"LIEN" shall mean any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property interest.
"ORDER" shall mean any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local or foreign or other court, arbitrator, mediator, tribunal,
administrative agency or regulatory authority.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to
18
which any Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, assets or business.
"PERSON" shall mean a natural person or any legal, commercial or governmental
entity, such as, but not limited to, a corporation, general partnership, joint
venture, limited partnership, limited liability company, trust, business
association, group acting in concert, or any person acting in a representative
capacity.
"PURCHASE PRICE" means the money and shares of capital stock to be paid over and
delivered to i5ive pursuant to Article 2.2.
"REPRESENTATIVE" shall mean any investment banker, financial advisor, attorney,
accountant, consultant, or other representative of a Person.
"SUITE101" shall mean Xxxxx000.xxx, Inc., a Delaware corporation and sole
stockholder of i5ive.
"WEBSITE ASSETS" shall mean the assets listed on Exhibit 12 as they exist
immediately prior to Closing:
12.2 DEFINITIONS ELSEWHERE IN AGREEMENT.
The following terms shall, whenever capitalized in this Agreement, have the
meanings ascribed to them in the referenced sections:
Closing Article 3.1
Closing Date Article 3.2
DOUBLE B Preamble
Extension Option Payment Article 1.2
Initial Option Payment Article 1.2
Management and Operating Services Agreement Article 6.1(a)(i)
Notice of Exercise Article 1.4
Notice of Extension Article 1.5
Option Article 1.1
Option Payment Article 1.2
Option Period Article 1.3
i5ive Preamble
Purchase Price Article 2.2
Suite U Preamble
Rules Article 10.2(a)
19
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
on its behalf and its corporate seal to be hereunto affixed and attested by
officers thereunto as of the day and year first above written.
ATTEST: I5IVE COMMUNICATIONS INC.
/s/ By: /s/
---------------------------------- ----------------------------------
Secretary (Assistant) Name: Xxxxxxxx X. Xxxxxxxx
Title: President
[CORPORATE SEAL]
: DOUBLE B HOLDINGS, LLC
By: /s/
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
20
EXHIBIT P-1
BUSINESS PLAN
1. Leverage the i5ive editor base and technology to provide DOUBLE B authors
the opportunity to create, merchandise, market, archive, and sell valuable
knowledge in the form of eHows, and courses. This may take the form of two types
of courses, Commissioned Courses and Self Designated courses. The former will
consist of courses the company identifies as high demand topics and/or topics
for which a publisher partner has identified course literature or textbooks. The
latter will consist of courses that approved authors identify and write by
utilizing templates and our editing process.
2. Solicit strong publisher partners to provide appropriate literature and
textbooks to accompany course cells. These partners will be responsible to ship
all books sold.
3. Solicit i5ive members to become subscribers to the paid author service.
4. Solicit i5ive members to subscribe to a private labeled/co-branded "plus"
service.
5. Consider other i5ive products and services to be bundled with "plus"
services or to be deployed separately.
21
EXHIBIT 1.4
NOTICE OF EXERCISE
To: i5ive Communications Inc.
From: DOUBLE B HOLDINGS, LLC
Pursuant to Article 1.4 of the Option Agreement dated March 15, 2002
between us, notice is herewith given the ______ day of ______, 2002 that the
undersigned irrevocably exercises the Option granted.
DOUBLE B HOLDINGS, LLC
Attest: By
-----------------------------------
Name:
----------------------------------- Title:
Name:
Title:
22
EXHIBIT 1.5
NOTICE OF EXTENSION
To: i5ive Communications Inc.
From: DOUBLE B HOLDINGS, LLC
Pursuant to Article 1.5 of the Option Agreement dated March 15, 2002
between us, notice is herewith given the ______ day of __________, 2002 that the
undersigned irrevocably extends the Option Period provided in such agreement.
This notice is accompanied by payment of the Extension Option Payment in
accordance with Article 1.2 of such agreement.
DOUBLE B HOLDINGS, LLC
Attest: By
-----------------------------------
Name:
----------------------------------- Title:
Name:
Title:
23
EXHIBIT 2.3
LIST OF CONTRACTS ASSUMED
MONTHLY AMOUNT (CND $)
----------------------
Critical Path varies - $2,500.00 Web email
Danka Financial $ 344.39 Photocopier lease
Danka Vancouver varies - $ 100.00 Photocopier usage fee
Telus varies - $1,000.00 Telephone lines and long
distance charges
Telus Advanced $2,565.00 Off-site computer housing
Penreal $5,411.82 Premises lease
Citicorp $ 430.92 Telephone lease
Smartnet (2ic) VARIES $ 230.00 ADSL Lines for office
BC Hydro $ 300.00 Hydro (heat and electricity)
Westport $ 321.00 Cleaners
ADT $ 30.00 Security
SOFTWARE LICENSES
-----------------
OCLC annual - US$13,500
Ultraseek License Spiders and categories our web site documents
(up to 250,000 documents)
Commencing from the date hereof and during the term of this Option and, if this
Option is exercised, for a total period of six (6) months from the date hereof,
DOUBLE B shall reimburse i5ive in an amount equal to 20% of the monthly rental
(prorated for portions of any month) payable under the terms of the Assignment
of Lease dated May 1, 2001 (the "Assignment") with XXXXXXXXXXX.XXX INC. In the
event the Option is exercised and a Closing held thereunder, DOUBLE B shall
assume at the Closing i5ive's obligations under the Assignment and i5ive shall
receive a sum equal to its Deposit of (Cdn)$20,026.80 under the Assignment, less
an amount equal to 80% of the monthly rental (prorated for portions of any
month) payable under the terms of the Assignment from the date of the Closing to
a date six (6) months from the date hereof. If this Option expires without being
exercised, DOUBLE B shall have no further obligation to reimburse i5ive under
the terms of the Assignment.
24
EXHIBIT 4.4
LIST OF I5IVE'S PATENTS, TRADEMARKS, SERVICE MARKS TRADENAMES, COPYRIGHTS
AND APPLICATIONS AND REGISTRATIONS THEREFOR
TRADEMARKS
Xxxxx000.xxx(TM)
Real People Helping Real People(TM)
Best-of-Web Directory(TM)
SuiteU(TM)
SuiteUniversity(TM)
COPYRIGHTS
----------
Content of Web Site for the period 1996-2002 Xxxxx000.xxx, Inc
EXCEPTIONS TO TITLE TO THE ABOVE
NONE
INFRINGEMENT AND OTHER CLAIMS ASSERTED
NONE
ROYALTY PAYMENT OBLIGATIONS FOR INTELLECTUAL PROPERTY
NONE
25
EXHIBIT 4.5
COMPUTER SOFTWARE AND DATABASES OWNED, LICENSED, LEASED, INTERNALLY DEVELOPED
OR OTHERWISE USED
OCLC License annual - US$13,500
Ultraseek License Spiders and categories our web site documents
(up to 250,000 documents)
Xxxxx000.xxx and SuiteU Web site Templates The templates
developed in-house by our computer
technicians which make up the S101 Web Site
DOMAIN NAMES
0000.xxx
0xxx.xxx
Xxxxxx.xxx
X-Xxxxxxx.xxx
XxxXxxxxxx.xxx
XxxXxxxx.xxx
XxxXxxxxxxXxxxx.xxx
XXXxxxx.xxx
XxxxXxxxxxx.xxx
Xxxxxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxx.xxx
X0xxx.xxx
may2nd-1934
xxxxxxxxxxxx.xxx
Xxxxxxxxxxxxxxxxxxxx.xxx
xxxxx000.xxx
xxxxx000.xxx
xxxxx000.xxx
XxxxxxXxxxxxx.xxx
XxxxxXxxxxxx.xxx
xxxxxxxxxx.xxx
xxxxxxxxxxxxx.xxx
xxxxxx.xxx
xxxxxxxxxxxxxxx.xxx
EXCEPTIONS
(none)
26
EXHIBIT 12
WEBSITE ASSETS
COMPUTER EQUIPMENT
INTERNAL
EXTERNAL MICROSOFT
COMPUTER NAME USER IP O/S O/S SERIAL NUMBER OFFICE VERSION OFFICE SERIAL NUMBER
----------------- ---------- ------------- -------- ----------------------- ----------------- -----------------------
OFFICE COMPUTERS
----------------
MONKEY XXXXX 10.0.0.110 WIN98 15199-OEM-0075252-86584 2000 Professional 00400-OEM-0080947-35284
XXXXXX XXXX 10.0.0.111 WIN98 15199-OEM-0075252-86580 2000 Professional 00400-OEM-0080947-35574
XXXX XXXXX 10.0.0.112 WIN98 25501-OEM-0079912-94042 2000 Professional 25501-OEM-0079624-86136
TADPOLE XXXXXX 10.0.0.113 WIN2000 51873-335-7364502-09245 2000 Professional 31801-OEM-0081714-27845
DOG XXXXX 10.0.0.114 WIN98 SE 34799-OEM-0079912-94034 2000 Professional 34899-OEM-0080947-35284
BONES BARRIE 10.0.0.118 WIN98 SE 03801-OEM-0079912-94030 2000 Professional 25701-OEM-0079624-86136
SQUIRREL XXXX 10.0.0.120 WIN98 SE 26101-OEM-0079912-94042 2000 Professional 26101-OEM-0079624-86136
CAT ALEXIS 10.0.0.121 WIN98 SE 29900-OEM-0086712-06520 2000 Professional 29900-OEM-0081714-27213
POSSUM RINA 10.0.0.124 WIN98 SE 12001-OEM-0079912-94030 2000 Professional 12101-OEM-0081714-27213
FROG XXXXXXX 10.0.0.126 WIN2000 51873-335-5534842-09531 2000 Professional 31601-OEM-0079624-86136
POODLE XXXX 10.0.0.127 WIN98 SE 27401-OEM-0079912-94042 2000 Professional 27401-OEM-0079624-86136
RHINO XXXXX 10.0.0.129 WIN2000 51873-006-1152165-09978 2000 Professional 30400-OEM-0881714-27213
27
INTERNAL
EXTERNAL MICROSOFT
COMPUTER NAME USER IP O/S O/S SERIAL NUMBER OFFICE VERSION OFFICE SERIAL NUMBER
----------------- ---------- ------------- -------- ----------------------- ----------------- -----------------------
TIGER Barrie
EAGLE Scrap - use for parts
MULE Scrap - use for parts
FIREWALL Scrap - use for parts
CHUCKY Scrap - use for parts
HP Printer Xxxxxx
(black ink only)
HP Printer Xxxxxxx
(colour)
Lexmark Xxxxxx Xxxx
Proxima
Fax Machine
OFFICE SERVERS
--------------
ELEPHANT 10.0.0.3 WINNT 50370-419-0435637-91589
SOLARIS 10.0.0.4 WIN2000 51876-335-3281867-05497
HEDGEHOG 10.0.0.5 WIN2000 51876-335-0781237-20003 2000 Professional 18800-OEM-0080947-35332
LLAMA 10.0.0.6 WIN2000 51876-OEM-0000572-20000 2000 Professional 50106-335-6688554-02487
XXX XXXXX 10.0.0.8 WINNT 50370-387-4417327-20000 2000 Professional 17200-OEM-0081714-27845
CHEETAH 10.0.0.9 WIN2000 51879-335-2864915-05848
GRIZZLIES 10.0.0.10 WINNT 20999-OEM-0043403-36988
PANDA SQL 10.0.0.50 WIN2000
OTTER BIGIP 10.0.0.252 UNIX
TELUS
-----
WHALE IBM 192.168.1.8 WIN2000
POLARBEAR MICRON 192.168.1.58 WINNT 50370-387-4417327-54137
CAMEL WEB 192.168.1.100 WINNT 20999-OEM-0043403-37918
SHARK WEB 192.168.1.101 WINNT 20999-OEM-0043403-36988
DOLPHIN MISC 192.168.1.109 WINNT 20999-OEM-0043403-37913
BIGIP 192.168.1.252 UNIX
APC POWER
*OFFICE FURNITURE # of items
AND FIXTURES
28
Refrigerator 1
Dishwasher 1
Rugs 6
Boardroom table 1 table, 5 chairs
and chairs
Storage shelving
Desks (ikea) 20
Computer desks
(Jerker) 4
Metal Filing
Cabinets 4
Small Desk 25
drawer/cabinet
(Ikea) Credenza 1
(Doug's office)
Book Shelves 3
Whiteboards 6
Rolling desk
chairs 25
Stacking chairs 4
Reception chairs
(purple) 3
Window cushions 5
---------------
* Tie to the assumption (take-over) of the lease
