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Exhibit 4.08
Agreement and Plan of Reorganization
by and among
At Home Corporation,
Xxxxxx Acquisition Corporation,
Xxxxxxxxxxx.xxx International, Inc.
and
The Founding Shareholders of Xxxxxxxxxxx.xxx International, Inc.
April 5, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made and
entered into as of April 5, 2000 (the "Agreement Date") by and among At Home
Corporation, a Delaware corporation ("Excite@Home"), Xxxxxx Acquisition
Corporation, a Colorado corporation that is a wholly-owned subsidiary of
Excite@Home ("Sub"), and Xxxxxxxxxxx.xxx International, Inc., a Colorado
corporation ("Worldprints"), and the founding shareholders of Worldprints listed
on the List of Founders attached as Exhibit A hereto (collectively, the
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"Worldprints Founders," and each individually, a "Worldprints Founder") each of
whom, immediately prior to the consummation of the Merger (as defined below)
will be a shareholder of Worldprints.
Recitals
A. The parties intend that, subject to the terms and conditions of this
Agreement, Worldprints will be merged with and into Sub in a forward triangular
merger, with Sub to be the surviving corporation of such merger, all pursuant to
the terms and conditions of this Agreement and applicable law. The parties also
intend for such merger to be treated as a "reorganization" under Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and to be treated
as a "purchase" transaction for accounting purposes.
B. Concurrently with the execution and delivery of this Agreement,
Worldprints Shareholders who collectively own at least 96% of the issued and
outstanding capital stock of Worldprints have approved the Merger, this
Agreement, the Plan of Merger and the transactions provided for herein and
therein, in accordance with Worldprints' charter documents and applicable law,
and will execute and deliver to Excite@Home an Investment Representation Letter
in the form and substance of Exhibit B attached hereto, pursuant to which each
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such shareholder will provide certain representations and warranties to
Excite@Home and will agree not to sell or otherwise transfer any of the shares
of Excite@Home Series B Non-Voting Convertible Preferred Stock received by such
shareholder in the Merger (the "Investment Representation Letter").
C. Upon the effectiveness of the Merger, and subject to the terms hereof,
(i) the shares of capital stock of Worldprints that are outstanding immediately
prior to the effectiveness of the Merger will be converted into shares of the
Series A Common Stock of Excite@Home and Series B Non-Voting Convertible
Preferred Stock of Excite@Home, (ii) options, warrants and other rights to
purchase Worldprints capital stock that are outstanding immediately prior to the
effectiveness of the Merger will be converted into options, warrants and other
rights to purchase Series A Common Stock of Excite@Home, and (iii) Worldprints
will be merged with and into Sub, in each case, as provided in this Agreement.
Now, therefore, in consideration of the foregoing and the mutual promises,
covenants and conditions contained herein, the parties hereby agree as follows:
Article 1
Certain Definitions
As used in this Agreement, the following terms will have the meanings
set forth below:
1.1 "Excite@Home Ancillary Agreements" means, collectively, each
certificate to be delivered by Excite@Home or an officer or officers of
Excite@Home at the Closing pursuant to Article 9 of this Agreement and each
agreement (other than this Agreement) which Excite@Home is to enter into as a
party thereto pursuant to this Agreement.
1.2 "Excite@Home Average Price Per Share" means $45.3125.
1.3 "Excite@Home Common Stock" means Excite@Home Series A Common Stock,
par value $0.01 per share.
1.4 "Excite@Home Preferred Stock" means Excite@Home Series B Non-Voting
Convertible Preferred Stock, par value $0.01 per share, having the rights,
preferences, limitations and terms set forth in the Certificate of Designation
and the Certificate of Correction of Certificate of Designation each
substantially in the forms attached hereto as Exhibit C (the "Certificate of
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Designation").
1.5 "Common Stock Conversion Number" means the product (calculated to the
sixth decimal place (with the sixth decimal place rounded up if the seventh
decimal place is 5 or greater)) of (a) the quotient (calculated to the sixth
decimal place (with the sixth decimal place rounded up if the seventh decimal
place is 5 or greater)) obtained by dividing (i) the Worldprints Common Stock
Amount Per Share by (ii) the Excite@Home Average Price Per Share; and (b) one-
half (0.5).
1.6 "Debt" of any person means, at any date, without duplication, (i) all
obligations of such person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such person to pay the deferred purchase price of property or
services, (iv) all obligations of such person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all obligations of
such person to purchase securities (or other property) which arise out of or in
connection with the sale of the same or substantially similar securities or
property, (vi) all non-contingent obligations of such person to reimburse any
bank or other person in respect of amounts paid under a letter of credit or
similar instrument, (vii) all Debt of others secured by an Encumbrance on any
asset of such person, whether or not such Debt is assumed by such person, and
(viii) all Debt of others Guaranteed by such person.
1.7 The "Effective Time" means the date and time on which the Merger first
becomes legally effective under the laws of the State of Colorado as a result of
the filing with the Colorado Secretary of State of a Plan of Merger and Articles
of Merger in substantially the forms attached hereto as Exhibit D (the "Plan of
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Merger") and any required related certificates pursuant to, and in conformity
with, the requirements of Section 0-000-000 of the Colorado Business
Corporations Act (the "CBCA").
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1.8 "Encumbrance" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, title retention devices,
collateral assignments, claims, charges, restrictions or other encumbrances of
any kind in respect of such asset.
1.9 "Guarantee" by any person means any obligation, contingent or
otherwise, of such person directly or indirectly guaranteeing any Debt or other
obligation of any other person.
1.10 "knowledge," when used with reference to (i) an individual, means the
actual knowledge, after due inquiry, of such individual with respect to a
representation or warranty of such individual contained in this Agreement, or
any other certificate or agreement required to be entered into or delivered at
the Closing by such individual in connection with the Merger, or (ii) a person
that is not an individual, means the collective actual knowledge, after due
inquiry, of the directors and officers of such person and its subsidiaries, and
any other employees of such person and its subsidiaries having managerial
responsibility for the portion of the operations, assets or liabilities of such
person and its subsidiaries with respect to which such knowledge of such person
is being represented.
1.11 "Legal Requirements" means any federal, state, local, municipal,
foreign or other law, statute, constitution, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Authority.
1.12 "Material Adverse Change" or "Material Adverse Effect," when used
with reference to any entity or group of related entities, means any event,
change, violation, inaccuracy, circumstance or effect that is or is reasonably
likely to be, individually or in the aggregate, materially adverse to the
condition (financial or otherwise), capitalization, properties, employees,
assets (including intangible assets), business, operations, results of
operations or prospects of such entity and its subsidiaries, taken as a whole;
provided, that in no event shall (x) a change in the price of the publicly
traded stock of a Excite@Home constitute, in and of itself, a "Material Adverse
Change" or "Material Adverse Effect" in Excite@Home, and (y) individually or
collectively, any controversy, dispute or related judicial or arbitral
mediation, settlement, proceeding or judgment related to the World Notes
constitute, in and of itself or themselves, a "Material Adverse Change" or
"Material Adverse Effect" in Worldprints.
1.13 "Merger" means the statutory merger of Worldprints with and into Sub
to be effected pursuant to this Agreement.
1.14 "Merger Adjustment" shall mean any Debt of Worldprints existing
immediately prior to the Effective Time, other than (i) principal in an
aggregate amount not to exceed $4,000,000 and accrued interest under the World
Notes and any Replacement Notes, (ii) any outstanding amounts loaned by
Excite@Home to Worldprints, and (iii) outstanding trade payables of Worldprints
incurred in the ordinary course of its business consistent with past practice,
all of which amounts are set forth on Schedule 1.14 to this Agreement and which
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will be updated as of the Closing (the "Closing Debt Schedule").
1.15 "New Worldprints Options" means options that vest and become
exercisable no faster than as to 1/4th of the shares subject to such option on
the first anniversary of the date of their
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grant and as to 1/48/th/ of the shares subject to such option at the end of each
month thereafter to purchase up to that number of shares of Worldprints Common
Stock which are reserved for issuance under the Worldprints Plan, but which are
not yet subject to outstanding Worldprints Options as of the Agreement Date.
1.16 "person" means any individual, corporation (including any not-for-
profit corporation), partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), association, organization, entity or Governmental Authority.
1.17 "Preferred Stock Conversion Number" means the product (calculated to
the ninth decimal place (with the ninth decimal place rounded up if the tenth
decimal place is 5 or greater)) of (a) the quotient (calculated to the sixth
decimal place (with the sixth decimal place rounded up if the seventh decimal
place is 5 or greater)) obtained by dividing (i) the Worldprints Common Stock
Amount Per Share, by (ii) the Excite@Home Average Price Per Share, by (iii) one
thousand (1000); and (b) one-half (0.5).
1.18 "Replacement Notes" shall mean any promissory note(s) or other
instrument evidencing Debt with a maturity date no earlier than April 14, 2000,
issued by Worldprints, the proceeds of which are used as repayment for or in
replacement of the World Notes.
1.19 "Sub Ancillary Agreements" means, collectively, the Plan of Merger,
each certificate to be delivered by Sub or an officer or officers of Sub at the
Closing pursuant to Article 8 of this Agreement and each agreement (other than
this Agreement) which Sub is to enter into as a party thereto pursuant to this
Agreement.
1.20 "Termination Date" means April 14, 2000.
1.21 "Total Merger Consideration" means an amount that equals the
difference of (i) Ninety-Six Million Dollars ($96,000,000) and (ii) any Merger
Adjustment.
1.22 "Worldprints Ancillary Agreements" means, collectively, the Plan of
Merger, each certificate to be delivered by Worldprints or an officer or
officers of Worldprints at the Closing pursuant to Article 9 of this Agreement,
and each other agreement (other than this Agreement) which Worldprints is to
enter into as a party thereto pursuant to this Agreement.
1.23 "Worldprints Common Stock" means common stock, no par value per
share, of Worldprints.
1.24 "Worldprints Common Stock Amount Per Share" means the quotient
(calculated to the sixth decimal place (with the sixth decimal place rounded up
if the seventh decimal place is 5 or greater)) obtained by dividing (i) the
Total Merger Consideration by (ii) the Worldprints Fully Diluted Share Number.
1.25 "Worldprints Fully Diluted Share Number" means the number of shares
of Worldprints Common Stock, Worldprints Options and Worldprints Warrants (on a
fully exercised and converted to Common Stock basis) that are issued and
outstanding immediately prior to the Effective Time.
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1.26 "Worldprints Options" shall have the meaning given in Section 2.3 of
this Agreement.
1.27 "Worldprints Warrants" shall have the meaning given in Section 2.4 of
this Agreement.
1.28 "Worldprints Preferred Stock" means preferred stock, no par value per
share, of Worldprints.
1.29 "Worldprints Shareholders" means the record holders of issued and
outstanding Worldprints Common Stock immediately prior to the Effective Time.
1.30 "Worldprints Websites" means all websites or other sites accessed via
the internet or any other electronic network, including, without limitation, any
cable-based network or private network, owned or operated by Worldprints and/or
any of its subsidiaries (either alone or jointly with others), either as of the
Agreement Date or in the past, including those certain websites currently
accessible at the following URL addresses (each of which is proceeded by
xxxx://xxx.): xxxxxxxxx.xxx; xxxxxxxx.xxx; xxxxxxxxxxx.xxx; xxxxxxxx.xxx;
xxxxxxxxxxx.xxx; xxxxxxxxxx.xxx; xxxxxx.xxx; xxxxxxxxxxxx.xxx; xxxxxxxx.xxx;
xxxxxxx.xxx; xxxxxxxxx.xxx; xxxxxxxxxxxx.xxx; xxxxxxxx.xxx; xxxxxxxxxx.xxx;
xxxxxx0x.xxx; xxxxxx0x.xxx; xxxxxxxxxx0x.xxx; xxxxxxxxxx0x.xxx;
xxxxxxxxxxx0x.xxx; xxxxxxxxxxx0x.xxx; xxxxxxxxxx.xxx; xxxxxxxxxxxxxxx.xxx;
xxxxxxxxxxx.xxx; xxxxxxxxxxxx.xxx; xxxxxx.xxx; xxxxxxxxxxxxxxxxx.xxx;
xxxxxxxxxx.xxx; xxxxxxxxxxxxx.xxx.
1.31 "World Notes" shall mean (i) that certain Worldprints Convertible
Bridge Note dated September 1, 1999 in a principal amount of $2,000,000 issued
by Worldprints to World Venture Partners, Inc., and (ii) that certain
Worldprints Convertible Bridge Note dated September 30, 1999 in a principal
amount of $4,000,000 issued by Worldprints to World Venture Partners, Inc.
1.32 "World Warrant" shall mean (i) any warrant to purchase Worldprints
Common Stock issued by Worldprints to the holder(s) of the Replacement Notes in
consideration for the making of the loan(s) represented by the Replacement
Notes; and (ii) any warrant to purchase Worldprints capital stock issued by
Worldprints to World Venture Partners, Inc. or any subsequent holder of the
World Notes in exchange for World Venture Partners' or such holder's binding
consent to waive any default under the World Notes and such party's agreement to
extend the maturity date of the World Notes until a date no earlier than April
14, 2000.
Other capitalized terms defined elsewhere in this Agreement and not defined
in this Article 1 will have the meanings assigned to such terms in this
Agreement.
Article 2
Plan of Reorganization
2.1 Conversion of Shares.
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2.1.1 Conversion of Sub Stock. At the Effective Time, each share of
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Sub common stock that is issued and outstanding immediately prior to the
Effective Time will continue after the Effective Time to be an identical
outstanding share of the Surviving Corporation (as defined below).
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2.1.2 Conversion of Worldprints Common Stock. Subject to the terms
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and conditions of this Agreement, at the Effective Time, each share of
Worldprints Common Stock that is issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without the need for any
further action on the part of the holder thereof (except as expressly provided
herein), be converted into and represent the right to receive (i) the number of
shares of Excite@Home Common Stock that is equal to the Common Stock Conversion
Number, and (ii) the number of shares of Excite@Home Preferred Stock that is
equal to the Preferred Stock Conversion Number, all subject to the provisions of
Section 2.1.3 (regarding rights of holders of Dissenting Shares), Section 2.1.4
(regarding the elimination of fractional shares of Excite@Home Common Stock) and
Section 2.5 (regarding the withholding of Escrow Shares).
2.1.3 Dissenting Shares. Holders of shares of Worldprints Common
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Stock who have complied with all requirements for perfecting stockholders'
rights of dissent, as set forth in Article 113 of the CBCA, shall be entitled to
their rights under Colorado law with respect to such shares ("Dissenting
Shares").
2.1.4 Fractional Shares. No fractional shares of Excite@Home Common
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Stock will be issued in connection with the Merger. In lieu thereof, each holder
of Worldprints Common Stock who would otherwise be entitled to receive a
fraction of a share of Excite@Home Common Stock pursuant to Section 2.1.2,
computed after aggregating all shares of Excite@Home Common Stock to be received
by such holder pursuant to Section 2.1.2, will instead receive from Excite@Home,
in accordance with Article 7 hereof, an amount of cash (rounded to the nearest
cent) equal to the product obtained by multiplying (i) the Excite@Home Average
Price Per Share (as adjusted to reflect any Capital Change (as defined in
Section 2.2 below) of Excite@Home) by (ii) the fraction of a share of
Excite@Home Common Stock that such holder would otherwise have been entitled to
receive. Excite@Home Preferred Stock will be issued in fractional shares to the
extent conversion of Worldprints Common Stock into Excite@Home Preferred Stock
pursuant to Section 2.1.2 results in fractional shares of Excite@Home Preferred
Stock.
2.1.5 Continuation of Vesting and Repurchase Rights. If any shares
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of Worldprints Common Stock that are outstanding immediately prior to the
Effective Time are (a) unvested or are subject to a repurchase option (other
than a right of first refusal), risk of forfeiture, or other condition providing
that such shares may be forfeited or repurchased by Worldprints upon any
termination of the shareholder's employment, directorship or other relationship
with Worldprints (and/or any affiliate of Worldprints) under the terms of any
restricted stock purchase agreement or other agreement with Worldprints that
does not by its terms provide that such repurchase option, risk of forfeiture or
other condition lapses automatically upon consummation of the Merger ("Unvested
Worldprints Shares") or (b) subject to a contractual restriction on the transfer
of such shares, other than a right of first refusal ("Restricted Worldprints
Shares"), then the shares of Excite@Home Common Stock and Excite@Home Preferred
Stock issued upon the conversion of such Unvested Worldprints Shares or
Restricted Worldprints Shares in the Merger will continue to be unvested and
will continue to be subject to the same repurchase options, risks of forfeiture,
restrictions on transfer (other than a right of first refusal) or other
conditions, as applicable, immediately following the Effective Time as they were
subject to immediately prior to the Effective Time, and the certificates
representing such shares of Excite@Home Common Stock and Excite@Home Preferred
Stock shall accordingly be marked with appropriate legends noting such
repurchase options, risks of forfeiture, restrictions on transfer or other
conditions. Worldprints shall
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use reasonable efforts to take all actions that may be necessary to ensure that,
from and after the Effective Time, Excite@Home is entitled to exercise any such
repurchase option or other right set forth in any such restricted stock purchase
agreement or other agreement and to enforce any such contractual restriction on
transfer (other than a right of first refusal).
2.2 Adjustments for Capital Changes. Notwithstanding the provisions of
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Section 2.1, if Excite@Home recapitalizes, either through a subdivision (or
stock split) of any of its outstanding shares of Excite@Home Common Stock into a
greater number of such shares, or a combination (or reverse stock split) of any
of its outstanding shares of Excite@Home Common Stock into a lesser number of
such shares, or reorganizes, reclassifies or otherwise changes its outstanding
shares of Excite@Home Common Stock into the same or a different number of shares
of other classes or series of Excite@Home stock (other than through a
subdivision or combination of shares provided for in the preceding clause), or
declares a dividend or other distribution on its outstanding shares payable in
shares of Excite@Home Common Stock or in shares or securities convertible into
shares of Excite@Home capital stock (each, a "Capital Change") at any time after
the Agreement Date and prior to the Effective Time, then the Excite@Home Average
Price Per Share and the Common Stock Conversion Number and the Preferred Stock
Conversion Number will each be proportionally and equitably adjusted.
2.3 Worldprints Options. At the Effective Time, all outstanding options
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(collectively, "Worldprints Options") to purchase Worldprints Common Stock,
including all Worldprints Options granted under Worldprints' 1999 Stock
Incentive Plan, as amended (the "Worldprints Plan") will be assumed by
Excite@Home. Each Worldprints Option so assumed by Excite@Home shall be
entitled, in accordance with the terms of such option, to purchase after the
Effective Time that number of shares of Excite@Home Common Stock, determined by
multiplying (i) the number of shares of Worldprints Common Stock subject to such
Worldprints Option at the Effective Time, by (ii) two times the Common Stock
Conversion Number, and the exercise price per share for each such assumed Option
will equal (i) the exercise price of the Worldprints Option immediately prior to
the Effective Time divided by (ii) two times the Common Stock Conversion Number.
If the foregoing calculation results in an assumed option being exercisable for
a fraction of a share, then the number of shares of Excite@Home Common Stock
subject to such option will be rounded down to the nearest whole number, with no
cash being payable for such fractional share. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422 of the Code,
if applicable, and all other terms of the Worldprints Options will otherwise be
unchanged. Continuous employment with Worldprints will be credited to an
optionee for purposes of determining the number of shares subject to exercise
after the Effective Time. Excite@Home will cause the Excite@Home Common Stock
issued upon exercise of the assumed Worldprints Options to be registered on Form
S-8 of the Securities and Exchange Commission ("SEC") as soon as is practicable
after the Effective Time (but no later than two whole business days after the
Effective Time), will exercise reasonable commercial efforts to maintain the
effectiveness of such registration statement for so long as such assumed
Worldprints Options remain outstanding, will reserve a sufficient number of
shares of Excite@Home Common Stock for issuance upon exercise thereof and will
have caused the shares of Excite@Home Common Stock to be issued upon the
exercise of assumed Worldprints Options to be approved for listing on the Nasdaq
National Stock Market, subject only to official notice of issuance. Excite@Home
will administer the Worldprints Plan assumed pursuant to this Section 2.3 in a
manner that complies with Rule 16b-3 promulgated by the SEC under the Securities
Exchange Act of 1934, as amended ("Exchange Act").
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2.4 Worldprints Warrants. At the Effective Time, each of the then
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outstanding warrants, exchangeable or convertible securities or rights to
purchase or otherwise acquire, that are exercisable or convertible, ultimately
or potentially, into any Worldprints Common Stock (each, a "Worldprints
Warrant") shall, by virtue of the Merger, and without any further action on the
part of any holder thereof, be assumed by Excite@Home and converted into a
warrant or like security (each, an "Excite@Home Warrant") to purchase that
number of shares of Excite@Home Common Stock determined by (i) multiplying the
number of shares of Worldprints Common Stock that are subject to such
Worldprints Warrant immediately prior to the Effective Time, by (ii) two times
the Common Stock Conversion Number, at an exercise price per share of such
Excite@Home Common Stock equal to (i) the exercise price per share of
Worldprints Common Stock that was in effect for such Worldprints Warrant
immediately prior to the Effective Time divided by (ii) two times the Common
Stock Conversion Number. If the foregoing calculation would result in an assumed
and converted Worldprints Warrant being converted into an Excite@Home Warrant
that, after aggregating all the shares of Excite@Home Common Stock issuable upon
the exercise of such Excite@Home Warrant, would be exercisable for a fraction of
a share of Excite@Home Common Stock, then the number of shares of Excite@Home
Common Stock subject to such Excite@Home Warrant will be rounded down to the
nearest whole number of shares of Excite@Home Common Stock. The exercisability
period and other terms and conditions of the Worldprints Warrants will remain
unchanged.
2.5 Escrow of Shares. At the Effective Time, Excite@Home will withhold
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from the shares of Excite@Home Common Stock and Excite@Home Preferred Stock to
be issued to Worldprints Shareholders in the Merger upon conversion of their
Worldprints Common Stock pursuant to Section 2.1.2 above, forty percent of the
shares of Excite@Home Preferred Stock (including any fractions of a share
thereof) issued to such Worldprints Shareholders pursuant to Section 2.1.2 (such
withheld shares of Excite@Home Preferred Stock, any shares of Excite@Home
capital stock or other securities into which such shares of Excite@Home
Preferred Stock are converted or exchanged and any dividends or distributions in
the form of Excite@Home capital stock or other securities of Excite@Home
received in respect of such shares of Excite@Home Preferred Stock or other stock
or securities to which such shares of Excite@Home Preferred Stock are converted
or exchanged, being hereinafter referred to as the "Escrow Shares"), and will
hold the certificates representing such Escrow Shares as security for the
Worldprints Shareholders' indemnification obligations for Damages (as defined in
Section 11.2) under Article 11 hereof. The Escrow Shares will be represented by
a certificate or certificates issued in the names of each Worldprints
Shareholder in proportion to each such shareholder's interest therein and will
be held by Excite@Home, subject to the terms and conditions of this Section 2.5
and Article 11 hereof, until the Release Date (as defined in Section 11.1
hereof). Any dividend or distribution (other than a non-taxable dividend or
distribution in the form of Excite@Home capital stock or other securities of
Excite@Home) with respect to the Escrow Shares shall be promptly paid to the
Worldprints Shareholders (in proportion to each such shareholder's interest in
the Escrow Shares) and shall not be withheld in the escrow. To the extent that
any dividend or distribution made with respect to the Escrow Shares prior to the
Release Date (as defined in Section 11.1 hereof) or, in the case of Escrow
Shares in escrow after the Release Date pursuant to the last sentence of this
Section 2.5, the date on which such Escrow Shares are released from escrow,
results in a liability for tax (as defined in Section 3.7.2 hereof), such tax
liability shall be that of the Worldprints Shareholders (in proportion to each
such shareholder's interest in the Escrow Shares), and not of Excite@Home or
Sub. Any and all voting rights with respect to the Escrow Shares shall be
exercisable by the
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Worldprints Shareholders or their authorized agent as of the Effective Time.
Excite@Home, Sub and the Worldprints Shareholders hereby agree and acknowledge
that the Escrow Shares shall be treated as transferred to and owned by the
Worldprints Shareholders as of the Effective Time and all times thereafter for
all tax (as defined in Section 3.7.2 hereof) purposes. Escrow Shares, other than
Escrow Shares having a value (calculated pursuant to Section 11.3(a)) equal to
the amount of Damages asserted in any claim which has not been resolved pursuant
to the terms hereof prior to the Release Date, shall be released to the
Worldprints Shareholders on the Release Date, and, in the case of any such
withheld shares, upon the final resolution of such claim(s).
2.6 Effects of the Merger. At and upon the Effective Time:
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(a) the separate existence of Worldprints will cease and
Worldprints will be merged with and into Sub, and Sub will be the surviving
corporation of the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") pursuant to the terms of this Agreement and the Plan of Merger;
(b) the Articles of Incorporation of Sub will continue
unchanged and be the Articles of Incorporation of the Surviving Corporation
immediately after the Effective Time;
(c) the Bylaws of Sub will continue unchanged and be the
Bylaws of the Surviving Corporation immediately after the Effective Time;
(d) each share of Worldprints Common Stock that is
outstanding immediately prior to the Effective Time will be converted as
provided in this Article 2;
(e) each Worldprints Option and Worldprints Warrant that is
outstanding immediately prior to the Effective Time will be assumed as provided
in this Article 2;
(f) each share of Sub Common Stock that is outstanding
immediately prior to the Effective Time will continue to be an identical share
of the Surviving Corporation as provided in Section 2.1.1;
(g) the officers of the Surviving Corporation immediately
after the Effective Time will be those individuals who were the officers of Sub
immediately prior to the Effective Time, and each such individual shall,
immediately after the Effective Time, hold the same office or offices of the
Surviving Corporation as the office or offices that such individual held with
Sub immediately prior to the Effective Time;
(h) the members of the Board of Directors of the Surviving
Corporation immediately after the Effective Time will be the members of the
Board of Directors of Sub immediately prior to the Effective Time; and
(i) the Merger will, from and after the Effective Time,
have all of the effects provided by applicable law.
2.7 Securities Law Issues; Registration Rights. Excite@Home shall issue
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the shares of Excite@Home Common Stock and Excite@Home Preferred Stock to be
issued to the Worldprints Shareholders in the Merger pursuant to Section 2.1.2
pursuant to an exemption or exemptions from
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registration under Section 4(2) of the Securities Act of 1933, as amended (the
"1933 Act"), and/or Regulation D promulgated under the 1933 Act and the
exemption from qualification under the laws of the State of Colorado and other
applicable state securities laws. Excite@Home and Worldprints shall comply with
all applicable provisions of, and rules under, the 1933 Act in connection with
offering and issuance of shares of Excite@Home Common Stock and Excite@Home
Preferred Stock in the Merger. Within two whole business days following the
Effective Time, Excite@Home will cause to be filed with the SEC and use
commercially reasonable efforts to cause to become effective as soon as
practicable, a shelf registration statement on Form S-3 providing for the resale
by (i) the Worldprints Shareholders of the shares of Excite@Home Common Stock
issued to them in the Merger pursuant to Section 2.1.2 hereof, and (ii) the
holders of Worldprints Warrants set forth on Schedule 2.7 to this Agreement, of
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the shares of Excite@Home Common Stock to be issued to them upon exercise of
their Worldprints Warrants, all pursuant to the terms and conditions of Article
12 hereof.
2.8 Tax-Free Reorganization; No Representations by Excite@Home.
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(a) The parties intend to adopt this Agreement as a tax-
free plan of reorganization and to consummate the Merger in accordance with the
provisions of Section 368(a)(1)(A) of the Code by virtue of the provisions of
Section 368(a)(2)(D) of the Code. However, Excite@Home makes no representations
or warranty to Worldprints or to any Worldprints Shareholder or other holder of
Worldprints securities regarding the tax treatment of the Merger, whether the
Merger will qualify as a tax-free plan of reorganization under the Code, or any
of the tax consequences to any Worldprints Shareholder or such holder of this
Agreement, the Plan of Merger, the Merger or any of the other transactions or
agreements contemplated hereby, and Worldprints and the Worldprints Shareholders
acknowledge that Worldprints and the Worldprints Shareholders are relying solely
on their own tax advisors in connection with this Agreement, the Merger and the
other transactions contemplated by this Agreement.
(b) Worldprints and the Worldprints Shareholders make no
representations or warranty to Excite@Home or to Sub regarding the tax treatment
of the Merger, whether the Merger will qualify as a tax-free plan of
reorganization under the Code, or any of the tax consequences to Excite@Home or
Sub or such holder of this Agreement, the Plan of Merger, the Merger or any of
the other transactions or agreements contemplated hereby, and Excite@Home and
Sub acknowledge that Excite@Home and Sub are relying solely on their own tax
advisors in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement.
(c) After the Merger, Excite@Home and Sub shall: (i) report
on their respective tax returns and tax filings the transactions contemplated by
this Agreement as a tax-free reorganization (except for cash paid in lieu of
fractional shares) under Section 368(a)(1) of the Code; (ii) keep their records
and file in connection with their federal and state income tax returns all such
information as may be required by Section 1.368-3 of the Treasury Regulations
(and corresponding state rules and regulations) with respect to the transactions
contemplated by this Agreement; and (iii) refrain from taking any position in
connection with their federal or state income tax returns that would be
inconsistent with such qualification of the transactions contemplated hereunder
as a tax-free reorganization (except for cash paid in lieu of fractional shares)
under Section 368(a)(1) of the Code.
-10-
2.9 Further Assurances. If, at any time after the Effective Time,
------------------
Excite@Home believes or is advised that any further instruments, deeds,
assignments or assurances are reasonably necessary or desirable to consummate
the Merger or to carry out the purposes and intent of this Agreement at or after
the Effective Time, then Excite@Home, the Surviving Corporation and their
respective officers and directors will execute and deliver all such proper
deeds, assignments, instruments and assurances and do all other things necessary
or desirable to consummate the Merger and to carry out the purposes and intent
of this Agreement, in the name of Worldprints or otherwise.
Article 3
Representations and Warranties of Worldprints and the Founders
Worldprints and each Worldprints Founder represents and warrants to
Excite@Home that, except as set forth in the letter addressed to Excite@Home
from Worldprints and dated as of the Agreement Date (including all schedules
thereto) which has been delivered by Worldprints to Excite@Home concurrently
with the parties' execution of this Agreement (the "Worldprints Disclosure
Letter"), each of the representations, warranties and statements contained in
the following sections of this Article 3 is true and correct as of the Agreement
Date and will be true and correct on and as of the Closing Date (as defined in
Section 7.1 hereof). For all purposes of this Agreement, the statements
contained in the Worldprints Disclosure Letter and its schedules shall also be
deemed to be representations and warranties made and given by Worldprints and
each Worldprints Founder under Article 3 of this Agreement.
The receipt by Excite@Home of information pursuant to Section 5.1 or
otherwise on or before the Closing, shall not limit the right of Excite@Home
under Article 9 to require as a condition precedent to the performance of its
obligations under this Agreement on such Closing Date the accuracy in all
material respects of the representations and warranties made by the representing
party in this Agreement (as provided in Article 9) and the performance in all
material respects of the covenants of Worldprints made in this Agreement
(without regard to such information) and to receive a certificate with respect
to the same.
3.1 Organization and Good Standing. Worldprints is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Colorado. Worldprints and each of its subsidiaries has the corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted and as proposed to be conducted, and is qualified to transact
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
make such qualification necessary, except in any jurisdiction in which the
failure to so qualify or be in good standing would not be reasonably expected to
have a Material Adverse Effect on Worldprints. Worldprints has delivered to
Excite@Home true and correct copies of the currently effective Articles of
Incorporation and Bylaws or other charter documents, as applicable, of
Worldprints and each of its subsidiaries, each as amended to date. Neither
Worldprints nor any of its subsidiaries is in violation of its Articles of
Incorporation, Bylaws or other charter documents. Chautauqua Publishing Group,
LLC is a wholly-owned subsidiary of Worldprints, and is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Colorado.
3.2 Subsidiaries. Except for Chautauqua Publishing Group, LLC,
------------
Worldprints does not have any subsidiary or any equity or ownership interest,
whether direct or indirect, in any
-11-
corporation, partnership, limited liability company, joint venture or other
business entity. Worldprints owns all the issued and outstanding membership
interests of Chautauqua Publishing Group, LLC, free and clear of all
Encumbrances. Worldprints is not obligated to make and is not bound by any
agreement or obligation to make any investment in or capital contribution in or
on behalf of any other entity.
3.3 Power, Authorization and Validity.
---------------------------------
3.3.1 Power and Authority. Worldprints has all requisite corporate
-------------------
power and authority to enter into, execute, deliver, and perform its obligations
under, this Agreement and all Worldprints Ancillary Agreements and to consummate
the Merger. The Merger and the execution, delivery and performance by
Worldprints of this Agreement and each of the Worldprints Ancillary Agreements
have been duly and validly approved and authorized by Worldprints' Board of
Directors, and, to the extent shareholder approval is required under
Worldprints' Articles of Incorporation or Bylaws or under applicable law or
regulation, have been duly and validly approved and adopted by Worldprints'
shareholders in full compliance with applicable law and Worldprints' Articles of
Incorporation and Bylaws, each as amended.
3.3.2 No Consents. No consent, approval, order or authorization of,
-----------
or registration, declaration or filing with, any court, administrative agency,
commission or other governmental authority (each, a "Governmental Authority"),
or any other person or entity, governmental or otherwise (including, without
limitation, any consent, approval, order, authorization, registration,
declaration or filing pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act (the "HSR Act")), is necessary or required to be made or obtained by
Worldprints to enable Worldprints to lawfully execute and deliver, enter into,
and to perform its obligations under, this Agreement and each of the Worldprints
Ancillary Agreements, or to consummate the Merger, except for the filing of the
Plan of Merger with the Colorado Secretary of State as required under Colorado
law. The aggregate HSR Assets of Worldprints, do not, and will not immediately
prior to Closing of the Merger, equal or exceed $10,000,000, and, to
Worldprints' knowledge, there is no person, or group of persons under Common
Control, who Control(s) Worldprints. For purposes of this Section the term "HSR
Assets" means the total assets (as set forth on the most recent regularly
prepared balance sheet) of Worldprints, and, to the extent they are not
consolidated in such balance sheet, the total assets (as set forth on the most
recent regularly prepared balance sheet(s)) of all entities Controlled by
Worldprints. For the purposes of this Section, the term "Control," or
"Controlling" means either: (i) holding beneficial ownership, whether direct, or
indirect through fiduciaries, agents, controlled entities or other means, of
fifty percent or more of the outstanding voting securities of an issuer; or (ii)
in the case of an entity that has no outstanding voting securities, having the
right to fifty percent or more of the profits of the entity, or having the right
in the event of dissolution to fifty percent or more of the assets of the
entity; or (iii) having the contractual power presently to designate fifty
percent or more of the directors of a corporation, or in the case of
unincorporated entities, of individuals exercising similar functions. For the
purposes of this Section, "Common Control" means sharing an Ultimate Parent. For
the purposes of this Section, "Ultimate Parent" means a person who is not
Controlled by any other entity.
3.3.3 Enforceability. This Agreement and each of the Worldprints
--------------
Ancillary Agreements are, or when executed by Worldprints and the Worldprints
Founders will be, valid and
-12-
binding obligations of Worldprints and the Worldprints Founders, enforceable
against Worldprints and the Worldprints Founders in accordance with their
respective terms, subject to the effect of (a) applicable bankruptcy and other
similar laws affecting the rights of creditors generally and (b) rules of law
and equity governing specific performance, injunctive relief and other equitable
remedies. Notwithstanding the foregoing, Worldprints makes no representation or
warranty in this Section 3.3.3 with regard to the Worldprints Founders.
3.4 Capitalization of Worldprints.
-----------------------------
3.4.1 Outstanding Securities. The authorized capital stock of
----------------------
Worldprints consists entirely of: (i) 10,000,000 shares of Worldprints Common
Stock, of which a total of 1,896,067 shares are issued and outstanding and
5,000,000 shares of Worldprints Preferred Stock, none of which are issued and
outstanding. The number of issued and outstanding shares of Worldprints Common
Stock issued by Worldprints to each of the Worldprints Shareholders are set
forth in Schedule 3.4.1(a) to this Agreement. No other shares of Worldprints
-----------------
Common Stock are issued or outstanding. Worldprints holds no treasury shares. To
Worldprints' and each of the Worldprints Founders' knowledge (such knowledge, in
this instance, being based solely upon a review of Worldprints' written
corporate records), each of the Worldprints Shareholders has good and marketable
title to that number of shares of Worldprints Common Stock as set forth beside
such person's name on Schedule 3.4.1(a), free and clear of all Encumbrances or
any restrictions on voting, except as set forth in Item 3.4.1 to the Worldprints
Disclosure Letter. An aggregate of 400,000 shares of Worldprints Common Stock
are reserved and authorized for issuance pursuant to the Worldprints Plan, of
which options (including New Worldprints Options) to purchase a total of 323,559
shares of Worldprints Common Stock are outstanding, and there are outstanding
additional options granted outside of the Worldprints Plan to purchase a total
of 4,508 shares of Worldprints Common Stock. Additionally, there are Worldprints
Warrants to acquire an aggregate of 274,071 shares of Worldprints Common Stock.
Schedule 3.4.1(b) of this Agreement lists for each Person to whom Worldprints
-----------------
has issued Worldprints Options and Worldprints Warrants, the name of the person
to whom each such Worldprints Option or Worldprints Warrant was issued, the
exercise price for each such Worldprints Option and Worldprints Warrant, the
number of shares or other securities covered by each such Worldprints Option and
Worldprints Warrant, and the vesting schedule and the extent each such
Worldprints Option and Worldprints Warrant are vested as of the Agreement Date.
True and complete copies of each Worldprints Option and Worldprints Warrant have
been delivered by Worldprints to Excite@Home. Except as set forth in Item
3.4.1(c) to the Worldprints Disclosure Letter, the vesting or exercisablility
(or any other material terms) of any Worldprints Option or Worldprints Warrant
will not accelerate or otherwise change (except as expressly contemplated by
Sections 2.3 and 2.4 of this Agreement) as a result of the execution and
delivery of this Agreement or the consummation of the Merger or the transactions
contemplated thereby.
As of the Closing Date, there will have been no change in the
authorized or outstanding capital stock of Worldprints as represented in the
foregoing sentences of this Section 3.4.1. All issued and outstanding shares of
Worldprints' Common Stock and all of the issued and outstanding membership
interests of Chautauqua Publishing Group, LLC have been duly authorized and
validly issued, are fully paid and nonassessable, and except as set forth in
certain Worldprints shareholder agreements, copies of which have been delivered
to Excite@Home and each of which are listed on Item 3.4.1(c) to the Worldprints
Disclosure Letter, are not subject to any preemptive right, right of
-13-
first refusal, right of first offer or right of rescission, and have been
offered, issued, sold and delivered by Worldprints in compliance with (i) all
registration or qualification requirements (or applicable exemptions therefrom)
of all applicable securities laws and, to the knowledge of Worldprints and each
of the Worldprints Founders, other applicable Legal Requirements and (ii) all
requirements set forth in applicable agreements or instruments. All shares of
Worldprints Common Stock subject to issuance under Worldprints Options and
Worldprints Warrants, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. All outstanding Worldprints
Options and Worldprints Warrants have been issued and granted in compliance with
(i) all registration or qualification requirements (or applicable exemptions
therefrom) of all applicable securities laws and, to the knowledge of
Worldprints and each of the Worldprints Founders, other applicable Legal
Requirements and (ii) all requirements set forth in applicable agreements or
instruments.
3.4.2 No Other Options, Warrants or Rights. Other than as set forth
------------------------------------
in Section 3.4.1 above, there are no options, warrants, convertible securities
or other securities, calls, commitments, conversion privileges, preemptive
rights, rights of first refusal, rights of first offer or other rights or
agreements outstanding to purchase or otherwise acquire (whether directly or
indirectly) any shares of Worldprints' authorized but unissued capital stock or
any securities convertible into or exchangeable for any shares of Worldprints'
capital stock or obligating Worldprints to grant, issue, extend, or enter into
any such option, warrant, convertible security or other security, call,
commitment, conversion privilege, preemptive right, right of first refusal,
right of first offer or other right or agreement, and there is no liability for
dividends accrued but unpaid.
3.4.3 No Voting Arrangements or Registration Rights. Except as set
---------------------------------------------
forth in Item 3.4.3 to the Worldprints Disclosure Letter, there are no voting
agreements, voting trusts, proxies, preemptive rights, rights of first refusal,
rights of first offer or other restrictions (other than normal restrictions on
transfer under applicable federal and state securities laws) applicable to any
of Worldprints' outstanding capital stock or any Worldprints Options or
Worldprints Warrants or to the conversion of any shares of Worldprints' capital
stock in the Merger pursuant to any agreement or obligation to which Worldprints
is a party or, to Worldprints' or any Worldprints Founder's knowledge, pursuant
to any other agreement or obligation. Worldprints is not under any obligation to
register under the 1933 Act any of its presently outstanding shares of stock or
other securities or any stock or other securities that may be subsequently
issued except as set forth in Item 3.4.3 to the Worldprints Disclosure Letter.
3.5 No Conflict. Except as set forth in Item 3.5 to the Worldprints
-----------
Disclosure Letter, neither the execution and delivery of this Agreement nor any
of the Worldprints Ancillary Agreements by Worldprints or the Worldprints
Founders, nor the consummation of the Merger or any of the other transactions
contemplated hereby or thereby, will conflict with, or (with or without notice
or lapse of time, or both) result in a termination, breach, impairment or
violation of, or constitute a default under: (i) any provision of the Articles
of Incorporation or Bylaws or other charter documents of Worldprints or any of
its subsidiaries as currently in effect; (ii) any federal, state, local or
foreign judgment, writ, decree, order, statute, rule or regulation applicable to
Worldprints or any of its subsidiaries or any of their respective assets or
properties, except where such breach or violation would not have a Material
Adverse Effect on Worldprints; or (iii) any material instrument, agreement,
contract, undertaking, understanding, letter of intent, memorandum of
understanding or commitment (whether verbal or in writing) to which Worldprints
or any of its
-14-
subsidiaries is a party or by which Worldprints or any of its subsidiaries or
any of their respective material assets or properties are bound. Neither
Worldprints' entering into this Agreement nor the consummation of the Merger or
the transactions contemplated thereby will give rise to, or trigger the
application of, any rights of any third party that would come into effect upon
the effectiveness of the Merger. The consummation of the Merger by Worldprints
will not require the consent, release, waiver or approval of any third party
(including, without limitation, the consent of any party required to be obtained
in order to keep any agreement or contract between such party and Worldprints
(or any of its subsidiaries) in effect following the Merger or to provide that
Worldprints (and/or any of its subsidiaries) is not in breach or violation of
any such contract or agreement following the Merger), other than the required
approval of Worldprints' shareholders.
3.6 Litigation. There is no action, claim, suit, arbitration, mediation,
----------
proceeding, claim or investigation (each, an "Action") pending against
Worldprints or any of its subsidiaries (or against any officer, director,
employee or agent of Worldprints or any of its subsidiaries in their capacity as
such or relating to their employment, services or relationship with Worldprints
or such subsidiary) before any court, administrative agency or arbitrator, nor,
to Worldprints' or any Worldprints Founder's knowledge, except as set forth in
Item 3.6 to the Worldprints Disclosure Letter, has any Action been threatened.
There is no judgment, decree, injunction, rule or order of any governmental
entity or agency, court or arbitrator outstanding against Worldprints. Except as
set forth in Item 3.6 to the Worldprints Disclosure Letter, there is no basis
for any person, firm, corporation or other entity to assert a claim against
Worldprints based upon: (a) Worldprints' entering into this Agreement or any
Worldprints Ancillary Agreement or consummating the Merger or any of the
transactions contemplated by this Agreement or any Worldprints Ancillary
Agreement; (b) a claim of ownership of, or options, warrants or other rights to
acquire ownership of, any shares of the capital stock of Worldprints or any
rights as a Worldprints shareholder, including any option, warrant or preemptive
rights or rights to notice or to vote, other than for the normal rights of the
Worldprints Shareholders with respect to the Worldprints Common Stock shown as
being owned by such persons on Schedule 3.4.1(a) hereof and the normal rights of
holders of Worldprints Options and Worldprints Warrants shown as being owned by
such holders on Schedule 3.4.1(b) hereof.
3.7 Taxes.
-----
3.7.1 Worldprints and its predecessor have timely filed all federal,
state, local and foreign tax and information returns required to be filed by it,
has timely paid all taxes required to be paid by it for which payment is due,
has established an adequate accrual or reserve for the payment of all taxes
payable in respect of the periods subsequent to the periods covered by its most
recent applicable tax returns (which accrual or reserve as of the Balance Sheet
Date (as defined in Section 3.8 below) is fully reflected on the Balance Sheet
(as defined in Section 3.8 below) and in any more recent balance sheet of
Worldprints provided by Worldprints to Excite@Home on or before the Agreement
Date), has made all necessary estimated tax payments, and has no liability for
taxes in excess of the amount so paid or accruals or reserves so established.
All such returns and reports are true, correct and complete, and Worldprints has
provided Excite@Home with true and correct copies of such returns and reports.
Worldprints is not delinquent in the payment of any tax or in the filing of any
tax returns, and no deficiencies for any tax have been threatened, claimed,
proposed or assessed against Worldprints, any of its subsidiaries, or any of the
officers, employees or agents of Worldprints or any of its subsidiaries in their
capacity as such. Worldprints has not
-15-
received any notification from the Internal Revenue Service or any other taxing
authority regarding any material issues that: (a) are currently pending before
the Internal Revenue Service or any other taxing authority (including, but not
limited to, any sales or use tax authority) regarding Worldprints or any of its
subsidiaries or (b) have been raised by the Internal Revenue Service or other
taxing authority and not yet finally resolved. No tax return of Worldprints, its
predecessor or any of its subsidiaries is under audit by the Internal Revenue
Service or any state or local taxing agency or authority and any such past
audits (if any) have been completed and fully resolved to the satisfaction of
the applicable tax authority conducting such audit and all taxes and any
penalties or interest determined by such audit to be due from Worldprints or any
of its subsidiaries have been paid in full to the applicable taxing authorities.
No tax liens are currently in effect against any assets of Worldprints or any of
its subsidiaries or other liens which arise by operation of law for taxes not
yet due and payable. There is not in effect any waiver by Worldprints of any
statute of limitations with respect to any taxes to any extension of time for
filing any tax return which has not been filed; and Worldprints has not
consented to extend to a date later than the date hereof the period in which any
tax may be assessed or collected by any taxing authority. Worldprints is not a
"personal holding company" within the meaning of the Code. Worldprints has not
filed any election under Section 341(f) of the Code. Worldprints and its
subsidiaries have each withheld with respect to each of its employees and
independent contractors all taxes, including, but not limited to, federal and
state income taxes, FICA, Medicare, FUTA and other taxes, required to be
withheld, and paid such withheld amounts to the appropriate tax authority within
the time prescribed by law. Since its inception, Worldprints has not been a
"United States real property holding corporation", as defined in Section
897(c)(2) of the U.S. Internal Revenue Code of 1986, as amended, and in Section
1.897-2(b) of the Treasury Regulations issued thereunder (the "Regulations"),
and Worldprints has filed with the Internal Revenue Service all statements, if
any, with its United States income tax returns which are required under Section
1.897-2(h) of the Regulations.
3.7.2 For the purposes of this Section, the terms "tax" and "taxes"
include all federal, state, local and foreign income, alternative or add-on
minimum income, gains, franchise, excise, property, property transfer, sales,
use, employment, license, payroll, ad valorem, documentary, stamp, withholding,
occupation, recording, value added or transfer taxes, governmental charges,
fees, customs duties, levies or assessments (whether payable directly or by
withholding), and, with respect to any such taxes, any estimated tax, interest,
fines and penalties or additions to tax and interest on such fines, penalties
and additions to tax.
3.8 Worldprints Financial Statements. Worldprints has delivered to
--------------------------------
Excite@Home as an attachment to the Worldprints Disclosure Letter the unaudited
consolidated balance sheets of Worldprints or its predecessor dated as of
December 31, 1998, December 31, 1999 and February 29, 2000, respectively, and
Worldprints' or its predecessor's unaudited consolidated statements of
operations, statements of cash flows and statements of changes in shareholders'
equity (or, as applicable, statement of changes in members' interests) for the
years ended December 31, 1998 and December 31, 1999, and for the two-month
period ended February 29, 2000 (all such financial statements of Worldprints and
any notes thereto are hereinafter collectively referred to as the "Worldprints
Financial Statements"). The Worldprints Financial Statements (a) are derived
from and in accordance with the books and records of Worldprints, (b) fairly
present the financial condition of Worldprints at the dates therein indicated
and the results of operations for the periods therein specified (subject to
normal year-end adjustments which are not material in amount) and (c) have been
prepared in accordance with United States generally accepted accounting
principles
-16-
("GAAP") applied on a basis consistent with prior periods except for any absence
of notes thereto. Worldprints has no material debt, liability or obligation of
any nature, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, except for (i) those shown on Worldprints' unaudited balance
sheet as of February 29, 2000 included in the Worldprints Financial Statements
(the "Balance Sheet"), and (ii) those that may have been incurred after February
29, 2000 (the "Balance Sheet Date") in the ordinary course of Worldprints'
business consistent with its past practices, and that are not material in
amount, either individually or collectively, and are not required to be set
forth in the Balance Sheet under GAAP. All reserves established by Worldprints
that are set forth in or reflected in the Balance Sheet are reasonably adequate.
At the Balance Sheet Date, there were no material loss contingencies (as such
term is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which are not adequately
provided for in the Balance Sheet as required by said Statement No. 5.
3.9 Title to Properties. Worldprints and each of its subsidiaries have
-------------------
good and marketable title to all of their respective assets and properties
(including, but not limited to, those shown on the Balance Sheet), free and
clear of all Encumbrances, other than liens for current taxes that are not yet
due and payable. All machinery, vehicles, equipment and other tangible personal
property owned or leased by Worldprints and its subsidiaries or used in its
business are in good condition and repair, normal wear and tear excepted, and
all leases of real or personal property to which Worldprints or any of its
subsidiaries is a party are fully effective and afford Worldprints or its
subsidiary, as applicable, peaceful and undisturbed leasehold possession of the
real or personal property that is the subject of the lease. Neither Worldprints
nor any of its subsidiaries owns any real property. Neither Worldprints nor any
of its subsidiaries is in violation of any zoning, building, safety or
environmental ordinance, regulation or requirement or other law or regulation
applicable to the operation of its owned or leased properties, the violation of
which would have a Material Adverse Effect, nor has Worldprints received any
notice of violation of law with which it has not complied. Item 3.9 to the
--------
Worldprints Disclosure Letter sets forth a complete and accurate list of all
personal property owned or leased by Worldprints or any of its subsidiaries with
an individual value of $1,000 or greater.
3.10 Absence of Certain Changes. Except as set forth in Item 3.10 to the
--------------------------
Worldprints Disclosure Letter, since the Balance Sheet Date, Worldprints has
operated its business in the ordinary course consistent with its past practice
and, since such date, there has not been with respect to Worldprints or any of
its subsidiaries any:
(a) Material Adverse Change;
(b) amendment or change in the Articles of Incorporation or
Bylaws of Worldprints;
(c) incurrence, creation or assumption by Worldprints or
any of its subsidiaries of (i) any Encumbrance on any of the assets or
properties of Worldprints or any of its subsidiaries; (ii) any obligation or
liability or any indebtedness for borrowed money, or (iii) any contingent
liability as a guarantor or surety with respect to the obligations of others;
-17-
(d) grant or issuance of any options, warrants or other
rights to acquire from Worldprints or any of its subsidiaries, directly or
indirectly, or any offer, issuance or sale by Worldprints of any debt or equity
securities of Worldprints or any of its subsidiaries;
(e) any acceleration or release of any vesting condition to
the right to exercise any option, warrant or other right to purchase or
otherwise acquire any shares of Worldprints' capital stock, or any acceleration
or release of any right to repurchase shares of Worldprints' capital stock upon
the shareholder's termination of employment or services with Worldprints or any
subsidiary of Worldprints or pursuant to any right of first refusal;
(f) payment or discharge by Worldprints or any of its
subsidiaries of any Encumbrance on any asset or property of Worldprints or any
of its subsidiaries, or the payment or discharge of any liability that was not
either shown on the Balance Sheet or incurred in the ordinary course of
Worldprints' business after the Balance Sheet Date in an amount not in excess of
$10,000 for any single liability to a particular creditor;
(g) purchase, license, sale, assignment or other
disposition or transfer, or any agreement or other arrangement for the purchase,
license, sale, assignment or other disposition or transfer, of any of the
assets, properties or goodwill of Worldprints other than a license of any
product or products of Worldprints or any of its subsidiaries made in the
ordinary course of Worldprints' business consistent with its past practice;
(h) damage, destruction or loss of any property or asset,
whether or not covered by insurance, having (or reasonably likely with the
passage of time to have) a Material Adverse Effect on Worldprints;
(i) declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock of
Worldprints, any split, combination or recapitalization of the capital stock of
Worldprints or any direct or indirect redemption, purchase or other acquisition
of any capital stock of Worldprints or any change in any rights, preferences,
privileges or restrictions of any outstanding security of Worldprints;
(j) change or increase in the compensation payable or to
become payable to any of the officers, directors, or employees of Worldprints or
any of its subsidiaries, or any bonus or pension, insurance or other benefit
payment or arrangement (including, without limitation, stock awards, stock
option grants, stock appreciation rights or stock option grants) made to or with
any of such officers, employees or agents except in connection with normal
employee salary or performance reviews or otherwise in the ordinary course of
Worldprints' business consistent with its past practice;
(k) change with respect to the management, supervisory or
other key personnel of Worldprints;
(l) obligation or liability incurred by Worldprints or any
of its subsidiaries to any of its officers, directors or shareholders, except
for normal and customary compensation and expense allowances payable to officers
in the ordinary course of Worldprints' business consistent with its past
practice;
-18-
(m) making by Worldprints or any of its subsidiaries of any
loan, advance or capital contribution to, or any investment in, any officer,
director or shareholder of Worldprints or any firm or business enterprise in
which any such person had a direct or indirect material interest at the time of
such loan, advance, capital contribution or investment;
(n) entering into, amendment of, relinquishment,
termination or non-renewal by Worldprints of any contract, lease, transaction,
commitment or other right or obligation other than in the ordinary course of its
business consistent with its past practice or any written or oral indication or
assertion by the other party thereto of any material problems with Worldprints'
(or any of its subsidiaries') services or performance under such contract,
lease, transaction, commitment or other right or obligation or its desire to so
amend, relinquish, terminate or not renew any such contract, lease, transaction,
commitment or other right or obligation;
(o) material change in the manner in which Worldprints or
any of its subsidiaries extends discounts, credits or warranties to customers or
otherwise deals with its customers;
(p) entering into by Worldprints or any of its subsidiaries
of any transaction, contract or agreement that by its terms requires or
contemplates a current and/or future financial commitment, expense (inclusive of
overhead expense) or obligation on the part of Worldprints or any of its
subsidiaries involving in excess of $25,000 or that is not entered into in the
ordinary course of Worldprints' business, or the conduct of any business or
operations other than in the ordinary course of Worldprints' business;
(q) any license, transfer or grant of a right under any
Worldprints IP Rights (as defined in Section 3.13 below), other than those
licensed, transferred or granted in the ordinary course of Worldprints'
business; or
(r) any agreement or arrangement made by Worldprints or any
of its subsidiaries to take any action which, if taken prior to the Agreement
Date, would have made any representation or warranty of Worldprints set forth in
Article 3 of this Agreement untrue or incorrect as of the date when made.
3.11 Contracts and Commitments/Licenses and Permits. Item 3.11 to
---------------------------------------------- ---------
the Worldprints Disclosure Letter sets forth a list of each of the following (i)
written or oral contracts, agreements, commitments or other instruments to which
Worldprints or any of its subsidiaries is a party or to which Worldprints or any
of its subsidiaries or any of their respective assets or properties is bound and
(ii) licenses and permits held by Worldprints:
(a) any website hosting, website linking, content or data
sharing, data feed, information exchange, advertising, fee sharing, lead or
customer referral, commerce, co-branding, framing, service, order or transaction
processing or similar agreement relating to any aspect or element of any of the
Worldprints Websites or any other website;
(b) any distributor, OEM (Original Equipment Manufacturer),
VAR (Value Added Reseller), sales representative or similar agreement under
which any third party is authorized to sell, sublicense, lease, distribute,
market or take orders for, any product, service or technology of Worldprints or
any of its subsidiaries;
-19-
(c) any continuing contract for the future purchase, sale,
license, provision or manufacture of products, material, supplies, equipment or
services requiring payment to or from Worldprints or any of its subsidiaries in
an amount in excess of $25,000 per annum which is not terminable on ninety or
fewer days' notice without cost or other liability to Worldprints;
(d) any contract or commitment in which Worldprints or any
of its subsidiaries has granted or received most favored customer pricing
provisions or exclusive marketing, on-line distribution or other rights relating
to any product or service, group of products or services, market or geographic
territory;
(e) any contract providing for the development of any
software, content (including, without limitation, textual content and visual,
photographic or graphics content), technology or intellectual property for (or
for the benefit or use of) Worldprints and/or any of its subsidiaries, or
providing for the purchase or license of any software, content (including,
without limitation, textual content and visual or graphics content), technology
or intellectual property to (or for the benefit or use of) Worldprints and/or
any of its subsidiaries, which software, content, technology or intellectual
property is in any manner used or incorporated (or is contemplated by
Worldprints to be used or incorporated) (i) in connection with any aspect or
element of any of the Worldprints Websites; (ii) in any product or service
currently sold, licensed, provided, leased, distributed or marketed by
Worldprints or any of its subsidiaries (other than software generally available
to the public at a per copy license fee of less than $500 per copy);
(f) any joint venture or partnership contract or agreement
or other agreement which has involved, or is reasonably expected to involve, a
sharing of profits, expenses or losses with any other party;
(g) any contract or commitment for or relating to the
employment of any officer, employee or consultant of Worldprints or any of its
subsidiaries or any other type of contract or understanding with any officer,
employee or consultant of Worldprints or any of its subsidiaries that is not
immediately terminable by Worldprints or the applicable Worldprints subsidiary
without cost or other liability;
(h) any indenture, mortgage, trust deed, promissory note,
loan agreement, security agreement, guarantee or other agreement or commitment
for the borrowing of money, for a line of credit or for a leasing transaction of
a type required to be capitalized in accordance with Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board;
(i) any lease or other agreement under which Worldprints or
any of its subsidiaries is lessee of or holds or operates any items of tangible
personal property or real property owned by any third party and under which
payments to such third party exceed $10,000 per annum;
(j) any agreement or arrangement for the sale, licensing or
leasing of any assets, properties, products, services or rights having a value
in excess of $10,000;
(k) any agreement that restricts Worldprints or any of its
subsidiaries from engaging in any aspect of its business, from participating or
competing in any line of business
-20-
or market or that restricts Worldprints or any of its subsidiaries from engaging
in any business in any market or geographic area;
(l) any Worldprints IP Rights Agreement (as defined in
Section 3.13);
(m) any agreement relating to the sale, issuance, grant,
exercise, award, purchase, repurchase or redemption of any shares of capital
stock or other securities of Worldprints or any of its subsidiaries or any
options, warrants or other rights to purchase or otherwise acquire any such
shares of capital stock, other securities or options, warrants or other rights
therefor;
(n) any consulting or similar agreement under which
Worldprints or any of its subsidiaries provides any advice or services to a
third party for an annual compensation to Worldprints of $20,000 per year or
more;
(o) any contract with or commitment to any labor union;
(p) any contract or arrangement under which Worldprints or
any of its subsidiaries has made any commitment to develop any new technology,
to deliver any software currently under development or to enhance or customize
any software;
(q) any other agreement, contract, commitment or instrument
that is material to the business of Worldprints or any of its subsidiaries or
that involves a future commitment by Worldprints or any of its subsidiaries in
excess of $25,000; and
(r) any Governmental Permit (as defined in Section 3.14.4).
A true and complete copy of each agreement or document required by this
subsections (a) through (q) of this Section to be listed on Item 3.11 to the
---------
Worldprints Disclosure Letter (such agreements and documents being hereinafter
collectively referred to as the "Worldprints Material Agreements") and a copy of
each Governmental Permit required by subsection (r) of this Section to be listed
on Item 3.11 to the Worldprints Disclosure Letter has been delivered to
Excite@Home.
3.12 No Default; No Consent Required; No Restrictions. Neither Worldprints
------------------------------------------------
nor any of its subsidiaries is in material breach or default under any
Worldprints Material Agreement. Neither Worldprints nor any of its subsidiaries
has any material liability for renegotiation of government contracts or
subcontracts, if any. Except as set forth in Item 3.12 to the Worldprints
---------
Disclosure Letter, no consent, notice or approval of any third party is required
to ensure that, following the Effective Time, any Worldprints Material Agreement
will continue to be in full force and effect without any breach or violation
thereof caused by virtue of the Merger or by any other transaction called for by
this Agreement or any Worldprints Ancillary Agreement. Except as set forth in
Item 3.12 to the Worldprints Disclosure Letter, neither Worldprints nor any of
---------
its subsidiaries is a party to, and no asset or property of Worldprints or any
of its subsidiaries is bound or affected by, any judgment, injunction, order,
decree, contract, covenant or agreement (noncompete or otherwise) that restricts
or prohibits, purports to restrict or prohibit, Worldprints or any of its
subsidiaries or, following the Effective Time, the Surviving Corporation or
Excite@Home, from freely engaging in any business now conducted by any of them
or from competing anywhere in the world (including, without limitation, any
contracts, covenants or agreements restricting the geographic area in which
Worldprints or any of its subsidiaries may sell, license, market, distribute or
support any products or
-21-
technology or provide services, or restricting the markets, customers or
industries that Worldprints or any of its subsidiaries may address in operating
their respective businesses), or includes any grants by Worldprints of exclusive
rights or licenses. Except as set forth in Item 3.12 to the Worldprints
---------
Disclosure Letter, no event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or would reasonably
be expected to, (a) result in a violation or breach of any of the provisions of
any Worldprints Material Agreement, (b) give any third party (i) the right to
declare a default or exercise any remedy under any Worldprints Material
Agreement, (ii) the right to a rebate, chargeback, penalty or change in delivery
schedule under any Worldprints Material Agreement, (iii) the right to accelerate
the maturity or performance of any obligation of Worldprints or any of its
subsidiaries under any Worldprints Material Agreement, or (iv) the right to
cancel, terminate or modify any Worldprints Material Agreement, except in each
such case for such defaults, acceleration rights, termination rights and other
rights that have not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Worldprints.
Except as set forth in Item 3.12 to the Worldprints Disclosure Letter, neither
---------
Worldprints nor any subsidiary of Worldprints has received any notice or other
communication regarding any actual or possible violation or breach of, or
default under, any Worldprints Material Agreement.
3.13 Intellectual Property.
---------------------
3.13.1 Worldprints and its subsidiaries own, or have the valid right
or license to use, possess, sell, license, copy, distribute, market, advertise
and/or dispose of all Intellectual Property Rights (as defined below) and
Worldprints Materials (as defined below) necessary or required for the conduct
of the business of Worldprints and its subsidiaries as presently conducted,
including, without limitation, the operation of each of the Worldprints Websites
(such Intellectual Property Rights together with the Worldprints Materials being
hereinafter collectively referred to as the "Worldprints IP Rights"). As used
herein, the term "Intellectual Property Rights" means, collectively, all
worldwide industrial and intellectual property rights, including, without
limitation, patents, patent applications, patent rights, trademarks, trademark
registrations and applications therefor, trade dress rights, trade names,
service marks, service xxxx registrations and applications therefor, Internet
domain names, Internet and World Wide Web URLs or addresses, copyrights,
copyright registrations and applications therefor, moral and economic rights of
authors and inventors, however denominated, throughout the world, rights of
privacy and publicity, mask work rights, mask work registrations and
applications therefor, inventions, trade secrets and know-how. As used herein,
the term "Worldprints Materials" means, collectively, all user data, databases,
data collection, datamarks, database architectures and all rights therein,
franchises, licenses, customer lists, supplier lists, proprietary processes and
formulae, software source code and object code, algorithms, net lists,
architectures, structures, screen displays, photographs, images, layouts,
inventions, development tools, designs, blueprints, specifications, technical
drawings (or similar information in electronic format) and all documentation and
media constituting, describing or relating to the foregoing, including, without
limitation, manuals, programmers' notes, memoranda and records.
3.13.2 Neither the execution, delivery and performance of this
Agreement, the Plan of Merger, or the consummation of the Merger and the other
transactions contemplated hereby and/or by Worldprints Ancillary Agreements
will: (a) constitute a material breach of or default under any instrument,
contract, license or other agreement governing any Worldprints IP Right to
-22-
which Worldprints or any of its subsidiaries is a party (collectively, the
"Worldprints IP Rights Agreements"); (b) cause the forfeiture or termination of,
or give rise to a right of forfeiture or termination of, any Worldprints IP
Right; or (c) materially impair the right of Worldprints or the Surviving
Corporation to use, possess, sell or license any Worldprints IP Right or portion
thereof. Except as set forth in Item 3.13.2 to the Worldprints Disclosure
-----------
Letter, there are no royalties, honoraria, fees or other payments payable by
Worldprints or any of its subsidiaries to any third person by reason of the
ownership, use, possession, license, sale, marketing, advertising or disposition
of any Worldprints IP Rights by Worldprints or any of its subsidiaries.
3.13.3 Neither the manufacture, marketing, license, sale, furnishing
or intended use of any product or service (including, without limitation, any
product or service offered to users of any of the Worldprints Websites)
currently licensed, utilized, sold, provided or furnished by Worldprints or any
of its subsidiaries violates any license or agreement between Worldprints and
any third party or infringes or misappropriates any Intellectual Property Right
of any other party; and, except as set forth in Item 3.13.3 to the Worldprints
-----------
Disclosure Letter, there is not pending or, to the knowledge of Worldprints or
any Worldprints Founder, threatened, any claim or litigation contesting the
validity, ownership or right of Worldprints or any of its subsidiaries to use,
possess, sell, market, advertise, license or dispose of any Worldprints IP Right
nor, to the knowledge of Worldprints or any Worldprints Founder, is there any
basis for any such claim nor, except as set forth in Item 3.13.3 to the
-----------
Worldprints Disclosure Letter, has Worldprints received any notice asserting
that any Worldprints IP Right or the proposed use, sale, license or disposition
thereof conflicts or will conflict with the rights of any other party, nor, to
the knowledge of Worldprints or any of the Worldprints Founders, is there any
basis for any such assertion.
3.13.4 To Worldprints' and each of the Worldprints Founders'
knowledge, no employee, consultant or independent contractor of Worldprints or
any subsidiary of Worldprints: (a) is in material violation of any term or
covenant of any employment contract, patent disclosure agreement, invention
assignment agreement, non-disclosure agreement, noncompetition agreement or any
other contract or agreement with Worldprints; or (b) has developed any
technology, software or other copyrightable, patentable, or otherwise
proprietary work for Worldprints or any of its subsidiaries that is subject to
any agreement under which such employee, consultant or independent contractor
has assigned or otherwise granted to any third party any rights (including,
without limitation, Intellectual Property) in or to such technology, software or
other copyrightable, patentable or otherwise proprietary work or any
Intellectual Property related thereto. To Worldprints' and each of the
Worldprints Founders' knowledge, the employment of any employee of Worldprints
or any subsidiary of Worldprints or the use by Worldprints or any subsidiary of
Worldprints of the services of any consultant or independent contractor does not
subject Worldprints or any such subsidiary to any liability to any third party.
3.13.5 To Worldprints' and each of the Worldprints Founders'
knowledge, except as set forth on Item 3.13.5 to the Worldprints Disclosure
-----------
Letter, there are no and will be no royalties, honoraria, fees or other payments
(other than salaries payable to employees and amounts payable to independent
contractors not contingent on or related to use of their work product) pursuant
to agreements in effect as of the Effective Time payable by Worldprints or any
of its subsidiaries to any third person by reason of the ownership, use,
possession, license, copying, modifying, making derivative works of, sale,
marketing, advertising and/or disposition of any Worldprints IP Rights by
Worldprints or any of its subsidiaries before or after the Closing Date.
-23-
3.13.6 Worldprints has taken commercially reasonable and adequate
precautions to protect, preserve and maintain the secrecy and confidentiality of
the Worldprints IP Rights and all Worldprints' ownership interests and
proprietary rights therein. All officers, employees and consultants of
Worldprints and its subsidiaries having access to proprietary information of
Worldprints or its subsidiaries, its customers or business partners, have
executed and delivered to Worldprints an agreement regarding the protection of
such proprietary information and the assignment of inventions to Worldprints;
and copies of the form of all such agreements have been delivered to
Excite@Home. Worldprints has secured valid written assignments from all
consultants, contractors and employees who were involved in, or who contributed
to, the creation or development of any Worldprints IP Rights, of the rights to
such contributions that may be owned by such persons or that Worldprints does
not already own by operation of law. No current or former employee, officer,
director, consultant or independent contractor of Worldprints or of any
subsidiary of Worldprints has any right, license, claim or interest whatsoever
in or with respect to any Worldprints IP Rights.
3.13.7 Item 3.13.7 to the Worldprints Disclosure Letter contains a
-----------
true and complete list of (i) all worldwide registrations by Worldprints or its
subsidiaries of any patents, copyrights, mask works, trademarks, service marks,
Internet domain names or Internet or World Wide Web URLs or addresses with any
governmental or quasi-governmental authority; (ii) all applications,
registrations, filings and other formal actions made or taken pursuant to
federal, state and foreign laws by Worldprints or its subsidiaries to secure,
perfect or protect its interest in Worldprints IP Rights, including, without
limitation, all patent applications, copyright applications, and applications
for registration of trademarks and service marks, (iii) all unregistered
copyrights, trademarks and service marks of Worldprints or its subsidiaries. All
patents, and all registered trademarks, service marks, Internet domain names,
Internet or World Wide Web URLs or addresses and copyrights held by Worldprints
or its subsidiaries are valid, enforceable and subsisting. Each material
registered item of Worldprints Intellectual Property is valid and subsisting,
and, to Worldprints' and each of the Worldprints Founders' knowledge, all
necessary registration maintenance and renewal fees currently due in connection
with such registered item of Worldprints Intellectual Property have been paid
and filed with the appropriate patent, copyright, trademark or other
Governmental Authority in the Untied States or in applicable foreign
jurisdictions, as the case may be, for the purposes of maintaining and
preserving such item of Worldprints Intellectual Property.
3.13.8 Item 3.13.8 to the Worldprints Disclosure Letter contains a
-----------
true and complete list of (i) all licenses, sublicenses and other agreements as
to which Worldprints or any of its subsidiaries is a party and pursuant to which
any person or entity is authorized to use any Worldprints IP Rights, and (ii)
all licenses, sublicenses and other agreements as to which Worldprints or any of
its subsidiaries is a party and pursuant to which Worldprints or any of its
subsidiaries is authorized to use any third-party patents, trademarks, Internet
domain names, Internet or World Wide Web URLs or addresses, or copyrights,
including, but not limited to, software ("Third Party IP Rights") which would be
infringed by, or are incorporated in, or form a part of, any product or service
sold, licensed, distributed, provided or marketed by Worldprints or any of its
subsidiaries.
3.13.9 Except as set forth in Item 3.13.9 to the Worldprints
-----------
Disclosure Letter, neither Worldprints nor any of its subsidiaries, nor any
other party acting on its or their behalf, has
-24-
disclosed or delivered to any party, or permitted the disclosure or delivery to
any escrow agent or other party, of any Worldprints Source Code (as defined
below). No event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) will, or would reasonably be expected
to, result in the disclosure or delivery to any party of any Worldprints Source
Code (as defined below). Item 3.13.9 to the Worldprints Disclosure Letter
-----------
identifies each contract, agreement and instrument (whether written or oral)
pursuant to which Worldprints has deposited, or is or may be required to
deposit, with an escrowholder or any other party, any Worldprints Source Code
and further describes whether the execution of this Agreement or the
consummation of the Merger or any of the other transactions contemplated hereby,
in and of itself, would reasonably be expected to result in the release from
escrow of any Worldprints Source Code. As used in this Section 3.13.9,
"Worldprints Source Code" means, collectively, any software source code, or any
material portion or aspect of the software source code of the Image Catcher
Wallpaper/Screensaver software currently made available on the Worldprints
Websites.
3.13.10 Except as set forth in Item 3.13.10 to the Worldprints
------------
Disclosure Letter, to Worldprints' and each of the Worldprints Founders'
knowledge, there is no unauthorized use, disclosure, infringement or
misappropriation of any Worldprints IP Rights or any of its subsidiaries by any
third party, including any employee or former employee of Worldprints or any of
its subsidiaries. Except as set forth in Item 3.13.10 to the Worldprints
------------
Disclosure Letter, neither Worldprints nor any of its subsidiaries has agreed to
indemnify any person for any infringement of any Intellectual Property of any
third party by any product or service that has been sold, licensed, leased,
supplied, marketed, distributed, or provided by Worldprints.
3.13.11 To Worldprints' and each of the Worldprints Founders'
knowledge, all software developed by Worldprints and licensed by Worldprints or
any of its subsidiaries to customers and all other products manufactured, sold,
licensed, leased or delivered by Worldprints or any of its subsidiaries to
customers and all services provided by Worldprints or any of its subsidiaries to
customers on or prior to the Closing Date conform in all material respects to
applicable contractual commitments, express and implied warranties, product
specifications and product documentation and to any representations provided to
customers and neither Worldprints nor any of its subsidiaries has any material
liability (and, to Worldprints' and each of the Worldprints Founders' knowledge,
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Worldprints or any of
its subsidiaries giving rise to any liability that could have a Material Adverse
Effect on Worldprints) for replacement or repair thereof or other damages in
connection therewith in excess of any reserves therefor reflected on the Balance
Sheet.
3.13.12 All of the software and other technology developed by
Worldprints or any of its subsidiaries is Year 2000 Compliant. To Worldprints'
and each of the Worldprints Founders' knowledge, all software, hardware and
other technology utilized by Worldprints in connection with any of the
Worldprints Websites or otherwise used in connection with the Worldprints
business as presently conducted are Year 2000 Compliant. "Year 2000 Compliant"
means, as applied to software or other technology, that: (i) such software or
other technology will operate and correctly store, represent and process
(including sort) all dates (including single and multi-century formulas and leap
year calculations), such that errors will not occur when the date being used is
in the Year 2000, or in a year preceding or following the Year 2000; (ii) such
software or other technology has been written and tested to support numeric and
date transitions from the twentieth century to the
-25-
twenty-first century, and back (including without limitation all calculations,
aging, reporting, printing, displays, reversals, disaster and vital records
recoveries) without error, corruption or impact to current and/or future
operations; and (iii) such software or other technology will function without
error or interruption related to any date information, specifically including
errors or interruptions from functions which may involve date information from
more than one century. This warranty does not apply to any failure or error to
the extent caused by third-party owned software or other technology that was not
developed by Worldprints or any of its subsidiaries or which is not utilized by
Worldprints in connection with any of the Worldprints Websites or otherwise used
in connection with the Worldprints business as currently conducted.
3.14 Compliance with Laws.
--------------------
3.14.1 Worldprints and each of its subsidiaries has complied, and
is now and at the Closing Date will be in material compliance with, all
applicable federal, state, local or foreign laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to its material assets, properties, and business (and any
regulations promulgated thereunder) (collectively, "Applicable Law").
Worldprints and each of its subsidiaries hold all valid licenses and other
governmental permits that are necessary and/or legally required to be held by
them to conduct their respective businesses as presently conducted, except where
the failure to hold such licenses or permits, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Worldprints.
3.14.2 Each of the Worldprints Websites and all materials and
products distributed or marketed by Worldprints have at all times made all
disclosures to users or customers required by Applicable Law and none of such
disclosures made or contained in any Worldprints Website or in any such
materials have been inaccurate, misleading or deceptive, except where the
failure to make such disclosures, or where such inaccurate, misleading or
deceptive disclosures, individually or in the aggregate, would not have a
Material Adverse Effect on Worldprints.
3.14.3 Worldprints and each of its subsidiaries has at all times
been in compliance with Applicable Laws relating to the privacy of users of each
of the Worldprints Websites, except where the failure to so be in compliance,
individually or in the aggregate, would not have a Material Adverse Effect on
Worldprints.
3.14.4 Worldprints and each of its subsidiaries holds all permits,
licenses and approvals from, and has made all filings with, government (and
quasi-governmental) agencies and authorities, that are necessary for Worldprints
to conduct its present business without any violation of Applicable Law
("Governmental Permits") and all such Governmental Permits are in full force and
effect, except where the failure to hold such licenses or permits, or make such
filings, or maintain such Governmental Permits in full force and effect,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Worldprints. Neither Worldprints nor any of its
subsidiaries has received any notice or other communication from any
Governmental Authority (or quasi-governmental authority) regarding (a) any
actual or possible violation of law or any Governmental Permit or any failure to
comply with any term or requirement of any Governmental Permit, or (b) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Permit.
-26-
3.14.5 Neither Worldprints nor any of its subsidiaries, nor any
director, officer, agent or employee of Worldprints and/or any of its
subsidiaries, has, for or on behalf of Worldprints or any of its subsidiaries,
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
3.15 Certain Transactions and Agreements. Except as set forth in Item
-----------------------------------
3.15 to the Worldprints Disclosure Letter, none of the officers or directors of
Worldprints, the Worldprints Founders, or, to Worldprints' or the Worldprints
Founders' knowledge, the Worldprints Shareholders or employees of Worldprints,
nor to Worldprints' or the Worldprints Founders' knowledge, any member of their
immediate families, has any direct or indirect ownership interest in any firm or
corporation that competes with, or does business with, or has any contractual
arrangement with, Worldprints (except with respect to any interest in less than
five percent of the stock of any corporation whose stock is publicly traded).
Except as set forth in Item 3.15 to the Worldprints Disclosure Letter, none of
said officers or directors, or the Worldprints Founders, nor to Worldprints' or
the Worldprints Founders' knowledge, any of the Worldprints Shareholders or
Worldprints employees, nor any member of their immediate families, is a party
to, or otherwise directly or indirectly interested in, any contract or informal
arrangement with Worldprints, except for normal compensation for services as an
officer, director or employee thereof that have been disclosed to Excite@Home
and except for agreements related to the purchase of the stock of Worldprints by
such persons. None of said officers or directors, or the Worldprints Founders,
nor to Worldprints' or the Worldprints Founders' knowledge, any of the
Worldprints Shareholders or Worldprints employees, nor their family members has
any interest in any property, real or personal, tangible or intangible
(including but not limited to any Worldprints IP Rights or any other
Intellectual Property) that is used in, or that pertains to, the business of
Worldprints, except for the normal rights of a shareholder.
3.16 Employees, ERISA and Other Compliance.
-------------------------------------
3.16.1 Worldprints and its subsidiaries are in compliance in all
material respects with all applicable laws, agreements and contracts relating to
employment, employment practices, immigration, wages, hours, and terms and
conditions of employment, including, but not limited to, employee compensation
matters. A list of all employees, officers and consultants of Worldprints and
its subsidiaries and their current title and/or job description and compensation
is set forth on Item 3.16.1 to Worldprints Disclosure Letter. Worldprints and
-----------
its subsidiaries do not have any employment contracts or consulting agreements
currently in effect that are not terminable at will (other than agreements with
the sole purpose of providing for the confidentiality of proprietary information
or assignment of inventions).
3.16.2 Neither Worldprints nor any of its subsidiaries (i) now is,
nor has ever been, subject to a union organizing effort, (ii) is subject to any
collective bargaining agreement with respect to any of its employees, (iii) is
subject to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization or (iv) has any current labor
disputes. Worldprints and its subsidiaries have good labor relations, and
Worldprints and the Worldprints Founders have no knowledge of any facts
indicating that the consummation of the Merger or any of
-27-
the other transactions contemplated hereby will have a Material Adverse Effect
on such labor relations, and have no knowledge that any of their key employees
intends to leave their employ. Except as provided in Item 3.16.2 to the
Worldprints Disclosure Letter, all of the employees of Worldprints and its
subsidiaries are legally permitted to be employed by Worldprints or its
subsidiaries in the United States of America in their current job capacities.
3.16.3 Neither Worldprints nor any of its subsidiaries has any
pension plan which constitutes, or has since the enactment of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") constituted, a
"multiemployer plan" as defined in Section 3(37) of ERISA. No pension plan of
Worldprints or any of its subsidiaries is subject to Title IV of ERISA.
3.16.4 (a) Item 3.16.4 to the Worldprints Disclosure Letter lists
-----------
each employment, severance or other similar contract, arrangement or policy,
each "employee benefit plan" as defined in Section 3(3) of ERISA and each plan
or arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' benefits, vacation benefits, severance
benefits, disability benefits, death benefits, hospitalization benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which is entered into, maintained or
contributed to by Worldprints or any of its subsidiaries and covers any employee
or former employee of Worldprints or any of its subsidiaries. Such contracts,
plans and arrangements as are described in this Section 3.16.4 are hereinafter
collectively referred to as "Worldprints Benefit Arrangements."
(b) Each Worldprints Benefit Arrangement has been
maintained in compliance in all material respects with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Worldprints Benefit Arrangement, and each such
Worldprints Benefit Arrangement that is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter that such plan
satisfied the requirements of the Tax Reform Act of 1986 (a copy of which
letter(s) have been delivered to Excite@Home).
(c) Worldprints has delivered to Excite@Home a complete and
correct copy and description of each Worldprints Benefit Arrangement.
(d) Worldprints (and/or its subsidiary, if applicable) has
timely filed and delivered to Excite@Home and its counsel the most recent annual
report (Form 5500) for each Worldprints Benefit Arrangement that is an "employee
benefit plan" as defined under ERISA.
(e) Neither Worldprints nor any of its subsidiaries has
ever been a participant in any "prohibited transaction", within the meaning of
Section 406 of ERISA with respect to any employee pension benefit plan (as
defined in Section 3(2) of ERISA) which Worldprints or any of its subsidiaries
sponsors as employer or in which Worldprints or any of its subsidiaries
participates as an employer, which was not otherwise exempt pursuant to Section
408 of ERISA (including any individual exemption granted under Section 408(a) of
ERISA), or which could result in an excise tax under the Code.
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(f) All contributions due from Worldprints or any of its
subsidiaries with respect to any of Worldprints Benefit Arrangements have been
made or have been accrued on Worldprints' financial statements (including,
without limitation, the Worldprints Financial Statements), and no further
contributions will be due or will have accrued thereunder as of the Closing
Date.
(g) All individuals who, pursuant to the terms of any
Worldprints Benefit Arrangement, are entitled to participate in any such
Worldprints Benefit Arrangement, are currently participating in such Worldprints
Benefit Arrangement or have been offered an opportunity to do so and have
declined in writing.
3.16.5 Except as provided in Item 3.16.5 to the Worldprints
Disclosure Letter, there has been no amendment to, written interpretation or
announcement (whether or not written) by Worldprints relating to, or change in
employee participation or coverage under, any Worldprints Benefit Arrangement
that would increase materially the expense of maintaining such Worldprints
Benefit Arrangement above the level of the expense incurred in Worldprints'
fiscal year ended December 31, 1999.
3.16.6 The group health plans (as defined in Section 4980B(g) of
the Code) that benefit employees of Worldprints are in compliance, in all
material respects, with the continuation coverage requirements of Section 4980B
of the Code as such requirements affect Worldprints, its subsidiaries and their
employees. As of the Closing Date, there will be no material outstanding,
uncorrected violations under the Consolidation Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), with respect to any of Worldprints Benefit
Arrangements, covered employees, or qualified beneficiaries that could
reasonably be expected to result in a Material Adverse Effect on Worldprints, or
in a Material Adverse Effect on Excite@Home after the Effective Time.
3.16.7 No benefit payable or which may become payable by
Worldprints or any of its subsidiaries pursuant to any Worldprints Benefit
Arrangement or as a result of or arising under this Agreement or the Plan of
Merger will constitute an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code) which is subject to the imposition of an excise Tax
under Section 4999 of the Code or which would not be deductible by reason of
Section 280G of the Code. Except as provided in Item 3.16.7 to the Worldprints
Disclosure Letter, neither Worldprints nor any subsidiary of Worldprints is a
party to any: (a) agreement with any executive officer or other key employee
thereof (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Worldprints
or such Worldprints subsidiary in the nature of the Merger or any of the other
transactions contemplated by this Agreement or any Worldprints Ancillary
Agreement, (ii) providing any term of employment or compensation guarantee, or
(iii) providing severance benefits or other benefits after the termination of
employment of such employee regardless of the reason for such termination of
employment; or (b) agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of the Merger or any of the other transactions
contemplated by this Agreement or any Worldprints Ancillary Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement or any Worldprints Ancillary
Agreement.
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3.17 Corporate Documents. Worldprints has made available to Excite@Home
-------------------
for examination all documents and information listed in the Worldprints
Disclosure Letter or in any schedule thereto or in any other exhibit or schedule
called for by this Agreement which have been requested by Excite@Home, including
the following: (a) copies of Worldprints' Articles of Incorporation and Bylaws
as currently in effect; (b) Worldprints' minute book containing all records of
all proceedings, consents, actions, and meetings of Worldprints' shareholders,
board of directors and any committees thereof (other than any records of
proceedings concerning the deliberations of the shareholders, directors or
members of committees of Worldprints regarding the Merger or this Agreement,
deliberations regarding contractual or other relationships between Worldprints
and Excite@Home or any other party related to Excite@Home, or deliberations
regarding World Venture Partners, Inc. (collectively, the "Excluded
Materials")); (c) Worldprints' stock ledger, option ledger, and warrant ledger
and journal reflecting all stock issuances and transfers, and all grants of
options and warrants to purchase Worldprints capital stock and other Worldprints
securities; (d) all permits, orders, and consents issued by, and filings by
Worldprints with, any regulatory agency with respect to Worldprints, or any
securities of Worldprints, and all applications for such permits, orders, and
consents; and (e) all the Worldprints Material Agreements; provided, that the
--------
Excluded Materials will be provided to Excite@Home immediately following the
Closing.
3.18 No Brokers. Neither Worldprints, any subsidiary of Worldprints nor
----------
any affiliate of Worldprints or any of its subsidiaries is obligated for the
payment of any fees or expenses of any investment banker, broker, finder or
similar party in connection with the origin, negotiation or execution of this
Agreement or in connection with the Merger or any other transaction contemplated
by this Agreement, and Excite@Home will not incur any liability, either directly
or indirectly, to any such investment banker, broker, finder or similar party as
a result of, this Agreement, the Merger or any act or omission of Worldprints,
any of its employees, officers, directors, shareholders, agents, subsidiaries or
affiliates.
3.19 Books and Records.
-----------------
3.19.1 The books, records and accounts of Worldprints (a) are in all
material respects true, complete and correct, (b) have been maintained in
accordance with good business practices, (c) are stated in reasonable detail and
accurately and fairly reflect the transactions and dispositions of the assets of
Worldprints, and (d) accurately and fairly reflect the basis for the Worldprints
Financial Statements.
3.19.2 Worldprints has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (a)
transactions are executed in accordance with management's general or specific
authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and
(ii) to maintain accountability for assets; and (c) the amount recorded for
assets on the books and records of Worldprints is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
3.20 Insurance. Except as set forth in Item 3.20 to the Worldprints
---------
Disclosure Letter, during the prior two years, Worldprints (including its
predecessor) and its subsidiaries have maintained, and now maintain, policies of
insurance and bonds of the type and in amounts
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customarily carried by persons conducting businesses or owning assets similar in
type and size to those of Worldprints and its subsidiaries, including, without
limitation, all legally required workers' compensation insurance and errors and
omissions, casualty, fire and general liability insurance. There is no material
claim pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been timely
paid, and Worldprints and its subsidiaries are otherwise in compliance with the
terms of such policies and bonds. Worldprints and the Worldprints Founders have
no knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies. All policies of insurance now held by
Worldprints or any of its subsidiaries are set forth in Item 3.20 to the
---------
Worldprints Disclosure Letter, together with the name of the insurer under each
policy, the type of policy, the policy coverage amount and any applicable
deductible.
3.21 Environmental Matters.
---------------------
3.21.1 Worldprints and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below), which compliance includes the
possession by Worldprints and its subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof, except where the failure to so
be in compliance, individually or in the aggregate, would not have a Material
Adverse Effect on Worldprints. Neither Worldprints nor any of its subsidiaries
has received any notice or other communication (in writing or otherwise),
whether from a governmental body, citizens-group, employee or otherwise, that
alleges that Worldprints or any of its subsidiaries is not in compliance with
any Environmental Law, and, to Worldprints' and each of the Worldprints
Founders' knowledge, there are no circumstances that may prevent or interfere
with the compliance by Worldprints or any of its subsidiaries with any current
Environmental Law in the future. To Worldprints' and each of the Worldprints
Founders' knowledge, no current or prior owner of any property leased or
possessed by Worldprints or any of its subsidiaries has received any notice or
other communication (in writing or otherwise), whether from a government body,
citizens-group, employee or otherwise, that alleges that such current or prior
owner or Worldprints or any of its subsidiaries is not in compliance with any
Environmental Law. All governmental authorizations currently held by
Worldprints or any of its subsidiaries pursuant to any Environmental Law (if
any) are identified in Item 3.21 to the Worldprints Disclosure Letter.
---------
3.21.2 For purposes of this Section 3.21: (i) "Environmental Law"
means any federal, state, local or foreign statute, law regulation or other
legal requirement relating to pollution or protection of human health or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Material of Environmental Concern" include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products and any other substance that is currently regulated by an
Environmental Law or that is otherwise generally recognized to be a danger to
health, reproduction or the environment.
3.22 Board Approval. The Board of Directors of Worldprints has
--------------
unanimously (other than any director who has recused himself from such actions)
(i) approved this Agreement, the Plan
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of Merger and the Merger and all the agreements, transactions and actions
contemplated hereby that require board of directors approval under applicable
law and Worldprints' Articles of Incorporation and Bylaws, (ii) determined that
the Merger is in the best interests of the shareholders of Worldprints and is on
terms that are fair to such shareholders, and has recommended the Merger to the
Worldprints Shareholders, and (iii) submitted this Agreement, the Merger and the
other transactions and agreements contemplated by this Agreement that require
shareholder approval under applicable law and Worldprints' Articles of
Incorporation and Bylaws to the vote and approval of Worldprints' shareholders.
3.23 Shareholder Approval. Concurrently with the execution of this
--------------------
Agreement, Worldprints Shareholders who collectively own at least 96% of the
issued and outstanding capital stock of Worldprints will have voted or given
written consents approving the Merger, this Agreement and the other transactions
contemplated thereby that require shareholder approval under applicable law and
Worldprints' Articles of Incorporation and Bylaws in conformance with applicable
law and Worldprints' charter documents.
3.24 Disclosure. Neither this Agreement, its exhibits and schedules and
----------
the Worldprints Disclosure Letter, nor any of the certificates or documents to
be delivered by Worldprints to Excite@Home under this Agreement, taken together,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
3.25 Tax Matters. The representations of Worldprints set forth in
-----------
Schedule 3.25 are true and correct in all respects.
Article 4
Representations and Warranties of Excite@Home and Sub
Excite@Home and Sub hereby represent and warrant to Worldprints that, except
as set forth in the letter addressed to Worldprints from Excite@Home and dated
as of the Agreement Date which has been delivered by Excite@Home to Worldprints
concurrently herewith (the "Excite@Home Disclosure Letter"), each of the
following representations, warranties and statements contained in the following
Sections of this Article 4 are true and correct as of the Agreement Date and
will be true and correct on and as of the Closing Date. For all purposes of this
Agreement, the statements contained in the Excite@Home Disclosure Letter and its
schedules shall also be deemed to be representations and warranties made and
given by Excite@Home and Sub under Article 4 of this Agreement.
The receipt by Worldprints of information pursuant to Section 6.1 or
otherwise on or before the Closing, shall not limit the right of Worldprints
under Article 8 to require as a condition precedent to the performance of its
obligations under this Agreement on such Closing Date the accuracy in all
material respects of the representations and warranties made by the representing
party in this Agreement (as provided in Article 8) and the performance in all
material respects of the covenants of Excite@Home made in this Agreement
(without regard to such information) and to receive a certificate with respect
to the same.
4.1 Organization and Good Standing. Excite@Home is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now
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conducted and as proposed to be conducted, and is qualified to transact
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
make such qualification necessary, except in any jurisdiction in which the
failure to so qualify or be in good standing would not be reasonably expected to
have a Material Adverse Effect on Excite@Home. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado, and has the corporate power and authority to own, operate and lease
its properties and to carry on its business. Sub was formed solely to consummate
the Merger and has not carried on any business since the date of its
organization. Excite@Home owns all of the issued and outstanding capital stock
of Sub.
4.2 Power, Authorization and Validity.
---------------------------------
4.2.1 Power and Authority. Excite@Home has all requisite corporate
-------------------
power and authority to enter into, execute, deliver and perform its obligations
under, this Agreement and all the Excite@Home Ancillary Agreements. The
execution, delivery and performance of this Agreement and each of the
Excite@Home Ancillary Agreements by Excite@Home have been duly and validly
approved and authorized by Excite@Home's Board of Directors in compliance with
applicable law (including the Delaware General Corporation Law) and
Excite@Home's Certificate of Incorporation and Bylaws, each as amended. Sub has
all requisite corporate power, capacity and authority to execute, deliver and
perform its obligations under, this Agreement and all the Sub Ancillary
Agreements and to consummate the Merger. The execution, delivery and performance
of this Agreement and each of the Sub Ancillary Agreements by Sub have been duly
and validly approved and authorized by Sub's Board of Directors and its sole
stockholder in compliance with applicable law (including Colorado law) and Sub's
Articles of Incorporation and bylaws, each as amended.
4.2.2 No Consents. No consent, approval, order or authorization
-----------
of, or registration, declaration or filing with, any court, administrative
agency, commission, other Governmental Authority or other person is necessary or
required to be made or obtained by Excite@Home or Sub to enable Excite@Home and
Sub to enter into, and to perform their respective obligations under, this
Agreement, the Excite@Home Ancillary Agreements or the Sub Ancillary Agreements,
respectively, and for Sub to consummate the Merger, except for: (a) the filing
of the Plan of Merger with the Colorado Secretary of State as required under
Colorado law to effect the Merger (if any filing thereof is required by
Excite@Home or Sub); (b) the filing by Excite@Home with the Securities and
Exchange Commission ("SEC") or any state securities law authorities of any
notices or filings required in connection with the exemptions from the
registration or qualification requirements of the 1933 Act and/or applicable
state securities laws which Excite@Home relies on in issuing shares of
Excite@Home Common Stock pursuant to this Agreement; (c) the filing by
Excite@Home of such reports and information with the SEC under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
promulgated by the SEC thereunder, as may be required in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement;
(d) the filing by Excite@Home with the SEC of the Form S-3 registration
statement to be filed by Excite@Home pursuant to this Agreement; (e) the filing
by Excite@Home with the SEC of the Form S-8 registration statement to be filed
by Excite@Home pursuant to this Agreement; (f) the filing by Excite@Home with
the Delaware Secretary of State of the Certificate of Designation to be filed by
Excite@Home pursuant to this Agreement (g) such other filings as may be required
by the Nasdaq Stock Market with respect to the
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Merger and the other transactions contemplated by this Agreement, and the
issuance of the shares of Excite@Home Common Stock and the assumption of
Worldprints Options and Worldprints Warrants by Excite@Home in the Merger; and
(h) such other filings, if any, as may be required in order for Excite@Home to
comply with applicable federal and state securities laws.
4.2.3 Enforceability. This Agreement and the Excite@Home Ancillary
--------------
Agreements are, or when executed by Excite@Home will be, valid and binding
obligations of Excite@Home, enforceable against Excite@Home in accordance with
their respective terms, subject to the effect of (a) applicable bankruptcy and
other similar laws affecting the rights of creditors generally and (b) rules of
law and equity governing specific performance, injunctive relief and other
equitable remedies. This Agreement and the Sub Ancillary Agreements are, or when
executed by Sub will be, valid and binding obligations of Sub, enforceable
against Sub in accordance with their respective terms, subject to the effect of
(a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally and (b) rules of law and equity governing specific
performance, injunctive relief and other equitable remedies.
4.3 Excite@Home and Sub Capital Structure.
-------------------------------------
(a) The authorized capital stock of Excite@Home consists of
719,719,414 shares of common stock, par value $0.01 per share, of which
683,700,000 shares have been designated Series A Common Stock (or Excite@Home
Common Stock), 30,800,000 shares have been designated Series B Common Stock and
5,219,414 shares have been designated Series K Common Stock, of which there were
361,800,891 shares of Series A Common Stock, 30,800,000 shares of Series B
Common Stock and 2,000,000 shares of Series K Common Stock issued and
outstanding as of March 8, 2000, and 9,650,000 shares of Preferred Stock, par
value $0.01 per share, of which (i) 10,143.549 shares designated as Series A
Non-Voting Convertible Preferred Stock were issued and outstanding as of Xxxxx
0, 0000, (xx) 1,008 shares designated as Series B Non-Voting Convertible
Preferred Stock were authorized for issuance, of which 202.310 shares were
issued and outstanding as of March 8, 2000 and up to 804 shares were reserved
for issuance pursuant to this Agreement, and (iii) 1,279.065 shares designated
as Series C Non-Voting Convertible Preferred Stock were issued and outstanding
as of March 8, 2000. As of the Effective Time, Excite@Home will have reserved
for issuance a sufficient number of shares of Excite@Home Common Stock to allow
for the conversion of the Series B Non-Voting Convertible Preferred Stock issued
in the Merger and the exercise of all assumed and converted Worldprints Warrants
and Worldprints Options. All outstanding shares of Excite@Home capital stock are
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights and have been offered, issued, sold and delivered by
Excite@Home in compliance with (i) all registration or qualification
requirements (or applicable exemptions therefrom) of all applicable securities
laws and, to the knowledge of Excite@Home, other applicable Legal Requirements
and (ii) all requirements set forth in applicable agreements or instruments. As
of March 8, 2000: (i) there were options outstanding to purchase an aggregate of
59,167,606 shares of Excite@Home Common Stock pursuant to Excite@Home's stock
option plans; and (ii) 1,422,310 shares of Excite@Home Common Stock reserved for
future issuance under Excite@Home's 1997 Employee Stock Purchase Plan. All
shares of Excite@Home Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
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(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, no par value, all of which, as of the date hereof, are
issued and outstanding and are held by Excite@Home. All of the outstanding
shares of Sub's common stock have been duly authorized and validly issued, and
are fully paid and nonassessable. Sub was formed for the purpose of consummating
the Merger and has no material assets or liabilities except as necessary for
such purpose.
(c) The Excite@Home Common Stock and Excite@Home Preferred
Stock to be issued in the Merger, when issued in accordance with the provisions
of this Agreement, will be validly issued, fully paid and nonassessable, and not
subject to any preemptive rights.
4.4 No Conflict. Neither the execution and delivery of this Agreement nor
-----------
any of the Excite@Home Ancillary Agreements or Sub Ancillary Agreements by
Excite@Home or Sub, nor the consummation of the transactions contemplated hereby
or thereby, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of, or constitute
a default under: (i) any provision of the Certificate of Incorporation or Bylaws
or other charter documents of Excite@Home or Sub as currently in effect; (ii)
any federal, state, local or foreign judgment, writ, decree, order, statute,
rule or regulation applicable to Excite@Home or Sub or any of their respective
material assets or properties; or (iii) any material instrument, agreement or
contract to which Excite@Home or any of its subsidiaries is a party or by which
Excite@Home or any of its subsidiaries or any of their respective material
assets or properties are bound.
4.5 SEC Filings.
-----------
(a) Excite@Home has filed all forms, reports and documents
required to be filed by Excite@Home with the SEC since Excite@Home became a
reporting company under the 1934 Act, and has made available to Worldprints such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports and documents (including those that Excite@Home may file
subsequent to the date hereof) are referred to herein as the "Excite@Home SEC
Reports." Item 4.5(a) of the Excite@Home Disclosure Letter sets forth a list of
the Excite@Home SEC Reports. As of their respective dates, the Excite@Home SEC
Reports (i) were prepared in accordance with the requirements of the 1933 Act or
the 1934 Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Excite@Home SEC Reports, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently filed
Excite@Home SEC Report. Excite@Home has filed with the SEC as exhibits to the
Excite@Home SEC Reports all agreements, documents and instruments required to be
so filed, and such exhibits are true and complete copies of such agreements,
documents or instruments, as the case may be (subject to redaction to preserve
confidential treatment where appropriate). Excite@Home has provided to
Worldprints a copy of any such exhibit that materially affects the rights of the
Worldprints Shareholders to enforce the terms of this Agreement. None of
Excite@Home's subsidiaries is required to file any reports with the SEC under
the 1934 Act. Excite@Home represents and warrants that, as of the Agreement
Date, it is eligible to utilize a Form S-3.
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(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Excite@Home SEC Reports (the "Excite@Home Financials"), including any
Excite@Home SEC Reports filed after the date hereof until the Closing Date, (i)
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q, 8-K or any
successor form under the 0000 Xxx) and (iii) fairly presented in all material
respects the consolidated financial position of Excite@Home and its subsidiaries
as at the respective dates thereof and the consolidated results of Excite@Home's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments. The audited balance sheet of
Excite@Home contained in Excite@Home SEC Reports as of December 31, 1998 is
hereinafter referred to as the "Excite@Home Balance Sheet." Except as disclosed
in the Excite@Home Financials, since December 31, 1999, neither Excite@Home nor
any of its subsidiaries has any liabilities required under GAAP (applied on a
consistent basis) to be set forth on a balance sheet (absolute, accrued,
contingent or otherwise) which are, individually or in the aggregate, material
to the business, results of operations or financial condition of Excite@Home and
its subsidiaries taken as a whole, except for liabilities incurred since the
date of the Excite@Home Balance Sheet in the ordinary course of business
consistent with past practices and liabilities incurred in connection with this
Agreement.
(c) Since December 31, 1999, there has been no material
disagreement (within the meaning of Item 304(a)(1)(iv) of Regulation S-K under
the 0000 Xxx) between any of Excite@Home and its subsidiaries, on the one part,
and any of its independent accountants, on the other part, with respect to any
aspect of the manner in which Excite@Home or such subsidiary, as the case may
be, has maintained or maintains its books and records or the manner in which
Excite@Home or the subsidiary, as the case may be, has reported upon the
financial condition and results of operations of any of Excite@Home and its
subsidiaries since such date, that has not been resolved to the satisfaction of
the relevant independent accountants.
4.6 Disclosure. Excite@Home has made available to Worldprints an
----------
investor disclosure package consisting of Excite@Home's annual reports on Form
10-K for its fiscal years ending December 31, 1998 and December 31, 1999,
respectively (the "Fiscal Year End"), all Forms 10-Q and 8-K filed by
Excite@Home with the SEC since the Fiscal Year End and up to the date of this
Agreement and all proxy materials distributed to Excite@Home's stockholders
since the Fiscal Year End and up to the date of this Agreement (the "Excite@Home
Disclosure Package").
4.7 Absence of Certain Changes or Events. Except as set forth in Item
------------------------------------
4.7 of the Excite@Home Disclosure Letter, since December 31, 1999, there has not
been any Material Adverse Change in Excite@Home.
4.8 Litigation. There is no Action pending against Excite@Home or Sub,
----------
or to Excite@Home's knowledge, threatened against Excite@Home or Sub, that
restricts in any material respect or prohibits (or, if successful, would
materially restrict or prohibit) the conclusion of the Merger or any of the
transactions contemplated herein or in any of the Excite@Home Ancillary
Agreements or Sub Ancillary Agreements. There is no Action pending against any
of Excite@Home and its subsidiaries, or to Excite@Home's knowledge, threatened
against any of
-36-
Excite@Home and its subsidiaries, that involves the Merger or any of the
transactions contemplated herein or in any of the Excite@Home Ancillary
Agreements or Sub Ancillary Agreements or any property owned, leased, licensed
or used by any of Excite@Home and its subsidiaries, as the case may be, that,
individually or in the aggregate, if determined adversely to any of them, would
reasonably be expected to have a Material Adverse Effect on Excite@Home.
4.9 Compliance with Laws. None of Excite@Home and its subsidiaries is
--------------------
in, and none of them has received written notice of, a violation of or default
with respect to, any Legal Requirement, except for such violations or defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on Excite@Home. Each of Excite@Home and its
subsidiaries hold all Governmental Permits, other than those as to which the
failure to hold, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Excite@Home.
4.10 Tax Matters. The representations of Excite@Home and Sub set forth in
-----------
Schedule 4.10 are true and correct in all respects.
Article 5
Pre Closing Covenants of Worldprints
During the time period from the Agreement Date until the earlier to
occur of (i) the Effective Time or (ii) the termination of this Agreement in
accordance with the provisions of Article 10, Worldprints and each Worldprints
Founder covenants and agrees with Excite@Home as follows:
5.1 Advice of Changes. Worldprints and each Worldprints Founder will
-----------------
promptly advise Excite@Home in writing (a) of any event occurring subsequent to
the Agreement Date that would render any representation or warranty of
Worldprints or a Worldprints Founder contained in Article 3 of this Agreement,
if made on or as of the date of such event or the Closing Date, untrue or
inaccurate and (b) of any event that would reasonably be expected to have a
Material Adverse Effect on Worldprints.
5.2 Maintenance of Business. Worldprints will carry on and preserve its
-----------------------
business and its relationships with customers, advertisers, suppliers,
employees, users of the Worldprints Websites and others with whom Worldprints
has contractual relations in substantially the same manner as it has prior to
the Agreement Date. If Worldprints or any Worldprints Founder becomes aware of
a material deterioration in the relationship with any key customer, key
advertiser, key supplier or key employee, it or such Worldprints Founder will
promptly bring such information to the attention of Excite@Home in writing and,
if requested by Excite@Home, will use reasonable commercial efforts to promptly
restore the relationship.
5.3 Conduct of Business. Worldprints will continue to conduct its
-------------------
business and maintain its business relationships in the ordinary and usual
course (including paying any taxes as the same shall become due), and neither
Worldprints nor any of its subsidiaries will, without the prior written consent
and approval of Excite@Home:
-37-
(a) borrow or lend any money, other than reasonable and
normal advances to employees for bona fide travel expenses that are incurred in
the ordinary course of Worldprints' business consistent with Worldprints' past
practices and other than debt represented by the Replacement Notes;
(b) enter into any material transaction or agreement or
take any other action not in the ordinary course of Worldprints' business
consistent with Worldprints' past practices;
(c) grant any Encumbrance on any of its assets, other than
to secure payment of the Replacement Notes as is consistent with the terms of
that certain Security Agreement dated as of November 29, 1999 between
Worldprints and Excite@Home (the "Security Agreement");
(d) sell, transfer or dispose of any of its assets except
in the ordinary course of Worldprints' business consistent with Worldprints'
past practices;
(e) enter into any material lease or contract for the
purchase or sale of any property, whether real or personal, tangible or
intangible;
(f) other than 1999 holiday or year-end bonuses not to
exceed, in the aggregate, $50,000, pay any bonus, increased salary or special
remuneration to any officer, director, employee or consultant (except for normal
salary increases consistent with Worldprints' past practices and not to exceed
5% of such officer's, employee's or consultant's base annual compensation, and
except pursuant to existing arrangements previously disclosed to and approved in
writing by Excite@Home) or enter into any new employment or consulting agreement
with any such person;
(g) change any of its accounting methods;
(h) declare, set aside or pay any cash or stock dividend or
other distribution in respect of its capital stock, redeem, repurchase or
otherwise acquire any of its capital stock or other securities (except for the
repurchase of stock from employees, directors, consultants or contractors of
Worldprints in connection with the termination of their services with
Worldprints at the original purchase price of such stock), pay or distribute any
cash or property to any shareholder or security holder of Worldprints or make
any other cash payment to any shareholder or security holder of Worldprints that
is unusual, extraordinary, or not made in the ordinary course of Worldprints'
business consistent with its past practices;
(i) amend or terminate any contract, agreement or license
to which Worldprints or any of its subsidiaries is a party except those amended
or terminated in the ordinary course of Worldprints' business, consistent with
its past practices, and which are not material in amount or effect;
(j) guarantee or act as a surety for any obligation of any
third party;
(k) waive or release any material right or claim except in
the ordinary course of Worldprints' business;
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(l) issue, sell, create or authorize any shares of its
capital stock of any class or series or any other of its securities, or issue,
grant or create any warrants, obligations, subscriptions, options (other than
New Worldprints Options), convertible securities, or other commitments to issue
shares of its capital stock or any securities that are potentially exchangeable
for, or convertible into, shares of its capital stock, other than the issuance
of the Replacement Notes or the World Warrants consistent with the terms of the
Security Agreement;
(m) subdivide or split or combine or reverse split the
outstanding shares of its capital stock of any class or series or enter into any
recapitalization affecting the number of outstanding shares of its capital stock
of any class or series or affecting any other of its securities;
(n) merge, consolidate or reorganize with, or acquire, or
enter into any other business combination with, any corporation, partnership,
limited liability company or any other entity (other than Excite@Home or Sub) or
enter into any negotiations, discussions or agreement for such purpose;
(o) amend its Articles of Incorporation or Bylaws;
(p) license any of its technology or Intellectual Property,
or acquire any Intellectual Property (or any license thereto) from any third
party except for any such license in the ordinary course of Worldprints'
business;
(q) materially change any insurance coverage;
(r) agree to any audit assessment by any tax authority or
file any federal or state income or franchise tax return unless copies of such
returns have first been delivered to Excite@Home for its review at a reasonable
time prior to filing;
(s) modify or change the exercise or conversion rights or
exercise or purchase prices of any capital stock of Worldprints, any Worldprints
stock options, warrants or other Worldprints securities, or accelerate or
otherwise modify (i) the right to exercise any option, warrant or other right to
purchase any capital stock or other securities of Worldprints or (ii) the
vesting or release of any shares of capital stock or other securities of
Worldprints from any repurchase options or rights of refusal held by Worldprints
or any other party or any other restrictions; or
(t) agree to do any of the things described in the
preceding clauses 5.3(a) through 5.3(s).
5.4 Regulatory Approvals. Worldprints will promptly execute and file, or
--------------------
join in the execution and filing, of any application, notification or any other
document that may be necessary in order to obtain the authorization, approval or
consent of any Governmental Authority, whether federal, state, local or foreign,
which may be reasonably required, or which Excite@Home may reasonably request,
in connection with the consummation of the Merger or any other transactions
contemplated by this Agreement or any Worldprints Ancillary Agreement.
Worldprints will use reasonably diligent efforts to obtain, and to cooperate
with Excite@Home to promptly obtain, all such authorizations, approvals and
consents.
-39-
5.5 Necessary Consents. Worldprints will use reasonably diligent efforts
------------------
to promptly obtain such written consents and authorizations of third parties,
give notices to third parties and take such other actions as may be necessary or
appropriate in addition to those set forth in the foregoing Sections of this
Article 5 in order to effect the consummation of the Merger and the other
transactions contemplated by this Agreement, to enable Excite@Home to carry on
Worldprints' business immediately after the Effective Time and to keep in effect
and avoid the breach, violation of, termination of, or adverse change to, any
agreement or contract to which Worldprints or any of its subsidiaries is a party
or is bound or by which any of their assets is bound.
5.6 Litigation. Worldprints and each Worldprints Founder will notify
----------
Excite@Home in writing promptly after learning of any claim, action, suit,
arbitration, mediation, proceeding or investigation by or before any court,
arbitrator or arbitration panel, board or governmental agency, initiated by or
against it or any of its subsidiaries, or known by it to be threatened against
Worldprints or any of its subsidiaries or any of their officers, directors,
employees or shareholders in their capacity as such.
5.7 No Other Negotiations. During the time period commencing on the
---------------------
Agreement Date and ending on the earlier to occur of (a) termination of this
Agreement in accordance with the provisions of Article 10 or (b) consummation of
the Merger, Worldprints and each Worldprints Founder will not, and Worldprints
and each Worldprints Founder will not authorize, encourage or permit any
officer, director, employee, shareholder, affiliate or agent of Worldprints or
any subsidiary of Worldprints or any attorney, investment banker or other person
on Worldprints' or their behalf to, directly or indirectly: (i) solicit,
initiate, encourage or induce the making, submission or announcement of, any
offer or proposal from any party concerning any Alternative Transaction (as
defined below) or take any other action that could reasonably be expected to
lead to an Alternative Transaction or a proposal therefor; (ii) consider any
inquiry, offer or proposal received from any party concerning any Alternative
Transaction; (iii) furnish any information regarding Worldprints to any person
or entity in connection with or in response to any inquiry, offer or proposal
for or regarding any Alternative Transaction; (iv) participate in any
discussions or negotiations with any person or entity with respect to any
Alternative Transaction; (v) otherwise cooperate with, facilitate or encourage
any effort or attempt by any person or entity (other than Excite@Home) to effect
any Alternative Transaction; or (vi) execute, enter into or become bound by any
letter of intent, agreement, commitment or understanding between Worldprints and
any third party that is related to, provides for or concerns any Alternative
Transaction. During the foregoing time period identified in the preceding
sentence, Worldprints and each Worldprints Founder will promptly notify
Excite@Home orally and in writing of any inquiries or proposals received by
Worldprints or any of its subsidiaries, directors, officers, shareholders,
employees or agents regarding any Alternative Transaction and will, identify the
party making the inquiry or proposal and the nature and terms of any inquiry or
proposal. Any violation of the restrictions set forth in this section by any
officer, director or employee of Worldprints or any of its subsidiaries or any
attorney, investment banker or other director or representative of Worldprints
shall be deemed a breach of this Section 5.7 by Worldprints. As used herein, the
term "Alternative Transaction" means any commitment, agreement or transaction
involving or providing for (a) the possible disposition of all or any
substantial portion of Worldprints' business, assets or capital stock, whether
by way of merger, consolidation, sale of assets, sale of stock, stock exchange,
tender offer and/or any other form of business combination or (b) any initial
public offering of capital stock or other securities of Worldprints pursuant to
a registration statement filed under the 1933 Act.
-40-
5.8 Access to Information. Until the earlier of the Closing or the
---------------------
termination of this Agreement in accordance with the provisions of Article 10,
Worldprints will allow Excite@Home and its agents access at reasonable times to
the files, books, records, technology, contracts, personnel and offices of
Worldprints (other than the Excluded Materials), including, without limitation,
any and all written information relating to Worldprints' taxes, commitments,
contracts, leases, licenses, and real, personal and intangible property and
financial condition, subject to the terms of the Letter Agreement between
Worldprints and Excite@Home dated as of November 29, 1999 and that certain
letter from Worldprints to Excite@Home dated as of November 29, 1999 (the
"Confidentiality Agreements"). Worldprints will cause its accountants to
cooperate with Excite@Home and its agents in making available all financial
information reasonably requested by Excite@Home, including without limitation
the right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
5.9 Satisfaction of Conditions Precedent. Worldprints and each
------------------------------------
Worldprints Founder will use its diligent efforts to satisfy or cause to be
satisfied all the conditions precedent which are set forth in Article 9, and
Worldprints will use its diligent efforts to cause the Merger and the other
transactions contemplated by this Agreement to be consummated in accordance with
this Agreement.
5.10 Worldprints Employee Plans and Benefit Arrangements. Upon the
---------------------------------------------------
request of Excite@Home, Worldprints will terminate any Worldprints Benefit Plan,
conditioned on the occurrence of, and effective immediately prior to, the
Effective Time.
5.11 Amendment of Existing Worldprints Options and Worldprints Warrants.
------------------------------------------------------------------
Worldprints shall, conditioned on the occurrence of, and effective immediately
prior to, the Effective Time, use its commercially reasonable efforts to amend
and to obtain the written consent of each holder of Worldprints Options listed
on Schedule 5.11 hereto and each holder of Worldprints Warrants to amend: (i)
-------------
outstanding Worldprints Options granted to each such holder to eliminate
acceleration of vesting under such Worldprints Option, and (ii) each outstanding
Worldprints Warrant to permit such warrants upon the Closing of the Merger to be
exercisable into only Excite@Home Common Stock, and shall provide such holders
of Worldprints Warrants with the notices required under the terms of their
respective Worldprints Warrant.
5.12 Determination Concerning Worldprints Options. Worldprints shall,
--------------------------------------------
conditioned on and effective immediately prior to, the Effective Time, determine
and provide that outstanding Worldprints Options (including Worldprints Options
granted outside of the Worldprints Plan) to be assumed by Excite@Home at the
Effective Time, shall be exercisable solely for Excite@Home Common Stock and
that such consideration is equal in fair market value to the per share
consideration to be received by the holders of Worldprints Common Stock in the
Merger.
5.13 New Worldprints Options. Worldprints shall, conditioned on the
-----------------------
occurrence of, and effective immediately prior to, the Effective Time, grant the
New Worldprints Options pursuant to the Worldprints Plan to employees of
Worldprints and in share amounts and with vesting and other terms set forth on
Schedule 5.13.
--------------
-41-
Article 6
Excite@Home Covenants
During the time period from the Agreement Date until the earlier to
occur of (i) the Effective Time, (ii) the termination of this Agreement in
accordance with Article 10 or (iii) such later period as is set forth in Section
6.5, Excite@Home covenants and agrees as follows:
6.1 Advice of Changes. Excite@Home will promptly advise Worldprints in
-----------------
writing of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Excite@Home or Sub contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
to be untrue or inaccurate in any material respect, or which would reasonably be
expected to have a Material Adverse Effect on Excite@Home.
6.2 Regulatory Approvals. Excite@Home and Sub will execute and file, or
--------------------
join in the execution and filing, of any application, notification or other
document that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, federal, state, local or foreign, which may be
reasonably required, in connection with the consummation of the Merger and the
other transactions contemplated by this Agreement and the Excite@Home Ancillary
Agreements and Sub Ancillary Agreements in accordance with the terms of this
Agreement. Excite@Home and Sub will use diligent efforts to obtain all such
authorizations, approvals and consents. Notwithstanding anything in this
Agreement to the contrary, neither Excite@Home nor any of its affiliates shall
be under any obligation to make proposals, execute or carry out agreements or
submit to orders providing for the sale or other disposition or holding separate
(through the establishment of a trust or otherwise) of any assets or categories
of assets of Excite@Home, or any of its affiliates or Worldprints, or the
holding separate of the shares of Worldprints Common Stock or imposing or
seeking to impose any limitation on the ability of Excite@Home or any of its
subsidiaries or affiliates to conduct their business or own such assets or to
acquire, hold or exercise full rights of ownership of the shares of Worldprints
Common Stock.
6.3 Satisfaction of Conditions Precedent. Each of Excite@Home and Sub
------------------------------------
will use its diligent efforts to satisfy or cause to be satisfied all of the
conditions precedent which are set forth in Article 8, and each of Excite@Home
and Sub will use its diligent efforts to cause the transactions contemplated by
this Agreement to be consummated in accordance with the terms of this Agreement.
6.4 Listing of Additional Shares. Excite@Home will use its diligent
----------------------------
efforts to cause the shares of (i) Excite@Home Common Stock to be issued in the
Merger upon conversion of Worldprints Common Stock, and (ii) when issued, the
shares of Excite@Home capital stock issued upon conversion of the Excite@Home
Preferred Stock to be issued in the Merger upon conversion of Worldprints Common
Stock and shares of Excite@Home capital stock to be issued upon exercise of
Worldprints Options and Worldprints Warrants assumed by Excite@Home in the
Merger, to be approved for listing on the Nasdaq National Stock Market, subject
only to official notice of issuance.
6.5 Directors and Officers Indemnification. Excite@Home agrees for the
--------------------------------------
benefit of the Indemnified Persons that, for six years after the Effective Time,
the Surviving Corporation and its subsidiaries shall indemnify each person who
is now, or has been at any time prior to the date of this Agreement, a director,
officer, employee or agent of any of Worldprints and its subsidiaries,
-42-
and the successors and assigns of such persons (collectively, "Indemnified
Persons"), to the same extent and in the same manner as is now provided in the
Articles of Incorporation and Bylaws of Worldprints, and the Operating Agreement
of Chautauqua Publishing Group, LLC, each as in effect immediately prior to the
Effective Time. Excite@Home hereby guarantees the prompt performance of the
obligations of the Surviving Corporation provided for under this Section.
6.6 SEC Documents. Promptly after filing any publicly available report,
-------------
schedule, form, statement or other document with the SEC, Excite@Home shall
deliver a copy thereof to Worldprints.
6.7 New Worldprints Options. It is acknowledged and agreed that, if any
-----------------------
New Worldprints Options are allocated to a Worldprints employee who terminates
employment prior to the Effective Time or otherwise forfeits any rights to New
Worldprints Options prior to the Effective Time, such New Worldprints Options
and any Worldprints Options previously issued to such Worldprints employee will
expire according to their terms and Excite@Home shall not request or require
that Worldprints reallocate such terminated New Worldprints Options to any other
employee.
Article 7
Closing Matters
7.1 The Closing. Subject to termination of this Agreement as provided in
-----------
Article 10 below, the closing of the transactions to consummate the Merger (the
"Closing") will take place at the offices of Fenwick & West LLP, Two Palo Alto
Square, Palo Alto, California at 10:00 a.m., Pacific Time, no later than the
second business day after all of the conditions to Closing set forth in Sections
8 and 9 hereof have been satisfied and/or waived in accordance with this
Agreement, or on such other day as Excite@Home and Worldprints may mutually
agree upon (the "Closing Date"). Concurrently with the Closing, the Plan of
Merger will be filed with the Colorado Secretary of State.
7.2 Exchange of Certificates.
------------------------
7.2.1 At the Effective Time, shares of Worldprints Common Stock
that are outstanding immediately prior thereto (other than Dissenting Shares for
which dissenters rights have been or will be perfected in accordance with
applicable law), will, by virtue of the Merger and without further action, cease
to exist, and all such shares will be converted into the right to receive from
Excite@Home the number of shares of Excite@Home Common Stock and Excite@Home
Preferred Stock to which such holder is entitled pursuant to Section 2.1.2,
subject to the provisions of Section 2.1.4 (regarding the elimination of
fractional shares of Excite@Home Common Stock) and Section 2.5 (regarding the
withholding of Escrow Shares). At the Closing, each holder of shares of
Worldprints Common Stock that are outstanding immediately prior thereto (other
than Dissenting Shares), will surrender either (i) the certificate(s) for such
shares (each a "Worldprints Certificate"), duly endorsed to Excite@Home for
cancellation as of the Effective Time, or (ii) an affidavit of lost certificate
and an indemnity in form and substance reasonably satisfactory to Excite@Home
(the "Affidavit"). Promptly after the Effective Time and receipt of such
Worldprints Certificate or Affidavit (as the case may be): (a) Excite@Home or
its transfer agent will issue to each tendering holder of a Worldprints
Certificate or an Affidavit, certificates (a
-43-
"Tendering Worldprints Holder") for the number of shares of Excite@Home Common
Stock and Excite@Home Preferred Stock to which such holder is entitled pursuant
to Section 2.1.2, subject to the provisions of Section 2.1.4 (regarding the
elimination of fractional shares of Excite@Home Common Stock) and Section 2.5
(regarding the withholding of Escrow Shares); and (b) Excite@Home or its
transfer agent will pay by check to each Tendering Worldprints Holder cash in
the amounts payable to such holder in accordance with the provisions of Sections
2.1.4.
7.2.2 No dividends or distributions payable to holders of record of
Excite@Home Common Stock or Excite@Home Common Stock after the Effective Time
will be paid to the holder of any unsurrendered Worldprints Certificate unless
and until the holder of such unsurrendered Worldprints Certificate surrenders
such Worldprints Certificate or an Affidavit to Excite@Home as provided above.
Subject to the effect, if any, of applicable escheat and other laws, following
surrender of any Worldprints Certificate or Affidavit, there will be delivered
to the person entitled thereto, without interest, the amount of any dividends
and distributions theretofore paid with respect to Excite@Home Common Stock and
Excite@Home Preferred Stock so withheld as of any date subsequent to the
Effective Time and prior to such date of delivery.
7.2.3 After the Effective Time, there will be no further
registration of transfers on the stock transfer books of Worldprints or its
transfer agent of any shares of capital stock of Worldprints that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Worldprints Certificates or an Affidavit are presented for any reason,
they will be canceled and exchanged as provided in this Section 7.2.
7.2.4 Until Worldprints Certificates or an Affidavit representing
shares of Worldprints Common Stock that are outstanding immediately prior to the
Effective Time are surrendered pursuant to Section 7.2.1 above, such Worldprints
Certificates will be deemed, for all purposes, to evidence ownership of the
number of shares of Excite@Home Common Stock and Excite@Home Preferred Stock
into which such shares of Worldprints Common Stock will have been converted
pursuant to Section 2.1.2, subject to the provisions of Section 2.1.4 (regarding
the elimination of fractional shares of Excite@Home Common Stock) and Section
2.5 (regarding the withholding of Escrow Shares).
Article 8
Conditions to Obligations of Worldprints
Worldprints' obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by Worldprints, but only in a writing signed
by Worldprints):
8.1 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of Excite@Home and Sub set forth in Article 4 (a) that are qualified
as to materiality will be true and correct and (B) that are not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing with the same force and effect as if they had been made on
the Closing Date (except for any such representations or warranties that, by
their terms, speak only as of a specific date or dates, in which case such
representations and warranties that are qualified as to materiality shall be
true and correct, and such representations and warranties that are not qualified
as to materiality shall be true and correct in all material respects, on and as
of such
-44-
specified date or dates), and Worldprints will have received a certificate to
such effect executed by an officer of Excite@Home.
8.2 Covenants. Each of Excite@Home and Sub will have performed and
---------
complied in all material respects with all of its covenants contained in this
Agreement on or before the Closing (to the extent that such covenants require
performance by Excite@Home on or before the Closing), and Worldprints will have
received a certificate to such effect signed by an officer of Excite@Home and
Sub.
8.3 No Material Adverse Change. There will not have been any Material
--------------------------
Adverse Change in Excite@Home, whether or not resulting from a breach in any
representation, warranty or covenant in this Agreement, and Worldprints will
have received a certificate to such effect signed by an officer of Excite@Home.
8.4 Requisite Approvals. This Agreement will have been duly and validly
-------------------
approved and adopted by Excite@Home's Board of Directors in accordance with
applicable law and Excite@Home's Certificate of Incorporation and Bylaws, each
as amended. This Agreement will have been approved and adopted by Sub's Board
of Directors and sole stockholder in accordance with applicable law and Sub's
Certificate of Incorporation and Bylaws, each as amended.
8.5 Compliance with Law; No Legal Restraints; No Litigation. There will
-------------------------------------------------------
not be issued or enacted or adopted, or threatened in writing by any
Governmental Authority, any order, decree, temporary, preliminary or permanent
injunction, legislative enactment, statute, regulation, action or proceeding, or
any judgment or ruling by any Governmental Authority that prohibits or renders
illegal or imposes limitations on the Merger or any other material transaction
contemplated by this Agreement or any Worldprints Ancillary Agreement. No
litigation or proceeding will be threatened or pending for the purpose or with
the probable effect of enjoining or preventing the consummation of the Merger or
any of the other material transactions contemplated by this Agreement, or which
would be reasonably expected to have a Material Adverse Effect on Excite@Home.
8.6 Government Consents. There will have been obtained at or prior to the
-------------------
Closing Date such permits or authorizations, and there will have been taken all
such other actions by any regulatory authority having jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the Merger, including, but not limited to, requirements
under applicable federal and state securities laws.
8.7 Opinion of Excite@Home's Counsel. Worldprints will have received
--------------------------------
from Fenwick & West LLP, counsel to Excite@Home, an opinion opining to the
matters set forth in Exhibit E.
---------
8.8 Worldprints Tax Opinion. Worldprints shall have received an opinion
-----------------------
of Xxxxxx & Xxxxxxx LLP, counsel to Worldprints, in the form attached as Exhibit
-------
F to this Agreement (the "Worldprints Tax Opinion"), on the basis of certain
-
facts, representations and assumptions set forth in such opinion, dated the
Closing Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization under Section 368(a) of the Code and that each
of Excite@Home, Sub and Worldprints will be a party to the reorganization within
the meaning of Section 368(b) of the Code and that none of the Worldprints
Shareholders shall recognize gain or loss for federal income tax purposes as a
result of the Merger, other than with respect to any cash
-45-
paid in lieu of fractional shares of Excite@Home Common Stock. In rendering such
opinion, such counsel shall be entitled to rely upon representation letters
signed by officers of Worldprints, Excite@Home and Sub in the forms attached as
Attachments 1 and 2 to the Worldprints Tax Opinion.
8.9 Nasdaq Listing. The shares of Excite@Home Common Stock that are
--------------
issuable upon the conversion of outstanding shares of Worldprints Common Stock,
upon the conversion of Excite@Home Preferred Stock issued in the Merger and upon
exercise of outstanding Worldprints Options and Worldprints Warrants assumed by
Excite@Home in the Merger shall be authorized for listing on the Nasdaq National
Stock Market (subject only to official notice of issuance).
8.10 Certificate of Designation Effective. The Certificate of Designation
------------------------------------
shall have been duly adopted by Excite@Home by all necessary corporate action,
and shall have been duly filed with and accepted by the Secretary of State of
the State of Delaware.
8.11 Xxxx-Xxxxx-Xxxxxx Compliance. All applicable waiting periods under
----------------------------
the HSR Act shall have expired or early termination shall have been granted by
both the Federal Trade Commission and the United States Department of Justice.
8.12 Worldprints Debt. Immediately prior to the Closing, Excite@Home
----------------
shall have paid off Debt of Worldprints in an aggregate principal amount not to
exceed $4,000,000 and accrued interest under the World Notes and any Replacement
Notes.
Article 9
Conditions to Obligations of Excite@Home
The obligations of Excite@Home hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by Excite@Home, but only in a writing
signed by Excite@Home):
9.1 Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties of Worldprints and each Worldprints Founder set forth in Article 3
(a) that are qualified as to materiality will be true and correct and (B) that
are not qualified as to materiality shall be true and correct in all material
respects, in each case on and as of the Closing with the same force and effect
as if they had been made at the Closing Date (except for any such
representations or warranties that, by their terms, speak only as of a specific
date or dates, in which case such representations and warranties that are
qualified as to materiality shall be true and correct, and such representations
and warranties that are not qualified as to materiality shall be true and
correct in all material respects, on and as of such specified date or dates),
and Excite@Home will have received a certificate to such effect executed by
Worldprints' President or Chief Executive Officer and by Worldprints' Chief
Operating Officer. The representations and warranties of each Worldprints
Shareholder set forth in such Worldprints' Shareholder's Investment
Representation Letter shall be true and correct in all material respects.
9.2 Covenants. Worldprints will have performed and complied in all
---------
material respects with all of its covenants contained in this Agreement on or
before the Closing, and Excite@Home will have received a certificate to such
effect signed by Worldprints' Chief Executive Officer or
-46-
President and by Worldprints' Chief Operating Officer. Each Worldprints Founder
shall have performed and complied in all material respects with his covenants
contained in this Agreement before the Closing.
9.3 No Material Adverse Change. There will not have been any Material
--------------------------
Adverse Change in Worldprints, whether or not resulting from a breach in any
representation, warranty or covenant in this Agreement, and Excite@Home will
have received a certificate to such effect signed by Worldprints' President or
Chief Executive Officer and Worldprints' Chief Operating Officer.
9.4 Compliance with Law; No Legal Restraints; No Litigation. There will
-------------------------------------------------------
not be any outstanding or threatened in writing, or enacted or adopted, any
order, decree, temporary, preliminary or permanent injunction, legislative
enactment, statute, regulation, action or proceeding by any Governmental
Authority that prohibits or renders illegal or imposes limitations on: (i) the
Merger or any other material transaction contemplated by this Agreement or any
Worldprints Ancillary Agreement; or (ii) Excite@Home's right (or the right of
any Excite@Home subsidiary) to own, retain, use or operate any of its products,
properties or assets (including but not limited to properties or assets of
Worldprints) on or after consummation of the Merger or seeking a disposition or
divestiture of any such properties or assets. No litigation or proceeding will
be threatened or pending for the purpose or with the probable effect of
enjoining or preventing the consummation of any of the transactions contemplated
by this Agreement, or which could be reasonably expected to have a Material
Adverse Effect on Worldprints.
9.5 Government Consents. There will have been obtained at or prior to
-------------------
the Closing Date such permits or authorizations, and there will have been taken
all such other actions, as may be required to lawfully consummate the Merger by
any governmental or regulatory authority having jurisdiction over the parties
and the actions herein proposed to be taken.
9.6 Opinion of Worldprints' Counsel. Excite@Home will have received from
-------------------------------
Xxxxxx & Xxxxxxx LLP, counsel to Worldprints, an opinion opining to the matters
set forth in Exhibit G.
---------
9.7 Excite@Home Tax Opinion. Excite@Home shall have received an opinion
-----------------------
of Fenwick & West LLP, counsel to Excite@Home, in the form attached as Exhibit H
---------
to this Agreement (the "Excite@Home Tax Opinion"), on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Closing Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization under Section 368(a) of the Code and that each
of Excite@Home, Sub and Worldprints will be a party to the reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinion, such
counsel shall be entitled to rely upon representation letters signed by officers
of Worldprints, Excite@Home and Sub in the forms attached as Attachments 1 and 2
to the Excite@Home Tax Opinion.
9.8 Consents. Excite@Home will have received duly executed copies of all
--------
material third-party consents, approvals, assignments, notices, waivers,
authorizations or other certificates (including those set forth in Item 3.12 to
the Worldprints Disclosure Letter) contemplated by this Agreement, the
Worldprints Disclosure Letter or deemed reasonably necessary to provide for the
continuation in full force and effect of any and all material contracts,
agreements and leases of Worldprints and its subsidiaries after the Merger and
the preservation of Worldprints' IP Rights and other assets and properties after
the Merger and for Excite@Home to consummate the Merger and
-47-
the other transactions contemplated by this Agreement, the Excite@Home Ancillary
Agreements and the Worldprints Ancillary Agreements, in each case in form and
substance reasonably satisfactory to Excite@Home.
9.9 Requisite Approvals. This Agreement, the Merger and the Worldprints
-------------------
Ancillary Agreements will have been duly and validly approved and adopted, as
required by applicable law and Worldprints' Articles of Incorporation and
Bylaws, by (a) all of the members of Worldprints' Board of Directors, and (b)
the valid and affirmative vote of at least 96% of the outstanding shares of
Worldprints Common Stock.
9.10 Investment Representation Letters; Exemptions Available.
-------------------------------------------------------
Excite@Home: (a) will have received an executed counterpart of the Investment
Representation Letter executed by each Worldprints Shareholder who, immediately
prior to the Effective Time, owns any shares of Worldprints Common Stock; (b)
must be reasonably satisfied that there are not more than thirty-five
Worldprints Shareholders who are not "accredited investors" within the meaning
of Regulation D promulgated under the 1933 Act; and (c) must be reasonably
satisfied that the issuance of shares of Excite@Home Common Stock and
Excite@Home Preferred Stock pursuant to this Agreement is exempt from the
registration requirements of the 1933 Act by virtue of the exemptions provided
by Section 4(2) of the 1933 Act and/or Regulation D under the 1933 Act and any
exemptions from the registration and/or qualification requirements of all
applicable state "blue sky" securities laws.
9.11 Continued Employment of Certain Personnel. Xxxxxx Xxxxxxxxx (a) will
-----------------------------------------
have continued to be employed as a full-time employee of Worldprints at all
times from the Agreement Date through the Effective Time and (b) will have
executed and delivered to Excite@Home an employment agreement substantially in
the form attached hereto as Exhibit I (the "Employment Agreements").
---------
9.12 Founder Consulting Agreement. Each of Xxxxxxx Xxxxxxxxx, Xxx Xxxxxx
----------------------------
and Xxx Xxxxxxxx (a) will have continued to be employed as a full-time employee
of Worldprints at all times from the Agreement Date through the Effective Time
and (b) will have executed and delivered to Excite@Home a consulting agreement
in the form of Exhibit J (the "Founder Consulting Agreement").
---------
9.13 Resignation of Directors and Officers. The directors and officers of
-------------------------------------
Worldprints in office immediately prior to the Effective Time will have resigned
as directors and officers of the Surviving Corporation in writing effective as
of the Effective Time.
9.14 Certificate of Designation Effective. The Certificate of Designation
------------------------------------
shall have been duly adopted by Excite@Home by all necessary corporate action,
and shall have been duly filed with and accepted by the Secretary of State of
the State of Delaware.
9.15 Xxxx-Xxxxx-Xxxxxx Compliance. All applicable waiting periods under
----------------------------
the HSR Act shall have expired or early termination shall have been granted by
both the Federal Trade Commission and the United States Department of Justice.
9.16 Amendment of Existing Worldprints Options and Worldprints Warrants.
------------------------------------------------------------------
Each outstanding Worldprints Option listed on Schedule 5.11 hereto shall have
been duly amended to eliminate acceleration of vesting, and each outstanding
Worldprints Warrant listed on Schedule 2.7
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hereto shall have been duly amended to permit such warrants to be exercisable
for only Excite@Home Common Stock upon the closing of the Merger, and
Worldprints shall have provided each such holder with the notices required under
the terms of such Worldprints Warrant.
9.17 Determination Concerning Worldprints Options. Worldprints shall have
--------------------------------------------
determined and provided that outstanding Worldprints Options (including
Worldprints Options granted outside of the Worldprints Plan) to be assumed by
Excite@Home at the Effective Time, will be exercisable solely for Excite@Home
Common Stock and that such consideration is equal in fair market value to the
per share consideration to be received by the holders of Worldprints Common
Stock in the Merger.
9.18 New Worldprints Options. Worldprints shall have granted New
-----------------------
Worldprints Options set forth on Schedule 5.13.
9.19 Worldprints Debt. Immediately prior to the Closing, Worldprints
----------------
shall have paid off all Debt of Worldprints existing immediately prior to the
Effective Time, other than (i) principal in an aggregate amount not to exceed
$4,000,000 and accrued interest under the World Notes and any Replacement Notes,
(ii) any outstanding amounts loaned by Excite@Home to Worldprints, and (iii)
outstanding trade payables of Worldprints incurred in the ordinary course of its
business consistent with past practice, all of which amounts are set forth on
Schedule 1.14 to this Agreement and which will be updated as of the Closing.
-------------
9.20 Settlement Agreement and Release. Worldprints and World Venture
--------------------------------
Partners, Inc. shall have entered into and delivered the Settlement Agreement
and Release substantially in the form attached hereto as Exhibit K.
----------
9.21 Development Assignment and Confidentiality Agreement. Worldprints
----------------------------------------------------
and each of Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxxxx, Xxx X. Xxxxxx, Xxxxx X'Xxxxxxx,
and Xxxxx Xxxxxxxx shall have executed and delivered the Development Assignment
and Confidentiality Agreement attached hereto as Exhibit L.
---------
Article 10
Termination of Agreement
10.1 Termination by Mutual Consent. This Agreement may be terminated at
-----------------------------
any time prior to the Effective Time by the mutual written consent of
Excite@Home and Worldprints.
10.2 Unilateral Termination.
----------------------
10.2.1 Either Excite@Home or Worldprints, by giving written notice
to the other, may terminate this Agreement if a court of competent jurisdiction
or other Governmental Authority shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger.
10.2.2 Either Excite@Home or Worldprints, by giving written notice
to the other, may terminate this Agreement if the Merger shall not have been
consummated by midnight Pacific Time on the Termination Date; provided, however,
that the right to terminate this Agreement pursuant to this Section 10.2.2 shall
not be available to any party whose failure to perform in any
-49-
material respect any of its obligations or covenants under this Agreement
results in the failure of any condition set forth in Article 8 or Article 9 or
if the failure of such condition results from facts or circumstances that
constitute a material breach of a representation or warranty or covenant made
under this Agreement by such party, if the other party has performed in all
material respects its obligations under this Agreement and if the
representations and warranties of such other party to this Agreement are true
and correct in all material respects as of the Termination Date.
10.2.3 Either Excite@Home or Worldprints may terminate this
Agreement at any time prior to the Closing if the other has committed (or, in
the case of a termination by Worldprints, Sub has committed, and, in the case of
a termination by Excite@Home, a Worldprints Founder has committed) a material
breach of (a) any of its representations and warranties under Article 3 or
Article 4 of this Agreement, as applicable; or (b) any of its covenants under
Article 5 or Article 6 of this Agreement, as applicable, and has not cured such
material breach within ten days after the party seeking to terminate this
Agreement has given the other party written notice of the material breach and
its intention to terminate this Agreement pursuant to this Section 10.2.3.
10.3 No Liability for Termination. Termination of this Agreement by a
----------------------------
party (the "Terminating Party") in accordance with the provisions of this
Section 10 will not give rise to any obligation or liability on the part of the
Terminating Party on account of such termination; provided, however, that
nothing herein shall relieve a party from liability for a willful breach of this
Agreement. The provisions of Article 10 and Article 13 shall survive any
termination of this Agreement.
Article 11
Survival of Representations, Indemnification
and Remedies, Continuing Covenants
11.1 Survival of Representations. Except as set forth in the following
---------------------------
sentence, all representations, warranties and covenants of the parties to this
Agreement contained in this Agreement (other than covenants which by their
express terms survive for a different period) will remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any of
the parties to this Agreement, until that date (the "Release Date") which is the
earlier of (i) the termination of this Agreement or (ii) March 31, 2001.
Notwithstanding the foregoing, Excite@Home may seek recovery of Special Damages
(as defined in Section 11.3(b) or Shareholder Damages (as defined in Section
11.2(b)) at any time prior to the expiration of the applicable statute of
limitations for the claim which seeks recovery of such Special Damages or
Shareholder Damages.
11.2 Agreement to Indemnify.
----------------------
(a) (i) Except as hereinafter provided in this Article 11,
the Worldprints Founders will jointly and severally, indemnify and hold
harmless, and (ii) the Worldprints Shareholders who are not Worldprints Founders
will severally, but not jointly, on a pro rata basis based upon their respective
ownership interests in Worldprints Common Stock set forth besides their names on
Schedule 3.4.1(a) to this Agreement, indemnify and hold harmless, Excite@Home
and the Surviving Corporation and their respective officers, directors, agents,
representatives stockholders and employees, and each person, if any, who
controls or may control Excite@Home or
-50-
the Surviving Corporation within the meaning of the 1933 Act or the 1934 Act
(each hereinafter referred to individually as an "Excite@Home Indemnified
Person" and collectively as "Excite@Home Indemnified Persons") from and against
any and all claims, demands, suits, actions, causes of actions, losses, costs,
damages, liabilities and expenses including, without limitation, reasonable
attorneys' fees, other professionals' and experts' reasonable fees and court or
arbitration costs (hereinafter collectively referred to as "Damages") directly
or indirectly incurred, resulting or and arising out of: (a) any inaccuracy,
misrepresentation, breach of, or default in, any of the representations,
warranties or covenants given or made by Worldprints or a Worldprints Founder in
this Agreement or in the Worldprints Disclosure Letter or in any certificate,
document or instrument delivered by or on behalf of Worldprints or an officer of
Worldprints pursuant hereto; or (b) any Excess Transaction Expenses (as defined
in Section 13.7) (collectively, "Ordinary Damages"). Except with respect to
claims arising from Special Damages or Shareholder Damages, which may be raised
after the Release Date, any claim of indemnity made by an Excite@Home
Indemnified Person under this Section 11.2(a) must be raised in a writing
delivered to the Representative (as defined below) by no later than the Release
Date, and, if raised by such date, such claim shall survive the Release Date
until final resolution thereof. Notwithstanding anything to the contrary in this
Agreement, in no event shall a Worldprints Shareholder that is not also a
Worldprints Founder be required to indemnify or hold harmless Excite@Home
Indemnified Persons from Damages resulting from any inaccuracy,
misrepresentation, breach of, or default in any representation, warranty or
covenant given or made by a Worldprints Founder in this Agreement that is not
also given or made by Worldprints.
(b) Except as hereinafter provided in this Article 11, each
Worldprints Shareholder (including each Worldprints Founder) severally (and not
jointly) indemnifies and holds harmless Excite@Home Indemnified Persons from and
against all Damages incurred or suffered by any such persons or arising from, by
reason of or in connection with (i) any misrepresentation or breach of or
default in connection with any of the representations, warranties, covenants or
agreements given or made by such Worldprints Shareholder in the Investment
Representation Letter executed by such Worldprints Shareholder pursuant to this
Agreement, or (ii) the failure of any Worldprints Shareholder to have good,
valid and marketable title to the issued and outstanding Worldprints Common
Stock or Worldprints Preferred Stock held by such stockholders, free and clear
of all Encumbrances, or to have full right, capacity and authority to vote such
Worldprints Common Stock in favor of the Merger and the other transactions
contemplated by this Agreement (collectively "Shareholder Damages").
(c) Each Worldprints Shareholder (including each
Worldprints Founder) jointly and severally indemnifies and holds harmless the
Excite@Home Indemnified Persons from and against Special Damages (as hereinafter
defined) incurred or suffered by any such Excite@Home Indemnified Persons
arising from, by reason of, or in connection with, (i) any fraudulent conduct,
fraudulent misrepresentation or other willful misconduct on the part of
Worldprints or any officer, director, employee or agent of Worldprints or any
Worldprints subsidiary, or (ii) any inaccuracy, misrepresentation, breach of, or
default in, the representations or warranties of Worldprints set forth in
Section 3.4 (Capitalization) or Section 3.7 (Taxes) of this Agreement.
(d) Each Worldprints Founder severally (and not jointly)
indemnifies and holds harmless the Excite@Home Indemnified Persons from and
against Special Damages incurred
-51-
or suffered by any such Excite@Home Indemnified Persons arising from, by reason
of, or in connection with, (i) any fraudulent conduct, fraudulent
misrepresentation or other willful misconduct on the part of such Worldprints
Founder, or (ii) any inaccuracy, misrepresentation, breach of, or default in,
the representations or warranties of such Worldprints Founder set forth in
Section 3.4 (Capitalization) or Section 3.7 (Taxes) of this Agreement.
11.3 Limitation.
----------
(a) Basic Cap On Indemnity Obligation. Except with respect
---------------------------------
to claims for indemnification for Special Damages and Shareholder Damages, in no
event will the maximum aggregate liability of any Worldprints Shareholder
(including a Worldprints Founder) exceed the dollar amount that results from
multiplying (x) the Excite@Home Average Price Per Share by (y) the product of
one thousand (1000) times the total number of shares of Excite@Home Preferred
Stock (including fractions of a share thereof) issued at the Effective Time to
such Worldprints Shareholder pursuant to Article 2 hereof by (z) 0.7 (seventy
percent). In seeking indemnification for Damages under Section 11.2, the
Excite@Home Indemnified Persons shall first exercise their remedies with respect
to the Escrow Shares and any other assets deposited in escrow pursuant to the
terms of Section 2.5 and Article 11 hereof (including any shares of Excite@Home
capital stock or other securities into which Excite@Home Preferred Stock is
converted or exchanged or which is received in respect of such shares of
Excite@Home Preferred Stock or other capital stock and securities), and then may
seek recovery of such Damages against any other assets of the Worldprints
Shareholder or the Worldprints Founders (as the case may be). For purposes of
satisfying claims for Damages, the value of each share of Excite@Home Common
Stock shall be deemed to be equal to the Excite@Home Average Price Per Share,
and the value of each share of Excite@Home Preferred Stock shall be deemed to be
equal to one thousand (1,000) times the Excite@Home Average Price Per Share, in
each case regardless of its actual fair market value as of the time that a claim
for indemnification may be made against such share. Each Worldprints Shareholder
and each Worldprints Founder agrees that claims for indemnification against such
Person under this Article 11 may be satisfied by the forfeiture of such Person's
shares of Excite@Home Preferred Stock (including fractions of a share thereof)
as provided for in this Article 11 and that, except as provided herein, no
Excite@Home Indemnified Person shall have any obligation to exercise its
remedies against any other assets of such Worldprints Shareholder or Worldprints
Founder prior to exercising them against such shares of Excite@Home Preferred
Stock. In the event of a Capital Change after the Effective Time, the
Excite@Home Average Price Per Share will, for purposes of this Section 11.3, be
proportionally and equitably adjusted.
(b) Basket. The indemnification provided for in Section
------
11.2(a) shall not apply unless and until the aggregate Damages for which one or
more Excite@Home Indemnified Persons seeks or has sought indemnification
hereunder exceeds a cumulative aggregate of Two Hundred and Fifty Thousand
Dollars (the "Basket"), in which event Worldprints Shareholders and the
Worldprints Founders shall, subject to the other limitations herein, be liable
to indemnify the Excite@Home Indemnified Persons for all Damages; provided,
however, that the Basket and the foregoing provisions of this sentence shall not
apply to any indemnification claim for (i) fraudulent conduct, fraudulent
misrepresentation or other willful misconduct on the part of Worldprints or any
officer, director, employee or agent of Worldprints, Worldprints Founder,
Worldprints Shareholder or any subsidiary of Worldprints, or (ii) Excess
Transaction Expenses. As used herein, "Special Damages" means Damages resulting
from (a) any fraudulent conduct, fraudulent misrepresentation
-52-
or other willful misconduct on the part of Worldprints or any officer, director,
employee or agent of Worldprints, Worldprints Founder, Worldprints Shareholder,
or any subsidiary of Worldprints, or (b) any inaccuracy, misrepresentation,
breach of, or default in, the representations and warranties of Worldprints or
the Worldprints Founders set forth in Section 3.4 (Capitalization) or Section
3.7 (Taxes) of this Agreement.
(c) Special Cap On Indemnity Obligation. Except with
-----------------------------------
respect to claims for indemnification against a Worldprints Founder for any
fraudulent conduct, fraudulent misrepresentation or other willful misconduct on
the part of Worldprints or any officer, director, employee or agent of
Worldprints, such Worldprints Founder or any subsidiary of Worldprints (which,
for Worldprints Founders, shall not be limited), in no event will the maximum
aggregate liability of any Worldprints Shareholder for Special Damages or of a
Worldprints Shareholder for Shareholder Damages exceed the dollar amount that
results from multiplying (a) the closing price of a share of Excite@Home Common
Stock on the Nasdaq National Market on the Closing Date, by (b) the sum of the
(i) total number of shares of Excite@Home Common Stock and (ii) one thousand
(1000) times the total number of shares of Worldprints Preferred Stock
(including fractions of a share thereof) issuable at the Effective Time to such
Worldprints Shareholder pursuant to Section 2.
11.4 Appointment of Representative.
-----------------------------
(a) By voting in favor of the Merger, each of the Worldprints
Shareholders approves the designation of and designates Xxx X. Xxxxxx as the
representative of the Worldprints Shareholders (the "Representative") and as the
attorney-in-fact and agent for and on behalf of each Worldprints Shareholder
with respect to claims for indemnification under Article 11 for Ordinary Damages
and/or Special Damages, except Special Damages asserted against any of the
Worldprints Founders pursuant to Section 11.2(d) (each a "Representative
Claim"), and the taking by the Representative of any and all actions and the
making of any decisions required or permitted to be taken by the Representative
under this Agreement, including, without limitation, the exercise of the power
to: (a) authorize the release or delivery to Excite@Home of shares of
Excite@Home Preferred Stock and any other assets deposited in escrow pursuant to
the terms of Section 2.5 and Article 11 hereof (including any shares of
Excite@Home capital stock or other securities into which Excite@Home Preferred
Stock is converted or exchanged or which is received in respect of such shares
of Excite@Home Preferred Stock or other capital stock and securities) in
satisfaction of Representative Claims by Excite@Home or any other Excite@Home
Indemnified Person (as defined herein) pursuant to Article 11; (b) agree to,
negotiate, enter into settlements and compromises of, demand arbitration of, and
comply with orders of courts and awards of arbitrators with respect to, such
Representative Claims; (c) arbitrate, resolve, settle or compromise any
Representative Claim made pursuant to Article 11; and (d) take all actions
necessary in the judgment of the Representative for the accomplishment of the
foregoing. The Representative will have authority and power to act on behalf of
each Worldprints Shareholder with respect to the disposition, settlement or
other handling of all Representative Claims under Article 11 hereof and all
rights or obligations arising under Article 11 related to Representative Claims.
The Worldprints Shareholders will be bound by all actions taken and documents
executed by the Representative in connection with Representative Claims, and
Excite@Home will be entitled to rely on any action or decision of the
Representative related thereto. The Worldprints Shareholders hereby acknowledge
and agree that (i) in performing the functions specified in this Agreement, the
Representative will not be liable to any Worldprints Shareholder in the absence
of gross negligence or willful
-53-
misconduct on the part of the Representative; and (ii) any claims against the
Representative shall be properly asserted against the Representative only in the
Representative's capacity as the Representative and shall not be asserted
against any corporation, firm, enterprise or organization of which the
Representative is an officer, director, partner, agent, shareholder, employee or
independent contractor. Any out-of-pocket costs and expenses reasonably incurred
by the Representative in connection with actions taken by the Representative
pursuant to the terms of Article 11 (including, without limitation, the hiring
of legal counsel and the incurring of legal fees and costs) will be paid by the
Worldprints Shareholders to the Representative pro rata in proportion to their
respective percentage equity interests as reflected in Schedule 3.4.1(a) to this
Agreement.
(b) The Representative will serve without compensation; provided,
however, that the Representative will be compensated at an hourly rate of $150
for any time in excess of fifty hours in the aggregate that he spends in
performing the duties of the Representative, in addition to any reasonable
expenses the Representative may incur in performing the duties of the
Representative. The Representative shall be entitled to make an assessment
against any Worldprints' Shareholder in respect of the Representative's time
charges or expenses. Such assessment shall be made by a written notice to the
Worldprints' Shareholders in the manner provided in this Agreement for the
giving of notice, in an amount equal to each Worldprints Shareholder's pro rata
share of any assessment (such pro rata share being based upon the respective
ownership interests of the Worldprints' Shareholders set forth beside their
names on Schedule 3.4.1(a) of this Agreement) and the due date for payment of
the assessment and shall specify in reasonable detail the facts or circumstances
giving rise to the assessment. Each Worldprints' Shareholder shall make payment
in full of its share of an assessment no later than ten calendar days after the
payment date specified in the notice of assessment. In the event a Worldprints'
Shareholder does not pay the full amount of the assessment, the Representative
shall be entitled to payment from such Worldprints Shareholder of the amount
shown in the notice of assessment, plus an additional 25% of the requested
assessment as liquidated damages (and not as a penalty) for failure to timely
pay the assessment, in addition to any costs of collection, including reasonable
attorneys' fees and court costs. Pending application of the proceeds of an
assessment, the Representative shall deposit the proceeds of an assessment in a
money market demand account at a commercial bank having an office in Boulder,
Colorado. Such account will also serve as the depository for any excess funds
remaining after application of the proceeds of an assessment, provided that any
assessment funds that remain unused for a period of 90 days shall be returned to
the appropriate Worldprints' Shareholders.
11.5 Notice of Claim. Claims for indemnification under Article 11 that are
---------------
not Representative Claims shall be made upon the Worldprints Shareholder
(including Worldprints Founder) as to which such claim applies (each such claim
being an "Individual Claim"). Excite@Home (and only Excite@Home) may give notice
of a Representative Claim or an Individual Claim under this Agreement whether
for its own Ordinary Damages, Special Damages or Shareholder Damages or for
Ordinary Damages, Special Damages or Shareholder Damages incurred by any other
Excite@Home Indemnified Person, and Excite@Home will give written notice of a
Claim executed by an officer of Excite@Home (a "Notice of Claim") to the
Representative, and, in the case of an Individual Claim, to the Worldprints
Shareholder against whom such Individual Claim is made, promptly after
Excite@Home becomes aware of the existence of any potential claim by an
Excite@Home Indemnified Person for indemnity from the Worldprints Shareholders
or a Worldprints Shareholder under Article 11, but in any event before the
Release Date arising from or relating to:
-54-
(i) (a) any Ordinary Damages, (b) any Special Damages or
(c) any Shareholder Damages; or
(ii) the assertion, whether orally or in writing, against
Excite@Home or against any other Excite@Home Indemnified Person of a claim,
demand, suit, action, arbitration, investigation, inquiry or proceeding brought
by a third party against such Indemnified Person that is based upon, or includes
assertions that would, if true, constitute (in each such case, a "Third-Party
Claim"): (a) any Ordinary Damages, (b) any Special Damages or (c) any
Shareholder Damages.
Excite@Home agrees that it will make Claims only as permitted by
Article 11. No delay on the part of Excite@Home in giving the Representative
and/or a Worldprints Shareholder a Notice of Claim will relieve the
Representative or any Worldprints Shareholder from any of its obligations under
Article 11 unless (and then only to the extent) that the Representative or the
Worldprints Shareholders are materially prejudiced thereby. A Notice of Claim
shall identify with reasonable particularity that the subject claim asserted in
the Notice of Claim is a claim for Ordinary Damages, Special Damages and/or
Shareholder Damages, it being understood and agreed that such identification of
a claim as a claim for Ordinary Damages, Special Damages and/or Shareholder
Damages is an irrevocable election by Excite@Home to pursue such claim in
accordance with the procedures, conditions and limitations set forth in this
Article 11. The parties hereto acknowledge, however, that a claim may consist of
elements that combine more than one of Ordinary Damages, Special Damages and/or
Shareholder Damages, provided, however, that Excite@Home may not make multiple
recoveries for Damages arising out of the same specific set of facts and
circumstances by asserting a claim as more than one of Ordinary Damages, Special
Damages and/or Shareholder Damages.
11.6 Defense of Third-Party Claims.
-----------------------------
(a) Excite@Home shall defend any Third-Party Claim, and the
costs and expenses incurred by Excite@Home in connection with such defense
(including, but not limited to, reasonable attorneys' fees, other professionals'
and experts' fees and court or arbitration costs) shall be included in the
Ordinary Damages, Special Damages or Shareholder Damages for which Excite@Home
may seek indemnity pursuant to a Representative Claim or an Individual Claim
made by any Excite@Home Indemnified Person hereunder.
(b) The Representative and, if the claim includes an
Individual Claim, the Worldprints Shareholder against whom such Individual Claim
is made, shall have the right to receive copies of all pleadings, notices and
communications with respect to the Third-Party Claim to the extent that receipt
of such documents by the Representative and such Worldprints Shareholder does
not affect any privilege relating to the Excite@Home Indemnified Person, and may
participate in settlement negotiations with respect to the Third-Party Claim. No
Excite@Home Indemnified Person shall enter into any settlement of a Third-Party
Claim without the prior written consent of the Representative or, if such claim
is an Individual Claim, the Worldprints Shareholder against whom such Individual
Claim has been made (which consent shall not be unreasonably withheld),
provided, that if the Representative shall have consented to any such settlement
of a Representative Claim, then the Representative shall have no power or
authority to object to any Representative Claim by any Excite@Home Indemnified
Person for indemnity under Section 11.2 hereof for the amount of such
settlement, and that if a Worldprints Shareholder shall have consented
-55-
to any settlement of an Individual Claim, then the Worldprints Shareholder shall
have no power or authority to object to any Individual Claim by an Excite@Home
Indemnified Person for indemnity under Section 11.2 hereof for the amount of
such settlement, and that, in each case, the Worldprints Shareholders will
remain responsible to indemnify all Excite@Home Indemnified Person(s) for all
Ordinary Damages, Special Damages or Shareholder Damages they may incur arising
out of, resulting from or caused by the Third-Party Claim to the fullest extent
provided in Article 11 hereof.
11.7 Contents of Notice of Claim. Each Notice of Claim by Excite@Home
---------------------------
given pursuant to Section 11.5 will contain the following information:
(i) Excite@Home's good faith estimate of the reasonably
foreseeable maximum amount of the alleged Ordinary Damages, Special Damages or
Shareholder Damages arising from such Representative Claim or Individual Claim
(which amount may be the amount of damages claimed by a third party in an action
brought against any Excite@Home Indemnified Person based on alleged facts, which
if true, would give rise to liability for Ordinary Damages, Special Damages or
Shareholder Damages to such Excite@Home Indemnified Person under Article 11);
and
(ii) a brief description, in reasonable detail (to the
extent reasonably available to Excite@Home), of the facts, circumstances or
events giving rise to the alleged Ordinary Damages, Special Damages or
Shareholder Damages based on Excite@Home's good faith belief thereof, including,
without limitation, the identity and address of any third-party claimant (to the
extent reasonably available to Excite@Home) and copies of any formal demand or
complaint.
11.8 Resolution of Notice of Claim. Any Notice of Claim received by the
-----------------------------
Representative and/or Worldprints Shareholder pursuant to Section 11.5 and
Section 11.7 above will be resolved as follows:
(a) Uncontested Claims. In the event that, within thirty
------------------
calendar days after the Notice of Claim containing a statement of the claimed
Ordinary Damages, Special Damages or Shareholder Damages is received by the
Representative and/or Worldprints Shareholder pursuant to Section 11.5 and
Section 11.7, the Representative, in the case of a Representative Claim, or the
applicable Worldprints Shareholder in the case of an Individual Claim, does not
contest such Notice of Claim in writing to Excite@Home as provided in Section
11.8(b) (an "Uncontested Claim"), the Representative in the case of a
Representative Claim will be conclusively deemed to have consented, on behalf of
all Worldprints Shareholders (including the Worldprints Founders), or the
Worldprints Shareholder in the case of an Individual Claim will be conclusively
deemed to have consented, to the recovery by the Excite@Home Indemnified Person
of the full amount of Ordinary Damages, Special Damages or Shareholder Damages
specified in the Notice of Claim in accordance with this Article 11, including
the forfeiture of shares of Excite@Home Preferred Stock and any other assets
deposited in escrow pursuant to the terms of Section 2.5 and Article 11 hereof
(including any shares of Excite@Home capital stock or other securities into
which Excite@Home Preferred Stock is converted or exchanged or which is received
in respect of such shares of Excite@Home Preferred Stock or other capital stock
and securities), in accordance with Section 11.3(a) and, without further notice,
to have stipulated to the entry of a final judgment for Damages against the
Worldprints Shareholders (including the Worldprints Founders)
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(in the case of a Representative Claim) or a Worldprints Shareholder (in the
case of an Individual Claim) for such amount in the Superior Court for the
County of San Mateo, the United States District Court for the Northern District
of California or the United States District Court of the District of Colorado,
or any other court having jurisdiction over the matter where venue is proper.
(b) Contested Claims. In the event that the
----------------
Representative, or in the case of an Individual Claim, the applicable
Worldprints Shareholder, gives Excite@Home written notice contesting all or any
portion of a Notice of Claim (a "Contested Claim") within the thirty day period
specified in Section 11.8(a), then such Contested Claim will be resolved by
either (A) a written settlement agreement executed by Excite@Home and the
Representative in the case of a Representative Claim, or Excite@Home and the
applicable Worldprints Shareholder in the case of an Individual Claim, or (B) in
the absence of such a written settlement agreement, by binding arbitration
between Excite@Home and the Representative in the case of a Representative
Claim, or Excite@Home and the applicable Worldprints Shareholder in the case of
an Individual Claim, in accordance with the terms and provisions of Section
11.8(c). Upon receipt by Excite@Home of written notice contesting all or any
portion of a Notice of Claim, it shall transmit stock certificates representing
Escrow Shares equal in value to the amount of Damages asserted in the Notice of
Claim (such Escrow Shares to be valued in accordance with Section 11.3) to a
third-party escrow agent mutually acceptable to Excite@Home and the
Representative (if Excite@Home and the Representative cannot agree within five
business days on a third-party escrow agent, then such escrow agent shall be
Chase Manhattan Bank and Trust Company National Association) (the "Escrow
Agent") and the parties to this Agreement will, at such time, enter into a
customary and reasonable escrow agreement, if any, required and provided by the
Escrow Agent, governing the terms of the Escrow Agent's service. With respect to
any of the Escrow Shares held by the Escrow Agent, the Escrow Agent will hold
and release shares in accordance with the procedures set forth in Section 2.5 of
this Agreement and this Article 11. Any fees or expenses charged by the Escrow
Agent in connection with its service pursuant to this Agreement shall be paid by
Excite@Home.
(c) Arbitration of Contested Claims. Each of Excite@Home,
-------------------------------
Worldprints and the Worldprints Shareholders agree that any Contested Claim will
be submitted to mandatory, final and binding arbitration before
J.A.M.S./ENDISPUTE or its successor ("J.A.M.S."), pursuant to the United States
Arbitration Act, 9 U.S.C., Section 1 et seq. and that any such arbitration will
be conducted in Boulder County, Colorado. Either Excite@Home or the
Representative in the case of a Representative Claim, or Excite@Home or the
applicable Worldprints Shareholder in the case of an Individual Claim, may
commence the arbitration process called for by this Agreement by filing a
written demand for arbitration with J.A.M.S. and giving a copy of such demand to
each of the other parties to this Agreement. The arbitration will be conducted
in accordance with the provisions of J.A.M.S's Streamlined Arbitration Rules and
Procedures in effect at the time of filing of the demand for arbitration,
subject to the provisions of Section 11.8(c) of this Agreement. The parties will
cooperate with J.A.M.S. and with each other in promptly selecting an arbitrator
from J.A.M.S.'s panel of neutrals, and in scheduling the arbitration proceedings
in order to fulfill the provisions, purposes and intent of this Agreement. The
parties covenant that they will participate in the arbitration in good faith,
and that they will share in its costs in accordance with subparagraph (i) below.
The provisions of this Section 11.8(c) may be enforced by any court of competent
jurisdiction, and the party seeking enforcement will be entitled to an award of
all costs, fees and expenses, including attorneys' fees, to be paid by the party
against whom enforcement is ordered.
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Subject to the provisions of subparagraph (vii) below, judgment upon the award
rendered by the arbitrator may be entered in any court having competent
jurisdiction.
(i) Payment of Costs. Excite@Home on the one hand, and
----------------
Worldprints Shareholders or a Worldprints Shareholder (through the
Representative in the case of a Representative Claim), on the other hand, will
bear the expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator will award to the prevailing
party, as determined by the arbitrator, all reasonable costs, fees and expenses
related to the arbitration, including reasonable fees and expenses of attorneys,
accountants and other professionals incurred by the prevailing party. If such an
award would result in manifest injustice, however, the arbitrator may apportion
such costs, fees and expenses between the parties in such a manner as the
arbitrator deems just and equitable.
(ii) Burden of Proof. Except as may be otherwise expressly
---------------
provided herein, for any Contested Claim submitted to arbitration, the burden of
proof will be as it would be if the claim were litigated in a judicial
proceeding governed by California law exclusively.
(iii) Award. Upon the conclusion of any arbitration
-----
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a final written arbitration award setting forth the basis
and reasons for any decision reached (the "Final Award") and will deliver such
documents to the Representative, or the applicable Worldprints Shareholder (in
the case of an Individual Claim) and Excite@Home, together with a signed copy of
the Final Award. Subject to the provisions of subparagraph (vii) below, the
Final Award will constitute a conclusive determination of all issues in
question, binding upon the Worldprints Shareholders (including the Worldprints
Founders) in the case of a Representative Claim, or the applicable Worldprints
Shareholder in the case of an Individual Claim, the Representative in the case
of a Representative Claim and Excite@Home, and will include an affirmative
statement to such effect. Awards of Damages will be subject to the provisions
regarding the "Basket" (as defined in Section 11.3); provided, however, that
awards of (i) Special Damages arising out of fraudulent conduct, fraudulent
misrepresentation or other willful misconduct on the part of Worldprints or any
officer, director, employee or agent of Worldprints, Worldprints Shareholder or
any subsidiary of Worldprints, (ii) Shareholder Damages arising out of the
failure of a Worldprints Shareholder to have good, valid and marketable title to
the issued and outstanding Worldprints Common Stock or Worldprints Preferred
Stock held by such Worldprints Shareholder, free and clear of all Encumbrances,
or (iii) Excess Transaction Expenses will not be subject to such provisions
regarding the "Basket".
(iv) Timing. The Representative or the applicable
------
Worldprints Shareholder, Excite@Home and the arbitrator will conclude each
arbitration pursuant to this Section 11.8 as promptly as possible for the
Contested Claim being arbitrated.
(v) Terms of Arbitration. The arbitrator chosen in
--------------------
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
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(vi) Exclusive Remedy. Following the Effective Time, except
----------------
as specifically otherwise provided in this Agreement, arbitration conducted in
accordance with this Agreement will be the sole and exclusive remedy of the
parties for any Representative Claim or Individual Claim made pursuant to
Article 11.
(vii) Treatment of Damages. Upon issuance and delivery of
--------------------
the Final Award as provided in subparagraph (iii) above, Excite@Home will
immediately be entitled to recover the amount of any Damages determined and
awarded to Excite@Home under such Final Award.
Article 12
Registration Rights
12.1 Certain Definitions. For purposes of this Article 12:
-------------------
(a) Registration. The terms "register," "registered," and
------------
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "Registrable
----------------------
Securities" means (i) the shares of Excite@Home Common Stock that are issued to
the Worldprints Shareholders in the Merger pursuant to Section 2.1.2 hereof
(which shares are not Escrow Shares or subject to any restrictions on transfer
set forth in the Investment Representation Letter), (ii) the shares of
Excite@Home Common Stock that are issued to holders of the Worldprints Warrants
listed on Schedule 2.7 hereto upon exercise of such Worldprints Warrants, and
(iii) any shares of Excite@Home Common Stock that may be issued as a dividend or
other distribution (including shares of Excite@Home Common Stock issued in a
subdivision and split of Excite@Home's outstanding Common Stock) with respect
to, or in exchange for, or in replacement of, shares of Excite@Home Common Stock
described in clauses (i) or (ii) of this Section 12.1(b) or in this clause
(iii); excluding in all cases, however, from the definition of "Registrable
---------
Securities" any such shares that are: (w) registered under the 1933 Act other
than pursuant to a registration statement filed pursuant to this Agreement; (x)
sold by a person in a transaction in which rights under this Agreement with
respect to such shares are not assigned in accordance with the terms of this
Agreement; (y) sold pursuant to a registration statement filed pursuant to this
Agreement; or (z) sold pursuant to Rule 144 promulgated under the 1933 Act or
otherwise sold to the public. Only shares of Excite@Home Common Stock shall be
Registrable Securities. Except as provided in clauses (ii) and (iii) of the
first sentence of this Section 12.1(b), without limitation, the term
"Registrable Securities" does not include any shares of Excite@Home Common Stock
that were not issued in connection with the Merger.
(c) Holder. The term "Holder" means an Worldprints
------
Shareholder who is the original holder of any Registrable Securities or any
assignee of record of any Registrable Securities to whom rights under this
Agreement have been duly assigned in accordance with the provisions of this
Agreement.
(d) Form S-3. The term "Form S-3" means a registration
--------
statement filed under Form S-3 under the 1933 Act, as such is in effect at the
Effective Time, or any successor form
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of registration statement under the 1933 Act subsequently adopted by the SEC
which permits inclusion or incorporation of a substantial amount of information
by reference to other documents filed by Excite@Home with the SEC.
(e) Rule 415. The term "Rule 415" means Rule 415
--------
promulgated under the 1933 Act, as such Rule may be amended from time to time,
or any similar or successor rule or regulation hereafter adopted by the SEC.
12.2 Form S-3 Shelf Registration.
---------------------------
(a) Filing and Registration Period. Subject to the terms
------------------------------
and conditions of this Agreement, as promptly as practicable following the
Effective Time of the Merger but no later than two whole business days
thereafter, and consistent with the requirements of applicable law, Excite@Home
shall prepare and file with the SEC a registration statement on Form S-3 for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the then outstanding Registrable Securities (the "Shelf Registration").
Excite@Home shall use commercially reasonable efforts to have such Shelf
Registration declared effective as soon as practicable after its filing and to
keep the Shelf Registration continuously effective under the 1933 Act for a
continuous period of time (such period of time being hereinafter called the
"Registration Period") commencing on the date the Shelf Registration is declared
effective under the 1933 Act by the SEC (the "Date of Effectiveness") and ending
(i) for purposes of Registrable Securities identified under Section 12.1(b)(i)
above (including any shares of Excite@Home Common Stock which are Registrable
Securities by virtue of Section 12.1(b)(iii) which are be issued as a dividend
or other distribution with respect to the Registrable Securities identified in
Section 12.1(b)(i)), on the date that is the first anniversary of the Effective
Time of the Merger (subject to the normal blackout policies of Excite@Home); and
(ii) for purposes of Registrable Securities identified under Section 12.1(b)(ii)
above (including any shares of Excite@Home Common Stock which are Registrable
Securities by virtue of Section 12.1(b)(iii) which are be issued as a dividend
or other distribution with respect to the Registrable Securities identified in
Section 12.1(b)(ii)), on the date that is the second anniversary of the
Effective Time of the Merger (subject to the normal blackout policies of
Excite@Home). Excite@Home shall have no duty or obligation to keep the Shelf
Registration (or any Subsequent Registration, as defined below) effective after
the expiration of the applicable Registration Period. Accordingly, the
Worldprints Shareholders acknowledge that the Registrable Securities identified
under Section 12.1(b)(i) (including any shares of Excite@Home Common Stock which
are Registrable Securities by virtue of Section 12.1(b)(iii) which are to be
issued as a dividend or other distribution with respect to the Registrable
Securities identified in Section 12.1(b)(i)) will not be registered under the
1933 Act beginning one year after the Effective Time of the Merger. The
Worldprints Shareholders and the holders of Worldprints Warrants listed on
Schedule 2.7 hereto further acknowledge that the Registrable Securities
identified under Section 12.1(b)(ii) (including any shares of Excite@Home Common
Stock which are Registrable Securities by virtue of Section 12.1(b)(iii) which
are to be issued as a dividend or other distribution with respect to the
Registrable Securities identified in Section 12.1(b)(ii)) will not be registered
under the 1933 Act beginning two years after the Effective Time of the Merger.
(b) Subsequent Registration. If the Shelf Registration is
-----------------------
filed with the SEC and becomes effective under the 1933 Act, and the Shelf
Registration or a Subsequent Registration (as defined below) thereafter ceases
to be effective for any reason at any time during
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the Registration Period, then Excite@Home shall use all reasonable efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall, within thirty days of such cessation of effectiveness,
file an amendment to the Shelf Registration seeking to obtain the withdrawal of
the order suspending the effectiveness thereof, or file an additional "shelf"
registration statement pursuant to Rule 415 covering all of the then outstanding
Registrable Securities (a "Subsequent Registration"). If a Subsequent
Registration is filed, Excite@Home shall use its best efforts to cause the
Subsequent Registration to be declared effective as soon as practicable after
such filing and to keep such registration statement continuously effective until
the end of the Registration Period.
(c) Supplements and Amendments. Subject to the provisions
--------------------------
of Section 12.2(g), during the Registration Period Excite@Home shall supplement
and amend the Shelf Registration if, as and when required by the 1933 Act, the
rules and regulations promulgated thereunder or the rules, regulations or
instructions applicable to the registration form used by Excite@Home for such
Shelf Registration.
(d) Timing and Manner of Sales. Any sale of Registrable
--------------------------
Securities pursuant to a Shelf Registration or a Subsequent Registration under
this Section 12.2 may be made only during a "Permitted Window" (as defined in
Section 12.2(g) below). In addition, any sale of Registrable Securities pursuant
to a Shelf Registration or a Subsequent Registration under this Section 12.2 may
only be made in accordance with the method or methods of distribution of such
Registrable Securities that are described in the registration statement for the
Shelf Registration (or Subsequent Registration, as applicable) and permitted by
such form of registration statement, which methods of distribution will be
specified by the Holders in their Notice of Resale (as defined below). Subject
to any other agreements between the Holder and Excite@Home or Surviving
Corporation, a Holder may also sell Registrable Securities in a bona fide
private offering if the selling Holder provides Excite@Home with a written
opinion of counsel, satisfactory to counsel to Excite@Home, that such offer and
sale is an exempt transaction under the 1933 Act and applicable state securities
laws, complies with all requirements for such exemptions and is not made with
use of the prospectus for the Shelf Registration (or Subsequent Registration, if
applicable).
(e) No Underwritings. No sale of Registrable Securities
-----------------
under any Shelf Registration (or Subsequent Registration) effected pursuant to
this Section 12.2 may be effected pursuant to any underwritten offering without
Excite@Home's prior written consent, which may be withheld in its sole and
absolute discretion.
(f) Notice of Resale. Before any Holder may make any sale,
----------------
transfer or other disposition of any Registrable Securities under the Shelf
Registration (or a Subsequent Registration) during the Registration Period, a
Holder or Holders who own at least five percent of the Registrable Securities
then outstanding must first give written notice to Excite@Home (a "Notice of
Resale") of such Holder's or Holders' present intention to so sell, transfer or
otherwise dispose of some or all of such Holder's or Holders' Registrable
Securities, and the number of Registrable Securities such Holder or Holders
propose(s) to so sell, transfer or otherwise dispose of. In addition, a Notice
of Resale shall contain the information required to be included therein under
Section 12.2(g).
-61-
(g) Permitted Window; Sale Procedures.
---------------------------------
(i) A "Permitted Window" is a period of ten consecutive
trading days commencing upon Excite@Home's written notification to the
Worldprints Shareholders in response to a Notice of Resale that the prospectus
contained in the Form S-3 registration statement filed pursuant to Section 12.2
of this Agreement is available to be used for resales of Registrable Securities
pursuant to the Shelf Registration (or a Subsequent Registration, as
applicable).
(ii) Before a Holder can make a sale of any Registrable
Securities pursuant to the Shelf Registration (or a Subsequent Registration),
and in order to cause a Permitted Window to commence, such Holder must first
give Excite@Home a Notice of Resale indicating such Holder's intention to sell
Registrable Securities pursuant to the Shelf Registration (or Subsequent
Registration, as applicable) and such Holder's intended plan of distribution of
such Registrable Securities (which must conform to the plan of distribution
contained in the prospectus for the Shelf Registration (or Subsequent
Registration, as applicable)).
(iii) Upon receipt of such Notice of Resale (unless a
certificate of Excite@Home is delivered as provided in Section 12.3(b) below),
Excite@Home will give written notice to all Holders as soon as practicable, but
in no event more than three business days after Excite@Home's receipt of such
Notice of Resale that either: (A) the prospectus contained in the registration
statement for the Shelf Registration (or Subsequent Registration, if applicable)
is current (it being acknowledged that it may be necessary for Excite@Home to
supplement the prospectus or make an appropriate filing under the 1934 Act so as
to cause the prospectus to become current) and that (as applicable) (1) the
Permitted Window will commence on the date of such notice by Excite@Home; or (B)
Excite@Home is required under the 1933 Act and the regulations thereunder to
amend the registration statement for the Shelf Registration (or Subsequent
Registration, as applicable) in order to cause the prospectus to be current. In
the event that Excite@Home determines that an amendment to the registration
statement is necessary as provided above, it will file and cause such amendment
to become effective as soon as practicable; whereupon it will notify the Holders
that the Permitted Window will then commence.
(iv) Excite@Home shall not be obligated to keep the
registration statement for the Shelf Registration (or any Subsequent
Registration) current during any period other than a Permitted Window. The
Holders may elect to withdraw a request for registration pursuant to a Notice of
Resale; provided however, that if Excite@Home has commenced preparation of any
supplement or amendment to the registration statement or any part thereof in
response to such Notice of Resale prior to receiving written notice from the
Holders' of the withdrawal of their request for registration, then the Holders
who originally gave Excite@Home such Notice of Resale will promptly reimburse
Excite@Home for its actual costs and expenses incurred in preparing and/or
filing such supplement and/or amendment.
(h) Trading Window Compliance. The Holders acknowledge that
-------------------------
Excite@Home maintains an Xxxxxxx Xxxxxxx Compliance Program and an Xxxxxxx
Xxxxxxx Policy, as such may be amended (the "Excite@Home Trading Policy") and
that the Excite@Home Trading Policy requires that those directors, officers and
employees of Excite@Home and its subsidiaries and those other persons whom
Excite@Home determines to be "Access Personnel" or otherwise subject to the
"trading window" and pre-clearance requirements of the Excite@Home Trading
-62-
Policy (and members of their immediate families and households) are permitted to
effect trades in Excite@Home securities: (i) only during those specified time
periods ("trading windows") in which such persons are permitted to make sales,
purchases or other trades in Excite@Home's securities under the "trading window"
provisions of the Excite@Home Trading Policy; and (ii) only after pre-clearance
of such sales, purchases or other trades with Excite@Home's Xxxxxxx Xxxxxxx
Compliance Officer. If a Holder is or becomes subject to the "trading window"
and/or "pre-clearance" provisions of the Excite@Home Trading Policy described
above, then, notwithstanding anything herein to the contrary, such Holder may
sell, transfer and dispose of Registrable Securities only during those trading
windows during which such Excite@Home Access Personnel are permitted to effect
trades in Excite@Home stock under the Excite@Home Trading Policy and only after
pre-clearing such trades with Excite@Home's Xxxxxxx Xxxxxxx Compliance Officer
as provided in the Excite@Home Trading Policy.
12.3 Limitations. Notwithstanding the provisions of Section 12.2 above,
-----------
Excite@Home shall not be obligated to effect any registration, qualification or
compliance of Registrable Securities pursuant to Section 12.2 of this Agreement,
and the Holders shall not be entitled to sell Registrable Securities pursuant to
any registration statement filed under Section 12.2 of this Agreement, as
applicable:
(a) if Form S-3 is not then available for such offering by
the Holders;
(b) if Excite@Home shall furnish to the Holders a
certificate signed by an officer of Excite@Home stating that, in the good faith
judgment of such officer, it would be detrimental to Excite@Home and its
stockholders for such Permitted Window to be in effect at such time, due, for
example, to the existence of a material development or potential material
development involving Excite@Home which Excite@Home would be obligated to
disclose in the prospectus contained in the Shelf Registration (or Subsequent
Registration, as applicable), which disclosure would, in the good faith judgment
of such officer, be premature or otherwise inadvisable at such time or would
have a material adverse affect upon Excite@Home and its stockholders, in which
event Excite@Home will have the right to defer a Permitted Window for a period
of not more than forty days after receipt of a Notice of Resale from the Holder
or Holders pursuant to this Section 12.3(b), provided that in the event that a
Permitted Window is deferred by Excite@Home pursuant to this Section 12.3(b)
then Excite@Home shall extend the Registration Period hereunder by the number of
days that such Permitted Window was so deferred;
(c) if Excite@Home is acquired and Excite@Home Common Stock
ceases to be publicly traded;
(d) in any particular jurisdiction in which Excite@Home
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance,
unless Excite@Home is already subject to service of process in such
jurisdiction; or
(e) if the SEC refuses to declare such registration
effective due to the participation of any particular Holder in such registration
(unless such Holder withdraws all such Holder's Registrable Securities from such
registration statement); or if the manner in which any Registrable Securities
are disposed of pursuant to the Shelf Registration (or Subsequent
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Registration, as applicable) is not included within the plan of distribution set
forth in the prospectus for the Shelf Registration (or Subsequent Registration,
as applicable).
12.4 Shares Otherwise Eligible for Resale. Notwithstanding anything
------------------------------------
herein to the contrary, Excite@Home shall not be obligated to effect or continue
to keep effective any such registration, registration statement, qualification
or compliance with respect to the Registrable Securities held by any particular
Holder:
(a) if Excite@Home or its legal counsel shall have received
a "no-action" letter or similar written confirmation from the SEC that all the
Registrable Securities then held by such Holder may be resold by such Holder
within a three month period without registration under the 1933 Act pursuant to
the provisions of Rule 144 promulgated under the 1933 Act (or successor
provisions), or otherwise;
(b) if legal counsel to Excite@Home shall deliver a written
opinion to Excite@Home, its transfer agent and the Holders, in form and
substance reasonably acceptable to Excite@Home and one legal counsel for the
Holders as a group, to the effect that all the Registrable Securities then held
by such Holder may be resold by such Holder within a three month period without
registration under the 1933 Act pursuant to the provisions of Rule 144
promulgated under the 1933 Act, or otherwise; or
(c) after expiration or termination of the Registration
Period.
12.5 Expenses. Excite@Home shall pay all expenses incurred in connection
--------
with any registration effected by Excite@Home pursuant to this Agreement
(excluding brokers' discounts and commissions), including, without limitation,
all filing, registration and qualification, printers', legal (including, the
reasonable fees and expenses of one counsel for the Holders as a group) and
accounting fees.
12.6 Obligations of Excite@Home. Subject to Sections 12.2, 12.3 and 12.4
--------------------------
above, when required to effect the registration of any Registrable Securities
under the terms of this Agreement, Excite@Home will, as expeditiously as
reasonably possible:
(a) furnish to the Holders such number of copies of the
prospectus for the Shelf Registration (or Subsequent Registration, as
applicable), including a preliminary prospectus (and amendments or supplements
thereto), in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by them;
(b) use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as will be reasonably requested by the
Holders; provided that Excite@Home will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such state or jurisdiction unless Excite@Home is
already so qualified or subject to service of process, respectively, in such
jurisdiction; and
(c) promptly notify each Holder of Registrable Securities
covered by such registration statement, at any time during a Permitted Window
when a prospectus relating
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thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
12.7 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of Excite@Home to take any action pursuant to this Article 12 that
the selling Holders will furnish to Excite@Home such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition and plan of distribution of such Registrable Securities as shall be
required to timely effect the registration of their Registrable Securities.
12.8 Delay of Registration. No Holder will have any right to obtain or
---------------------
seek an injunction restraining or otherwise delaying any registration that is
the subject of this Agreement as the result of any controversy that might arise
with respect to the interpretation or implementation of this Agreement.
12.9 Indemnification.
---------------
(a) By Excite@Home. To the extent permitted by law,
--------------
Excite@Home will indemnify, defend and hold harmless each Holder against any
losses, claims, damages, or liabilities (joint or several) to which such Holder
may become subject under the 1933 Act, the 1934 Act or other U.S. federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in a registration statement filed by Excite@Home
pursuant to this Agreement pursuant to which Registrable Securities are sold,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(ii) the omission or alleged omission to state in such
registration statement, preliminary prospectus or final prospectus or any
amendments or supplements thereto, a material fact required to be stated
therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by Excite@Home
of the 1933 Act, the 1934 Act, any U.S. federal or state securities law or any
rule or regulation promulgated under the 1933 Act, the 1934 Act or any U.S.
federal or state securities law in connection with the offering of Registrable
Securities covered by such registration statement;
provided however, that the indemnity agreement contained in this subsection
12.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the written
consent of Excite@Home (which consent shall not be unreasonably withheld), nor
shall Excite@Home be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder.
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(b) By Selling Holders. To the extent permitted by law,
------------------
each selling Holder will indemnify and hold harmless Excite@Home, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls Excite@Home within the meaning of the 1933 Act, any
underwriter and any other Holder selling securities under such registration
statement, against any losses, claims, damages or liabilities (joint or several)
to which Excite@Home or any such director, officer, controlling person,
underwriter or other such Holder may become subject under the 1933 Act, the 1934
Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will indemnify and reimburse Excite@Home or any such
director, officer, controlling person, underwriter or other Holder for any
reasonable attorneys' fees and other expenses reasonably incurred by Excite@Home
or any such director, officer, controlling person, underwriter or other Holder
in connection with investigating or defending any such loss, claim, damage,
liability or action, as incurred.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section 12.9 of notice of the commencement of any action (including
any governmental action) against such indemnified party, such indemnified party
will, if a claim for indemnification or contribution in respect thereof is to be
made against any indemnifying party under this Section 12.9, deliver to the
indemnifying party a written notice of the commencement thereof and, if the
indemnifying party is Excite@Home, Excite@Home shall have the right and
obligation to control the defense of such action, and if Excite@Home fails to
defend such action it shall indemnify and reimburse the selling Holders for any
reasonable attorneys' fees and other expenses reasonably incurred by them in
connection with investigating or defending such action; provided, however, that:
-------- -------
(i) Excite@Home shall also have the right, at its option, to assume and control
the defense of any action with respect to which Excite@Home or any person
entitled to be indemnified by the selling Holders under Section 12.9(b) is
entitled to indemnification from the selling Holders; (ii) the indemnified party
or parties shall have the right to participate at its own expense in the defense
of such action and (but only to the extent agreed in writing with Excite@Home
and any other indemnifying party similarly noticed) to assume the defense
thereof with counsel mutually satisfactory to the parties; and (iii) an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses of such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to an actual or potential conflict
of interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure of an indemnified party to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this Section 12.9, but the
omission so to deliver written notice to the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party otherwise than under this Section 12.9.
(d) Defect Eliminated in Final Prospectus. The foregoing
-------------------------------------
indemnity agreements of Excite@Home and the Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended or supplemented prospectus on file
with the SEC and effective at the time the sale of Registrable
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Securities under such registration statement occurs (the "Amended Prospectus"),
such indemnity agreement shall not inure to the benefit of any person if a copy
of the Amended Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage in the
action giving rise to indemnity claims under this Section 12.9, at or prior to
the time such action is required by the 1933 Act.
(e) Survival. The obligations of Excite@Home and Holders
--------
under this Section 12.9 shall survive the completion of any offering of
Registrable Securities in a registration statement pursuant to this Agreement,
and otherwise.
12.10 Duration and Termination of Excite@Home's Obligations. Excite@Home
-----------------------------------------------------
will have no obligations pursuant to Section 12.2 of this Agreement with respect
to any Notice of Resale or other request or requests for registration (or
inclusion in a registration) made by any Holder or to maintain or continue to
keep effective any registration or registration statement pursuant hereto: (a)
after the expiration or termination of the Registration Period; (b) with respect
to a particular Holder if, in the opinion of counsel to Excite@Home, all such
Registrable Securities proposed to be sold by such Holder may be sold in a three
month period without registration under the 1933 Act pursuant to Rule 144
promulgated under the 1933 Act or otherwise; or (c) if all Registrable
Securities have been registered and sold pursuant to a registration effected
pursuant to this Agreement and/or have been transferred in transactions in which
registration rights hereunder have not been assigned in accordance with this
Agreement.
12.11 Acknowledgment of Other Agreements. The Holders acknowledge that
----------------------------------
they have been informed by Excite@Home that other stockholders of Excite@Home
currently hold certain Form S-3 and other registration rights that may enable
such other stockholders to sell shares of Excite@Home during one or more
Permitted Windows or at other times (thus potentially adversely affecting the
receptivity of the market to the sale of the Registrable Securities pursuant to
a registration effected pursuant to this Agreement). The Holders further
acknowledge (i) that Excite@Home has agreed not to effect any public sale or
distribution of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any equity security of Excite@Home during the
fourteen days prior to, and during the sixty day period beginning on, the
effective date of any "Demand Registration" (as such term is defined in that
certain Third Amended and Restated Registration Rights Agreement dated as of
April 11, 1997, among Excite@Home and certain holders of Excite@Home capital
stock and attached as Exhibit 4.01 to Excite@Home's Form S-1 filed with the SEC
on May 16, 1997 (except as part of such registration), a copy of which has been
given to Worldprints and its counsel, and (ii) hereby agree not to effect any
public sale or distribution of any Excite@Home capital stock during the periods
described in clause (i) above, in each case including a sale pursuant to Rule
144 promulgated under the 1933 Act; provided, that as to each Holder Excite@Home
shall extend the Registration Period for that number of days which such Holder
of Registrable Securities could have otherwise sold such securities during a
Permitted Window but for the foregoing agreement of the Holders under clause
(ii) above.
12.12 Assignment. Notwithstanding anything herein to the contrary, the
----------
rights of a Holder under Article 12 may be assigned only with Excite@Home's
express prior written consent, which may be withheld in Excite@Home's sole
discretion; provided, however, that the rights of a Holder under Article 12 may
-------- -------
be assigned without Excite@Home's express prior written consent: (a) to a
Permitted Assignee (as defined below); or (b) (if applicable) by will or by the
laws of intestacy,
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descent or distribution, provided that the assignee first agrees in writing to
be bound by all the obligations of the Holders under this Agreement. Any attempt
to assign any rights of a Holder under Article 12 without Excite@Home's express
prior written consent in a situation in which such consent is required by this
Section shall be null and void and without effect. Subject to the foregoing
restrictions, all rights, covenants and agreements in Article 12 by or on behalf
of the parties hereto will bind and inure to the benefit of the respective
permitted successors and assigns of the parties hereto. Each of the following
parties are "Permitted Assignees" for purposes of this Section 12.12: (a) a
trust whose beneficiaries consist solely of a Holder and such Holder's immediate
family; (b) the personal representative (such as an executor of a Holder's
will), custodian or conservator of a Holder, in the case of the death,
bankruptcy or adjudication of incompetency of that Holder; (c) immediate family
members of a Holder; or (d) partners of a Holder that is a partnership.
Article 13
Miscellaneous
13.1 Governing Law. The internal laws of the State of California
-------------
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto; provided however, that issues
involving the consummation and effects of the Merger shall be governed by the
laws of the State of Colorado.
13.2 Assignment; Binding Upon Successors and Assigns. Neither party
-----------------------------------------------
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Any assignment in violation of this provision shall be
void.
13.3 Severability. If any provision of this Agreement, or the application
------------
thereof, will for any reason and to any extent be invalid or unenforceable, then
the remainder of this Agreement and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
13.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of all
parties reflected hereon as signatories.
13.5 Other Remedies. Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party hereunder will be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy will not preclude the exercise
of any other. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance
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with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction.
13.6 Amendment and Waivers. Any term or provision of this Agreement may
---------------------
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto as
provided in this Section at any time before or after approval of this Agreement
by the shareholders of Worldprints, but, after such approval, no amendment will
be made which by applicable law requires the further approval of the
shareholders of Worldprints without obtaining such further approval. At any time
prior to the Effective Time, each of Worldprints and Excite@Home, by action
taken by its Board of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other; (ii) waive any inaccuracies in the representations and warranties made to
it contained herein or in any document delivered pursuant hereto; and (iii)
waive compliance with any of the agreements or conditions for its benefit
contained herein. No such waiver or extension will be effective unless signed in
writing by the party against whom such waiver or extension is asserted. The
failure of any party to enforce any of the provisions hereof will not be
construed to be a waiver of the right of such party thereafter to enforce such
provisions.
13.7 Expenses. Each party will bear its respective legal, auditors' and
--------
investment bankers' and financial advisors' fees and other expenses incurred
with respect to this Agreement, the Merger and the transactions contemplated
hereby ("Transaction Expenses"); provided, however, that if the Merger is
successfully consummated, then not more than a maximum of $175,000 of
Worldprints' verified Transaction Expenses incurred by Worldprints in connection
with services rendered to Worldprints by its accountants, attorneys and
investment or financial advisors will be paid by Excite@Home and Excite@Home
will be entitled to indemnification from the Escrow Shares in accordance with
Section 11.2 for an amount equal to the amount (if any) by which Worldprints'
Transaction Expenses exceed $175,000 (such excess amount being hereinafter
called the "Excess Transaction Expenses"), and such indemnification shall not be
subject to the Basket.
13.8 Attorneys' Fees. Should suit be brought to enforce or interpret any
---------------
part of this Agreement, the prevailing party will be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal). The prevailing party will be entitled to recover its costs of suit,
regardless of whether such suit proceeds to final judgment.
13.9 Notices. All notices and other communications required or permitted
-------
under this Agreement will be in writing and will be either hand delivered in
person, sent by facsimile, sent by certified or registered first class mail,
postage pre-paid, or sent by nationally recognized express courier service. Such
notices and other communications will be effective upon receipt if hand
delivered or sent by facsimile, five (5) days after mailing if sent by mail, and
one (l) day after
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dispatch if sent by express courier, to the following addresses, or such other
addresses as any party may notify the other parties in accordance with this
Section:
If to Excite@Home:
At Home Corporation
000 Xxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax Number: (000) 000-0000
with copies to:
Fenwick & West LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Fax Number: (000) 000-0000
If to Worldprints:
Xxxxxxxxxxx.xxx International, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxxx and Xxxxx X. X'Xxxxxxx
Fax Number: (000) 000-0000
with a copy to:
Xxxxxx & Whitney LLP
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax Number: (000) 000-0000
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If to the Representative:
Xxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax Number: (000) 000-0000
If to a Worldprints Shareholder, including any Worldprints
Founder:
To the address specified on the signature page to the
applicable Investment Representation Letter
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 13.9.
13.10 Construction of Agreement. This Agreement has been negotiated by
-------------------------
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for reference purposes
only and will not in any manner limit the construction of this Agreement which
will be considered as a whole. Unless otherwise indicated, the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation."
13.11 No Joint Venture. Nothing contained in this Agreement will be
----------------
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other party. No party will hold itself out as having any authority or
relationship in contravention of this Section.
13.12 Further Assurances. Each party agrees to cooperate fully with the
------------------
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
13.13 Absence of Third Party Beneficiary Rights. No provisions of this
-----------------------------------------
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
13.14 Public Announcement. Upon execution of this Agreement, Excite@Home
-------------------
and Worldprints will issue a press release approved by both parties announcing
the Merger. Thereafter, Excite@Home may issue such press releases, and make such
other disclosures regarding the Merger, as it determines are required under
applicable securities laws or regulatory rules. Prior to the publication of such
initial and mutually agreed press release, neither party will make any public
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announcement relating to this Agreement or the transactions contemplated hereby
(except as may be required by law) and Worldprints will use its reasonable
efforts to prevent any trading in Excite@Home Common Stock by its officers,
directors, employees, shareholders and agents. Neither Excite@Home nor
Worldprints will make any disclosures regarding this Agreement or the Merger
that would jeopardize Excite@Home's ability to timely and lawfully issue the
shares of Excite@Home Common Stock in the Merger pursuant to the exemptions
described in Section 2.7.
13.15 Disclosure Letters. The Worldprints Disclosure Letter shall be
------------------
arranged in separate parts corresponding to the numbered and lettered sections
contained in Article 3, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Article 3, and shall not be deemed to relate to or to qualify any
other representation or warranty. The Excite@Home Disclosure Letter shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in Article 4, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Article 4, and shall not be deemed to relate to or to qualify any
other representation or warranty.
13.16 Confidentiality. Worldprints and Excite@Home each confirm that they
---------------
have entered into the Confidentiality Agreement and that they are each bound by,
and will abide by, the provisions of such Confidentiality Agreement (except that
Excite@Home will cease to be bound by the Confidentiality Agreement after the
Merger becomes effective). If this Agreement is terminated, the Confidentiality
Agreement shall remain in full force and effect and all copies of documents
containing confidential information of a disclosing party will be returned by
the receiving party to the disclosing party or be destroyed, as provided in the
Confidentiality Agreement.
13.17 Entire Agreement. This Agreement and the exhibits hereto constitute
----------------
the entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto other than the Confidentiality
Agreement. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
[The remainder of this page has been intentionally left blank.]
-72-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
At Home Corporation Xxxxxxxxxxx.xxx International, Inc.
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------- --------------------------
Name: Xxxx Xxxxxxx Xxxxxxx X. Xxxxxxxxx, President and CEO
----------------------------
Title: EVP
-----------------------------
Xxxxxx Acquisition Corporation
By: /s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx, President and CEO
Worldprints Founders
/s/ Xxxxxxx X Xxxxxxxxx /s/ Xxx Xxxxxxxxx
------------------------------- --------------------------
Xxxxxxx X. Xxxxxxxxx Xxx Xxxxxxxxx
/s/ Xxx X. Xxxxxx
-------------------------------
Xxx X. Xxxxxx
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List of Exhibits and Schedules
Exhibits:
--------
Exhibit A List of Worldprints Founders
Exhibit B Investment Representation Letter
Exhibit C Certificate of Designation of Series B Preferred Stock and
Certificate of Correction of Certificate of Designation
Exhibit D Plan of Merger
Exhibit E Matters to be Covered in the Opinion of Fenwick & West LLP
Exhibit F Matters to be Covered in the Worldprints Tax Opinion
Exhibit G Matters to be Covered in the Opinion of Xxxxxx & Xxxxxxx LLP
Exhibit H Matters to be Covered in the Excite@Home Tax Opinion
Exhibit I Form of Employment Agreement
Exhibit J Form of Founder Consulting Agreement
Exhibit K Form of Settlement Agreement and Release
Exhibit L Development Assignment and Confidentiality Agreement
Schedules:
---------
Schedule 1.14 Closing Debt Schedule
Schedule 2.7 List of Worldprints Warrants with Registration Rights
Schedule 3.4.1(a) List of Holders of Worldprints Common Stock
Schedule 3.4.1(b) List of Holders of Worldprints Options and Worldprints
Warrants
Schedule 3.25 Worldprints Tax Representations
Schedule 4.10 Excite@Home and Sub Tax Representations
Schedule 5.11 List of Holders of Amended Worldprints Options
Schedule 5.13 New Worldprints Options
