<PAGE>
As Filed With The Securities and Exchange Commission on January 5, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EARTHWEB INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3899472
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Park Avenue
New York, New York 10016
(Address of registrant's principal executive offices)
1998 Stock Incentive Plan
1998 Employee Stock Purchase Plan
(Full titles of the plans)
Jack D. Hidary
President and Chief Executive Officer
EarthWeb Inc.
3 Park Avenue
New York, New York 10016
(212) 725-6550
(Name, address and telephone number, including area code, of agent for service)
With a copy sent to:
Joseph W. Bartlett, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0012
(212) 468-8000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Title of Securities Amount to Maximum Offering Maximum Aggregate Amount of Registration
to be Registered be Registered Price Per Share Offering Price Fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, $.01 par 375,000 (1) 41 5/8 (2) 15,609,375 4,339.41
value per share
Common stock, $.01 par 159,000 (3) 41 5/8 (2) 6,618,375 1,839.91
value per share
----------------------------------------------------------------------------------
Total 534,000 22,227,750 6,179.32
</TABLE>
(1) Represents the number of shares that may be issued until December 31, 1999
under the 1998 Stock Incentive Plan.
(2) Estimated in accordance with Rule 457(h) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee. The
computation is the average of high and low prices of the common stock on the
Nasdaq National Market on December 30, 1998.
(3) Represents the number of shares that may be issued until December 31, 1999
under the 1998 Employee Stock Purchase Plan.
<PAGE>
EXPLANATORY NOTE
EarthWeb Inc. has prepared this Registration Statement in accordance with
the requirements of Form S-8 under the Securities Act of 1933, as amended (the
"1933 Act"), to register shares of common stock, $.01 par value per share, of
EarthWeb, issuable pursuant to EarthWeb's 1998 Stock Incentive Plan and 1998
Stock Purchase Plan.
Under cover of this Form S-8 is a Reoffer Prospectus EarthWeb prepared in
accordance with Part I of Form S-3 under the 1933 Act. The Reoffer Prospectus
may be utilized for reofferings and resales of up to 2,482 shares of common
stock acquired by a selling stockholder.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EarthWeb Inc. will send or give the documents containing the information
specified in Part 1 of Form S-8 to employees as specified by Securities and
Exchange Commission Rule 428 (b) (1) under the Securities Act of 1933, as
amended (the "1933 Act"). EarthWeb does not need to file these documents with
the commission either as part of this Registration Statement or as prospectuses
or prospectus supplements under Rule 424 of the 1933 Act.
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REOFFER PROSPECTUS
EarthWeb Inc.
3 Park Avenue
New York, NY 10016
(212) 725-6550
2,482 SHARES OF COMMON STOCK
The shares of common stock, $.01 par value per share, of EarthWeb Inc.
("EarthWeb" or the "Company") offered hereby (the "Shares") will be sold from
time to time by Geoffrey Smith (the "Selling Stockholder"). The Selling
Stockholder acquired the Shares pursuant to a compensatory benefit plan with
EarthWeb for consulting services the Selling Stockholder provided to EarthWeb.
The sales may occur in transactions in the over-the-counter market (quoted
on the Nasdaq National Market) at prevailing market prices or in negotiated
transactions. EarthWeb will not receive proceeds from any of these sales.
EarthWeb is paying for the expenses incurred in registering the Shares.
The Shares are "restricted securities" under the Securities Act of 1933
(the "1933 Act") before their sale under the Reoffer Prospectus. The Reoffer
Prospectus has been prepared for the purpose of registering the Shares under the
1933 Act to allow for future sales by the Selling Stockholder to the public
without restriction. To the knowledge of the Company, the Selling Stockholder
has no arrangement with any brokerage firm for the sale of the Shares. The
Selling Stockholder may be deemed to be an "underwriter" within the meaning of
the 1933 Act. Any commissions received by a broker or dealer in connection with
resales of the Shares may be deemed to be underwriting commissions or discounts
under the 1933 Act.
EarthWeb's common stock is traded in the over-the-counter market and quoted
on the Nasdaq National Market under the symbol "EWBX". On December 30, 1998 the
high price for the common stock, as reported on the Nasdaq National Market was
$43 3/8 per share and the low price was $39 7/8 per share.
__________
This investment involves a high degree of risk. Please see "Risk Factors"
beginning on page 8.
__________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this Reoffer Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
__________
January 5, 1999
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__________
TABLE OF CONTENTS
Where You Can Find More Information.. 5
Incorporated Documents............... 5
The Company.......................... 7
Risk Factors......................... 8
Use of Proceeds...................... 20
Selling Stockholder.................. 20
Plan of Distribution................. 20
Legal Matters........................ 21
Experts.............................. 21
__________
You should only rely on the information incorporated by reference or provided in
this Reoffer Prospectus or any supplement. We have not authorized anyone else
to provide you with different information. The common stock is not being
offered in any state where the offer is not permitted. You should not assume
that the information in this Reoffer Prospectus or any supplement is accurate as
of any date other than the date on the front of this Reoffer Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
EarthWeb files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC") as
required by the Securities Exchange Act of 1934, as amended (the "1934 Act").
You may read and copy any reports, statements or other information we file at
the SEC's Public Reference Rooms at:
. 450 Fifth Street, N.W., Washington, D.C. 20549;
. Seven World Trade Center, 13th Floor, New York, N.Y. 10048; or
. Northwest Atrium Center, 5000 West Madison Street, Suite 1400,
Chicago, IL. 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Rooms. Our filings are also available to the public from commercial
document retrieval services and the SEC website (http://www.sec.gov).
INCORPORATED DOCUMENTS
The SEC allows EarthWeb to "incorporate by reference" information into this
Reoffer Prospectus, which means that the Company can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Reoffer Prospectus, except for any information superseded by information in this
Reoffer Prospectus.
EarthWeb's prospectus dated November 10, 1998, filed pursuant to Rule
424(b) of the 1993 Act, is incorporated herein by reference. In addition, all
documents filed or subsequently filed by the Company under Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act, before the termination of this offering,
are incorporated by reference.
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The Company will provide without charge to each person to whom a copy of
this Reoffer Prospectus is delivered, upon oral or written request, a copy of
any or all documents incorporated by reference into this Reoffer Prospectus
(excluding exhibits unless the exhibits are specifically incorporated by
reference into the information the Reoffer Prospectus incorporates). Requests
should be directed to the Controller of EarthWeb, at EarthWeb's executive
offices, located at 3 Park Avenue, 38th Floor, New York, NY 10016. EarthWeb's
telephone number at that location is (212) 725-6550. The Company's corporate Web
site address is http://www.earthweb.com. Information contained on the Company's
Web site is not part of this Reoffer Prospectus.
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THE COMPANY
EarthWeb Inc. ("EarthWeb" or the "Company") is the leading provider of
Internet-based online services to the information technology ("IT") community
worldwide. The Internet is a communications medium that enables millions of
people worldwide to have access to current news and information, create
community among individuals with similar professional or personal interests and
purchase software and other products electronically. IT professionals,
typically, play an important role in many organizations, with responsibility for
developing, deploying and maintaining information technologies, such as software
applications, communication networks, computer hardware and technical support
systems.
The Company's integrated business-to-business online services address the
needs of IT professionals for content, community and commerce:
. Content offerings include a wide range of technical materials, such as
resource directories, tutorials and a reference library, which enhance
the ability of IT professionals to perform their job functions.
. Community areas, such as bulletin boards and question and answer
services, allow users to help one another solve technical problems and
share information.
. Commerce services provide a single online source for IT professionals to
purchase specialized software and other products.
EarthWeb's online services also offer a channel through which advertisers and
vendors can efficiently and effectively target what the Company believes to be
the largest aggregation of IT professionals worldwide.
As a global intermediary for IT professionals, advertisers and vendors,
EarthWeb is positioned as a trusted third party that offers an integrated
environment where these constituencies can share information, interact with one
another and transact business.
The Company's principal executive office is located at 3 Park Avenue, New
York, New York 10016, and its telephone number at this location is (212) 725-
6550. EarthWeb's corporate Web site address is http://www.earthweb.com.
Information contained on the Company's Web site is not part of this Reoffer
Prospectus.
7
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RISK FACTORS
In this section we highlight some of the risks associated with EarthWeb's
business and operations. Prospective investors should carefully consider the
following risk factors when evaluating an investment in the common stock offered
by this Reoffer Prospectus.
Extremely Limited Operating History; Anticipated Losses
Although EarthWeb commenced operations in October 1994, it did not begin
operating its current business of providing online services to IT professionals
until October 1995 and did not begin generating advertising revenues until June
1996. Accordingly, your evaluation of EarthWeb will be based on an extremely
limited operating history. You must consider that its prospects are subject to
the risks, expenses and uncertainties frequently encountered by companies in the
new and rapidly evolving markets for Internet products and services. These risks
include:
. the failure to continue to develop and extend EarthWeb's online service
brands;
. the rejection of EarthWeb's services by Internet users, vendors or
advertisers;
. the inability of EarthWeb to maintain and increase the levels of traffic
on its online services;
. the development of similar or superior services or products by
competitors;
. the failure of the market to adopt the Internet as an advertising medium;
. the failure to successfully sell Internet advertising through EarthWeb's
recently developed internal sales force;
. reductions in market prices for Internet advertising as a result of
competition or other factors;
. the inability of EarthWeb to integrate effectively the technology and
operations of any acquired businesses or technologies with its
operations; and
. the inability to identify, attract, retain and motivate qualified
personnel.
EarthWeb's failure to succeed in one or more of these areas could have a
material adverse affect on its business, results of operations and financial
condition.
As of September 30, 1998, EarthWeb had an accumulated deficit of $13.6
million. Although EarthWeb has experienced revenue growth in recent periods,
there can be no assurance that the revenues of EarthWeb will continue at their
current level or increase in the future. EarthWeb has not achieved profitability
on a quarterly or annual basis to date, and EarthWeb anticipates that it will
continue to incur net losses for the foreseeable future. EarthWeb currently
expects to increase its operating expenses significantly, expand its sales and
marketing operations and continue to develop and extend its online services. If
these expenses exceed revenues, EarthWeb's business, results of operations and
financial condition could be materially and adversely affected.
The extremely limited operating history of EarthWeb and the uncertain
nature of the markets addressed by EarthWeb make the prediction of future
results of operations difficult or impossible. Therefore, EarthWeb's recent
revenue growth should not be taken as indicative of the rate of revenue growth,
if any, that can be expected in the future. EarthWeb believes that period-to-
period comparisons of its results of operations are not meaningful and that you
should not rely on the results for any period as an indication of future
performance.
8
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Developing Market; Unproven Acceptance of EarthWeb's Online Services
The market for EarthWeb's online services has only recently begun to
develop, is rapidly evolving and can be characterized by an increasing number of
market entrants. Typical of a new and rapidly evolving industry, demand and
market acceptance for recently introduced services is subject to a high level of
uncertainty and risk. Because of this it is difficult to predict either the
future growth rate, if any, or the size of EarthWeb's market for online
services. This market may not continue to develop or become sustainable. If use
of its online services does not grow, EarthWeb's ability to establish other
online services would be materially and adversely impacted. In addition,
EarthWeb's business strategy includes plans to extend its online services model
to additional segments of the IT industry. EarthWeb may not be successful in its
efforts, however.
Dependence on Continued Growth in the Use of the Internet; Dependence on
Internet Infrastructure
EarthWeb's future success depends substantially on continued growth in
Internet use, to support the sale of advertising on EarthWeb's online services,
and on the acceptance and volume of commerce transactions on the Internet.
EarthWeb cannot assure you that the number of Internet users will continue to
grow or that commerce over the Internet will become more widespread. Typical of
a new and rapidly evolving industry, demand and market acceptance for recently
introduced services are subject to a high level of uncertainty. The Internet may
not prove to be a viable commercial marketplace for a number of reasons,
including:
. lack of acceptable security technologies;
. lack of access and ease of use;
. congestion of traffic;
. inconsistent quality of service and lack of availability of cost-
effective, high-speed service;
. potentially inadequate development of the necessary infrastructure;
. excessive governmental regulation;
. uncertainty regarding intellectual property ownership or timely
development; and
. commercialization of performance improvements, including high speed
modems.
See the discussion below under the headings "Online Security Risks,"
"Intellectual Property," and "Government Regulation and Legal Uncertainties" for
additional information.
EarthWeb's success depends also upon, among other things, the continued
development and maintenance of a viable Internet infrastructure to support the
continued growth in the use of the Internet. The maintenance and improvement of
this infrastructure will require the timely development of products, such as
high speed modems and communications equipment, to continue to provide reliable
Internet access and improved content. Because the current Internet
infrastructure may not be able to support an increased number of users or the
increased service requirements of users, the performance or reliability of the
Internet may be adversely affected. Furthermore, the Internet has experienced
certain outages and delays from damage to its infrastructure. Similar outages or
delays in the future, including those resulting from Year 2000 problems, could
have an adverse impact on the traffic on EarthWeb's online services. Further,
delays in the development or adoption of new Internet features (features
designed to support increased levels of activity, for example) may reduce the
effectiveness of the Internet. EarthWeb cannot give any assurance that the
infrastructure, products or services necessary to ensure the continued expansion
of the Internet will be developed or that the Internet will become a viable
commercial medium for advertisers. If the necessary infrastructure, standards,
protocols, products, services or facilities are not developed, or
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if the Internet does not become a viable commercial medium, EarthWeb's business,
results of operations and financial condition could be materially and adversely
affected. Even if such developments do occur, EarthWeb still may incur
substantial expenditures in adapting its services to the changing or emerging
technologies, and this, too, could have a material adverse effect on EarthWeb's
business, results of operations and financial condition.
Reliance on Advertising Revenues and Uncertain Adoption of the Internet as an
Advertising Medium
EarthWeb now derives substantially all of its revenues from selling
advertisements on its online services under short-term contracts. Most of
EarthWeb's advertising customers have only limited experience with Internet
advertising. Most have not devoted a significant portion of their advertising
expenditures to the Internet, and they may not find this advertising to be an
effective way to promote their products and services relative to traditional
print and broadcast media. EarthWeb's ability to generate significant
advertising revenues depends on, among other factors:
. advertisers' acceptance of the Internet as an effective and sustainable
advertising medium;
. the development of a large base of EarthWeb users who possess demographic
characteristics attractive to advertisers; and
. EarthWeb's ability to maintain effective advertising delivery and
measurement systems.
A system measuring the effectiveness of Internet advertising has not found
widespread acceptance in the business community, and EarthWeb cannot give any
assurances that a standard system will be developed to help turn Internet
advertising into a significant advertising medium. The Company cannot give any
assurance that advertisers will determine that advertising across the top,
bottom or sides of a web page ("banner advertising"), which comprises
substantially all of EarthWeb's revenues, is an effective or attractive way to
advertise either. Moreover, EarthWeb may not effectively transition to any other
form of Internet advertising that might develop.
Certain advertising filter software programs limit or remove advertising
from an Internet user's computer screen. This software, if generally adopted by
users, could have a materially adverse effect on the viability of Internet
advertising. EarthWeb relies primarily on its in-house advertising sales force
for domestic advertising sales, which involves additional risks and
uncertainties, such as risks associated with the recruitment, retention,
management, training and motivation of sales personnel. As a result the Company
cannot assure you that it will sustain or increase current advertising sales
levels, and this failure could have a material adverse effect on EarthWeb's
business, results of operations and financial condition.
In addition, there is intense competition in the sale of Internet
advertising, from web sites providing Internet search capabilities (often termed
"portals") and other high-traffic sites, for instance. The result is that
vendors quote a wide range of rates for a variety of advertising services,
making future levels of Internet advertising revenues difficult to project.
Competition for advertising placements among current and future Internet portals
and other popular Web sites, as well as competition with traditional media,
could result in significant price competition, reduced pricing for Internet
advertising and reductions in EarthWeb's advertising revenues.
Dependence on a Limited Number of Advertisers
EarthWeb's revenues to date have been derived from a limited number of
customers who advertise on EarthWeb's services, and EarthWeb expects that a
limited number of advertisers will continue to account for a significant portion
of its revenues. In particular,
. Microsoft accounted for approximately 14% of EarthWeb's revenues for the
nine months ended September 30, 1998, and IBM accounted for approximately
10% of revenues for the same period; and
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. EarthWeb's top 20 advertisers accounted for an aggregate of approximately
59% of the Company's revenues during those nine months.
Both Microsoft and IBM advertised on EarthWeb's online services during the year
ended December 31, 1997, but revenues from each accounted for less than 10% of
EarthWeb's revenues during that period.
Moreover, EarthWeb typically sells advertisements pursuant to purchase
order agreements that are subject to cancellation. EarthWeb can give no
assurances that current advertisers will continue to purchase advertising from
EarthWeb or that the Company will attract successfully additional advertisers.
The loss of one or more advertisers representing a material portion of
EarthWeb's revenues could have a material adverse effect on EarthWeb's business,
results of operations and financial condition. In addition, if a significant
advertiser did not pay or paid late amounts it owed the Company, that, too,
could have a material adverse effect on EarthWeb's business, results of
operations and financial condition.
Competition
The market for Internet-based online services is relatively new, intensely
competitive and rapidly changing. Since the advent of commercial services on the
Internet, the number of online services competing for users' attention and
spending has proliferated. One of many reasons for this is the absence of
substantial barriers to entry. EarthWeb expects competition will intensify in
the future. EarthWeb competes with companies that have sections of their Web
sites directed at segments or sub-segments of the IT community, such as Ziff-
Davis (InternetUser), CNET (builder.com and activex.com), CMP (TechWeb),
Mecklermedia (webdeveloper.com), Wired Digital (Webmonkey) and IDG (Javaworld).
EarthWeb also competes for circulation and advertising impressions with general
interest web sites and traditional media. With respect to product sales,
EarthWeb competes with traditional and online retailers of products such as
books and software.
Many of EarthWeb's current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than EarthWeb. These
competitors may be able to respond more quickly to new or emerging technologies
and changes in customer requirements and to devote greater resources to the
development, promotion and sale of their products and services. EarthWeb may not
be able to compete successfully against its current or future competitors.
Fluctuations in Quarterly Results of Operations; Seasonality
Because of its extremely limited operating history, EarthWeb does not have
financial data for a large number of past periods on which to project future
operating expenses. EarthWeb's expense levels are based in part upon its
expectations concerning future revenue and, to a large extent, are fixed.
Quarterly revenues and operating results depend largely on the quarter's
advertising revenues, which are difficult to forecast. Accordingly, the
cancellation or deferral of a small number of advertising contracts could have a
material adverse impact on EarthWeb's business, results of operations and
financial condition. EarthWeb may fail to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall, and any significant shortfall
in relation to EarthWeb's expectations would have an immediate and adverse
effect on EarthWeb's business, results of operations and financial condition.
EarthWeb's results of operations may fluctuate significantly in the future
due to a variety of factors, many of which are outside the Company's control.
These factors include, among others:
. the level of usage of the Internet;
. demand for Internet advertising;
. the addition or loss of advertisers;
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. the level of user traffic on EarthWeb's online services;
. economic conditions specific to the Internet industry and online media;
and
. economic conditions generally.
Management believes revenues are also subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarter of each calendar year. As a strategic response EarthWeb may
make pricing, service or marketing decisions or undertake business combinations
that could have a material adverse effect on EarthWeb's business, results of
operations and financial condition.
Due to the above factors and others, EarthWeb's quarterly operating results
may fall below the expectations of securities analysts and investors in the
future. In such event, the trading price of EarthWeb's common stock would likely
be materially and adversely affected.
Risks Associated with Brand Development
EarthWeb believes that establishing and maintaining brand identity of its
several brands is critical to attracting and expanding its targeted Internet
audience and that the importance of brand recognition will increase due to the
growing number of Internet online services. Promotion and enhancement of
EarthWeb's brands will depend largely on EarthWeb's success in continuing to
provide high-quality online services, which cannot be assured. If users do not
perceive EarthWeb's existing online services to be high quality, or if EarthWeb
introduces new online services or enters into new business ventures that are not
favorably received by users, EarthWeb may dilute its brands and decrease the
attractiveness of its audiences to advertisers. Furthermore, to attract and
retain Internet users and to promote and maintain its brands in response to
competitive pressures, EarthWeb may find it necessary to increase substantially
its financial commitment to creating and maintaining distinct brand loyalty
among users. If EarthWeb fails to provide high-quality online services, or
otherwise fails to promote and maintain its brands, or if the Company incurs
excessive expenses in an attempt to improve its online services, or promote and
maintain its brands, EarthWeb's business, results of operations and financial
condition could be materially and adversely affected.
Dependence on Key Personnel
EarthWeb's performance is substantially dependent on the performance of its
senior management and key technical personnel. In particular, EarthWeb's success
depends substantially on the continued efforts of Jack D. Hidary and William
Gollan. EarthWeb has acquired key person life insurance on only certain members
of its senior management personnel. The loss of the services of any of its
executive officers or other key employees could materially and adversely affect
the Company's business, results of operations and financial condition.
EarthWeb's future success also depends upon its continuing ability to
attract and retain highly qualified technical and managerial personnel.
Competition for these personnel is intense, and the Company's management cannot
provide any assurances that it will be able to attract and retain highly
qualified technical and managerial personnel now or in the future. The inability
to attract and retain the necessary technical and managerial personnel could
have a material and adverse impact on EarthWeb's business, results of operations
and financial condition.
Management of Growth
EarthWeb's recent growth has placed, and is expected to continue to place,
significant strain on its managerial, operational and financial resources. To
manage its future growth, EarthWeb must continue to implement and improve its
operational and financial systems and to expand, train and manage its employees.
EarthWeb also currently intends to establish or acquire additional services,
creating more operational and management complexities. In addition, EarthWeb
expects that its operational and management systems will face
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increased strain as a result of the expansion of its services into new segments
of the IT industry. EarthWeb may not be able to manage effectively the expansion
of its operations; EarthWeb's systems, procedures and controls may not be
adequate to support EarthWeb's operations; and management may not be able to
achieve the rapid execution necessary to fully exploit market opportunities for
the expansion of the Company's online services. The inability to manage growth
effectively could materially and adversely affect EarthWeb's business, results
of operations and financial condition.
Risks Associated with Potential Acquisitions
Since EarthWeb commenced its current business in 1996, its strategy has
included the acquisition of certain assets of Internet-based companies that
provide content and other information enhancing the Company's online services.
EarthWeb expects to continue this strategy in the future. Continued growth will
depend in part on the Company's ability to identify suitable acquisition
candidates and to acquire them on appropriate terms. Any acquisitions will be
accompanied by risks commonly encountered in these transactions, including:
. difficulties with assimilating the technology, operations and personnel
of the acquired companies;
. potential disruption of EarthWeb's ongoing business;
. additional expenses associated with amortization of acquired intangible
assets;
. maintenance of uniform standards, controls, procedures and policies; and
. the potential unknown liabilities associated with acquired businesses.
There can be no assurance that EarthWeb will be able to identify candidates that
it deems suitable for acquisition or that EarthWeb will be able to consummate
desired acquisitions on terms acceptable to it or that it will be successful in
integrating the acquired companies. If realized, any of these risks could
materially and adversely impact EarthWeb's business, results of operations and
financial condition.
Risks Associated with International Operations and Expansion
A key part of EarthWeb's strategy is to develop its online service brands
in international markets. To date, EarthWeb has only limited experience in
developing localized versions of its online services and in marketing and
operating its online services internationally. EarthWeb intends to enter into
relationships with foreign business partners. If the international revenues are
not adequate to offset investments in international activities, EarthWeb's
business, results of operations and financial condition could be materially and
adversely affected. EarthWeb may have difficulty in managing international
operations because of distance, language or cultural differences, and management
cannot give any assurance that EarthWeb or its future foreign business
associates will be able to successfully market and operate its online services
in foreign markets. EarthWeb also believes that in light of substantial
anticipated competition it will have to implement its international business
strategy quickly if it is to obtain a significant share of the market, but there
can be no assurance that EarthWeb will be able to do this. There are certain
other risks inherent in transacting international business, such as:
. unexpected changes in regulatory requirements;
. export restrictions;
. trade barriers;
. difficulties in staffing and managing foreign operations;
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. political instability;
. fluctuations in currency exchange; and
. adverse tax consequences.
Any of these risks could adversely impact the success of EarthWeb's
international operations and, consequently, EarthWeb's overall business, results
of operations and financial condition.
Dependence on Content Providers
EarthWeb's success depends upon its ability to provide a wide range of in-
depth content. The markets for EarthWeb's online services are characterized by
rapidly changing technology, emerging industry standards and the rapidly
changing needs of IT professionals. EarthWeb relies on a number of publishers of
technical materials, its vendors and the users of its online services for the
provision of up-to-date content. No single content provider is material to
EarthWeb's operations. However, the Company cannot give any assurances that
current vendors, the current online audience or the publishers of technical
materials with whom EarthWeb maintains relationships will continue to provide
the Company with a similar flow of content, in terms of quality or quantity, or
that they will do so on the same terms. If the flow of content for EarthWeb's
online services decreases either in terms of quality or quantity (or ceases
completely), EarthWeb's business, results of operations and financial condition
could be materially adversely impacted.
Dependence on Strategic Alliances
EarthWeb relies on strategic alliances with, among others, Sun
Microsystems, IBM, Microsoft, CMP, Ziff-Davis, MacMillan and Netscape to attract
users to its online services and paid advertising to its online services. The
Company cannot assure you that these relationships will continue beyond their
initial terms or that EarthWeb will develop additional third party alliances on
acceptable commercial terms, if at all. No one of these strategic alliances is
individually material to EarthWeb's operations. However, EarthWeb's inability to
maintain current strategic relationships generally or to develop new strategic
relationships could materially and adversely affect EarthWeb's business, results
of operation and financial condition.
Risk of Capacity Constraints and Systems Failures
The performance of EarthWeb's online services is critical to EarthWeb's
reputation, its ability to attract advertisers and its achieving market
acceptance of its online services. Any system failure, including network,
software or hardware failure, that causes interruption or an increase in
response time of EarthWeb's online services could result in decreased usage of
EarthWeb's services. If sustained or repeated any failure could reduce the
attractiveness of EarthWeb's online services to its users, vendors and
advertisers. Increase in the volume of queries conducted through EarthWeb's
online services could also strain the capacity of the software or hardware
employed by EarthWeb, which could lead to slower response time or system
failures, and adversely affect EarthWeb's advertising revenues. EarthWeb also
faces technical challenges associated with the increasing need to direct its
online offerings to specific population bases and certain geographic areas.
It is increasingly important and complex for the Company to manage
advertising within its large, high traffic Internet online service. EarthWeb
relies on both internal and licensed software for managing the placement of its
advertisements and analyzing their effectiveness. To the extent that any
extended failure of EarthWeb's advertising management system results in
incorrect advertising placement, EarthWeb may be exposed to "make good"
obligations to its advertising customers. A "make good" obligation requires a
party to keep providing a service until the promised result is achieved. If a
promised advertisement did not appear in the location and for the time period
agreed, for example, EarthWeb would have to place that advertisement again. By
displacing other advertising inventory, such obligations could defer advertising
revenues and materially and adversely impact
14
<PAGE>
EarthWeb's business, results of operations and financial condition. EarthWeb's
operations are dependent in part upon its ability to protect its operating
systems against physical damage from acts of God, power loss, telecommunications
failures, physical break-ins and similar events. The occurrence of any of these
events could result in interruptions, delays or cessations in service to users
of EarthWeb's online services, which might also materially and adverse impact
EarthWeb's business, results of operations and financial condition.
Online Security Risks
EarthWeb is potentially vulnerable to attempts by unauthorized computer
users, or "hackers," to penetrate EarthWeb's network security. If successful,
hackers could steal proprietary information or cause interruptions in EarthWeb's
online services. EarthWeb may be required to expend significant capital and
resources to protect against the threat of security breaches or to alleviate
problems caused by breaches. In addition, inadvertent transmission of computer
viruses could expose EarthWeb to risk of loss or litigation and possible
liability. Continued concerns over the security of Internet transactions and the
privacy of the users may also inhibit the growth of the Internet generally as a
means of conducting commercial transactions.
Intellectual Property
Legal standards relating to the validity, enforceability and scope of
protection of certain intellectual property rights in Internet-related
industries are uncertain and evolving. Therefore, EarthWeb can offer no
assurances about the future viability or value of any its intellectual property
rights or the rights of other companies in the IT industry. EarthWeb can offer
no assurances that the steps it takes to protect its intellectual property
rights will be adequate or that third parties will not infringe or
misappropriate its proprietary rights. Any infringement or misappropriation
could materially and adversely impact EarthWeb's business, results of operations
and financial condition. Furthermore, EarthWeb's business activities may
infringe upon the proprietary rights of others and other parties may assert
infringement claims against EarthWeb. EarthWeb anticipates that it may be
subject to claims in the ordinary course of its business, including claims that
EarthWeb has infringed the trademarks and other intellectual property rights of
third parties by:
. disseminating content on the Company's online services; or
. providing access to the content of third parties on the Company's online
services.
Any claims and related litigation could subject EarthWeb to significant
liability for damages and could result in invalidation of EarthWeb's proprietary
rights and, even if not meritorious, could be time-consuming and expensive to
defend and could result in the diversion of management time and attention, any
of which could have a material adverse effect on EarthWeb's business, results of
operations and financial condition
EarthWeb regards substantial elements of its online services as proprietary
and attempts to protect them by relying on:
. service mark;
. trade dress;
. copyright;
. trade secret laws; and
. restrictions on disclosure and transferring title.
15
<PAGE>
EarthWeb currently has no patents or patents pending for its online services and
does not anticipate that patents will become a significant part of its
intellectual property in the foreseeable future. EarthWeb enters into
confidentiality agreements with its employees, consultants, vendors and
customers; license agreements with third parties; and generally seeks to control
access to and distribution of its technology, documentation and other
proprietary information. EarthWeb generally registers its service marks in the
United States and internationally and has obtained United States service mark
registrations for "EarthWeb" and the related logo (the "Fang Logo Design"). The
Company has been assigned "Plugin Datamation" and "Datamation" service marks and
has applied for the registration of certain other marks, including
"developer.com" and "developer direct." Effective service mark, copyright and
trade secret protection may not be available in every country in which
EarthWeb's online services are distributed or made available through the
Internet. Management cannot give any assurances that the steps the Company takes
to protect its proprietary rights will be adequate or that third parties will
not infringe or misappropriate EarthWeb's copyrights, service marks, trade dress
and similar proprietary rights.
EarthWeb has licensed in the past, and it may license in the future,
certain elements of its distinctive trademarks, service marks, trade dress,
trade secrets and similar proprietary rights to third parties, in connection
with EarthWeb's online services that may be operated by third parties, for
example. While EarthWeb attempts to ensure that the quality of its several
brands is maintained by licensees, EarthWeb may not be able to prevent licensees
from taking actions that could materially and adversely affect the value of
EarthWeb's proprietary rights or the reputation of its online services, either
of which could materially and adversely affect on EarthWeb's business, results
of operation and financial condition. Also, EarthWeb is aware that third parties
have from time to time copied significant portions of developer.com directory
listings for use in competitive Internet navigational tools and services, and
the Company can give no assurances that the distinctive elements of
developer.com can be protected under copyright law.
Year 2000 Compliance
The Year 2000 issue involves the potential for system and processing
failures of date-related data resulting from computer-controlled systems using
two digits rather than four to define the applicable year. For instance,
computer programs that contain time-sensitive software may recognize a date
using two digits of "00" as the year 1900 rather than the year 2000. This could
result in system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in similar ordinary business activities.
EarthWeb believes that its internal software and hardware systems will
function properly with respect to dates in the year 2000 and thereafter and has
completed its internal IT and non-IT assessment. EarthWeb expects to incur no
significant costs in the future for Year 2000 problems. Nonetheless, there can
be no assurance in this regard until such systems are operational in the Year
2000. EarthWeb has contacted all of its significant suppliers to determine the
extent to which EarthWeb's systems are vulnerable to those parties' failure to
make their own systems Year 2000 compliant. These suppliers have informed
EarthWeb that their systems are Year 2000 compliant. Additionally, any Year 2000
problems experienced by EarthWeb's advertising customers could affect the
placement of advertisements on EarthWeb's online services. If any of EarthWeb's
suppliers or vendors prove not to be Year 2000 compliant, EarthWeb believes that
it could find a replacement vendor or supplier which is Year 2000 compliant
without significant delay or expense. However, if substantially all of
EarthWeb's suppliers and vendors prove not to be Year 2000 compliant and if
EarthWeb experiences difficulties in finding replacement vendors, then
EarthWeb's business could be materially and adversely affected. EarthWeb's
suppliers' and vendors' failures to correct material Year 2000 problems could
result in an interruption in, or a failure of, certain normal business
activities or operations at EarthWeb. Any failures could materially and
adversely affect EarthWeb's results of operations, liquidity and financial
condition. Due to general uncertainty inherent in the Year 2000 problem,
resulting from the uncertainty of the Year 2000 readiness of third-party
suppliers and vendors, EarthWeb cannot determine at this time whether the
consequences of Year 2000 failures will have a material impact on EarthWeb's
results of operations, liquidity or financial condition.
16
<PAGE>
Liability For Information Services
Because online users may download and distribute content that third parties
make available on EarthWeb's services, parties may assert claims against
EarthWeb for defamation, negligence or personal injury, or based on other
theories, due to the nature of this content. Parties have brought, and sometimes
successfully asserted, these types of claims against online service providers in
the past. In addition, EarthWeb could be exposed to liability connected with the
selection of listings accessible through EarthWeb's online services or through
content and materials that may be posted by users in EarthWeb's classifieds,
bulletin board or chat room services. The claims may include assertions that by
providing hypertext links to third-party Internet sites EarthWeb is liable for
wrongful actions by those third parties through those sites. It is also possible
that users could make claims against EarthWeb for losses incurred in reliance on
information provided on EarthWeb's online services. Although EarthWeb carries
general liability insurance, this insurance may not cover potential claims of
this type or may not be adequate to indemnify EarthWeb fully. Liability or legal
defense expenses uncovered by insurance or in excess of insurance coverage could
have a material adverse effect on EarthWeb's business, results of operations and
financial condition.
Government Regulation and Legal Uncertainties
Since few laws or regulations directly apply to access or commerce on the
Internet at this time, EarthWeb is not subject to direct government regulation,
other than regulations applicable to businesses generally. However, federal,
state, local and foreign governmental organizations are considering a number of
legislative and regulatory proposals. These entities may therefore adopt a
number of new laws or regulations connected with:
. privacy;
. taxation;
. infringement;
. pricing;
. quality of products and services; and
. intellectual property ownership.
The Company does not know how existing laws will be applied to the Internet in
areas such as property ownership, copyright, trademark, trade secret, obscenity
and defamation. New laws or the adaptation of existing laws to the Internet may
decrease growth in Internet use, which could decrease the demand for EarthWeb's
online services, increase the cost of EarthWeb doing business or otherwise have
a material adverse impact on the Company's business, results of operations and
financial condition.
Concentration of Stock Ownership
As of December 30, 1998, the present directors, executive officers, greater
than 5% stockholders and their respective affiliates beneficially owned
approximately 74% of EarthWeb's outstanding common stock. As of December 30,
1998, Warburg, Pincus Ventures, L.P. ("Warburg") beneficially owned
approximately 31% of EarthWeb's outstanding common stock. As a result of their
ownership, the directors, executive officers, greater than 5% stockholders
(including Warburg) and their respective affiliates collectively are able to
control all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. This concentration
of ownership may also have the effect of delaying or preventing a change in
control of EarthWeb.
17
<PAGE>
Shares Eligible for Future Sale; Registration Rights
No prediction can be made as to the effect, if any, that future sales of
common stock, or the availability of shares for future sales, will have on the
market price of the common stock prevailing from time to time. As of
December 30, 1998, there were 7,903,761 shares of common stock outstanding. Of
these, the 2,415,000 shares sold in the offering of common stock pursuant to
EarthWeb's Registration Statement on Form S-1, effective November 10, 1998 (the
"Registration Statement"), are freely tradable without restriction or further
registration under the 1933 Act by persons other than "affiliates" of EarthWeb,
as that term is defined in Rule 144 under the 1933 Act ("Rule 144"). Remaining
shares are "restricted securities," as that term is defined under Rule 144, and
may not be publicly resold except in compliance with the registration
requirements of the 1933 Act or pursuant to an exemption from such registration
requirements, including that provided by Rule 144.
EarthWeb, its officers and directors and certain of its stockholders have
agreed that during the period beginning on November 10, 1998 and continuing to
and including the date 180 days after that date they will not:
. offer, sell, contract to sell or otherwise dispose of common stock or any
securities of EarthWeb which are substantially similar to the common
stock, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive common
stock or any such substantially similar securities; or
. enter into any swap, option, future, forward or other agreement that
transfers, in whole or in part, the economic consequences of ownership of
common stock or any securities substantially similar to the common stock
(other than pursuant to employee stock option plans existing on, or upon
the conversion or exchange of convertible or exchangeable securities
outstanding as of November 10, 1998 and the issuance of common stock in
connection with the transactions described in the Registration
Statement), without the prior written consent of J.P. Morgan Securities
Inc.
As of December 30, 1998, an aggregate of 2,444,796 shares of common stock
(including 2,481 shares previously issued upon exercise of vested stock options)
were eligible for sale in the public market, subject to Rule 144. Additionally,
following the 180 day period referred to above, 5,798,798 shares of common stock
may be sold in the public market through the exercise of demand and piggyback
registration rights held by certain of EarthWeb's current stockholders.
As of December 30, 1998, there were outstanding options to purchase 499,212
shares of common stock, of which 107,793 were exercisable under EarthWeb's 1996
Amended and Restated Stock Plan. Future sales of common stock in the public
market, the expectation of sales or the availability of shares for sale, could
adversely affect the market price of the common stock.
No Prior Trading Market; Potential Volatility of Stock Price
There can be no assurance that an active trading market for the common
stock will be maintained. Further, he market price of the common stock may be
highly volatile. Many factors could affect the market price for the common
stock:
. variations in EarthWeb's financial results;
. actual earnings;
. earnings estimates by analysts;
. fluctuations in the stock prices of competitors;
18
<PAGE>
. loss of key management;
. adverse regulatory actions or decisions;
. announcements of extraordinary events such as litigation or acquisitions
or changes in pricing policies by EarthWeb or its competitors;
. changes in the market for EarthWeb's online services; or
. general economic, political and market conditions.
The common stock is quoted on Nasdaq, which has experienced extreme price
and volume trading volatility in recent years. This volatility has had a
substantial effect on the market prices of companies for reasons frequently
unrelated or disproportionate to the operating performance of those companies.
These broad market fluctuations may adversely affect the market price of the
common stock.
Absence of Dividends
EarthWeb anticipates that earnings will be retained for the development of
EarthWeb's business and that no cash dividends will be declared on the common
stock in the foreseeable future.
Anti-Takeover Provisions
Certain provisions of the Delaware General Corporation Law (the "DGCL") and
EarthWeb's Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws may delay, discourage or prevent a change in control of
EarthWeb unless such takeover or change in control is approved by EarthWeb's
Board of Directors. Such provisions also may render the removal of directors and
management more difficult, may discourage bids for the common stock at a premium
over the market price and may adversely affect the market price and the voting
and other rights of the holders of common stock. EarthWeb's Amended and Restated
By-Laws place certain restrictions on who may call a special meeting of
stockholders, and all amendments to the Amended and Restated By-Laws must be
approved by either the holders of 66.66% of the outstanding capital stock of
EarthWeb entitled to vote in the elections to the Board of Directors or by a
majority of the Board of Directors.
In addition to the common stock, EarthWeb's Amended and Restated
Certificate of Incorporation authorizes the issuance of up to 2,000,000 shares
of preferred stock without designation. The Board of Directors will have the
authority without action by EarthWeb's stockholders to fix the rights,
privileges and preferences of, and to issue shares of, this preferred stock,
which may have the effect of delaying, deterring or preventing a change in
control of EarthWeb.
Further, EarthWeb's Amended and Restated Certificate of Incorporation
provides that the Board of Directors will be divided into three classes of
directors serving staggered three-year terms. This classification provision
could have the effect of discouraging a third party from attempting to gain
control of EarthWeb, and it may only be amended by holders of 66.66% of the
outstanding capital stock of EarthWeb entitled to vote in the elections to the
Board of Directors.
19
<PAGE>
USE OF PROCEEDS
EarthWeb will not receive any of the proceeds from the sale of shares of
common stock by the Selling Stockholder.
SELLING STOCKHOLDER
The Shares of the Company to which this Reoffer Prospectus relates are
being registered for reoffers and resales by the Selling Stockholder, who
acquired the Shares pursuant to a compensatory benefit plan with EarthWeb for
consulting services he provided to EarthWeb. The Selling Stockholder may resell
all, a portion or none of such Shares from time to time.
The table below sets forth with respect to the Selling Stockholder, based
upon information available to the Company as of December 30, 1998, the number of
Shares owned, the number of Shares registered by this Reoffer Prospectus and the
number and percent of outstanding Shares that will be owned after the sale of
the registered Shares assuming the sale of all of the registered Shares.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Number of Shares
Selling Number of Shares Registered by Number of Shares % of Shares Owned
Stockholder Owned Before Sale Prospectus Owned after Sale after Sale
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Geoffrey Smith 2,482 2,482 0 0
- ------------------------------------------------------------------------------------------------------
</TABLE>
PLAN OF DISTRIBUTION
The Selling Stockholder may sell the Shares for value from time to time
under this Reoffer Prospectus in one or more transactions on Nasdaq, in a
negotiated transaction or in a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices otherwise negotiated. The Selling Stockholder may
effect such transactions by selling the Shares to or through brokers-dealers,
and such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholder and/or the
purchasers of the Shares for whom such broker-dealers may act as agent (which
compensation may be less than or in excess of customary commissions).
The Selling Stockholder and any broker-dealers that participate in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of Section 2(11) of the 1933 Act, and any commissions received by them and any
profit on the resale of the Shares sold by them may be deemed be underwriting
discounts and commissions under the 1933 Act. All selling and other expenses
incurred by the Selling Stockholder will be borne by the Selling Stockholder.
In addition to any Shares sold hereunder, the Selling Stockholder may, at
the same time, sell any shares of common stock, including the Shares, owned by
him or her in compliance with all of the requirements of Rule 144, regardless of
whether such shares are covered by this Reoffer Prospectus.
There is no assurance that the Selling Stockholder will sell all or any
portion of the Shares offered.
The Company will pay all expenses in connection with this offering and will
not receive any proceeds from sales of any Shares by the Selling Stockholder.
20
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for the
Company by Morrison & Foerster LLP, New York, New York.
EXPERTS
The balance sheets as of December 31, 1997 and 1996 and the statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997 have been incorporated by reference in
this Registration Statement in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
accounting and auditing.
21
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company's prospectus dated November 10, 1998, filed pursuant to Rule
424(b) of the 1933 Act, is incorporated herein by reference. In addition, all
documents filed or subsequently filed by the Company under Sections 13(a),
13(c), 14 and 15(d) of the 1934 Act, prior to the filing of a post-effective
amendment which indicates that all securities described herein have been sold or
which deregisters all securities then remaining unsold, are incorporated by
reference.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 ("Section 145") of the General Corporation Law of the State
of Delaware (the "DGCL") provides that directors and officers of Delaware
corporations may, under certain circumstances, be indemnified against expenses
(including attorneys' fees) and other liabilities actually and reasonably
incurred by them as a result of any suit brought against them in their capacity
as a director or officer, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful. Section 145 also
provides that directors and officers may also be indemnified against expenses
(including attorneys' fees) incurred by them in connection with a derivative
suit if they acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
The Company has implemented such indemnification provisions in its Amended
and Restated Certificate of Incorporation which provides that officers and
directors shall be entitled to be indemnified by the Company to the fullest
extent permitted by law against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any action,
suit or proceeding by reason of the fact that he or she is or was an officer or
director of the Company.
The above discussion of the Company's Amended and Restated Certificate of
Incorporation and Sections 102(b)(7) and 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Amended and Restated
Certificate of Incorporation and statutes.
For information regarding the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 9 below.
Item 7. Exemption from Registration Claimed.
With respect to the restricted securities reoffered or resold pursuant to
this registration statement, the Company claimed an exemption from registration
under the 1933 Act pursuant to Rule 701. The Company issued the securities to
the Selling Stockholder pursuant to a compensatory benefit plan with EarthWeb
for consulting
22
<PAGE>
services the Selling Stockholder provided to EarthWeb. These consulting services
were not in connection with the offer and sale of securities in a capital-
raising transaction.
Item 8. Exhibits.
EXHIBIT NO. Description
- ----------- -------------------------------------------------------------------
4.1 Amended and Restated Certificate of Incorporation
4.2 Amended and Restated By-laws
4.3 1998 Stock Incentive Plan (incorporated by reference to Exhibit
10.9 to the Registrant's Registration Statement filed on Form S-1
(Commission File No. 333-60837) which became effective on November
10, 1998)
4.4 1998 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.10 to the Registrant's Registration Statement filed on
Form S-1 (Commission File No. 333-60837) which became effective on
November 10, 1998)
4.5 Amendment No. 1 to 1998 Stock Incentive Plan dated as of November
17, 1998
4.6 Letter Agreement between EarthWeb Inc. and Geoffrey W. Smith Re:
Compensatory Benefit Plan dated as of April 29, 1998
5 Opinion of Morrison & Foerster LLP
23.1 Consent of Morrison & Foerster LLP (set forth in Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a) (3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided,
however, that paragraphs (a) (1)(i) and (a) (1) (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
23
<PAGE>
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other that the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to be believe it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on
January 5, 1999.
EarthWeb Inc.
By: /s/ JACK D. HIDARY
_____________________________________
JACK D. HIDARY,
President and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES STATED BELOW.
NAME AND SIGNATURES TITLE DATE
------------------- -------------------------- ------------------
/s/ JACK D. HIDARY President, Chief January 5, 1999
_____________________ Executive
JACK D. HIDARY Officer and Director
/s/ MURRAY HIDARY Executive Vice President, January 5, 1999
_____________________ Secretary, Treasurer and
MURRAY HIDARY Director
/s/ NOVA SPIVACK Director January 5, 1999
_____________________
NOVA SPIVACK
/s/ HENRY KRESSEL Director January 5, 1999
_____________________
HENRY KRESSEL
/s/ CARY DAVIS Director January 5, 1999
_____________________
CARY DAVIS
/s/ IRENE MATH Vice President, Finance January 5, 1999
_____________________ (Principal Financial and
IRENE MATH Accounting Officer)
25
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------
4.1 Amended and Restated Certificate of Incorporation
4.2 Amended and Restated By-laws
4.3 1998 Stock Incentive Plan (incorporated by reference to Exhibit
10.9 to the Registrant's Registration Statement filed on Form S-1
(Commission File No. 333-60837) which became effective on November
10, 1998)
4.4 1998 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.10 to the Registrant's Registration Statement filed on
Form S-1 (Commission File No. 333-60837) which became effective on
November 10, 1998)
4.5 Amendment No. 1 to 1998 Stock Incentive Plan dated as of November
17, 1998
4.6 Letter Agreement between EarthWeb Inc. and Geoffrey W. Smith Re:
Compensatory Benefit Plan dated as of April 29, 1998
5 Opinion of Morrison & Foerster LLP
23.1 Consent of Morrison & Foerster LLP (set forth in Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
26
<PAGE>
EXHIBIT 4.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EARTHWEB INC.
This Amended and Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Certificate of Incorporation of said
corporation, originally filed on June 17, 1997, in their entirety and has been
duly adopted in accordance with the provisions of Section 242 and 245 of the
General Corporation Law of the State of Delaware (the "DGCL") by the written
consent of the holders of a majority of each class of the outstanding stock of
the Corporation in accordance with the provisions of Section 228 of the DGCL.
ARTICLE I
NAME
----
The name of the corporation is EarthWeb Inc. (the "Company" or the
-------
"Corporation").
-----------
ARTICLE II
PURPOSE
-------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE III
INCORPORATOR
------------
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Jack D. Hidary. c/o EarthWeb Inc.
3 Park Avenue, 38th Floor
New York, NY 10016
<PAGE>
ARTICLE IV
BOARD OF DIRECTORS
------------------
The number of directors of the Corporation shall be such as from time to
time shall be fixed in the manner provided in the By-Laws of the Corporation.
The election of directors of the Corporation need not be by ballot unless the
By-Laws so require.
ARTICLE V
REGISTERED AGENT
----------------
The address of the registered office of the Corporation in the State of
Delaware is 9 East Loockerman Street, City of Dover, County of Kent, 19901. The
name of the registered agent of the Corporation at such address is National
Registered Agents, Inc.
ARTICLE VI
CAPITAL STOCK
-------------
6.1. Authorized Shares.
-----------------
(a) The total number of shares of capital stock that the Company is
authorized to issue is 26,500,000 shares, consisting of 21,750,000 shares of
common stock, $0.01 par value per share (the "Common Stock") and 4,750,000
------------
shares of Preferred Stock, $0.01 par value per share (the "Preferred Stock").
---------------
The shares of Preferred Stock are hereby designated as follows:
(i) 1,000,000 shares are designated as Series A Convertible
Preferred Stock (the "Series A Preferred Stock");
------------------------
(ii) 600,000 shares are designated as Series B Convertible
Preferred Stock (the "Series B Preferred Stock");
------------------------
(iii) 1,150,000 shares are designated as Series C Convertible
Preferred Stock (the "Series C Preferred Stock"); and
------------------------
(iv) 2,000,000 shares are undesignated shares of Preferred
Stock.
;provided, that upon the conversion of any number of shares of
Series A Preferred Stock or Series B Preferred Stock into shares of such
Common Stock, such number of shares of Series A Preferred Stock or Series B
Preferred Stock, as the case may be, and all the shares of Series C
Preferred Stock, shall cease to be authorized.
(b) Any of the 2,000,000 undesignated shares of Preferred Stock
("Undesignated Preferred Stock") may be issued from time to time in one or more
series. Subject to the limitations and restrictions set forth in this
paragraph, the Board of Directors or a
2
<PAGE>
Committee of the Board of Directors, to the extent permitted by law and the
Bylaws of the Corporation or a resolution of the Board of Directors, by
resolution or resolutions, is authorized to create or provide for any such
series, and to fix the designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including, without limitation, the authority to fix or
alter the dividend rights, dividend rates, conversion rights, exchange rights,
voting rights, rights and terms of redemption (including sinking and purchase
fund provisions), the redemption price or prices, the dissolution preferences
and the rights in respect to any distribution of assets of any wholly unissued
series of Undesignated Preferred Stock and the number of shares constituting any
such series, and the designation thereof, or any of them and to increase or
decrease the number of shares of any series so created, subsequent to the issue
of that series but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
(c) The designations, powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions thereof, with respect to the Preferred Stock which
is not Undesignated Preferred Stock and the Common Stock are as set forth in
this Article VI.
----------
6.2. Definitions.
-----------
For purposes of this Amended and Restated Certificate of Incorporation of
the Company, the following terms shall have the meanings given to them below:
"Accruing Dividends" has the meaning given to it in Section 6.3(a) of
--------------
this Article VI.
----------
"Affiliate" means, with respect to any specified Person, (1) any other
---------
Person who, directly or indirectly, owns or controls, is under common ownership
or control with, or is owned or controlled by, such specified Person, (2) any
other Person who is a director, officer or partner, or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities, of the specified Person or a Person described in clause (1)
----------
above, (3) any other Person of whom the specified Person is a director, officer
or partner or is, directly or indirectly, the beneficial owner of ten percent
(10%) or more of any class of equity securities, (4) any other Person in whom
the specified Person has a substantial beneficial interest or as to whom the
specified Person serves as trustee or in a similar capacity, or (5) any relative
or spouse of the specified Person or any of the foregoing Persons, any relative
of such spouse or any spouse of any such relative. As used in this definition,
the term "control" means the possession, directly or indirectly, of the power to
-------
direct the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Arbitration Procedure" means the following procedure to determine the
---------------------
Market Value of a security (the "valuation amount"). The valuation amount shall
----------------
be determined by an investment banking firm of national recognition, which firm
shall be reasonably acceptable to the Company and the Requisite Convertible
Preferred Holders. If the Company and the Requisite Convertible Preferred
Holders are unable to agree upon an acceptable investment banking firm within
ten (10) days after the date on which either the Company or the Requisite
Convertible Preferred
3
<PAGE>
Holders proposed that one be selected, the investment banking firm will be
selected by an arbitrator located in the City of New York, New York, selected by
the American Arbitration Association (or if such organization ceases to exist,
the arbitrator shall be chosen by a court of competent jurisdiction). The
arbitrator shall select the investment banking firm (within ten (10) days of his
appointment) from a list, jointly prepared by the Company and the Requisite
Convertible Preferred Holders, of not more than six investment banking firms of
national standing in the United States, of which no more than three may be named
by the Company and no more than three may be named by the Requisite Convertible
Preferred Holders. The arbitrator may consider, within the ten-day period
allotted, arguments from the Company and the Requisite Convertible Preferred
Holders regarding which investment banking firm to choose, but the selection by
the arbitrator shall be made in its sole discretion from the list of six. The
determination by such investment banking firm of the valuation amount shall be
final and binding upon the Company and the Convertible Preferred Holders. The
Company shall pay one-half the fees and expenses of the investment banking firms
and arbitrators (if any) used to determine the valuation amount, and the
Convertible Preferred Holders shall, ratably based on the number of shares of
Common Stock and Common Stock Equivalents held by each of them, pay the other
half of such fees and expenses. If required by any such investment banking firm
or arbitrator, the Company shall execute a retainer and engagement letter
containing reasonable terms and conditions, including customary provisions
concerning the rights of indemnification and contribution by the Company in
favor of such investment banking firm or arbitrator and its officers, directors,
partners employees, agents and Affiliates (other than for claims resulting from
such firm's or arbitrator's gross negligence, bad faith, or willful misconduct),
and each of the Company and the Convertible Preferred Holders shall, if
reasonably requested by any such investment banking firm or arbitrator, waive
all claims each of them may have against such firm or arbitrator (other than any
such claim arising out of such firm's or arbitrator's gross negligence, bad
faith or willful misconduct).
"Board" means the board of directors of the Company.
-----
"Common Stock" has the meaning set forth in Section 6.1 (a) of this Article
------------ --------------- -------
VI.
- --
"Common Stock Equivalent" means the right to acquire, whether or not
-----------------------
immediately exercisable, one share of Common Stock, whether evidenced by an
option, warrant, convertible security or other instrument or agreement.
"Company" has the meaning set forth in Article I.
------- ----------
"Conversion Date" has the meaning set forth in Section 6.6(b) of this
--------------- --------------
Article VI.
- ----------
"Conversion Price" has the meaning set forth in Section 6.6(a) of this
---------------- --------------
Article VI.
- ----------
"Convertible Preferred Stock" means, collectively, the Series A Preferred
---------------------------
Stock, the Series B Preferred Stock and the Series C Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor federal statute, and the rules and regulations of the Securities
and Exchange Commission thereunder, all as the same shall be in effect from time
to time.
4
<PAGE>
"Excluded Securities" means options (and the shares of Common Stock which
-------------------
may be issued upon the exercise thereof) granted under the Stock Plan to
purchase up to the maximum amount of 331,722 shares of Common Stock (adjusted to
reflect stock splits, stock dividends, stock combinations, recapitalizations and
like occurrences with respect to the Common Stock).
"Fully Diluted Basis" means a calculation of the number of shares of Common
-------------------
Stock outstanding which includes, in addition to the shares of Common Stock then
issued and outstanding, the aggregate number of shares of Common Stock then
issuable upon the exercise, conversion or exchange of all options (including all
options issuable under the Stock Plan), warrants, preferred stock and any other
security of the Company exercisable, convertible or exchangeable for or into
Common Stock.
"Governmental Authority" shall mean any domestic or foreign government or
----------------------
political subdivision thereof, whether on a federal, state or local level and
whether executive, legislative or judicial in nature, including any agency,
authority, board, bureau, commission, court, department or other instrumentality
thereof.
"Junior Stock" has the meaning given to it in Section 6.4(a) of this
------------ --------------
Article VI.
- ----------
"Liquidation" means any voluntary or involuntary liquidation, dissolution
------------
or winding up of the Company.
"Liquidation Preference" means, with respect to any share of a Series of
----------------------
Convertible Preferred Stock, the price paid for such share of Convertible
Preferred Stock when it was originally issued (subject to proportionate
adjustment in the event of any stock dividend or distribution paid in shares of
such series of Convertible Preferred Stock or stock split, reverse stock split
or combination or other similar pro rata recapitalization event affecting such
Series of Convertible Preferred Stock), plus an amount equal to all accrued and
unpaid dividends (whether or not declared) on such share, if any.
"Liquidity Event" means any Liquidation or Sale of the Company (other than
---------------
a Qualified Sale of the Company).
"Mandatory Conversion Event" means the first to occur of either:
--------------------------
(i) a Qualified Public Offering; or
(ii) a Qualified Sale of the Company.
"Mandatory Conversion Notice" has the meaning given to it in Section 6.7(b)
--------------------------- --------------
of this Article VI.
----------
"Market Value" means as to any security, the average of the closing prices
------------
of such security's sales on the principal national securities exchange on which
such security may at the time be listed, or, if there have been no sales on such
exchange on any day, the average of the highest bid and lowest asked prices on
such exchange at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such Security
5
<PAGE>
is not quoted in the NASDAQ System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated ("NOBI"), or any similar
----
or successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which such "Market Value" is being determined and
------------
the 20 consecutive business days prior to such day, or, if there have been no
bid or asked prices in the domestic over-the-counter market reported by NOBI,
the fair market value thereof determined in good faith jointly by the Company
and the Requisite Convertible Preferred Holders; provided, however, that if the
-------- -------
Company and the Requisite Convertible Preferred Holders are not able to agree
within a reasonable period of time (not to exceed ten (10) days) what amount
constitutes the Market Value thereof, then the Market Value thereof shall be
determined pursuant to the Arbitration Procedure.
"Optional Conversion Notice" has the meaning set forth in Section 6.6(b) of
-------------------------- --------------
this Article VI.
----------
"Optional Conversion Rights" has the meaning given to it in Section 6.6 of
-------------------------- -----------
this Article VI.
-----------
"Original Cost" means, with respect to any share of any Series of
-------------
Convertible Preferred Stock, as of any particular date, the amount originally
paid for such share when it was originally issued. In the event of any change
(by way of any stock dividend or distribution payable in shares of such Series
of Convertible Preferred Stock, or stock split, reverse stock split or
combination or other pro rata recapitalization event affecting such Series of
--- ----
Convertible Preferred Stock) in the number or kind of shares of such Series of
Convertible Preferred Stock, the Original Cost of the shares of such Series of
Convertible Preferred Stock immediately prior to such change shall be ratably
adjusted among such shares of such Series of Convertible Preferred Stock
immediately after such change.
"Original Issuance Date" means, with respect to a share of any Series of
----------------------
Convertible Preferred Stock, the date on which such share was first issued.
"Person" shall be construed as broadly as possible and shall include an
------
individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a Governmental Authority.
"Preferred Stock" has the meaning set forth in Section 6.1(a) of this
--------------- --------------
Article VI.
- ----------
"Qualified Public Offering" means the consummation of a firm commitment,
-------------------------
underwritten public offering of Common Stock registered under the Securities
Act, other than an offering in connection with an acquisition or an employee
benefit plan, that results in proceeds to the Company (net of any and all
underwriters) discounts and commissions) of at least $15,000,000 at a price per
share of Common Stock equal to at least the minimum price per share of Common
Stock determined by the following formula:
Where z = Minimum price per share of Common Stock;
6
<PAGE>
w = The Original Cost of a share of Series A
Preferred Stock;
x = The Original Cost of a share of Series B Preferred
Stock;
y = The Original Cost of the initial share of Series C
Preferred Stock issued by the Company;
a = The fraction, the numerator of which is the maximum
number of Common Stock Equivalents represented by the
outstanding shares of Series A Preferred Stock and
the denominator of which is the maximum number of
Common Stock Equivalents represented by all
outstanding shares of Convertible Preferred Stock, in
each case immediately before the consummation of such
underwritten public offering;
b = The fraction, the numerator of which is the maximum
number of Common Stock Equivalents represented by the
outstanding shares of Series B Preferred Stock and
the denominator of which is the maximum number of
Common Stock Equivalents represented by all
outstanding shares of Convertible Preferred Stock, in
each case immediately before the consummation of such
underwritten public offering; and
c = The fraction, the numerator of which is the maximum
number of Common Stock Equivalents represented by the
outstanding shares of Series C Preferred Stock and
the denominator of which is the maximum number of
Common Stock Equivalents represented by all
outstanding shares of Convertible Preferred Stock, in
each case immediately before the consummation of such
underwritten public offering;
Then z = w(a) + 3(x)(b) + 3(y)(c).
"Qualified Sale of the Company" means, with respect to any Series of
-----------------------------
Convertible Preferred Stock, the closing of a Sale of the Company that results
in the holders of the outstanding shares of such Series of Convertible Preferred
Stock receiving on or with respect to, or in exchange for, each share of such
Series of Convertible Preferred Stock (after giving effect to the conversion of
such share), cash equivalents or securities registered under the Securities Act
and the Exchange Act with an aggregate Market Value equal to at least the
product of (x) the Original Cost for a share of such Series of Convertible
Preferred Stock times (y) either (A) one
7
<PAGE>
(1), in the case of a share of Series A Preferred Stock, or (B) three (3), in
the case of a share of Series B Preferred Stock or Series C Preferred Stock.
"Requisite Convertible Preferred Holders" means the holders of a majority
---------------------------------------
of the outstanding shares of Convertible Preferred Stock of all Series at the
time in question.
"Requisite Series A Preferred Holders" means the holders of a majority of
------------------------------------
the outstanding shares of the Series A Preferred Stock at the time in question.
"Requisite Series B Preferred Holders" means the holders of a majority of
------------------------------------
the outstanding shares of the Series B Preferred Stock at the time in question.
"Requisite Series C Preferred Holders" means the holders of a majority of
------------------------------------
the outstanding shares of the Series C Preferred Stock at the time in question.
"Sale of the Company" means any sale of the Company to one or more Persons
-------------------
who or which are not Affiliates of the Company in a single transaction or Series
of related transactions, whether by way of (i) the sale or other disposition of
all or substantially all of the assets of the Company, (ii) the merger or
consolidation of the Company with or into another Person or (iii) the sale or
other transfer of a majority of the capital stock of the Company.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect from time to
time.
"Series A Preferred Stock" has the meaning set forth in Section 6.1(a)(i)
------------------------ -----------------
of this Article VI.
----------
"Series B Preferred Stock" has the meaning set forth in Section 6.1(a)(ii)
------------------------ ------------------
of this Article VI.
----------
"Series C Preferred Stock" has the meaning set forth in Section 6.1(a)(iii)
------------------------ -------------------
of this Article VI.
----------
"Stock Plan" means the Company's 1996 Stock Plan as in effect on the date
----------
hereof.
6.3. Dividends.
---------
(a) The holders of the Convertible Preferred Stock shall be entitled
to receive, out of funds legally available therefor, cumulative dividends
at the following rates: (i) 7% per share per annum, compounded annually, on
the Original Cost of each share of Convertible Preferred Stock, until
October 24, 2003, (ii) commencing on October 24, 2003, 9% per annum,
compounded annually, on the Original Cost of each share of Convertible
Preferred Stock, until October 24, 2004, and (iii) commencing on October
24, 2004, 11% per annum, compounded annually, on the Original Cost of each
share of Convertible Preferred Stock (collectively, the "Accruing
--------
Dividends"), payable in preference and priority to any payment of any cash
---------
dividend on Common Stock or any other shares of capital stock of the
Company other than the Convertible Preferred Stock or other class or series
of stock ranking on par with, or senior to the Convertible
8
<PAGE>
Preferred Stock in respect of dividends, when and as declared by the Board;
provided, however, that dividends on shares of Convertible Preferred
------- ------
Stock will cease to accrue upon the conversion of such shares of
Convertible Preferred Stock to Common Stock. The Accruing Dividends shall
accrue from day to day, whether or not earned or declared, but shall be
payable if and only (i) if, as and when declared by the Board and (ii) upon
a Liquidity Event that does not constitute a Mandatory Conversion Event.
(b) So long as any shares of a Series of Convertible Preferred
Stock are outstanding, the Company shall not pay or declare or set apart
for payment any dividend or make any other distribution on or with respect
to any shares of Common Stock or any other shares of capital stock of the
Company ranking on a parity with or junior to such Series of Convertible
Preferred Stock with respect to dividends or redeem, repurchase or
otherwise acquire any such shares unless the Company has paid, or at the
time pays, all accrued but unpaid dividends on such series of Convertible
Preferred Stock pursuant to this Section 6.3.
-----------
(c) No dividend or distribution shall be paid to the holders of a
series of Convertible Preferred Stock pursuant to this Section 6.3 in any
-----------
form of consideration other than cash unless the Requisite Series A
Preferred Holders, the Requisite Series B Preferred Holders or the
Requisite Series C Preferred Holders, as applicable, at the time of the
distribution, approve such distribution (including the valuation of the
consideration being distributed).
(d) Except as otherwise provided herein, if at any time the
Company pays less than the total amount of dividends then accrued with
respect to the Convertible Preferred Stock, such payment shall be
distributed ratably among the holders of the Convertible Preferred Stock
based upon the aggregate amount of accrued and unpaid dividends on the
shares of Convertible Preferred Stock of each series then held by each such
holder.
(e) Whenever the Company shall declare or pay any dividends on
its Common Stock, each holder of a share of Convertible Preferred Stock
shall be entitled to participate in such dividends on a ratable basis based
upon the Common Stock Equivalents represented by such share of Convertible
Preferred Stock, but only if the amount of such dividends would be greater
than any dividends then payable pursuant to Section 6.3(a). Dividends
-------------
payable pursuant to this Section 6.3(e) on any share of Convertible
--------------
Preferred Stock shall be reduced by any dividends paid pursuant to Section
-------
6.3(a) on such share.
------
6.4. Liquidity Event.
---------------
(a) Upon the occurrence of a Liquidity Event, the holders of
shares of a series of Convertible Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for
distribution to its shareholders, after and subject to the payment in full
of all amounts required to be distributed to the holders of any other class
or series of stock of the Company ranking on liquidation prior and in
preference to such series of Convertible Preferred Stock, but before any
payment shall be made to the holders of Common Stock or any other class or
series of stock ranking on liquidation junior to such series of Convertible
Preferred Stock (such Common Stock and other stock being collectively
referred to as "Junior Stock") by reason of their ownership thereof, an
-------------
amount per share equal to the Liquidation Preference of such share. If upon
any Liquidity Event the remaining assets of the Company available for
distribution
9
<PAGE>
to its shareholders shall be insufficient to pay the holders of shares of
Convertible Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Convertible Preferred Stock and any
class or series of stock ranking on liquidation on a parity with the
Convertible Preferred Stock shall share ratably in any distribution of the
remaining assets and funds of the Company in proportion to the respective
amounts which would otherwise be payable in respect of the shares held by
them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(b) After the distributions described in Section 6.3 above have
-----------
been paid in full, upon a Liquidity Event, all of the remaining assets
and funds of the Company available for distribution to its shareholders shall be
distributed ratably among the holders of the Common Stock.
(c) Anything contained in this Section 6.4 to the contrary notwithstanding,
-----------
each holder of shares of a Series of Convertible Preferred Stock shall have
the right to convert all or any part of the shares of such series of
Convertible Preferred Stock held by such holder into shares of Common Stock
pursuant to Section 6.6 in lieu of receiving the Liquidation Preference in
-----------
connection with any Liquidity Event.
6.5. Voting.
------
(a) Each holder of outstanding shares of a series of Convertible
Preferred Stock shall be entitled to the number of votes equal to the number of
whole shares of Common Stock into which the shares of such series of Convertible
Preferred Stock held by such holder are convertible (as adjusted from time to
time pursuant to Section 6.6), at each meeting of such shareholders of
-----------
the Company (and written actions of shareholders in lieu of meetings) with
respect to any and all matters presented to the shareholders of the Company for
their action or consideration. Except as provided by law, by the provisions of
Section 6.5(b) or by the provisions establishing any other
- --------------
series of Preferred Stock, holders of each series of Convertible Preferred Stock
holders of any other outstanding series of Preferred Stock shall vote together
with the holders of Common Stock as a single class.
(b) The Company shall not amend, alter or repeal any of the
preferences, rights, powers or other terms, or issue any shares, of a series of
Convertible Preferred Stock so as to affect adversely such series of Convertible
Preferred Stock or the outstanding shares thereof, without the written consent
or affirmative vote of the Requisite Series A Preferred Holders, the Requisite
Series B Preferred Holders or the Requisite Series C Preferred Holders, as the
case may be, given in writing or by vote at a meeting, consenting or voting (as
the case may be) separately as a class. For this purpose, without limiting the
generality of the foregoing, the authorization or issuance of any shares of any
series of Preferred Stock, or the reclassification of any series of stock which
is outstanding into any other series of stock, in each case, which is on a
parity with or has preference or priority over a series of Convertible Preferred
Stock as to the right to receive either dividends or amounts distributable upon
a Liquidity Event shall be deemed to affect adversely such series of Convertible
Preferred Stock and the outstanding shares thereof.
6.6. Optional Conversion.
-------------------
10
<PAGE>
The holders of each series of Convertible Preferred Stock shall have
optional conversion rights (the "Optional Conversion Rights") as follows:
--------------------------
(a) Right to Convert. Subject to and in compliance with the applicable
----------------
provisions of this Section 6.6, each holder of shares of a series of
-----------
Convertible Preferred Stock shall have the right, at such holder's option, at
any time and from time to time to convert any such share into that number of
fully paid and nonassessable shares of Common Stock equal to the quotient
obtained by dividing (x) the Original Cost of such share of such series of
Convertible Preferred Stock by (y) the applicable Conversion Price, as last
adjusted and then in effect, by surrender of the certificate representing such
share to be converted. The conversion price per share at which shares of Common
Stock shall be issuable upon conversion of shares of Convertible Preferred Stock
(the "Conversion Price") shall initially be
----------------
equal to the Original Cost of such share of Convertible Preferred Stock, and
shall be subject to adjustment from time to time as set forth in Section 6.6(i)
--------------
below. Upon any conversion pursuant to the provisions of this Section 6.6(a), no
--------------
adjustment to the Conversion Price shall be made for any accrued and unpaid
dividends on the Convertible Preferred Stock surrendered for conversion or on
the Common Stock delivered upon conversion. The holder, upon electing to make a
conversion, waives his right to such accrued but unpaid dividends.
(b) Mechanics. The holder of any shares of Convertible Preferred Stock
---------
exercise such holder's conversion right for such shares pursuant to Section
-------
6.6(a) by delivering to the Company the certificate or certificates for the
- ------
shares to be converted, duly assigned in blank or duly endorsed to the Company
(if required by it), accompanied by written notice (the "Optional
--------
Conversion Notice") stating that the holder elects to convert such shares
- -----------------
and stating the name or names (with address) in which the certificate or
certificates for the shares of Common Stock are to be issued. Conversion shall
be deemed to have been effected on the date when such delivery is made (the
"Conversion Date"). Upon conversion, any and all accrued but unpaid dividends on
---------------
the shares so converted shall cease to exist and the holder shall have no right
thereto. As promptly as practicable thereafter, the Company shall issue and
deliver to or upon the written order of such holder, to the place designated by
such holder, a certificate or certificates for the number of full shares of
Common Stock to which such holder is entitled. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a shareholder of record on the applicable Conversion Date unless the
transfer books of the Company are closed on that date, in which event such
person shall be deemed to have become a shareholder of record on the next
succeeding date on which the transfer books are open, but the Conversion Price
shall be that in effect on the Conversion Date. Upon conversion of only a
portion of the number of shares covered by a certificate representing shares of
Convertible Preferred Stock surrendered for conversion, the Company shall issue
and deliver to or upon the written order of the holder of the certificate so
surrendered for conversion, at the expense of the Company, a new certificate
covering the number of shares of Convertible Preferred Stock representing the
unconverted portion of the certificate so surrendered.
(c) RESERVED.
(d) Taxes Incident to Conversion. The Company shall pay any and all
----------------------------
issue taxes and other similar taxes that may be payable by the Company on its
issue or delivery of shares of Common Stock on conversion of any shares of
Convertible Preferred Stock. The
11
<PAGE>
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of, or any exchange, conversion
or recapitalization of, shares of Common Stock in a name other than that in
which the Convertible Preferred Stock so converted was registered. No such issue
or delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
(e) Sufficient Reserves of Stock. The Company shall at all times reserve
----------------------------
and keep available, out of its authorized but unissued Common Stock, solely for
the purpose of effecting the conversion of the Convertible Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion of all
shares of Convertible Preferred Stock from time to time outstanding.
(f) Registration of Reserves. If any shares of Common Stock to be
------------------------
reserved for the purpose of conversion of shares of Convertible Preferred Stock
require registration, listing with, or approval of, any governmental authority,
stock exchange or other regulatory body under any federal or state law or
regulation or otherwise, before such shares may be validly issued or delivered
upon conversion to the holder immediately prior to conversion, the Company will
in good faith and as expeditiously as possible endeavor to secure such
registration, listing or approval.
(g) Valid Issue for Conversion. All shares of Common Stock which may be
--------------------------
issued upon conversion of the shares of Convertible Preferred Stock will, upon
issuance by the Company, be validly issued, fully paid, (to the extent such
Convertible Preferred Stock was fully paid) nonassessable, and free from all
taxes, liens and charges with respect to their issuance due to any act of the
Company.
(h) Cancellation of Convertible Preferred Stock on Conversion. All
---------------------------------------------------------
certificates of a series of Convertible Preferred Stock surrendered for
conversion shall be appropriately canceled on the books of the Company, and the
shares so converted represented by such certificates shall be restored to the
status of authorized but unissued shares of such Series of Convertible Preferred
Stock of the Company.
(i) Adjustment of Conversion Price
------------------------------
The Conversion Price applicable to a series of Convertible Preferred
Stock shall be subject to adjustment from time to time as follows:
(i) If the Company shall, at any time or from time to time after
the Original Issuance Date, issue any Common Stock or Common Stock
Equivalent, other than any Excluded Securities, for a consideration per
share on a Common Stock Equivalent basis less than the Conversion Price in
effect immediately prior to such issuance, then the Conversion Price in
effect immediately prior to each such issuance shall forthwith be lowered
to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total number of
shares of Common Stock outstanding (including any shares of Common
Stock deemed to have been issued pursuant to subdivision (C) of
12
<PAGE>
clause (iii) below) immediately prior to such issuance, multiplied
by the Conversion Price, plus (y) the consideration received by the
Company upon such issuance; by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued
pursuant to subdivision (C) of clause (iii) below) immediately after
--------------- ------------
the issuance of such Common Stock.
(ii) If the Company shall, at any time or from time to time after
the Original Issuance Date, issue any Common Stock or Common Stock
Equivalent for a consideration per share on a Common Stock Equivalent basis
equal to or greater than the Conversion Price in effect immediately prior
to such issuance, then the Conversion Price in effect at such time shall
not be adjusted.
(iii) For the purposes of any adjustment of the Conversion Price
applicable to a series of Convertible Preferred Stock pursuant to Section
-------
6.6(i)(i) above, the following provisions shall be applicable:
---------
(A) In the case of the issuance of Common Stock for cash in
a public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor (before deducting
therefrom any discounts, commissions or placement fees payable by
the Company to any underwriter or placement agent in connection with
the issuance and sale thereof).
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the Market Value thereof.
(C) In the case of the issuance of options to purchase or
rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities:
(I) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase
or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were
issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (A) and
----------------
(B) above), if any, received by the Company upon the issuance
---
of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock
covered thereby (determined in the manner provided in
subdivisions (A) and (B) above) (and no further adjustment
---------------- ---
shall be made upon the issuance of shares of Common Stock
upon the exercise, conversion or exchange of such
13
<PAGE>
securities to the extent adjustments therefor have already
been made);
(II) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for
such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been
issued at the time such securities, options, or rights were
issued and for a consideration equal to the consideration
received by the Company for any such securities and related
options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of
any related option or rights (the consideration in each case
to be determined in the manner provided in subdivisions (A)
----------------
and (B) above) (and no further adjustment shall be made upon
---
the issuance of shares of Common Stock upon the exercise,
conversion or exchange of such securities to the extent
adjustments therefor have already been made);
(III) on any change in the number of shares or exercise
price of Common Stock deliverable upon exercise of any such
options or rights or conversions of or exchange for such
securities, other than a change resulting from the
antidilution provisions thereof, the Conversion Price shall
forthwith be readjusted (provided, however, that such event
-------- -------
has not already resulted in an adjustment to the Conversion
Price, in which event no such adjustment shall be made) to
such Conversion Price as would have obtained had the
adjustment made upon the issuance of such options, rights or
securities not converted prior to such change or options or
rights related to such securities not converted prior to such
change been made upon the basis of such change; and
(IV) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price
shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment made upon the issuance
of such options, rights, securities or options or rights
related to such securities, and any adjustment subsequent
thereto under clause (III) above, been made upon the basis of
------------
the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options or rights,
upon the conversion or exchange of such securities, or
14
<PAGE>
upon the exercise of the options or rights related to such
securities and subsequent conversion or exchange thereof.
(iv) If, at any time after the original Issuance Date, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up (or if no record date is set, the date such stock
dividend, subdivision of stock split is consummated), the Conversion Price
shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of the applicable series of
Convertible Preferred Stock shall be increased in proportion to such
increase in outstanding shares.
(v) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is decreased by a combination or reverse
stock split of the outstanding shares of Common Stock, then, following the
record date for such combination, the Conversion Price shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of the applicable series of
Convertible Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares.
(vi) In the event of any capital reorganization of the Company, any
reclassification of the stock of the Company (other than a change in par
value or from no par value to par value or from par value to no par value
or as a result of a stock dividend or subdivision, split-up or combination
of shares), or any consolidation or merger of the Company, each share of
the applicable series of Convertible Preferred Stock shall after such
reorganization, reclassification, consolidation, or merger be convertible
into the kind and number of shares of stock or other securities or property
of the Company or of the corporation resulting from such consolidation or
surviving such merger to which the holder of the number of shares of Common
Stock deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon conversion of such share of
the applicable series of Convertible Preferred Stock would have been
entitled upon such reorganization, reclassification, consolidation or
merger. The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations or mergers.
(vii) If any event occurs of the type contemplated by the
provisions of this Section 6.6(i) but not expressly provided for by such
--------------
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Board shall make an appropriate reduction in the
Conversion Price so as to protect the rights of the holders of the
applicable series of Convertible Preferred Stock.
(viii) All calculations under this paragraph shall be made to the
nearest one hundredth (1/100) of a cent.
15
<PAGE>
(ix) In any case in which the provisions of this Section 6.6 shall
-----------
require that an adjustment shall become effective immediately after a
record date of an event, the Company may defer until the occurrence of such
event issuing to the holder of any share of the applicable Series of
Convertible Preferred Stock converted after such record date and before the
occurrence of such event the shares of capital stock issuable upon such
conversion by reason of the adjustment required by such event in addition
to the shares of capital stock issuable upon such conversion before giving
effect to such adjustments; provided, however, that the Company shall
-------- -------
deliver to such holder an appropriate instrument evidencing such holder's
right to receive such additional shares.
(x) Whenever the Conversion Price shall be adjusted as provided in
this Section 6.6(i), the Company shall make available for inspection during
--------------
regular business hours, at its principal executive offices or at such
other place as may be designated by the Company, a statement, signed by its
chief executive officer, showing in detail the facts requiring such
adjustment and the Conversion Price that shall be in effect after such
adjustment. The Company shall also cause a copy of such statement to be
sent by first class certified mail, return receipt requested and postage
prepaid, to each holder of the applicable Series of Convertible Preferred
Stock at such holder's address appearing on the Company's records. Where
appropriate, such copy may be given in advance and may be included as part
of any notice required to be mailed under the provisions of clause (xi)
-----------
below.
(xi) If the Company shall propose to take any action of the types
described in clauses (iv), (v) or (vi) of this Section 6.6(i) above, the
------------ --- ---- --------------
Company shall give notice to each holder of shares of the applicable Series
of Convertible Preferred Stock, in the manner set forth in clause x above,
--------
which notice shall specify the record date, if any, with respect to any
such action and the date on which such action is to take place. Such notice
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect
may be known at the date of such notice) on the Conversion Price and the
number, kind or class of shares or other securities or property which shall
be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of the applicable series of
Convertible Stock. In the case of any action which would require the fixing
of a record date, such notice shall be given at least ten days (10) prior
to the date so fixed, and in case of all other action, such notice shall be
given at least ten (10) days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(xii) Waiver of Adjustment. In the event that the Requisite
--------------------
Convertible Preferred Holders shall consent to limit, or waive in its
entirety, any anti-dilution adjustment to which the holders of any Series
of Convertible Preferred Stock would otherwise be entitled hereunder, the
Corporation shall not be required to make any adjustment whatsoever with
respect to such Series of Convertible Preferred Stock, as appropriate, in
excess of such limit, as the terms of such consent may dictate.
6.7. Mandatory Conversion.
--------------------
16
<PAGE>
(a) Events of Mandatory Conversion. The Company shall have the right
------------------------------
to require each holder of Convertible Preferred Stock to convert all (but not
less than all) of the shares of any Series of Convertible Stock then held by
such holder into shares of Common Stock upon the occurrence of any Mandatory
Conversion Event with respect to such Series of Convertible Preferred Stock.
Upon any such conversion pursuant to the provisions of this Section 6.7(a), no
--------------
adjustment to the Conversion Price shall be made for any accrued and unpaid
dividends on such series of Convertible Stock surrendered for conversion or on
the Common Stock delivered upon conversion; the holder, upon the occurrence of a
conversion required by the Company after the occurrence of a Mandatory
Conversion Event, waives his right to such accrued but unpaid dividends.
(b) Mechanics. The Company shall exercise its rights under Section
--------- -------
6.7(a) above by mailing to each holder of the applicable Series of Convertible
- ------
Preferred Stock at the address of such holder last known to the Company, not
less than ten (10) nor more than 60 days prior to the date of the requested
conversion, a notice to such effect (the "Mandatory Conversion Notice"). Each
---------------------------
such conversion shall be deemed to have been effected as of the close of
business on the date specified in the Mandatory Conversion Notice, and from and
after such time, the rights of each holder of shares of the Series of
Convertible Preferred Stock subject to such conversion, as a holder of shares of
such Series of Convertible Preferred Stock, shall cease, any and all accrued but
unpaid dividends on the shares subject to such conversion shall cease to exist
and such holder shall have no right thereto, such holder shall be deemed to have
become the holder of the shares of Common Stock issuable upon conversion, and
the shares of such Series of Convertible Preferred Stock shall represent only
the right to receive that number of shares of Common Stock into which such
shares of such Series of Convertible Preferred Stock is convertible.
(c) Conversion. The number of shares of Common Stock into which a series
----------
of Convertible Stock is convertible upon the exercise by the Company of its
rights under Section 6.6(a) shall be determined in accordance with the
--------------
applicable provisions of Section 6.6, except as otherwise provided in this
-----------
Section 6.7.
- -----------
ARTICLE VII
INDEMNIFICATION AND LIMITATION OF DIRECTOR LIABILITY
----------------------------------------------------
The Company shall, to the fullest extent permitted by the Delaware General
Corporation Law, as the same may be from time to time amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify under the
Delaware General Corporation Law from and against any and all of the expenses,
liabilities or other matters referred to in or covered by the Delaware General
Corporation Law, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which any person may be entitled under any By-
law, resolution of shareholders, resolution of directors, agreement or
otherwise, as permitted by the Delaware General Corporation Law, as to action in
any capacity in which he served at the request of the Company.
17
<PAGE>
A director of the Company shall not be personally liable to the Company or
its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under (S)174(a) of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived any improper personal benefit.
If the Delaware General Corporation Law is amended after the date of
incorporation of the Company to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Company shall be deemed to be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders
of the Company shall not adversely affect any right or protection of a director
of the Company existing at the time of such repeal or modification.
ARTICLE VIII
------------
AMENDMENTS
----------
For so long as any shares of Series A or Series B Preferred Stock remain
outstanding, this Certificate shall constitute an agreement between the Company
and the holders of each Series of Convertible Preferred Stock and may only be
amended with the prior written consent of the Company, the Requisite Series A
Preferred Holders and the Requisite Series B Preferred Holders; provided,
--------
however, that any such amendment that would adversely affect the rights
- -------
hereunder of any holder of any Series of Convertible Preferred Stock, in its
capacity as such a holder, without similarly affecting the rights hereunder of
all holders of such Series of Convertible Preferred Stock, in their capacities
as such holders, shall not be effective as to such holder of such Series of
Convertible Preferred Stock without its prior written consent. At all other
times, the Corporation reserves the right to amend this Certificate of
Incorporation in any manner permitted by the Delaware Law and all rights and
powers conferred upon stockholders, directors and officers herein are subject to
this reservation. Notwithstanding the foregoing, the provisions set forth in
ARTICLE 6.1(a) and (b), this ARTICLE EIGHTH and ARTICLE NINTH may not be
repealed or amended in any respect, and no other provision may be adopted,
amended or repealed which would have the effect of modifying or permitting the
circumvention of the provisions set forth in ARTICLE 6.1(a) and (b), this
ARTICLE EIGHTH and ARTICLE NINTH, unless such action is approved by the
affirmative vote of the holders of not less than 66.66% of the total voting
power of all outstanding securities of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
18
<PAGE>
ARTICLE IX
POWERS OF THE BOARD OF DIRECTORS
--------------------------------
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation and of its directors and stockholders, it is further
provided:
(a) In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
and empowered:
(i) to make, alter, amend or repeal the By-laws in any manner not
inconsistent with the laws of the State of Delaware or this Certificate of
Incorporation;
(ii) without the assent or vote of the stockholders, to authorize and
issue securities and obligations of the Corporation, secured or unsecured,
and to include therein such provisions as to redemption, conversion or
other terms thereof as the Board of Directors in its sole discretion may
determine, and to authorize the mortgaging or pledging, as security
therefor, of any property of the Corporation, real or personal, including
after-acquired
property;
(iii) to determine whether any, and if any, what part, of the net
profits of the Corporation or its surplus shall be declared in dividends
and paid to the stockholders, and to direct and determine the use and
disposition of any such net p rofits or such surplus; and
(iv) to fix from time to time the amount of net profits of the
Corporation or of its surplus to be reserved as working capital or for any
other lawful purpose.
In addition to the powers and authorities herein or by statute expressly
conferred upon it, the Board of Directors may exercise all such powers and do
all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware,
of this Certificate of Incorporation and of the By-laws of the Corporation.
(b) Any director or any officer elected or appointed by the stockholders
or by the Board of Directors may be removed at any time in such manner as shall
be provided in the By-laws of the Corporation.
(c) From time to time any of the provisions of this Certificate of
Incorporation may be altered, amended or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this Certificate of Incorporation are granted subject to the provisions of this
paragraph (c).
(d) The directors shall be divided, with respect to the terms for which
they severally hold office, into three classes, designated Class I, Class II and
Class III, as nearly equal in number of directors as possible, with the term of
office of Class I to expire at the first Annual
19
<PAGE>
Meeting of Stockholders to be held after the effectiveness of the Registration
Statement on Form S-1 registering up to 2,415,000 shares of the Corporation's
Common Stock (the "Registration Statement"), the term of office of Class II to
expire at the second Annual Meeting of Stockholders to be held after the
effectiveness of the Registration Statement, and the term of office of Class III
to expire at the third Annual Meeting of Stockholders to be held after the
effectiveness of the Registration Statement with each class of directors to hold
office until their successors are duly elected and have qualified. At each
Annual Meeting of Stockholders following the initial terms of the directors set
forth below, directors elected to succeed those directors whose terms expire at
such annual meeting, other than those directors elected under particular
circumstances by a separate class vote of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation of the Corporation, shall be elected to hold office for a term
expiring at the Annual Meeting of Stockholders in the third year following the
year of their election and until their successors are duly elected and have
qualified. When the number of directors is changed, any newly created
directorships or any decrease in directorships shall be so apportioned among the
classes as to make all classes as nearly equal in number of directors as
possible, as determined by the Board of Directors. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director. The names of the persons (each of whose mailing address is
c/o EarthWeb Inc., 3 Park Avenue, New York, New York 10016) who are to serve
initially as directors of each class are: Class I: Nova Spivack; Class II:
Murray Hidary and Cary Davis; and Class III: Jack D. Hidary and Henry Kressel.
(e) No director may be removed from office by the stockholders except for
cause with the affirmative vote of the holders of not less than two-thirds of
the total voting power of all outstanding securities of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class.
(f) Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately as
a class or series, to elect directors, the election, term of office, filling the
vacancies, removal and other features of such directorships shall be governed by
the terms of the resolution or resolutions adopted by the Board of Directors
applicable thereto, and such directors so elected shall not be subject to the
provisions of this ARTICLE NINTH unless otherwise provided therein.
ARTICLE X
POWERS OF THE COURTS
--------------------
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders
20
<PAGE>
or class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree on any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
IN WITNESS WHEREOF, EarthWeb Inc. has caused this Certificate to be signed
by Jack D. Hidary, its President, on the 9th day of November, 1998.
/s/ Jack D. Hidary
------------------
Jack D. Hidary
21
<PAGE>
EARTHWEB INC.
Incorporated under the laws
of the State of Delaware
AMENDED AND RESTATED
BY - LAWS
As adopted on November 9, 1998
<PAGE>
BY-LAWS OF
EARTHWEB INC.
_____________________________
ARTICLE I
---------
OFFICES
-------
1.1. Registered Office.
-----------------
The registered office of EarthWeb Inc. (the "Corporation"), in the State of
Delaware shall be at 9 East Loockerman Street, City of Dover, County of Kent,
Delaware 19901, and the registered agent in charge thereof shall be National
Registered Agents, Inc.
1.2. Other Offices.
-------------
The Corporation may also have an office or offices at any other place or
places within or outside the State of Delaware.
ARTICLE II
----------
MEETING OF STOCKHOLDERS; STOCKHOLDERS'
CONSENT IN LIEU OF MEETING
--------------------------
2.1. Annual Meetings.
---------------
The annual meeting of the stockholders for the election of directors of a
class to be elected at such meeting, and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
date and hour as shall be fixed by the Board of Directors (the "Board") and
designated in the notice or waiver of notice thereof, except that no annual
meeting need be held if all actions, including the election of directors,
required by the General Corporation Law of the State of Delaware (the "Delaware
Statute") to be taken at a stockholders' annual meeting are taken by written
consent in lieu of meeting pursuant to Section 2.10 of this Article II.
2.2. Special Meetings.
----------------
Special Meetings of the stockholders of the corporation may be called, for
any purpose or purposes, by the Chairman of the Board or the President or the
Board of Directors at any time.
<PAGE>
2.3. Notice of Meetings.
------------------
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual or special meeting, business must be specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, otherwise properly brought before the
meeting by or at the direction of the Board of Directors or otherwise properly
brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before an annual or
special meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that in the event that
less than 40 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the 10th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual or
special meeting, (i) a brief description of the business desired to be brought
before the annual or special meeting and the reasons for conducting such
business at the annual or special meeting, (ii) the name and record address of
the stockholder proposing such business, (iii) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, (iv) any
material interest of the stockholder in such business and (v) any other
information which would be required to be disclosed in a proxy statement or
other filings required to be made in connection with the solicitation of proxies
for the proposal pursuant to Section 14 of the Securities and Exchange Act of
1934, as amended (the "Exchange Act").
2.4. Quorum.
------
At each meeting of the stockholders, except where otherwise provided by the
Amended and Restated Certificate of Incorporation of the Corporation (the
"Certificate") or these By-laws, the holders of a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote at such
meeting (based on the number of votes represented by such shares, respectively),
present in person or represented by proxy, shall constitute a quorum for the
transaction of business. In the absence of a quorum, a majority in interest of
the stockholders present in person or represented by proxy and entitled to vote,
or, in the absence of all the stockholders entitled to vote, any officer
entitled to preside at, or act as secretary of, such meeting, shall have the
power to adjourn the meeting from time to time, until stockholders holding the
requisite amount of stock to constitute a quorum shall be present or
represented. At any such adjourned meeting at which a quorum shall be present,
any business may be transacted which might have been transacted at the meeting
as originally called.
2.5. Organization.
------------
<PAGE>
(a) Unless otherwise determined by the Board, at each meeting of the
stockholders, one of the following shall act as chairman of the meeting and
preside thereat, in the following order of precedence:
(i) the Chairman;
(ii) the President;
(iii) any director, officer or stockholder of the Corporation
designated by the Board to act as chairman of such meeting and to preside
thereat if the Chairman or the President shall be absent from such meeting; or
(iv) a stockholder of record who shall be chosen chairman of such
meeting by a majority in voting interest of the stockholders present in person
or by proxy and entitled to vote thereat.
(b) The Secretary or, if he shall be presiding over such meeting in
accordance with the provisions of this Section 2.5 or if he shall be absent
from such meeting, the person (who shall be an Assistant Secretary, if an
Assistant Secretary has been appointed and is present) whom the chairman of such
meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
2.6. Order of Business.
-----------------
The order of business at each meeting of the stockholders shall be
determined by the chairman of such meeting, but such order of business may be
changed by a majority in voting interest of those present in person or by proxy
at such meeting and entitled to vote thereat.
2.7. Voting.
------
(a) Except as otherwise provided by law, the Certificate or these
By-laws, at each meeting of the stockholders, every stockholder of the
Corporation shall be entitled to one vote in person or by proxy for each share
of Common Stock of the Corporation held by him (or deemed held by him pursuant
to the Certificate) and registered in his name on the books of the Corporation
on the date fixed pursuant to Section 6.7 of Article VI as the record date for
the determination of stockholders entitled to vote at such meeting. Persons
holding stock in a fiduciary capacity shall be entitled to vote the shares so
held. A person whose stock is pledged shall be entitled to vote, unless, in the
transfer by the pledgor on the books of the Corporation, he has expressly
empowered the pledgee to vote thereon, in which case only the pledgee or his
proxy may represent and vote such stock. If shares or other securities having
voting power stand in the record of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two or more persons have the same fiduciary
relationship regarding the same shares, unless the Secretary shall be given
written notice to the contrary and furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect:
<PAGE>
(i) if only one votes, his act binds all;
(ii) if more than one votes, the act of the majority so voting binds
all; and
(iii) if more than one votes, but the vote is evenly split on any
particular matter, such shares shall be voted in the manner provided by law.
(b) If the instrument so filed shows that any such tenancy is held in
unequal interests, a majority or even-split for the purposes of this Section 2.7
shall be a majority or even-split in interest. The Corporation shall not vote
directly or indirectly any share of its own capital stock. Any vote of stock may
be given by the stockholder entitled thereto in person or by his proxy appointed
by an instrument in writing, subscribed by such stockholder or by his attorney
thereunto authorized, delivered to the secretary of the meeting; provided,
--------
however, that no proxy shall be voted after three years from its date, unless
- -------
said proxy provides for a longer period. At all meetings of the stockholders,
all matters (except where other provision is made by law, the Certificate or
these By-laws) shall be decided by the vote of a majority in interest of the
stockholders present in person or by proxy at such meeting and entitled to vote
thereon, a quorum being present. Unless demanded by a stockholder present in
person or by proxy at any meeting and entitled to vote thereon, the vote on any
question need not be by ballot. Upon a demand by any such stockholder for a vote
by ballot upon any question, such vote by ballot shall be taken. On a vote by
ballot, each ballot shall be signed by the stockholder voting, or by his proxy,
if there be such proxy, and shall state the number of shares voted.
2.8. Inspection.
----------
The chairman of the meeting may at any time appoint one or more inspectors
to serve at any meeting of the stockholders. Any inspector may be removed, and a
new inspector or inspectors appointed, by the Board at any time. Such inspectors
shall decide upon the qualifications of voters, accept and count votes, declare
the results of such vote, and subscribe and deliver to the secretary of the
meeting a certificate stating the number of shares of stock issued and
outstanding and entitled to vote thereon and the number of shares voted for and
against the question, respectively. The inspectors need not be stockholders of
the Corporation, and any director or officer of the Corporation may be an
inspector on any question other than a vote for or against his election to any
position with the Corporation or on any other matter in which he may be directly
interested. Before acting as herein provided, each inspector shall subscribe an
oath faithfully to execute the duties of an inspector with strict impartiality
and according to the best of his ability.
2.9. List of Stockholders.
--------------------
It shall be the duty of the Secretary or other officer of the Corporation
who shall have charge of its stock ledger to prepare and make, at least 10 days
before every meeting of the stockholders, a complete list of the stockholders
entitled to vote thereat, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
<PAGE>
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to any such meeting, during ordinary business hours, for
a period of at least 10 days prior to such meeting, either at a place within the
city where such meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting is
to be held. Such list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
2.10. Stockholders' Consent in Lieu of Meeting.
----------------------------------------
Any action required by the Delaware Statute to be taken at any annual or
special meeting of the stockholders of the Corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, by a consent in
writing, as permitted by the Delaware Statute.
ARTICLE III
BOARD OF DIRECTORS
------------------
3.1. General Powers.
--------------
The business, property and affairs of the Corporation shall be managed by
or under the direction of the Board, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Certificate directed or required to be exercised or done by the stockholders.
3.2. Number and Term of Office.
-------------------------
The number of directors shall be fixed from time to time by the Board.
Directors need not be stockholders. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. Except as otherwise provided in the
certificate of incorporation, each director shall serve for a term ending on the
date of the third annual meeting of stockholders next following the annual
meeting at which such director was elected. Notwithstanding the foregoing, each
director shall hold office until his successor is elected and qualified, or
until his earlier death or resignation or removal in the manner hereinafter
provided.
3.3. Election of Directors.
---------------------
At each meeting of the stockholders for the election of directors at which
a quorum is present, the persons receiving the greatest number of votes, up to
the number of directors of a class to be elected at such meeting, of the
stockholders present in person or by proxy and entitled to vote thereon shall be
the directors; provided, however, that for purposes of such vote no stockholder
-------- -------
<PAGE>
shall be allowed to cumulate his votes. Unless an election by ballot shall be
demanded as provided in Section 2.7 of Article II, election of directors may be
conducted in any manner approved at such meeting.
3.4. Resignation, Removal and Vacancies.
----------------------------------
(a) Any director may resign at any time by giving written notice
to the Board, the Chairman, the President or the Secretary. Such resignation
shall take effect at the time specified therein or, if the time be not
specified, upon receipt thereof; unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(b) Except as provided for in the Shareholders Agreement, as
defined below (if in effect), no director may be removed from office by the
stockholders except for cause with the affirmative vote of the holders of not
less than two-thirds of the total voting power of all outstanding securities of
the Corporation then entitled to vote generally in the election of directors,
voting together as a single class.
(c) Except as provided for in the Shareholders Agreement, as defined
below (if in effect), vacancies occurring on the Board for any reason may be
filled by solely by the vote of the Board or by the directors' written consent
pursuant to Section 3.6 of this Article III. If the number of directors then in
office is less than a quorum, such vacancies may be filled by a vote of a
majority of the directors then in office. Each director elected to fill a newly
created directorship shall hold office for a term that coincides with the term
of the class to which the director has been assigned.
3.5. Meetings.
--------
(a) Annual Meetings. As soon as practicable after each annual election
---------------
of directors of a class then elected, the Board shall meet for the purpose of
organization and the transaction of other business, unless it shall have
transacted all such business by written consent pursuant to Section 3.6 of this
Article III.
(b) Other Meetings. Other meetings of the Board shall be held at such
--------------
times and places as the Board, the Chairman, the President or any director shall
from time to time determine.
(c) Notice of Meetings. Notice shall be given to each director of each
------------------
meeting, including the time, place and purpose of such meeting. Notice of each
such meeting shall be mailed to each director, addressed to him at his residence
or usual place of business, at least five days before the date on which such
meeting is to be held, or shall be sent to him at such place by telegraph,
cable, wireless or other form of recorded communication, or be delivered
personally or by telephone not later than two days before the day on which such
meeting is to be held, but notice need not be given to any director who shall
attend such meeting. A written waiver of notice, signed by the person entitled
thereto, whether before or after the time of the meeting stated therein, shall
be deemed equivalent to notice.
<PAGE>
(d) Place of Meetings. The Board may hold its meetings at such place or
-----------------
places within or outside the State of Delaware as the Board may from time to
time determine, or as shall be designated in the respective notices or waivers
of notice thereof.
(e) Quorum and Manner of Acting. One-third of the total number of
---------------------------
directors then in office shall be present in person at any meeting of the Board
in order to constitute a quorum for the transaction of business at such meeting;
provided, however, for so long as the Shareholders Agreement dated as of October
25, 1996, among the Corporation (as the same may from time to time be amended,
modified or restated, the "Shareholders Agreement"), remains in effect, at least
one of the directors nominated pursuant to clause (i) of Section 2.1(b) of the
Shareholders Agreement must be present in order for a quorum to exist at any
meeting of the Board of Directors. The vote of a majority of those directors
present at any such meeting at which a quorum is present shall be necessary for
the passage of any resolution or act of the Board, except as otherwise expressly
required by law or these By-laws. In the absence of a quorum for any such
meeting, a majority of the directors present thereat may adjourn such meeting
from time to time until a quorum shall be present.
(f) Organization. At each meeting of the Board, one of the following
------------
shall act as chairman of the meeting and preside thereat, in the following order
of precedence:
(i) the Chairman;
(ii) the President (if a director); or
(iii) any director designated by a majority of the directors present.
The Secretary or, in the case of his absence, an Assistant Secretary, if an
Assistant Secretary has been appointed and is present, or any person whom the
chairman of the meeting shall appoint shall act as secretary of such meeting and
keep the minutes thereof.
3.6. Directors' Consent in Lieu of Meeting.
-------------------------------------
Any action required or permitted to be taken at any meeting of the Board
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by all
the directors then in office and such consent is filed with the minutes of the
proceedings of the Board.
3.7. Action by Means of Conference Telephone or Similar Communications
-----------------------------------------------------------------
Equipment.
- ---------
Any one or more members of the Board may participate in a meeting of the
Board by means of conference telephone or similar communications equipment by
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
3.8. Committees.
----------
<PAGE>
The Board may, by resolution or resolutions passed by a majority of the
whole Board, designate one or more committees, each such committee to consist of
one or more directors of the Corporation, which to the extent provided in said
resolution or resolutions shall have and may exercise the powers of the Board in
the management of the business and affairs of the Corporation and may authorize
the seal of the Corporation to be affixed to all papers which may require it,
such committee or committees to have such name or names as may be determined
from time to time by resolution adopted by the Board. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings, unless the Board shall otherwise provide. The Board shall
have power to change the members of any such committee at any time, to fill
vacancies and to discharge any such committee, either with or without cause, at
any time.
ARTICLE IV
OFFICERS
--------
4.1. Executive Officers.
------------------
The principal officers of the Corporation shall be a Chairman, if one is
appointed (and any references in these By-Laws to the Chairman shall not apply
if a Chairman has not been appointed), a President, a Secretary, and a
Treasurer, and may include such other officers as the Board may appoint pursuant
to Section 4.3 of this Article IV. Any two or more offices may be held by the
same person.
4.2. Authority and Duties.
--------------------
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By-laws or, to the extent so provided, by the Board.
4.3. Other Officers.
--------------
The Corporation may have such other officers, agents and employees as the
Board may deem necessary, including one or more Assistant Secretaries, one or
more Assistant Treasurers and one or more Vice Presidents, each of whom shall
hold office for such period, have such authority, and perform such duties as the
Board, the Chairman, or the President may from time to time determine. The Board
may delegate to any principal officer the power to appoint and define the
authority and duties of, or remove, any such officers, agents, or employees.
4.4. Term of Office. Resignation and Removal.
---------------------------------------
(a) All officers shall be elected or appointed by the Board and shall
hold office for such term as may be prescribed by the Board. Each officer shall
hold office until his successor has been elected or appointed and qualified or
<PAGE>
until his earlier death or resignation or removal in the manner hereinafter
provided. The Board may require any officer to give security for the faithful
performance of his duties.
(b) Any officer may resign at any time by giving written notice to the
Board, the Chairman, the President or the Secretary. Such resignation shall take
effect at the time specified therein or, if the time be not specified, at the
time it is accepted by action of the Board. Except as aforesaid, the acceptance
of such resignation shall not be necessary to make it effective.
(c) Except as provided for in the Shareholders Agreement (if in effect),
all officers and agents elected or appointed by the Board shall be subject to
removal at any time by the Board or by the stockholders of the Corporation with
or without cause.
4.5. Vacancies.
---------
If the office of Chairman, President, Secretary or Treasurer becomes vacant
for any reason, the Board shall fill such vacancy, and if any other office
becomes vacant, the Board may fill such vacancy. Any officer so appointed or
elected by the Board shall serve only until such time as the unexpired term of
his predecessor shall have expired, unless reelected or reappointed by the
Board.
4.6. The Chairman.
------------
The Chairman shall give counsel and advice to the Board and the officers of
the Corporation on all subjects concerning the welfare of the Corporation and
the conduct of its business and shall perform such other duties as the Board may
from time to time determine. Unless otherwise determined by the Board, he shall
preside at meetings of the Board and of the stockholders at which he is present.
4.7. The President.
-------------
The President shall be the chief executive officer of the Corporation. The
President shall have general and active management and control of the business
and affairs of the Corporation subject to the control of the Board and shall see
that all orders and resolutions of the Board are carried into effect. The
President shall from time to time make such reports of the affairs of the
Corporation as the Board of Directors may require and shall perform such other
duties as the Board may from time to time determine.
4.8. The Secretary.
-------------
The Secretary shall, to the extent practicable, attend all meetings of the
Board and all meetings of the stockholders and shall record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He may give,
or cause to be given, notice of all meetings of the stockholders and of the
Board, and shall perform such other duties as may be prescribed by the Board,
the Chairman or the President, under whose supervision he shall act. He shall
<PAGE>
keep in safe custody the seal of the Corporation and affix the same to any duly
authorized instrument requiring it and, when so affixed, it shall be attested by
his signature or by the signature of the Treasurer or, if appointed, an
Assistant Secretary or an Assistant Treasurer. He shall keep in safe custody the
certificate books and stockholder records and such other books and records as
the Board may direct, and shall perform all other duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the Board, the Chairman or the President.
4.9. The Treasurer.
-------------
The Treasurer shall have the care and custody of the corporate funds and
other valuable effects, including securities, shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, shall
render to the Chairman, President and directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation and shall perform
all other duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the Board, the Chairman or the
President.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
---------------------------------------------
5.1. Execution of Documents.
----------------------
The Board shall designate, by either specific or general resolution, the
officers, employees and agents of the Corporation who shall have the power to
execute and deliver deeds, contracts, mortgages, bonds, debentures, checks,
drafts and other orders for the payment of money and other documents for and in
the name of the Corporation, and may authorize such officers, employees and
agents to delegate such power (including authority to redelegate) by written
instrument to other officers, employees or agents of the Corporation; unless so
designated or expressly authorized by these By-laws, no officer, employee or
agent shall have any power or authority to bind the Corporation by any contract
or engagement, to pledge its credit or to render it liable pecuniarily for any
purpose or amount.
5.2. Deposits.
--------
All funds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation or otherwise as the Board or
Treasurer, or any other officer of the Corporation to whom power in this respect
shall have been given by the Board, shall select.
5.3. Proxies with Respect to Stock or Other Securities of Other Corporations.
-----------------------------------------------------------------------
<PAGE>
The Board shall designate the officers of the Corporation who shall have
authority from time to time to appoint an agent or agents of the Corporation to
exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in any
other corporation, and to vote or consent with respect to such stock or
securities. Such designated officers may instruct the person or persons so
appointed as to the manner of exercising such powers and rights, and such
designated officers may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal or otherwise, such
written proxies, powers of attorney or other instruments as they may deem
necessary or proper in order that the Corporation may exercise its powers and
rights.
ARTICLE VI
SHARES AND THEIR TRANSFER; FIXING RECORD DATE
---------------------------------------------
6.1. Certificates for Shares.
-----------------------
Every owner of stock of the Corporation shall be entitled to have a
certificate certifying the number and class of shares owned by him in the
Corporation, which shall be in such form as shall be prescribed by the Board.
Certificates shall be numbered and issued in consecutive order and shall be
signed by, or in the name of, the Corporation by the Chairman, the President or
any Vice President, and by the Treasurer (or an Assistant Treasurer, if
appointed) or the Secretary (or an Assistant Secretary, if appointed). In case
any officer or officers who shall have signed any such certificate or
certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate had not
ceased to be such officer or officers of the Corporation.
6.2. Record.
------
A record in one or more counterparts shall be kept of the name of the
person, firm or corporation owning the shares represented by each certificate
for stock of the Corporation issued, the number of shares represented by each
such certificate, the date thereof and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in whose
name shares of stock stand on the stock record of the Corporation shall be
deemed the owner thereof for all purposes regarding the Corporation.
6.3. Transfer and Registration of Stock.
----------------------------------
(a) The transfer of stock and certificates which represent the stock of
the Corporation shall be governed by Article 8 of Subtitle 1 of Title 6 of the
Delaware Code (the Uniform Commercial Code), as amended from time to time.
(b) Registration of transfers of shares of the Corporation shall be
made only on the books of the Corporation upon request of the registered holder
<PAGE>
thereof, or of his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and upon the surrender
of the certificate or certificates for such shares properly endorsed or
accompanied by a stock power duly executed.
6.4. Addresses of Stockholders.
-------------------------
Each stockholder shall designate to the Secretary an address at which
notices of meetings and all other corporate notices may be served or mailed to
him, and, if any stockholder shall fail to designate such address, corporate
notices may be served upon him by mail directed to him at his post-office
address, if any, as the same appears on the share record books of the
Corporation or at his last known post-office address.
6.5. Lost, Destroyed and Mutilated Certificates.
------------------------------------------
The holder of any shares of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of the certificate therefor,
and the Board may, in its discretion, cause to be issued to him a new
certificate or certificates for such shares, upon the surrender of the mutilated
certificates or, in the case of loss or destruction of the certificate, upon
satisfactory proof of such loss or destruction, and the Board may, in its
discretion, require the owner of the lost or destroyed certificate or his legal
representative to give the Corporation a bond in such sum and with such surety
or sureties as it may direct to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss or destruction of any such
certificate.
6.6. Regulations.
-----------
The Board may make such rules and regulations as it may deem expedient, not
inconsistent with these By-laws, concerning the issue, transfer and registration
of certificates for stock of the Corporation.
6.7. Fixing Date for Determination of Stockholders of Record.
-------------------------------------------------------
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board, and which record date shall be not more than 60 nor less than 10
days before the date of such meeting. If no record date is fixed by the Board,
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
- -------- -------
meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
may fix a record date, which record date shall not precede the date upon which
<PAGE>
the resolution fixing the record date is adopted by the Board, and which date
shall be not more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board. If no record date has been fixed by the
Board, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
is required by the Delaware Statute, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board and prior action by the Board is required by the
Delaware Statute, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board adopts the resolution taking such
prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than 60 days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.
ARTICLE VII
-----------
SEAL
----
The Board may provide for a corporate seal, which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of
incorporation of the Corporation and the words and figures "Corporate Seal -
1997 Delaware."
ARTICLE VIII
------------
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be the calendar year unless
otherwise determined by the Board.
ARTICLE IX
----------
INDEMNIFICATION AND INSURANCE
-----------------------------
9.1. Indemnification.
---------------
<PAGE>
(a) Each person who was or is made a party or is threatened to be made
a party to or is otherwise involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer or employee of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity while serving as a director, officer or employee
or in any other capacity while serving as a director, officer or employee, shall
be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware Statute, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss (including
attorneys' fees, judgments, fines, excise taxes or amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith and
such indemnification shall continue as to an indemnitee who has ceased to be a
director, officer or employee and shall inure to the benefit of the indemnitee's
heirs, testators, intestates, executors and administrators; provided, however,
-------- -------
that such person acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and with
respect to a criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful; provided further, however, that no indemnification
---------------- ------
shall be made in the case of an action, suit or proceeding by or in the right of
the Corporation in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such director, officer, employee or agent is
liable to the Corporation, unless a court having jurisdiction shall determine
that, despite such adjudication, such person is fairly and reasonably entitled
to indemnification; provided further, however, that, except as provided in
-------- ------- -------
Section 9.1(b) of this Article IX with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) initiated by such indemnitee was authorized
by the Board of Directors of the Corporation. The right to indemnification
conferred by this Article IX shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the Delaware Statute requires, an
-------- -------
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (hereinafter a
"final adjudication") that such indemnitee is not entitled to be indemnified for
such expenses under this Section or otherwise.
(b) If a claim under Section 9.1(a) of this Article IX is not paid in
full by the Corporation with 60 days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of expenses,
<PAGE>
in which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of any undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware Statute. Neither the failure of the Corporation (including the Board,
independent legal counsel, or the stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware Statute, nor an actual
determination by the Corporation (including the Board, independent legal
counsel, or the stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the indemnitee has not met
the applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Section or otherwise shall be on the Corporation.
(c) The rights to indemnification and to the advancement of expenses
conferred by this Article IX shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Charter, agreement,
vote of stockholders or disinterested directors or otherwise.
9.2. Insurance.
---------
The Corporation may purchase and maintain insurance, at its expense, to
protect itself and any person who is or was a director, officer, employee or
agent of the Corporation or any person who is or was serving at the request of
the Corporation as a director, officer, employer or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware Statute.
ARTICLE X
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AMENDMENT
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These By-laws may be altered, amended or repealed, in whole or in part, or
new By-laws may be adopted by the stockholders or by the Board of Directors,
provided, however, that notice of such alteration, amendment, repeal or adoption
of new By-laws be contained in the notice of such meeting of stockholders or
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Board of Directors as the case may be. Upon the effectiveness of a registration
statement filed by the Corporation under the Exchange Act, all such amendments
must be approved by either the holders of 66 2/3% of the outstanding capital
stock entitled to vote thereon or by a majority of the entire Board of Directors
then in office. Prior to the effectiveness of such registration statement, such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote or by a majority of the Board of
Directors.
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EXHIBIT 4.5
AMENDMENT NO. 1 TO THE EARTHWEB INC.
1998 STOCK INCENTIVE PLAN
Amendment No. 1 (this "Amendment") to the EarthWeb Inc. 1998 Stock
Incentive Plan (the "Plan") as of November 17, 1998:
WHEREAS, the Plan was adopted by the Board of Directors of EarthWeb Inc.
(the "Company") on November 9, 1998; and
WHEREAS, as of November 17, 1998, the Board of Directors of the Company
approved this Amendment;
NOW, THEREFORE, the Plan is hereby amended in the manner set forth below.
1. The first sentence of Section 3(a) of the Plan shall be deleted in its
entirety and be replaced by the following:
"Subject to the provisions of Section 10, below, the maximum aggregate
number of Shares which may be issued pursuant to Awards initially shall be
375,000 Shares, plus an annual increase to be added on the first day of the
Company's fiscal year beginning in 2000 equal to two percent (2%) of the number
of Shares outstanding as of such date or a lesser number of Shares determined by
the Administrator."
2. Except as amended hereby, the Plan remains unchanged and in full force
and effect and is hereby ratified, confirmed and reconfirmed.
3. All references from and after the date hereof to the Plan, whether
contained in any agreement, instrument, document, note, certificate or writing
of any kind or character, shall be deemed to mean the Plan as amended by this
Amendment.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
set forth above.
EarthWeb Inc.
By: /s/ Jack D. Hidary
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Jack D. Hidary
President and Chief Executive Officer
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EXHIBIT 4.6
EARTHWEB INC.
3 Park Avenue
New York, New York 10116
April 29, 1998
Geoffrey W. Smith
130 West 79th Street, #2A
New York, NY 10116
Re: Compensatory Benefit Plan
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Dear Mr. Smith:
In partial consideration of your consulting services provided to
EarthWeb Inc. (the "Company") in the areas of corporate development, strategy,
mergers and acquisitions and corporate finance, the Company hereby agrees to
issue to you 3,818 shares of its common stock.
It is understood that you will not perform services "in connection with
the offer and sale of securities in a capital-raising transaction," as that
phrase is used in the Securities Act of 1933, as amended (the "1933 Act"). The
Company issues the shares to you pursuant to the exemption provided under Rule
701 of the 1933 Act, and the shares are therefore "restricted securities," as
defined in Rule 144 of the 1933 Act. As a result, the shares may not be publicly
resold except in compliance with the registration requirements of the 1933 Act
or pursuant to an exemption from such registration requirements.
If this letter is in accordance with your understanding of our
agreement, please execute a copy of this letter in the space indicted below and
return such copy to my attention as soon as possible.
Very truly yours,
/s/ Murray Hidary
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Murray Hidary
Executive Vice President
ACCEPTED AND AGREED
AS OF THE DATE FIRST
WRITTEN ABOVE:
/s/ Geoffrey W. Smith
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Geoffrey W. Smith
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Exhibit 5
MORRISON & FOERSTER LLP
New York, New York
January 5, 1999
EarthWeb Inc.
3 Park Avenue
New York, NY 10016
Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
executed by you on January 5, 1999 and to be filed with the Securities and
Exchange Commission (the "SEC") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 534,000 shares of your
common stock, $.01 par value (the "Common Stock"), which will be issuable under
the 1998 Stock Incentive Plan and the 1998 Employee Stock Purchase Plan (the
"Plans").
As your counsel in connection with the Registration Statement, we have
examined the proceedings taken by you in connection with the adoption of the
Plans and the authorization of the issuance of the shares of Common Stock under
the Plans (the "Plan Shares") and such documents as we have deemed necessary to
render this opinion.
Based upon the foregoing, it is our opinion that the Plan Shares, when
issued pursuant to the terms of the Plans, will be validly issued, fully paid
and non-assessable shares of Common Stock.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
MORRISON & FOERSTER LLP
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Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-8 of our report dated March 31, 1998 on our audits of the financial
statements of EarthWeb Inc. as of December 31, 1997 and 1996 and for the three-
year period ended December 31, 1997. We also consent to the reference to our
firm under the caption "Experts."
PricewaterhouseCoopers LLP
New York, New York
January 4, 1999
