<PAGE>
As filed with the Securities and Exchange Commission on February 1, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
EARTHWEB INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3899472
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
3 Park Avenue
New York, New York 10016
(212) 725-6550
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Jack D. Hidary
President and Chief Executive Officer
EarthWeb Inc.
3 Park Avenue
New York, New York 10016
(212) 725-6550
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
With Copies to:
John R. Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104-0050
(212) 468-8000
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
Calculation of Registration Fee
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- --------------------------------------------------------------------------------
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<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate
Title of each Class of to be Offering Price Offering Amount of
Securities to be Registered Registered Per Share(1) Price(1) Registration Fee
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7% Convertible Subordinated Notes
due 2005 $75,000,000 100% $75,000,000 $19,800
- ------------------------------------------------------------------------------------------
Common Stock, par value $.01 per
share (2)
</TABLE>
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- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(i) of the Securities Act of 1933, as
amended.
(2) An indeterminate number of shares of common stock issuable upon conversion
of the Convertible Subordinated Notes registered hereby. Pursuant to Rule
457(i) under the Securities Act, no registration fee is required for these
shares.
The Registrant hereby amends the Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--FEBRUARY 1, 2000
PROSPECTUS
$75,000,000
[LOGO]
EARTHWEB
7% Convertible Subordinated Notes due 2005
and Shares of Common Stock Issuable Upon Conversion of the Notes
-----------
Holders of our 7% Convertible Subordinated Notes due 2005 may offer for sale
the notes and the shares of our common stock into which the notes are
convertible at various times at market prices prevailing at the time of sale or
at privately negotiated prices. The selling holders may sell the notes or the
common stock to or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions.
The notes are convertible, at the option of the holder, at any time on or
prior to maturity into shares of our common stock. The notes are convertible at
a conversion price of $39.10 per share, which is equal to a conversion rate of
25.5754 shares per $1,000 principal amount of notes, subject to adjustment. On
January 31, 2000 the last sale price of the common stock on the NASDAQ National
Market was $32 7/8 per share.
We will pay interest on the notes on January 25 and July 25 of each year,
beginning July 25, 2000. The notes will mature on January 25, 2005. We may
redeem some or all of the notes at any time before January 25, 2003 at a
redemption price of $1,000 per $1,000 principal amount of notes, plus accrued
and unpaid interest, if any, to the redemption date, if the closing price of
our common stock has exceeded 150% of the conversion price then in effect for
at least 20 trading days within a period of 30 consecutive trading days ending
on the trading day before the date of mailing of the provisional redemption
notice. We will make an additional payment in cash with respect to the notes
called for provisional redemption in an amount equal to $130.43 per $1,000
principal amount of notes, less the amount of any interest actually paid on the
notes before the call for redemption. We may redeem some or all of the notes at
any time after January 25, 2003 at the redemption prices described in this
offering memorandum.
The notes are unsecured and subordinated to our existing and future senior
indebtedness. In addition, the notes effectively rank junior to our
subsidiaries' liabilities.
We do not intend to apply for listing of the notes on any securities exchange
or for quotation through any automated quotation system. The notes are eligible
for trading in the Private Offerings, Resale and Trading through Automated
Linkages ("Portal") market of the National Association of Securities Dealers,
Inc. The notes are [not] expected to remain eligible for trading on the Portal
system and a trading market may not develop for the notes. Our common stock is
traded on the NASDAQ National Market under the symbol "EWBX."
We will not receive any proceeds from the sale of the notes and the common
stock into which the notes are convertible by the selling holders. We will pay
all expenses (other than selling commissions and fees and stock transfer taxes)
of the registration and sale of the notes and the common stock.
Investing in the notes or the common stock into which the notes are
convertible involves risks that are described in the "Risk Factors" section
beginning on page 3 of this prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
February , 2000
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TABLE OF CONTENTS
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Page
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<S> <C>
Earthweb................................................................... 1
Risk Factors............................................................... 3
Forward-Looking Statements................................................. 15
Ratio of Earnings to Fixed Charges......................................... 16
Use of Proceeds............................................................ 16
Price Range of Common Stock................................................ 16
Dividend Policy............................................................ 16
Selling Securityholders.................................................... 17
Description of Notes....................................................... 18
United States Federal Income Tax Considerations............................ 34
Plan of Distribution....................................................... 37
Legal Matters.............................................................. 38
Experts.................................................................... 38
Where You Can Find More Information........................................ 39
</TABLE>
----------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the selling securityholders have
not, authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not, and the selling securityholders are not, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing in this
prospectus is accurate only as of the date on the front cover of this
prospectus and the information we previously filed with the Securities and
Exchange Commission and incorporated by reference herein is accurate as of the
date filed. Our business, financial condition, results of operations and
prospects may have changed since that date.
----------------
EarthWeb SM is our registered service mark. All other service marks,
trademarks or trade names we refer to in this offering memorandum are the
property of their respective owners.
----------------
Unless otherwise indicated, all references to "EarthWeb," "we," "our" and
"us" for the period prior to October 25, 1996 are to EarthWeb Inc.'s
predecessors and, for later periods, refer to EarthWeb Inc. and, subsequent to
their acquisition or formation, its subsidiaries, including EW Career
Solutions, Inc. (f/k/a D&L Online, Inc., which owns the dice.com job board) and
EW Subscription Services Inc. (f/k/a MicroHouse International, Inc.).
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EARTHWEB
EarthWeb is the leading business portal for the global IT industry. We offer
a central portal serving each of the major vertical markets in the IT industry,
including enterprise management, networking and telecommunications, software
and internet development, and hardware and systems. Our network serves various
constituents of the IT industry across vertical segments, including:
<TABLE>
<S> <C> <C>
. IT managers .Recruiters/HR Managers .Hardware manufacturers
. Programmers and engineers .Corporate IT purchasers .Value-added resellers
. Network managers .Software publishers .IT services firms
</TABLE>
As a global intermediary for the IT industry, we are positioned as the
trusted third party platform offering an integrated environment where various
industry constituents can share information, manage their careers, recruit
personnel, and buy and sell products and services. We believe that we offer the
most in-depth content and comprehensive range of business-to-business and
business-to-professional services for the IT industry. We believe our network
has captured a critical mass of IT decision makers and professionals with
attractive demographics who collectively command significant spending power.
We derive revenue from advertising, including paid job listings and banners
and sponsorships, sales of and subscriptions to our information products and
services, as well as a variety of commerce offerings. Our business has grown
substantially as measured by revenues, customers and the breadth of our
content:
. For the nine months ended September 30, 1999, revenues increased to $21.7
million on a pro forma basis to account for certain acquisitions,
compared to $10.0 million, on the same pro forma basis, for the identical
period in 1998.
. We have increased our paid job listing customer base to over 3,600
customers as of September 30, 1999 from approximately 2,000 as of
December 31, 1998. Current paid job listing customers include Bank of
America, Yahoo!, Cisco Systems, Manpower Technical, General Motors and
MCI.
. We have increased our advertising banner and sponsorship customer base to
over 300 customers as of September 30, 1999 from approximately 175 as of
December 31, 1998. Our banner and sponsorship customer base includes IBM,
Microsoft, MCI, Nortel, Sun Microsystems, Oracle and MBNA. In addition,
we have been able to sell advertising space at rates that are higher than
the average rates charged by online services aimed at more general
audiences.
. We have substantially increased our base of subscriber customers to
approximately 17,000 as of September 30, 1999 from approximately 12,000
as of March 31, 1999. Corporate subscription customers include CBS,
Boeing, Prudential, IBM, Cisco Systems and the United States Patent and
Trademark Office.
To support our growth, we have increased our sales organization to
approximately 50 people as of September 30, 1999, from 26 people as of December
31, 1998.
EarthWeb's business portal addresses the needs of the various constituents of
the IT industry for content, career management and recruiting, commerce and
community.
. Content. Our extensive database of content, including full-text
reference books, training materials and tutorials, technical articles,
source code libraries and product surveys, enables IT professionals to
solve challenging technical problems and make informed purchase
decisions.
. Career Management and Recruiting. We believe that we are the leading
online job board for the IT industry. In addition, we provide a
comprehensive set of career and professional development online
services, including skill assessment tools, certification guides and
training materials.
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. Commerce. We provide an online marketplace where vendors can promote
and advertise their goods and services, and purchasers can identify,
evaluate and buy the products and services that meet their needs.
. Community. We provide a forum in which users can contribute material
and communicate with each other. Users are encouraged to submit source
code, object code, development tools and other materials that are then
archived in our directories.
Our Market Opportunity
As a business portal for the IT industry, we believe we are positioned to
participate in the growth of the online business-to-business sector. Forrester
Research forecasts that the growth of the online business-to-business sector
will outpace the growth of the business-to-consumer sector, with business-to-
business commerce expected to reach $1.5 trillion by 2003 in the United States
alone, a figure fourteen times the estimate for United States business-to-
consumer commerce for the same period.
Businesses and other organizations increasingly depend on Information
Technology for the successful implementation of their business strategies. This
expanded role of technology has continued to fuel the growth in the worldwide
market for IT products and services. International Data Corporation forecasts
that the worldwide market for IT products and services will grow from
approximately $800 billion in 1998 to over $1.0 trillion in 2001. We believe
that our targeted market of business services within the IT industry, including
reference materials, recruiting, training and advertising, represented an
annual market opportunity of $40 billion in 1999, and is expected to grow to
$63 billion by 2003. We believe that a significant portion of this market is
currently migrating online, and that we are uniquely positioned to benefit from
this trend.
Our Strategy
We seek to strengthen our position as the leading business portal for the
global IT industry by:
. broadening and enhancing business-services for the IT industry;
. promoting EarthWeb and our other brands;
. cultivating multiple revenue streams;
. pursuing strategic acquisitions and investments; and
. expanding internationally.
Recent Developments
On January 13, 2000, we signed a definitive agreement to acquire MeasureUp,
Inc., a privately held company that is a leader in online certification
preparation and assessment solutions for the IT industry. MeasureUp provides
online certification preparation for Microsoft, A+, Novell and Cisco. We also
agreed to acquire CCPrep and NetCerts, Inc., both of which offer online
certification preparation products and services designed for IT professionals
seeking Cisco certification. In aggregate, the companies recorded approximately
$1 million in revenues (unaudited) for the nine months ended September 30,
1999.
The capabilities provided by these companies broaden the array of integrated
career management services which we currently offer to IT professionals and
corporate clients. The focus on certification preparation and assessment is
intended as a strategic complement to the career management products and
services offered through our dice.com and gocertify.com.
The aggregate consideration for the acquisitions, in a combination of stock
and cash, is expected to be an estimated $19 million with additional
consideration of up to approximately $10 million to be paid based upon future
performance over a three-year period. The majority of the proposed aggregate
consideration relates to the proposed acquisition of MeasureUp. The
transactions are expected to close during the first quarter of 2000, subject to
the satisfaction of the conditions to closing set forth in each agreement, and
total consideration is subject to closing and post-closing adjustments. Each
acquisition will be accounted for using the purchase method of accounting.
Our principal executive office is located at 3 Park Avenue, New York, New
York 10016, and our telephone number is (212) 725-6550. Our corporate Web site
addresses include http://www.earthweb.com and http://www.ewbx.com. Information
contained on our Web sites is not part of this prospectus.
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RISK FACTORS
An investment in the securities offered by this prospectus involves a high
degree of risk. You should consider carefully the following risk factors in
addition to the remainder of this prospectus before making an investment
decision.
RISKS PARTICULAR TO EARTHWEB
You cannot predict our future success based on our limited operating history
Although we commenced operations in October 1994, we did not begin our
business of providing online services to IT professionals until October 1995,
and only recently broadened our online services to address the needs of other
constituents of the IT industry. We did not begin generating advertising
revenues until June 1996. The limited amount of information about us makes it
difficult for you to predict whether we will be successful.
We compete in the relatively new markets for Internet services and products.
Thus, you should also evaluate our chances of financial and operational success
in light of the risks, uncertainties, expenses, delays and difficulties
associated with operating a business in a relatively new and unproven market,
many of which may be beyond our control. Some of the risks that we face are
described in the following paragraphs. Our failure to address these risks could
have a material adverse effect on our business, results of operations and
financial condition.
We have a history of losses and may need additional funds
We had an accumulated deficit of $42.2 million at September 30, 1999. We have
also experienced operating losses as well as net losses for all of the fiscal
years during which we have operated. We expect that we will continue to operate
at a loss for the foreseeable future. Although our revenues have increased in
recent quarters, we cannot assure you that such growth will be maintained or
increased in the future. You should not rely on our recent revenue growth as
indicative of our future results of operations. We cannot predict with accuracy
our future results of operations and believe that any period-to-period
comparisons of our results of operations are not meaningful.
We expect to increase our operating expenses significantly, expand our sales
and marketing operations and continue to develop and extend our online
services. In the future, we may not generate sufficient revenues to pay for all
of these operating or other expenses. If we fail to generate sufficient cash to
pay these expenses, we will need to identify other sources of financing. We may
not be able to borrow money or issue more shares of common stock or other
securities to meet our cash needs, and even if we can complete such
transactions, the terms may seem unfavorable to us.
We compete in a highly competitive developing market without certainty of
future growth
The market for our online services has only recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market
entrants. As is typical of a new and rapidly evolving industry, demand and
market acceptance for recently introduced services is uncertain and we cannot
accurately predict the future growth, if any, and size of this market. The
market for our online services may not continue to develop or become
sustainable. If use of our online services fails to grow, our ability to
establish other online services would be materially adversely affected. In
addition, we may not be successful in our business strategy of extending our
online services model to additional segments of the IT industry.
We compete with other companies that direct portions of their Web sites
towards certain segments or sub-segments of the IT industry. Some of our
competitors include:
. Ziff-Davis (DevHead)
. CNET (builder.com and activex.com)
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. United News (cmpnet)
. Internet.com (webdeveloper.com)
. Lycos (Wired Digital's Webmonkey)
. IDG (Javaworld)
. Hotjobs.com
. Headhunter.net
. Monster.com
In addition, we compete for advertising revenues with general interest portal
and destination sites, as well as traditional media. Our competitors for sales
of products are book, software and online retailers that sell products similar
to ours. Many of our competitors have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than we do. As a result, they may be in a position to respond more
quickly to new or emerging technologies and changes in customer requirements
and to develop and promote their products and services more effectively. We may
not be able to compete successfully against present or future competitors.
There are relatively low barriers to entry in the online services market. We
do not own any patented technology that precludes or inhibits competitors from
entering the IT online market. Existing or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could have a material adverse effect on our business, results of operations and
financial condition.
Our future revenues are dependent on the adoption and effectiveness of the
Internet as an advertising medium
Our future success is highly dependent on an increase in the use of the
Internet as an advertising medium. The Internet advertising market is new and
rapidly evolving, and it cannot yet be compared with traditional advertising
media to gauge its effectiveness. As a result, demand and market acceptance for
Internet advertising solutions is uncertain. Most of our current or potential
advertising customers have little or no experience using the Internet for
advertising purposes and they have allocated only a limited portion of their
advertising budgets to Internet advertising. The adoption of Internet
advertising, particularly by those entities that have historically relied upon
traditional media for advertising, requires the acceptance of a new way of
conducting business, exchanging information and advertising products and
services. Such customers may find Internet advertising to be less effective for
promoting their products and services relative to traditional advertising
media. If the market for Internet advertising fails to develop or develops more
slowly than we expect, then our business, results of operations and financial
condition could be materially adversely affected.
There are currently no standards for the measurement of the effectiveness of
Internet advertising and standard measurements may need to be developed to
support and promote Internet advertising as a significant advertising medium.
Our advertising customers may challenge or refuse to accept our or third-party
measurements of advertisement delivery, and our customers may not accept any
errors in such measurements. In addition, the accuracy of database information
used to target advertisements is essential to the effectiveness of Internet
advertising that may be developed in the future. The information in our
database, like any database, may contain inaccuracies that our customers may
not accept.
If advertisers determine that banner advertising is an ineffective or
unattractive advertising medium, we may not be able to maintain our revenues
with other forms of advertising that we offer. Also, "filter" software programs
limit or prevent advertising from being delivered to a user's computer. The
commercial viability of Internet advertising, and our business, results of
operations and financial condition, would be materially adversely affected by
Web users' widespread adoption of such software.
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We rely heavily on advertising revenues
To date, substantially all of our revenues are derived from paid job
listings, banner advertisements and sponsorships. We rely primarily on our in-
house advertising sales force for domestic advertising sales. Our success
depends, in part, on hiring, retaining, managing, training and motivating our
sales force. If a significant portion of our advertising sales force leaves, we
may not be able to compete for or retain advertisers and we may not be able to
sustain or increase our current advertising sales level. The reduction in the
amount of revenue from advertising sales could have a material adverse effect
on our business, results of operations and financial condition.
In addition, the competition in the sale of advertising on the Internet,
including competition from Internet portals and other high-traffic sites is
intense. This competition has resulted in a wide range of rates quoted by
different vendors for a variety of advertising services. As a result, we cannot
accurately predict the future levels of Internet advertising revenues that we
will realize. The prices for Internet advertising may also be affected by
competition among current and future suppliers of Internet navigational
services or Web sites and advertising networks. This, together with competition
with other traditional media for advertising placements, could result in
significant price competition, reduced pricing for Internet advertising and
reductions in our advertising revenues.
We engage in barter transactions, which do not generate cash revenue
We engage in barter transactions, which reduce cash expenditures in marketing
and other areas, and leverage our advertising inventory. For the quarter and
nine months ending September 30, 1999, revenues from barter transactions
represented less than 10% and 11% of revenues, respectively. During 1998,
revenues from barter transactions represented approximately 25% of revenues and
less than 10% of revenues on a pro forma basis after giving effect to the
acquisition of dice.com. Barter revenues may continue to represent a portion of
our total revenues in future periods.
We must continue to maintain and develop our reputation and brand recognition
We believe that establishing and maintaining the identity of our several
brands is critical in attracting and expanding our audience, and that the
importance of brand recognition will increase due to the growing number of
Internet online services. Promotion and enhancement of our brands will depend
largely on our success in continuing to provide high quality online services.
If users do not perceive our existing online services to be of high quality, or
if we introduce new online services or enter into new business ventures that
are not favorably received by users, the uniqueness of our brands could be
diminished and the attractiveness of our audiences to advertisers could be
reduced. We may also find it necessary to increase substantially our financial
commitment to creating and maintaining a distinct brand loyalty among users. If
we (1) cannot provide high quality online services, (2) fail to promote and
maintain our brands, or (3) incur excessive expenses in an attempt to improve
our online services or promote and maintain our brands, our business, results
of operations and financial condition could be materially adversely affected.
We must retain key executives and personnel
Our performance is substantially dependent on the performance of our senior
management and key technical personnel. In particular, our success depends
substantially on the continued efforts of our senior management. We have
employment agreements, which include non-compete provisions, with members of
senior management. However, these key personnel and others may leave us or
compete with us, which could have a material adverse effect on our business,
results of operations and financial condition. In addition, we have not
purchased key person life insurance on all members of our senior management.
Our future success also depends upon our continuing ability to identify,
attract, hire and retain highly qualified personnel. There is currently a
shortage of qualified personnel in the online services market, and this
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shortage is likely to continue. We compete intensely for qualified personnel
with other companies. If we cannot attract, motivate and retain qualified
professionals, our business and results of operations could be materially
adversely affected.
Our continued future growth may strain our resources
A key part of our strategy is to grow, which may strain our managerial,
operational and financial resources. To manage recent acquisitions and future
growth, our management must continue to improve our operational and financial
systems and expand, train, retain and manage our employee base. Our management
may not be successful in managing our growth effectively. If our systems,
procedures and controls are inadequate to support our operations, our expansion
would be halted and we could lose our opportunity to gain significant market
share. Any inability to manage growth effectively could have a material adverse
effect on our business, results of operations and financial condition.
We may be unable to consummate potential acquisitions or integrate the
operations of companies we acquire
Our strategy includes the acquisition of assets of online service providers
that enhance our current services. As part of this strategy, during 1999 we
acquired both dice.com and MicroHouse, as well as the businesses of GoCertify
and The Perl Journal, among others. Our continued growth will depend in part on
our ability to continue to identify suitable acquisition candidates and to
acquire them on appropriate terms. In addition, the anticipated results of any
acquisitions may not be realized. Some of the risks that we may encounter in
acquiring other companies include the following:
. expenses, delays and difficulties of integrating the acquired company
into our existing organization;
. potential disruption of our ongoing business;
. diversion of management's attention;
. the amortization of the acquired company's intangible assets;
. impact on our financial condition due to the timing of the
acquisition;
. failure to retain key personnel;
. difficulties of integrating the personnel and cultures of the acquired
company into our organization; and
. potential legal liabilities.
If any of these risks materialize, they could have a material adverse effect
on our business, results of operations and financial condition.
We rely on a number of content providers
Our success depends upon our ability to provide a wide range of in-depth
content. The markets for our online services are characterized by rapidly
changing technology, emerging industry standards and the rapidly changing needs
of our audience. We rely on a number of publishers of technical materials, our
vendors and the users of our online services for the continuing provision of
up-to-date content. No single content provider is material to our operations.
However, publishers of technical materials with which we currently have a
relationship, our current vendors or the current users of our online services
may not continue to provide us with a similar flow of content or may not
continue to do so on the same terms and conditions. If the flow of content for
our online services decreases either in terms of quality or quantity, or ceases
completely, our business, results of operations and financial condition could
be materially adversely affected.
We rely on a number of strategic alliances
We rely on strategic alliances with Sun Microsystems, CMP Media, Ziff-Davis,
Macmillan, Fair Market, beyond.com and fatbrain.com, among others, to attract
users and paid advertising to our online services. These
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relationships may not continue or we may not be able to develop any additional
third party alliances on acceptable commercial terms. No one of these strategic
alliances is individually material to our operations. However, our inability to
maintain current strategic relationships generally or develop new strategic
relationships could have a material adverse effect on our business, results of
operations and financial condition.
Our quarterly results may fluctuate significantly
Because of our limited operating history, we plan our expenses based in part
upon our expectations concerning future revenue. Our expenses, to a large
extent, are fixed. Our quarterly revenues and operating results depend
substantially upon the advertising revenues we receive within that quarter,
which are difficult to forecast accurately. The cancellation or deferral of a
small number of advertising contracts could have a material adverse effect on
our business, results of operations and financial condition. We may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall, and any significant shortfall could have a material adverse effect
on our business, results of operations and financial condition.
Our quarterly results have historically been affected by variations in the
following:
. the level of usage of the Internet;
. demand for Internet advertising;
. the addition or loss of advertisers;
. the level of user traffic on our online services;
. economic conditions specific to the Internet industry; and
. online media and economic conditions generally.
We also believe that our revenues are subject to seasonal fluctuations
because advertisers generally place fewer advertisements during the first and
third calendar quarters of each year. As a strategic response to this, we have
and may continue to make pricing, service or marketing decisions. We also may
consummate business combinations to reduce our exposure to seasonality. Any
failure of one or more of these strategies could have a material adverse effect
on our business, results of operations and financial condition.
We may have difficulty in expanding and managing our international operations
A key part of our strategy is to develop our online services in international
markets. To date, we have had limited experience in developing localized
versions of our online services and in marketing and operating our online
services internationally. We intend to enter into relationships with foreign
business partners. If the international revenues are not adequate to offset our
investments in international activities, our business, results of operations
and financial condition could be materially and adversely affected.
We may experience difficulty in managing international operations because of
distance, as well as language and cultural differences. We and any of our
future foreign business associates may not be able to successfully market and
operate our online services in foreign markets. Furthermore, in light of
substantial anticipated competition, we believe that it will be necessary to
implement our business strategy quickly in international markets to obtain a
significant share of the market. We cannot give you any assurance that we will
be able to do so. Other risks that could affect our potential international
operations include:
. fluctuations in currency exchange rates;
. difficulties arising from staffing and managing foreign operations;
. unexpected changes in the legal and regulatory requirements of
different countries;
. potential political and economic instability; and
. overlapping or differing tax laws.
7
<PAGE>
If any of these risks materialize, our domestic and international businesses,
results of operations and financial condition could be materially adversely
affected.
RISKS TYPICAL OF THE INTERNET INDUSTRY
Our success is tied to the continued growth in the use of the Internet and the
adequacy of the Internet infrastructure
Our future success is substantially dependent upon continued growth in the
use of the Internet. The number of users and advertisers on the Internet may
not increase and commerce over the Internet may not become more accepted and
widespread for a number of reasons, including:
. actual or perceived lack of security of information, including credit
card numbers;
. lack of access and ease of use;
. congestion of traffic on the Internet;
. inconsistent quality of service and lack of availability of cost-
effective, high speed service;
. possible disruptions due to computer viruses, ongoing Year 2000
difficulties or other damage to the Internet servers or to users'
computers;
. excessive governmental regulation;
. uncertainty regarding intellectual property ownership; and
. lack of high-speed modems and other communications equipment.
Published reports have also indicated that growth in the use of the Internet
has resulted in users experiencing delays, transmission errors and other
difficulties. As currently configured, the Internet may not support an increase
in the number or requirements of our users. In addition, there have been
outages and delays on the Internet as a result of damage to the current
infrastructure. The amount of traffic on our online services could be
materially affected if there are outages or delays in the future. The use of
the Internet may also decline if there are delays in the development or
adoption of modifications by third parties that are required to support
increased levels of activity on the Internet. If none of the foregoing changes
occur, or if the Internet does not become a viable commercial medium, our
business, results of operations and financial condition could be materially
adversely affected. In addition, even if those changes occur, we may be
required to spend significant amounts to adapt our online services to any new
or emerging technologies relating to the Internet.
Capacity constraints or systems failures could materially and adversely affect
our business
The performance of our online services is critical to:
. our reputation;
. our ability to attract advertisers to our services; and
. achieving market acceptance of our online services.
Any system failure, including network, software or hardware failure, that
causes interruption or an increase in response time of our online services
could result in decreased usage of our services. If these failures are
sustained or repeated, they could reduce the attractiveness of our online
services to our users, vendors and advertisers. An increase in the volume of
queries conducted through our online services could strain the capacity of the
software or hardware we employ, which could lead to slower response time or
system failures, that could adversely affect our advertising revenues. We also
face technical challenges associated with higher levels of personalization and
localization of content delivered to users of our online services. The process
of managing advertising within our large, high traffic Internet online service
is an increasingly important and complex task. We rely on both internal and
licensed third party advertising, inventory management and analysis systems. We
could incur so-called "make good" obligations to our advertising customers if
an extended failure
8
<PAGE>
of our advertising system results in incorrect advertising insertions. By
displacing advertising inventory, these obligations could defer advertising
revenues and thereby have a material adverse effect on our business, results of
operations and financial condition.
Our operations are dependent in part upon our ability to protect our
operating systems against:
. physical damage from acts of God;
. power loss;
. telecommunications failures;
. physical and electronic break-ins;
. computer viruses; and
. similar events.
The occurrence of any of these events could result in interruptions, delays
or cessations in service to users of our online services, which could have a
material adverse effect on our business, results of operations and financial
condition.
We may face liability for the services that we provide
Because content made available by third parties may be downloaded by the
online services operated or facilitated by us and may be subsequently
distributed to others, there is a potential that claims will be asserted
against us for defamation, negligence or personal injury, or based on other
theories due to the nature of the content. These claims have been brought, and
sometimes successfully asserted, against other online service providers. In
addition, we could be exposed to liability with respect to the selection of
listings that may be accessible through our online services or through content
and materials that may be posted by users in our classifieds, bulletin board or
chat room services. By providing hypertext links to Internet sites operated by
other providers, third parties may attempt to assert claims or liability for
wrongful actions by these other providers through these Internet sites. It is
also possible that users could claim that we were responsible for losses
incurred in reliance on information provided on our online services. Although
we carry general liability insurance, our insurance may not cover potential
claims of this type or may not be adequate to provide full indemnification. Any
imposition of liability or legal defense expenses that are not covered by
insurance or are in excess of insurance coverage could have a material adverse
effect on our business, results of operations and financial condition.
Consumers may sue us if any of the products that we sell online are defective,
fail to perform properly or injure the user. To date, we have had very limited
experience in the sale of products online and the development of relationships
with manufacturers or suppliers of such products. Liability claims could
require us to spend significant time and money in litigation or to pay
significant damages. As a result, any such claims, whether or not successful,
could seriously damage our reputation and our business.
Misappropriation of our intellectual property could harm our reputation, affect
our competitive position and cost us money
We believe that our service marks and other proprietary rights are important
to our success and competitive position. We have registered some of our service
marks in the United States and abroad. We also limit access to and distribution
of our proprietary information, as well as proprietary information licensed
from third parties. Our management cannot ensure that these strategies will be
adequate to deter misappropriation of our proprietary information and material.
Despite our efforts to protect our intellectual property, we face the
following risks:
. non-recognition or inadequate protection of our proprietary rights in
various foreign countries;
. undetected misappropriation of our proprietary information or
materials;
9
<PAGE>
. development of similar technologies by competitors;
. unenforceability of the non-competition agreements entered into by our
employees; and
. infringement claims, even if not meritorious.
If any of these risks materialize, we could be required to pay significant
amounts to defend our rights and our managerial resources could be diverted.
Legal standards relating to the validity, enforceability and scope of
protection of various intellectual property rights in Internet-related
industries are uncertain and still evolving, and no assurance can be given as
to the future viability or value of any intellectual property rights of ours or
other companies within the IT industry. We generally enter into confidentiality
agreements with our employees, consultants, vendors and customers, license
agreements with third parties and generally seek to control access to and
distribution of our technology, documentation and other proprietary
information. We pursue the registration of our service marks in the United
States and internationally. We have obtained United States service mark
registrations for EarthWeb and its related logo and for developer.com (on the
Supplemental Register), have been assigned Plugin Datamation, Datamation and
Dice and have applied for the registration of additional service marks,
including EarthWeb's ITKnowledge and the developer.com logo. Although we
generally pursue the registration of our service marks and other intellectual
property, we have copyrights, trademarks and/or service marks that have not
been registered in the United States and/or other jurisdictions. Moreover,
effective trademark, copyright and trade secret protection may not be available
in every country in which our online services are distributed or made available
through the Internet. The steps we have taken to protect our proprietary rights
may not be adequate, and third parties could infringe or misappropriate our
copyrights, service marks, trade dress and similar proprietary rights.
We have licensed in the past, and expect to license in the future, various
elements of our distinctive trademarks, service marks, trade dress, trade
secrets and similar proprietary rights to third parties. While we attempt to
ensure that the quality of our several brands is maintained by these licensees,
no assurance can be given that these licensees will not take actions that could
materially and adversely affect the value of proprietary rights or the
reputation of our online services, either of which could have a material
adverse effect on business, results of operations and financial condition.
Also, we are 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 we cannot guarantee that the distinctive
elements of developer.com can be protected under copyright law.
We may be liable if third parties misappropriate our users' personal
information
If third parties were able to penetrate our network security or otherwise
misappropriate our users' personal information or credit card information, we
could be subject to liability. This liability could include claims for
unauthorized purchases with credit card information, impersonation or other
similar fraud claims. It could also include claims for other misuses of
personal information, including unauthorized marketing purposes. These claims
could result in litigation. In addition, the Federal Trade Commission and state
agencies have been investigating various Internet companies regarding their use
of personal information. We could incur additional expenses if new regulations
regarding the use of personal information are introduced or if our privacy
practices are investigated.
Our business is subject to U.S. and foreign government regulation of the
Internet and taxation
Congress and various state and local governments, as well as the European
Union, have recently passed legislation that regulates various aspects of the
Internet, including online content, copyright infringement, user privacy,
taxation, access charges, liability for third-party activities and
jurisdiction. In addition, federal, state, local and foreign governmental
organizations are also considering legislative and regulatory proposals that
would regulate the Internet. Areas of potential regulation include libel,
pricing, quality of products and services
10
<PAGE>
and intellectual property ownership. A number of proposals have been made at
the state and local level that would impose taxes on the sale of goods and
services through the Internet. Such proposals, if adopted, could substantially
impair the growth of e-commerce and could adversely affect our future results
of operations and financial condition.
A law imposing a three-year moratorium on new taxes on Internet-based
transactions was enacted by Congress in October 1998. This moratorium relates
to new taxes on Internet access fees and state taxes on commerce that
discriminate against out-of-state Web sites. Sales or use taxes imposed upon
the sale of products or services over the Internet will not be affected by this
moratorium. We have not yet been able to determine how we will be affected by
this moratorium. To the extent that the moratorium provides a material benefit,
its expiration after three years could have a material adverse effect on our
financial condition and results of operations.
Because these laws are relatively new and still in the process of being
implemented, it is not known how courts will interpret both existing and new
laws. Therefore, our management is uncertain as to how new laws or the
application of existing laws will affect our business. Increased regulation of
the Internet may reduce the use of the Internet, which could decrease the
demand for our services, increase our cost of doing business or otherwise have
a material adverse effect on our business, results of operations and financial
condition.
Accounting standards affecting the Internet industry are in flux
We are aware of various proposals being discussed by the accounting
profession and the Securities and Exchange Commission that would affect how
Internet companies record revenue, account for barter transactions, reflect
guarantees of hits in connection with advertising arrangements or accrue
expenses and, in certain cases, how their customers account for transactions
with Internet companies. While these discussions are still in a preliminary
phase and we believe that none of the proposals we are aware of would
materially adversely affect our financial position or results of operations in
the event they are adopted, we cannot predict with certainty the timing or
effect of the adoption of any of these proposed changes.
RISKS RELATING TO THE OFFERING
Your right to receive payments on the notes is subordinated to all of our
existing and future senior indebtedness and the notes are effectively
subordinated to indebtedness of our subsidiaries
The notes are unsecured obligations and subordinated in right of payment, as
provided in the indenture under which they are issued, to the prior payment in
full in cash or other payment satisfactory to holders of senior indebtedness of
all of our existing and future senior indebtedness. Senior indebtedness is
defined to include, among other things, all indebtedness for money borrowed and
indebtedness evidenced by securities, debentures, bonds or other similar
instruments. Senior indebtedness does not include indebtedness that is
expressly junior in right of payment to the notes or ranks pari passu in right
of payment to the notes. As of September 30, 1999, we had $15.1 million of
senior indebtedness. The terms of the notes do not limit the amount of
additional indebtedness, including senior indebtedness, which we can create,
incur, assume or guarantee. Upon any distribution of our assets upon any
insolvency, dissolution or reorganization, the payment of the principal of and
interest on the notes will be subordinated to the extent provided in the
indenture to the prior payment in full of all of our senior indebtedness, and
there may not be sufficient assets remaining to pay amounts due on any or all
of the notes then outstanding.
The notes are effectively subordinated to all existing and future liabilities
of our subsidiaries. Any right of ours to receive assets of any subsidiary upon
its liquidation or reorganization, and the consequent right of the holders of
the notes to participate in those assets, will be subject to the claims of that
subsidiary's creditors. If we ourselves are a creditor of that subsidiary, our
claims would still be subordinate to any security interests in the assets of
that subsidiary and any senior indebtedness of that subsidiary. As of September
30, 1999, our subsidiaries had an aggregate of approximately $12.3 million of
liabilities to which the notes would be effectively subordinated.
11
<PAGE>
We may not be able to satisfy a change in control offer
The indenture governing the notes contains provisions that apply to a change
in our control. If someone triggers a change in control as defined in the
indenture, we must offer to purchase those notes with cash, or at our option
with our common stock, subject to the terms and conditions of the indenture. If
we have to make that offer, we cannot be sure that we will have enough funds or
be able to issue enough common stock to pay for all the notes that the holders
could tender.
We have substantially increased our indebtedness
As a result of the sale of the notes, we have incurred $75.0 million of
additional indebtedness, increasing our ratio of long-term debt to equity
(expressed as a percentage) from approximately 10% to approximately 120% as of
September 30, 1999, on a pro forma basis giving effect to the sale of the
notes. Long-term debt excludes approximately $3.5 million of other long-term
liabilities incurred primarily in connection with the acquisition of D&L
Online. Our other indebtedness is principally comprised of notes payable. We
may incur substantial additional indebtedness in the future. The level of our
indebtedness, among other things, could
. make it difficult for us to make payments on the notes;
. make it difficult for us to obtain any necessary future financing for
working capital, capital expenditures, debt service requirements or
other purposes;
. limit our flexibility in planning for, or reacting to changes in, our
business; and
. make us more vulnerable in the event of a downturn in our business.
There can be no assurance that we will be able to meet our debt service
obligations, including our obligations under the notes.
We may not be able to pay our debt and other obligations
Our cash flow generated during the nine months ended September 30, 1999, if
annualized, would have been insufficient to pay the amount of interest payable
annually on the notes, and there can be no assurance that we will be able to
pay interest and other amounts due on the notes as and when they become due and
payable. Additionally, our earnings for the year ended December 31, 1995
through 1998 were insufficient to cover fixed charges during those same years
consisting of pretax interest on indebtedness, amortization of debt exhausted
and expense and rental expense. If our cash flow is inadequate to meet our
obligations, we could face substantial liquidity problems. If we are unable to
generate sufficient cash flow or otherwise obtain funds necessary to make
required payments on the notes or our other obligations, we would be in default
under the terms thereof, which would permit the holders of the notes to
accelerate the maturity of the notes and could also cause defaults under future
indebtedness we may incur. Any such default could have a material adverse
effect on our business, prospects, financial condition and operating results.
In addition, there can be no assurance that we would be able to repay amounts
due in respect of the notes if payment of the notes were to be accelerated
following the occurrence of an event of default as defined in the indenture.
There is no public market for the notes and transfers of the notes will be
restricted
There has been no trading market for the notes. We have applied for the notes
to be approved for trading on the PORTAL market. Although the initial
purchasers of the notes have advised us that they intend to make a market in
the notes, they are not obligated to make a market in the notes. The initial
purchasers could stop making a market at any time without notice. Accordingly,
no market for the notes may develop, and any market that develops may not last.
We do not intend to apply for listing of the notes on any securities exchange
or other stock market.
12
<PAGE>
Any rating of the notes may cause their trading price to fall
We believe that one or more rating agencies may rate the notes. If the rating
agencies rate the notes, they may assign a lower rating than expected by
investors. Rating agencies may also lower ratings on the notes in the future.
If the rating agencies assign a lower than expected rating or reduce their
ratings in the future, the trading price of the notes could decline.
Our stock price, like that of other Internet companies, is volatile
Our common stock began trading on the Nasdaq National Market on November 11,
1998 and its market price has been highly volatile. The price range for our
common stock has ranged from a low of $25.38 to a high of $89 since it began
trading on the Nasdaq National Market. In addition, the overall market for the
equity securities issued by Internet-related companies has been volatile. This
volatility may continue. Factors that may materially adversely affect the
market price of our common stock include:
. variations in our financial results and earnings;
. failure to meet or exceed estimates by securities analysts;
. fluctuations in the stock prices of our competitors;
. any loss of key management;
. adverse regulatory actions or decisions;
. announcements of extraordinary events, including material litigation or
acquisitions or changes in pricing policies by us or our competitors;
. changes in the market for our online services; and
. general economic, political and market conditions.
Four of our directors or their affiliates own a significant percentage of our
shares
As of September 30, 1999, Warburg, Pincus Ventures, L.P., Jack D. Hidary and
Murray Hidary (or their affiliates) owned 35.68% in the aggregate of the
outstanding shares of common stock and individually owned the percentage set
forth opposite their respective names below. Two of our directors are
affiliated with Warburg, Pincus Ventures, L.P. and both Jack Hidary and Murray
Hidary are directors and officers of EarthWeb.
<TABLE>
<S> <C>
Warburg, Pincus Ventures, L.P...................................... 18.62%
Jack D. Hidary..................................................... 8.55%
Murray Hidary...................................................... 8.50%
</TABLE>
If all the notes had been converted into shares of common stock immediately
after the original issuance of the notes, the aggregate percentage of shares of
common stock that Warburg, Pincus Ventures, L.P., Jack D. Hidary and Murray
Hidary (or their affiliates) own would have decreased to 29.8%. If the
stockholders listed above choose to act or vote in concert, they will have the
power to influence the election of our directors, the appointment of new
management and the approval of any other action requiring the approval of our
stockholders, including any amendments to our certificate of incorporation and
mergers or sales of all of its assets. In addition, without the consent of
these stockholders, we could be prevented from entering into potentially
beneficial transactions. Conversely, third parties could be discouraged from
making a tender offer or bid to acquire us at a price per share that is above
the price at which the common stock trades on the Nasdaq National Market.
Substantial sales of our common stock could adversely affect our stock price
In connection with our acquisitions of dice.com, MicroHouse and CodeGuru, we
issued a significant number of shares of common stock. Of these shares 635,215
are being offered and sold from time to time under an effective registration
statement by the holders of those shares. Those shareholders have agreed to
13
<PAGE>
restrict their sales of such shares of common stock to a limited number of
shares per quarter. Certain of those shares are currently held under escrow
arrangements and are not immediately resellable. However, in the event that all
of those shares available for sale in any quarter are all sold on one day, such
sales may have an adverse effect in the market price of our common stock.
Our charter documents could make it more difficult for a third party to acquire
us
Various provisions of our certificate of incorporation and by-laws are
designed to discourage or prevent a third party from acquiring control of us.
Our by-laws include restrictions on who may call a special meeting of
stockholders, and either a majority of the board of directors or the holders of
two-thirds of our outstanding capital stock, which are entitled to vote in the
elections of the board of directors, must approve all amendments to our by-
laws.
Our certificate of incorporation authorizes the board of directors to issue
up to 2,000,000 shares of "blank check" preferred stock. The board of directors
will have the authority without action by our stockholders to fix the rights,
privileges and preferences of, and to issue shares of this preferred stock. In
addition, our certificate of incorporation provides that the board of directors
will be divided into three classes with the directors serving staggered three-
year terms. Only the holders of two-thirds of our outstanding capital stock
that are entitled to vote in the elections of the board of directors can amend
this provision.
14
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus and the documents that are and will be incorporated into this
prospectus contain forward-looking statements that involve risks and
uncertainties. The outcome of the events described in these forward-looking
statements is subject to risks and actual results could differ materially.
These statements relate to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words like
"believes," "expects," "may," "will," "should," "seeks," "pro forma," or
"anticipates," and similar expressions. Our actual results could differ
materially from those discussed in these statements. Factors that could
contribute to these differences include those discussed under "Risk Factors"
and elsewhere in this prospectus and documents incorporated by reference.
We include information in this prospectus about (1) the worldwide market for
information technology products and services, (2) the size of business-to-
business Internet commerce, (3) the worldwide market for IT education and
training and (4) the worldwide market for IT recruiting. This information is
based on studies prepared by the Internet market research firms International
Data Corporation and Forrester Research. These studies include projections
based on a number of assumptions including:
. no catastrophic failure of the Internet;
. the continuing expansion of the worldwide economy;
. Internet security will be adequately addressed;
. the number of people online and the total number of hours spent online
will increase significantly over the next five years;
. the use of the Internet will increase significantly in major foreign
countries and some of these foreign countries will adopt the U.S. style
of advertising on the Internet;
. media advertising will continue to grow in all categories and online
advertising will comprise an increased percentage of all media
advertising;
. the value of online advertising dollars spent per online user hour will
increase;
. non-technology industry Internet advertising will increase;
. the download speed of content will increase dramatically; and
. a proliferation of Internet access devices other than the PC (for
example, PC/television sets).
If any one or more of these assumptions are incorrect, the projections based
on these assumptions may be materially different from actual results. Internet-
related markets and products may not grow over the next three to four years at
the rates projected by International Data Corporation or Forrester Research, or
at all. If Internet-related markets or products do not grow at the assumed
projected rates, our business, results of operations and financial condition
could be materially and adversely affected.
15
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
We present below the deficiency of our earnings to fixed charges on a
historical basis for the years ended December 31, 1995 through 1998 and for the
nine months ended September 30, 1999. For purposes of computing the ratio of
earnings to fixed charges: (1) earnings consist of pretax income (loss) from
continuing operations, and (2) fixed charges consist of pretax interest
(including capitalized interest) on all indebtedness, amortization of debt
discount and expense, and that portion of rental expense that we believe to be
representative of interest.
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended
----------------------------- September 30,
1995 1996 1997 1998 1999
----- ------- ------- ------- -----------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Deficiency of earnings
available to cover fixed
charges..................... (640) (2,046) (7,821) (8,970) (24,938)
</TABLE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the notes or the
common stock issuable upon conversion thereof by the selling securityholders.
PRICE RANGE OF COMMON STOCK
Our common stock has been quoted on the Nasdaq National Market under the
symbol "EWBX" since November 11, 1998. The following table sets forth, for the
periods indicated, the high and low closing sales prices per share of the
common stock as reported on the Nasdaq National Market:
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Year Ended December 31, 1998
Fourth Quarter (from November 11)................................ $69.25 $33.00
Year Ended December 31, 1999
First Quarter.................................................... $54.81 $35.50
Second Quarter................................................... $77.63 $26.19
Third Quarter.................................................... $49.25 $32.88
Fourth Quarter................................................... $51.88 $30.25
Year Ending December 31, 2000
First Quarter (through January 31)............................... $50.13 $32.63
</TABLE>
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock and do
not expect to do so in the foreseeable future. We currently intend to retain
any earnings to finance the expansion and development of our business. Any
future determination of the payment of dividends will be made at the discretion
of the board of directors based upon various conditions, including our
earnings, financial condition and capital requirements as well as the economic
and other conditions that the board of directors may deem relevant.
16
<PAGE>
SELLING SECURITYHOLDERS
The notes were originally issued by us in a private placement on January 25,
2000. The notes may thereafter have been sold by the initial purchasers in
transactions exempt from the registration requirements of the Securities Act to
persons reasonably believed by the initial purchasers to be "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act).
The selling securityholders may offer and sell the notes or the common stock
into which the notes are convertible from time to time to purchasers directly,
or through underwriters, brokers, dealers or agents, at market prices
prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution."
The following table sets forth information, as of January 25, 2000, with
respect to the selling securityholders and the respective principal amounts of
notes beneficially owned by each selling securityholder that may be offered
pursuant to this prospectus. Because the selling securityholders may offer all
or some portion of their securities, no estimate can currently be given as to
the number of shares that will be held by any selling securityholders upon
termination of such sales. In addition, selling securityholders may have
disposed of, or may dispose of, all or a portion of their securities in
transactions exempt from the requirements of the Securities Act.
<TABLE>
<CAPTION>
Principal Amount of Common Stock Owned
Notes Beneficially Owned Prior to the Common Stock
Name and Offered Hereby Offering (1)(2) Offered Hereby(1)(2)
---- ------------------------ ------------------ -------------------
<S> <C> <C> <C>
$
----------- --------- ---------
Total..... $75,000,000 1,918,157 1,918,157
===========
</TABLE>
- ----------------
(1) Assumes a conversion price of $39.10 per share and a cash payment in
lieu of any fractional interest.
(2) Assumes that any holders of notes or any future transferee from any
such holder does not beneficially own any common stock other than
common stock into which the notes are convertible at the conversion
price of $39.10 per share.
Other than as may be stated in any prospectus supplement, none of the selling
securityholders has had any material relationship with us or our affiliates
within the past three years. All of the notes were "restricted securities"
under the Securities Act prior to this registration.
The selling holders have represented or will represent to us that they
purchased the notes for their own account for investment only and not with a
view toward selling or distributing them, except pursuant to sales registered
under the Securities Act or exemptions. We agreed to file the registration
statement of which this prospectus is part to register the resale of the notes
and the shares of common stock issuable upon conversion of the notes. We agreed
to prepare and file all necessary amendments and supplements to the
registration statement to keep it effective until the earlier of the sale of
all the transfer restricted securities pursuant to the shelf registration
statement or two years after the latest date of original issuance.
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<PAGE>
DESCRIPTION OF NOTES
The notes have been issued under the indenture (the "Indenture") between us
and State Street Bank and Trust Company of California, N.A., as trustee (the
"Trustee"). Copies of the Indenture, including the form of notes, and
registration rights agreement have been filed as exhibits to the registration
statement of which this prospectus is a part.
We have summarized portions of the Indenture below. This summary is not
complete. We urge you to read the Indenture because it defines your rights as a
holder of the notes. Terms not defined in this description have the meanings
given them in the Indenture. In this section, "EarthWeb", "we", "our" and "us"
each refers only to EarthWeb Inc. and not to any of its subsidiaries.
General
The notes are unsecured, subordinated obligations of EarthWeb in an aggregate
principal amount of $75,000,000 and will mature on January 25, 2005. The
principal amount of each note is $1,000 and will be payable at the office of
the Paying Agent, which initially will be the Trustee, or an office or agency
maintained by us for that purpose in the Borough of Manhattan, The City of New
York.
The notes bear interest at the rate of 7% per annum on the principal amount
from the date of issuance of the notes, or from the most recent date to which
interest has been paid or provided for until the notes are paid in full,
converted or funds are made available for payment in full of the notes in
accordance with the Indenture. Interest will be payable at the date of maturity
(or earlier purchase, redemption or, in some circumstances, conversion) and
semiannually on January 25 and July 25 of each year (each an "Interest Payment
Date"), commencing on July 25, 2000, to holders of record at the close of
business on the January 10 and July 10 (whether or not a business day)
immediately preceding each Interest Payment Date (each a "Regular Record
Date"). Each payment of interest on the notes will include interest accrued
through the day before the applicable Interest Payment Date or the date of
maturity (or earlier purchase, redemption or, in some circumstances,
conversion), as the case may be. Any payment of principal and cash interest
required to be made on any day that is not a business day will be made on the
next succeeding business day. Interest will be computed on the basis of a 360-
day year composed of twelve 30-day months.
In the event of the maturity, conversion, purchase by us at the option of a
holder or redemption of a note, interest will cease to accrue on that note
under the terms and subject to the conditions of the Indenture. We may not
reissue a note that has matured or been converted, redeemed or otherwise
cancelled, except for registration of transfer, exchange or replacement of that
note.
You may present the notes for conversion at the office of the Conversion
Agent and for exchange or registration of transfer at the office of the
Registrar. Each of these agents will initially be the Trustee.
The Indenture does not contain any financial covenants or restrictions on the
payment of dividends, the incurrence of Senior Indebtedness (defined below) or
the issuance or repurchase of securities by us. The Indenture contains no
covenants or other provisions to protect holders of the notes in the event of a
highly leveraged transaction or a change in control, except to the extent
described below under "--Change in Control Permits Purchase of Notes at the
Option of the Holder."
Subordination
The notes are unsecured obligations and subordinated in right of payment, as
provided in the Indenture, to the prior payment in full in cash or other
payment satisfactory to holders of Senior Indebtedness of all our existing and
future Senior Indebtedness.
At September 30, 1999, we had $15.1 million of Senior Indebtedness
outstanding. The Indenture does not restrict the incurrence by us or our
subsidiaries of indebtedness or other obligations.
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The term "Senior Indebtedness" means that the principal, premium, if any,
interest (including all interest accrued subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and all other amounts
owed in respect of all our Indebtedness (defined below), whether outstanding on
the date of the Indenture or thereafter created, incurred, assumed, guaranteed
or in effect guaranteed by us, including all deferrals, renewals, extensions,
refinancings, replacements, restatements or refundings of, or amendments,
modifications or supplements to, the foregoing, except for:
.any such Indebtedness that is by its terms subordinated to or ranking
equal with the notes; and
. any Indebtedness between or among us or any of our subsidiaries, a
majority of the voting stock of which we directly or indirectly own, or
any of our affiliates, including all other debt securities and
guarantees in respect of those debt securities issued to any trust, or
trustees of any trust, partnership or other entity affiliated with us
that is, directly or indirectly, a financing vehicle used by us in
connection with the issuance by that financing vehicle of preferred
securities or other securities that rank equal with, or junior to, the
notes.
The term "Indebtedness" means, with respect to any person:
. all indebtedness, obligations and other liabilities, contingent or
otherwise, of that person for borrowed money (including obligations of
that person in respect of overdrafts, foreign exchange contracts,
currency exchange or similar agreements, interest rate protection,
hedging or similar agreements, and any loans or advances from banks,
whether or not evidenced by notes or similar instruments) or evidenced
by bonds, debentures, notes or similar instruments (whether or not the
recourse of the lender is to the whole of the assets of that person or
only to a portion thereof), other than any account payable or other
accrued current liability or obligation, in each case incurred in the
ordinary course of business in connection with the obtaining of
materials or services;
. all reimbursement obligations and other liabilities, contingent or
otherwise, of that person with respect to letters of credit, bank
guarantees, bankers' acceptances, security purchase facilities or
similar credit transactions;
. all obligations and liabilities, contingent or otherwise, in respect of
deferred and unpaid balances on any purchase price of any property;
. all obligations and liabilities, contingent or otherwise, in respect of
leases of that person required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on the balance sheet of that person and all obligations and
other liabilities, contingent or otherwise, under any lease or related
document, including, without limitation, the balance deferred and unpaid
on any purchase price of any property and a purchase agreement, in
connection with the lease of real property that provides that the person
is contractually obligated to purchase or cause a third party to
purchase the leased property and thereby guarantee a minimum residual
value of the leased property to the lessor and the obligations of that
person under that lease or related document to purchase or to cause a
third party to purchase that leased property;
. all obligations of that person, contingent or otherwise, with respect to
an interest rate or other swap, cap or collar agreement or other similar
instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement;
. all direct or indirect guarantees or similar agreements by that person
in respect of, and obligations or liabilities, contingent or otherwise,
of that person to purchase or otherwise acquire or otherwise assure a
creditor against loss in respect of indebtedness, obligations or
liabilities of another person of the kind described in the above
clauses;
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. any indebtedness, or other obligations described in the above clauses
secured by any mortgage, pledge, lien or other encumbrance existing on
property that is owned or held by that person, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed
by that person; and
. any and all deferrals, renewals, extensions, refinancings, replacements,
restatements and refundings of, or amendments, modifications or
supplements to, or any indebtedness or obligation issued in exchange
for, any indebtedness, obligation or liability of the kind described in
the above clauses.
Any Senior Indebtedness will continue to be Senior Indebtedness and will be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any of its terms.
By reason of the application of the subordination provisions, in the event of
dissolution, insolvency, bankruptcy or other similar proceedings, upon any
distribution of our assets:
. the holders of the notes are required to pay over their share of that
distribution to the trustee in bankruptcy, receiver or other person
distributing our assets for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all
holders of Senior Indebtedness in full in cash or other payment
satisfactory to the holders of Senior Indebtedness; and
. our unsecured creditors may recover less, ratably, than holders of our
Senior Indebtedness, and may recover more, ratably, than the holders of
notes.
In addition, we may not pay the principal amount, the Change in Control
Purchase Price (defined below), any redemption amounts or interest with respect
to any notes, and we may not acquire any notes for cash or property, except as
provided in the Indenture, if:
. any payment default on any Senior Indebtedness has occurred and is
continuing beyond any applicable grace period or
. any default, other than a payment default, with respect to Senior
Indebtedness occurs and is continuing that permits the acceleration of
the maturity of that Senior Indebtedness and that default is either the
subject of judicial proceedings or we receive a written notice of that
default (a "Senior Indebtedness Default Notice").
Notwithstanding the foregoing, payments with respect to the notes may resume
and we may acquire notes for cash when:
. the default with respect to the Senior Indebtedness is cured or waived
or ceases to exist or
. in the case of a Senior Indebtedness Default Notice, 179 or more days
pass after notice of the default is received by us, provided that the
terms of the Indenture otherwise permit the payment or acquisition of
the notes at that time.
If we receive a Senior Indebtedness Default Notice, then a similar notice
received within nine months after receiving that Senior Indebtedness Default
Notice relating to the same default on the same issue or Senior Indebtedness
will not be effective to prevent the payment or acquisition of the notes as
provided above. In addition, no payment may be made on the notes if any notes
are declared due and payable prior to their Stated Maturity by reason of the
occurrence of an Event of Default until the earlier of:
. 120 days after the date of acceleration of the maturity of that Senior
Indebtedness or
. the payment in full of all Senior Indebtedness
but only if payment on the notes is then otherwise permitted under the terms of
the Indenture.
Upon any payment or distribution of our assets to creditors upon any of our
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other similar
proceedings, the holders of Senior Indebtedness will first be entitled to
receive payment in full, in cash or other payment satisfactory to the holders
of Senior Indebtedness, of all amounts due or to become due
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on the Senior Indebtedness, or payment of those amounts must have been provided
for, before the holders of the notes will be entitled to receive any payment or
distribution with respect to any notes.
The notes are effectively subordinated to all existing and future liabilities
of our subsidiaries. Any rights of ours to receive assets of any subsidiary
upon its liquidation or reorganization, and the consequent right of the holders
of the notes to participate in those assets, will be subject to the claims of
that subsidiary's creditors, including trade creditors, except to the extent
that we ourselves are recognized as a creditor of that subsidiary, in which
case our claims would still be subordinate to any securities interests in the
assets of that subsidiary and any indebtedness of that subsidiary senior to
that held by us. As of September 30, 1999, our subsidiaries had an aggregate of
approximately $12.3 million of liabilities to which the notes would be
effectively subordinated.
Conversion Rights
A holder of a note is entitled to convert it into shares of common stock at
any time on or prior to maturity, provided, that if a note is called for
redemption, the holder is entitled to convert it at any time before the close
of business on the last business day prior to the redemption date. A note in
respect of which a holder has delivered a Change in Control Purchase Notice (as
defined below) exercising that holder's option to require us to purchase that
holder's note, may be converted only if the Change in Control Purchase Notice
is withdrawn by a written notice of withdrawal delivered by the holder to the
Paying Agent prior to the close of business on the Change in Control Purchase
Date, in accordance with the terms of the Indenture.
The initial conversion price for the notes is $39.10 per share of common
stock, which is equal to a Conversion Rate of 25.5754 shares per $1,000
principal amount of notes. The Conversion Rate is subject to adjustment upon
the occurrence of some events described below. A holder otherwise entitled to a
fractional share of common stock will receive cash in an amount equal to the
market value of that fractional share based on the closing sale price on the
trading day immediately preceding the Conversion Date. A holder may convert a
portion of that holder's notes so long as that portion is $1,000 principal
amount or an integral multiple of $1,000.
To convert a note, a holder must:
. complete and manually sign the conversion notice on the back of the
note, or complete and manually sign a facsimile of the note, and deliver
the conversion notice to the Conversion agent, initially the Trustee, at
the office maintained by the Conversion Agent for that purpose;
. surrender the note to the Conversion Agent;
. if required, furnish appropriate endorsements and transfer documents;
and
. if required, pay all transfer or similar taxes.
Under the Indenture, the date on which all of these requirements have been
satisfied is the Conversion Date.
Upon conversion of a note, except as provided below, a holder will not
receive any cash payment representing accrued interest on the note. Our
delivery to the holder of the fixed number of shares of common stock into which
the note is convertible, together with any cash payment to be made instead of
any fractional shares, will satisfy our obligation to pay the principal amount
of the note, and the accrued and unpaid interest to the Conversion Date. Thus,
the accrued but unpaid interest to the Conversion Date will be deemed to be
paid in full rather than cancelled, extinguished or forfeited. Notwithstanding
the foregoing, accrued but unpaid cash interest will be payable upon any
conversion of notes at the option of the holder made concurrently with or after
acceleration of the notes following an Event of Default described under "--
Events of Default" below. Notes surrendered for conversion during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on that Interest Payment Date,
except notes to be redeemed on a date within that period, must be accompanied
by payment of an amount equal to the interest on the surrendered notes that the
registered holder is to receive. Except where notes surrendered for
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conversion must be accompanied by payment as described above, no interest on
converted notes will be payable by us on any Interest Payment Date subsequent
to the date of conversion. The Conversion Rate will not be adjusted at any time
during the term of the notes for accrued interest.
A certificate for the number of full shares of common stock into which any
note is converted, and any cash payment to be made instead of any fractional
shares, will be delivered as soon as practicable, but in any event no later
than the seventh business day following the Conversion Date. For a summary of
the U.S. federal income tax treatment of a holder receiving common stock upon
conversion, see "United States Federal Income Tax Considerations--Conversion of
Notes."
The Conversion Rate is subject to adjustment in some events, including:
. the issuance of shares of our common stock as a dividend or a
distribution with respect to common stock;
. some subdivisions and combinations of our common stock;
. the issuance to all holders of common stock of rights or warrants
entitling them, for a period not exceeding 45 days, to subscribe for
shares of our common stock at less than the current market price as
defined in the Indenture;
. the distribution to holders of common stock of evidences of our
indebtedness, securities or capital stock, cash or assets, including
securities, but excluding common stock distributions covered above,
those rights, warrants, dividends and distributions referred to above,
dividends and distributions paid exclusively in cash and distributions
upon mergers or consolidations resulting in a reclassification,
conversion, exchange or cancellation of common stock covered in a
Transaction adjustment described below;
. the payment of dividends and other distributions on common stock paid
exclusively in cash, if the aggregate amount of these dividends and
other distributions, when taken together with:
-- other all-cash distributions made within the preceding 12 months not
triggering a Conversion Rate adjustment, and
-- any cash and the fair market value, as of the expiration of the
tender or exchange offer referred to below, of consideration payable
in respect of any tender or exchange offer by us or one of our
subsidiaries for the common stock concluded within the preceding 12
months not triggering a Conversion Rate adjustment,
exceeds 10% of our aggregate market capitalization on the date of the
payment of those dividends and other distributions. The aggregate
market capitalization is the product of the current market price of our
common stock as of the trading day immediately preceding the date of
declaration of the applicable dividend multiplied by the number of
shares of common stock then outstanding; and
. payment to holders of common stock in respect of a tender or exchange
offer, other than an odd-lot offer, by us or one of our subsidiaries for
common stock as of the trading day next succeeding the last date tenders
or exchanges may be made pursuant to a tender or exchange offer by us or
one of our subsidiaries, which involves an aggregate consideration that,
together with:
-- any cash and the fair market value of other consideration payable in
respect of any tender or exchange offer by us or one of our
subsidiaries for the common stock concluded within the preceding 12
months not triggering a Conversion Rate adjustment, and
-- the aggregate amount of any all-cash distributions to all holders of
our common stock made within the preceding 12 months not triggering
a Conversion Rate adjustment,
exceeds 10% of our aggregate market capitalization.
However, adjustment is not necessary if holders may participate in the
transactions otherwise giving rise to an adjustment on a basis and with notice
that our Board of Directors determines to be fair and appropriate, or
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in some other cases specified in the Indenture. In cases where the fair market
value of the portion of assets, debt securities or rights, warrants or options
to purchase our securities applicable to one share of common stock distributed
to stockholders exceeds the Average Sale Price (as defined in the Indenture)
per share of common stock, or the Average Sale Price per share of common stock
exceeds the fair market value of that portion of assets, debt securities or
rights, warrants or options so distributed by less than $1.00, rather than
being entitled to an adjustment in the Conversion Rate, the holder of a note
upon conversion of the note will be entitled to receive, in addition to the
shares of common stock into which that note is convertible, the kind and
amounts of assets, debt securities or rights, options or warrants comprising
the distribution that the holder of that note would have received if that
holder had converted that note immediately prior to the record date for
determining the stockholders entitled to receive the distribution. The
Indenture permits us to increase the Conversion Rate from time to time.
In the event that we become a party to any transaction, including, and with
some exceptions:
. any recapitalization or reclassification of the common stock;
. any consolidation of us with, or merger of us into, any other Person, or
any merger of another Person into us;
. any sale, transfer or lease of all or substantially all of our assets;
or
. any compulsory share exchange
pursuant to which the common stock is converted into the right to receive other
securities, cash or other property (each of the above being referred to as a
"Transaction"), then the holders of notes then outstanding will have the right
to convert the notes only into the kind and amount of securities, cash or other
property receivable upon the consummation of that Transaction by a holder of
the number of shares of common stock issuable upon conversion of those notes
immediately prior to that Transaction.
In the case of a Transaction, each note will become convertible into the
securities, cash or property receivable by a holder of the number of shares of
the common stock into which the note was convertible immediately prior to that
Transaction. This change could substantially lessen or eliminate the value of
the conversion privilege associated with the notes in the future. For example,
if we were acquired in a cash merger each note would become convertible solely
into cash and would no longer be convertible into securities whose value would
vary depending on our future prospects and other factors.
In the event of a taxable distribution to holders of common stock that
results in an adjustment of the Conversion Rate, or in which holders otherwise
participate, or in the event the Conversion Rate is increased at our
discretion, the holders of the notes may, in some circumstances, be deemed to
have received a distribution subject to United States federal income tax as a
dividend. Moreover, in some other circumstances, the absence of an adjustment
to the Conversion Rate may result in a taxable dividend to holders of common
stock. See "United States Federal Income Tax Considerations--Adjustments to
Conversion Price."
Provisional Redemption
We may redeem the notes, in whole or in part, at any time prior to January
25, 2003, at a redemption price equal to $1,000 per $1,000 principal amount of
notes to be redeemed plus accrued and unpaid interest, if any, to the
provisional redemption date if (i) the closing price of our common stock has
exceeded 150% of the conversion price then in effect (as determined based on
the then effective Conversion Rate) for at least 20 trading days within a
period of 30 consecutive trading days ending on the trading day prior to the
date of mailing of the provisional redemption notice (which date shall be not
less than 10 nor more than 20 trading days prior to the provisional redemption
date) and (ii) the shelf registration statement covering resales of the notes
and the common stock issuable upon conversion of the notes is effective and
available for use and is expected to remain effective for the 30 days following
the provisional redemption date.
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Upon any provisional redemption, we will make an additional payment in cash
with respect to the notes called for redemption to holders on the notice date
in an amount equal to $130.43 per $1,000 principal amount of notes, less the
amount of any interest actually paid on the notes prior to the Notice Date. WE
WILL BE OBLIGATED TO MAKE THIS ADDITIONAL PAYMENT ON ALL NOTES CALLED FOR
PROVISIONAL REDEMPTION, INCLUDING ANY NOTES CONVERTED AFTER THE NOTICE DATE AND
BEFORE THE PROVISIONAL REDEMPTION DATE.
Redemption of Notes At Our Option
There is no sinking fund for the notes. On and after January 25, 2003, we
will be entitled to redeem the notes for cash as a whole at any time, or from
time to time in part, upon not less than 30 days' nor more than 60 days' notice
of redemption given by mail to holders of notes, unless a shorter notice is
satisfactory to the Trustee, at the redemption prices set out below plus
accrued cash interest to the redemption date. Any redemption of the notes must
be in integral multiples of $1,000 principal amount.
The table below shows redemption prices of a note per $1,000 principal amount
if redeemed during the periods described below.
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
January 25, 2003 through January 24, 2004................. 102.8%
Thereafter................................................ 101.4%
</TABLE>
If fewer than all of the notes are to be redeemed, the Trustee will select
the notes to be redeemed in principal amounts at maturity of $1,000 or integral
multiples of $1,000 by lot, pro rata or by another method the Trustee considers
fair and appropriate. If a portion of a holder's notes is selected for partial
redemption and that holder converts a portion of those notes prior to the
redemption, the converted portion will be deemed, solely for purposes of
determining the aggregate principal amount of the notes to be redeemed by us,
to be of the portion selected for redemption.
Change In Control Permits Purchase of Notes at the Option of the Holder
In the event of any Change in Control (as defined below) of EarthWeb, each
holder of notes will have the right, at the holder's option, subject to the
terms and conditions of the Indenture, to require us to purchase all or any
part of the holder's notes provided that the principal amount must be $1,000 or
an integral multiple of $1,000. Each holder of notes will have the right to
require us to make that purchase on the date that is 45 business days after the
occurrence of the Change in Control (the "Change in Control Purchase Date") at
a price equal to 100% of the principal amount of that holder's notes plus
accrued interest to the Change in Control Purchase Date (the "Change in Control
Purchase Price").
We may, at our option, instead of paying the Change in Control Purchase Price
in cash, pay the Change in Control Purchase Price in our common stock valued at
95% of the average of the closing sales prices of our common stock for the five
trading days immediately preceding and including the third day prior to the
Change in Control Date. We cannot pay the Change in Control Purchase Price in
common stock unless we satisfy the conditions described in the Indenture.
Within 15 business days after the Change in Control, we will mail to the
Trustee, each holder, and beneficial owners as required by applicable law, a
notice regarding the Change in Control, which will state, among other things:
. the date of the Change in Control and, briefly, the events causing the
Change in Control;
. the date by which the Change in Control Purchase Notice (as defined
below) must be given;
. the Change in Control Purchase Date;
. the Change in Control Purchase Price;
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. the name and address of the Paying Agent and the Conversion Agent;
. the Conversion Rate and any adjustments to the Conversion Rate;
. the procedures that holders must follow to exercise these rights;
. the procedures for withdrawing a Change in Control Purchase Notice;
. that holders who want to convert notes must satisfy the requirements
provided in the notes; and
. briefly, the conversion rights of holders of notes.
We will cause a copy of the notice regarding the Change in Control to be
published in The Wall Street Journal or another daily newspaper of national
circulation.
To exercise the purchase right, the holder must deliver written notice of
the exercise of the purchase right (a "Change in Control Purchase Notice") to
the Paying Agent or an office or agency maintained by us for that purpose in
the Borough of Manhattan, The City of New York, prior to the close of
business, on the Change in Control Purchase Date. Any Change in Control
Purchase Notice must state:
. the name of the holder;
. the certificate numbers of the notes to be delivered by the holder of
those notes for purchase by us;
. the portion of the principal amount of notes to be purchased, which
portion must be $1,000 or an integral multiple of $1,000; and
. that the notes are to be purchased by us pursuant to the applicable
provisions of the notes.
A holder may withdraw any Change in Control Purchase Notice by a written
notice of withdrawal delivered to the Paying Agent prior to the close of
business on the Change in Control Purchase Date. The notice of withdrawal must
state the principal amount and the certificate numbers of the notes as to
which the withdrawal notice relates and the principal amount, if any, which
remains subject to a Change in Control Purchase Notice.
Payment of the Change in Control Purchase Price for a note for which a
Change in Control Purchase Notice has been delivered and not withdrawn is
conditioned upon delivery of the note, together with necessary endorsements,
to the Paying Agent or an office or agency maintained by us for that purpose
in the Borough of Manhattan, The City of New York, at any time, whether prior
to, on or after the Change in Control Purchase Date, after the delivery of the
Change in Control Purchase Notice. Payment of the Change in Control Purchase
Price for the note will be made promptly following the later of the business
day following the Change in Control Purchase Date and the time of delivery of
the note. If the Paying Agent holds, in accordance with the terms of the
Indenture, money sufficient to pay the Change in Control Purchase Price of
that note on the business day following the Change in Control Purchase Date,
then, immediately after the Change in Control Purchase Date, that note will
cease to be outstanding and interest on that note will cease to accrue and
will be deemed paid, whether or not that note is delivered to the Paying
Agent, and all other rights of the holder will terminate, other than the right
to receive the Change in Control Purchase Price upon delivery of that note.
Under the Indenture, "Change in Control" of EarthWeb is deemed to have
occurred upon the occurrence of any of the following events:
. any "person "or "group " (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")),
acquires the beneficial ownership (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, through a purchase, merger
or other acquisition transaction, of more than 50% of our total
outstanding voting stock other than an acquisition by us, any of our
subsidiaries or any of our employee benefit plans;
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. we consolidate with, or merge with or into another Person or convey,
transfer, lease or otherwise dispose of all or substantially all of our
assets to any Person, or any Person consolidates with or merges with or
into us, in any such event pursuant to a transaction in which our
outstanding voting stock is converted into or exchanged for cash,
securities or other property, other than where:
-- our voting stock is not converted or exchanged at all, except to the
extent necessary to reflect a change in our jurisdiction of
incorporation, or is converted into or exchanged for voting stock,
other than Redeemable Capital Stock, of the surviving or transferee
corporation and
-- immediately after such transaction, no "person" or "group" (as such
terms are used in Sections 13(d)and 14(d)of the Exchange Act) is the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person will be deemed to have
"beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more
than 50% of the total outstanding voting stock of the surviving or
transferee corporation;
. during any consecutive two-year period, individuals who at the beginning
of that two-year period constituted our Board of Directors (together
with any new directors whose election to such Board of Directors, or
whose nomination for election by our stockholders, was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason
to constitute a majority of our Board of Directors then in office; or
. our stockholders pass a special resolution approving a plan of
liquidation or dissolution.
"Redeemable Capital Stock" means any class or series of capital stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the final
stated maturity of the notes or is redeemable at the option of the holder of
the notes at any time prior to such final stated maturity, or is convertible
into or exchangeable for debt securities at any time prior to such final stated
maturity. Redeemable Capital Stock will not include any common stock the holder
of which has a right to put to us upon some terminations of employment.
The Indenture does not permit our Board of Directors to waive our obligation
to purchase notes at the option of the holder in the event of a Change in
Control of EarthWeb.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be applicable, and
will file Schedule 13E-4 or any other schedule required under the Exchange Act
in connection with any offer by us to purchase notes at the option of the
holders of notes upon a Change in Control. In some circumstances, the Change in
Control purchase feature of the notes may make more difficult or discourage a
takeover of us and, thus, the removal of incumbent management. The Change in
Control purchase feature, however, is not the result of management's knowledge
of any specific effort to accumulate shares of common stock or to obtain
control of us by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions.
Instead, the Change in Control purchase feature is the result of negotiations
between us and the initial purchasers.
If a Change in Control were to occur, we cannot assure you that we would have
funds sufficient to pay the Change in Control Purchase Price for all of the
notes that might be delivered by holders seeking to exercise the purchase
right, because we or our subsidiaries might also be required to prepay some
indebtedness or obligations having financial covenants with change of control
provisions in favor of the holders of that indebtedness or those obligations.
In addition, our other indebtedness may have cross-default provisions that
could be triggered by a default under the Change in Control provisions thereby
possibly accelerating the maturity of that other indebtedness. In that case,
the holders of the notes would be subordinated to the prior claims of the
holders of other indebtedness having cross-default provisions. In addition, our
ability to purchase
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the notes with cash may be limited by the terms of our then-existing borrowing
agreements. No notes may be purchased pursuant to the provisions described
above if there has occurred and is continuing an Event of Default described
under "--Events of Default" below (other than a default in the payment of the
Change in Control Purchase Price with respect to those notes).
Consolidation, Merger And Sale Of Assets
We, without the consent of any holders of outstanding notes, are entitled to
consolidate with or merge into or transfer or lease our assets substantially as
an entirety to, any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof (each
a "Person"), and any Person is entitled to consolidate with or merge into, or
transfer or lease its assets substantially as an entirety to us, provided that:
. the Person, if other than us, formed by a consolidation or into which we
are merged or the Person which acquires or leases our assets
substantially as an entirety is a corporation, partnership, limited
liability company or trust organized and existing under the laws of any
United States jurisdiction and expressly assumes our obligations on the
notes and under the Indenture;
. immediately after giving effect to the consolidation, merger, transfer
or lease, no Event of Default (as defined above), and no event which,
after notice or lapse of time or both, would become an Event of Default,
happened and is continuing; and
. an officer's certificate and an opinion of counsel, each stating that
the consolidation, merger, transfer or lease complies with the
provisions of the Indenture, have been delivered by us to the Trustee.
Information Requirement
We have agreed that, during any period in which we are not subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, to
make available to holders of the notes, or beneficial owners of interests
therein, or any prospective purchaser thereof, the information required by Rule
144A(d)(4) to be made available in connection with the sale of such note or
beneficial interest.
Events Of Default
The Indenture provides that, if an Event of Default specified in the
Indenture occurs and is continuing, either the Trustee or the holders of not
less than 25% in aggregate principal amount of the notes then outstanding may
declare the principal amount of, and accrued interest to the date of that
declaration, on all the notes to be immediately due and payable. In the case of
some events of bankruptcy or insolvency, the principal amount of, and accrued
interest on all the notes to the date of the occurrence of that event, will
automatically become and be immediately due and payable. Upon any acceleration
of the payment of principal amount and accrued interest, the subordination
provisions of the Indenture will preclude any payment being made to holders of
notes until the earlier of:
. 120 days or more after the date of that acceleration; and
. the payment in full of all Senior Indebtedness,
but only if such payment is then otherwise permitted under the terms of the
Indenture. See "--Subordination."
Under some circumstances, the holders of a majority in aggregate principal
amount of the notes may rescind any acceleration with respect to the notes and
its consequences.
Interest will continue to accrue and be payable on demand upon a default in:
. the payment of:
- principal and interest when due,
- redemption amounts, or
- Change in Control Purchase Price;
. the delivery of shares of common stock to be delivered on conversion of
notes; or
. the payment of cash in lieu of fractional shares to be paid on
conversion of notes,
in each case to the extent that the payment of interest that is due is legally
enforceable.
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Under the Indenture, Events of Default include:
. default in payment of the principal amount, interest when due (if that
default in payment of interest continues for 30 days), any redemption
amounts or the Change in Control Purchase Price with respect to any
note, when that principal amount, interest, redemption amount or Change
in Control Purchase Price becomes due and payable (whether or not that
payment is prohibited by the provisions of the Indenture);
. failure by us to deliver shares of common stock, together with cash
instead of fractional shares, when those shares of common stock, or cash
instead of fractional shares, are required to be delivered following
conversion of a note, and that default continues for 10 days;
. failure by us to comply with any of our other agreements in the notes or
the Indenture upon the receipt by us of notice of that default from the
Trustee or from holders of not less than 25% in aggregate principal
amount of the notes then outstanding and our failure to cure that
default within 60 days after our receipt of that notice;
. default under any bond, note or other evidence of indebtedness for money
borrowed by us having an aggregate outstanding principal amount in
excess of $10 million, which default shall have resulted in that
indebtedness being accelerated, without that indebtedness being
discharged or that acceleration having been rescinded or annulled within
30 days after our receipt of the notice of default from the Trustee or
receipt by us and the Trustee of the notice of default from the holders
of not less than 25% in aggregate principal amount of the notes then
outstanding, unless that default has been cured or waived; or
. some events of bankruptcy or insolvency.
The Trustee will, within 90 days after the occurrence of any default, mail to
all holders of the notes notice of all defaults of which the Trustee is aware,
unless those defaults have been cured or waived before the giving of that
notice. The Trustee may withhold notice as to any default other than a payment
default, if it determines in good faith that withholding the notice is in the
interests of the holders. The term default for the purpose of this provision
means any event that is, or after notice or lapse of time or both would become,
an Event of Default with respect to the notes.
The holders of a majority in aggregate principal amount of the outstanding
notes may direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee, provided that the direction must not be in conflict with any
law or the Indenture and the direction is subject to some other limitations.
The Trustee may refuse to perform any duty or exercise any right or power or
extend or risk its own funds or otherwise incur any financial liability unless
it receives indemnity satisfactory to it against any loss, liability or
expense. No holder of any note will have any right to pursue any remedy with
respect to the Indenture or the notes, unless:
. that holder has previously given the Trustee written notice of a
continuing Event of Default;
. the holders of at least 25% in aggregate principal amount of the
outstanding notes have made a written request to the Trustee to pursue
the relevant remedy;
. the holder giving that written notice has, or the holders making that
written request have, offered to the Trustee reasonable security or
indemnity against any loss, liability or expense satisfactory to it;
. the Trustee has failed to comply with the request within 60 days after
receipt of that notice, request and offer of security or indemnity; and
. the holders of a majority in aggregate principal amount of the
outstanding notes have not given the Trustee a direction inconsistent
with that request within 60 days after receipt of that request.
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The right of any holder:
. to receive payment of principal, any redemption amounts, the Change in
Control Purchase Price or interest in respect of the notes held by that
holder on or after the respective due dates expressed in the notes;
. to convert those notes; or
. to bring suit for the enforcement of any payment of principal, any
redemption amounts, the Change in Control Purchase Price or interest in
respect of those notes held by that holder on or after the respective
due dates expressed in the notes, or the right to convert;
will not be impaired or adversely affected without that holder's consent.
The holders of a majority in aggregate principal amount of notes at the time
outstanding may waive any existing default and its consequences except:
. any default in any payment on the notes;
. any default with respect to the conversion rights of the notes; or
. any default in respect of the covenants or provisions in the Indenture
that may not be modified without the consent of the holder of each note
as described in "--Modification, Waiver and Meetings" below.
When a default is waived, it is deemed cured and will cease to exist, but
that waiver does not extend to any subsequent or other default or impair any
consequent right.
We will be required to furnish to the Trustee annually a statement as to any
default by us in the performance and observance of our obligations under the
Indenture. In addition, we will be required to file with the Trustee written
notice of the occurrence of any default or Event of Default within five
business days of our becoming aware of the occurrence of any default or Event
of Default.
Modification, Waiver And Meetings
The Indenture or the notes may be modified or amended by us and the Trustee
with the consent of the holders of not less than a majority in aggregate
principal amount of the notes then outstanding. The Indenture or the notes may
not be modified or amended by us without the consent of each holder affected
thereby, to, among other things:
. reduce the principal amount, Change in Control Purchase Price or any
redemption amounts with respect to any note, or extend the stated
maturity of any note or alter the manner of payment or rate of interest
on any note or make any note payable in money or securities other than
that stated in the note;
. make any reduction in the principal amount of notes whose holders must
consent to an amendment or any waiver under the Indenture or modify the
Indenture provisions relating to those amendments or waivers;
. make any change that adversely affects the right of a holder to convert
any note;
. modify the provisions of the Indenture relating to the ranking of the
notes in a manner adverse to the holders of the notes; or
. impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the notes.
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Without the consent of any holder of notes, we and the Trustee may amend the
Indenture to:
. cure any ambiguity, defect or inconsistency, provided, however, that the
amendment to cure any ambiguity, defect or inconsistency does not
materially adversely affect the rights of any holder of notes;
. provide for the assumption by a successor of our obligations under the
Indenture;
. provide for uncertificated notes in addition to certificated notes, as
long as those uncertificated notes are in registered form for United
States federal income tax purposes;
. make any change that does not adversely affect the rights of any holder
of notes;
. make any change to comply with any requirement of the Securities and
Exchange Commission in connection with the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended;
. add to our covenants or our obligations under the Indenture for the
protection of holders of the notes; or
. surrender any right, power or option conferred by the Indenture on us.
Form, Denomination, Exchange, Registration, Transfer and Payment
We expect to initially issue the notes in the form of one or more global
notes. The global notes will be deposited with, or on behalf of The Depository
Trust Company ("DTC"), and registered in the name of DTC or its nominee. The
notes will be issued in denominations of $1,000 and $1,000 multiples.
The principal, any premium and any interest on the notes will be payable,
without coupons, and the exchange of and the transfer of the notes will be
registrable, at our office or agency maintained for that purpose in the Borough
of Manhattan, The City of New York and at any other office or agency maintained
for that purpose.
Holders may present the notes for exchange, and for registration of transfer,
with the form of transfer endorsed on those notes, or with a satisfactory
written instrument of transfer, duly executed, at the office of the appropriate
securities registrar or at the office of any transfer agent designated by us
for that purpose, without service charge and upon payment of any faxes and
other governmental charges as described in the Indenture. We will appoint the
Trustee of the notes as securities registrar under the Indenture. We may at any
time rescind designation of any transfer agent or approve a change in the
location through which any transfer agent acts, provided that we maintain a
transfer agent in each place of payment for the notes. We may at any time
designate additional transfer agents for the notes.
All monies paid by us to a paying agent for the payment of principal, any
premium or any interest, on any note which remains unclaimed for two years
after the principal, premium or interest has become due and payable may be
repaid to us, and after the two-year period, the holder of that note may look
only to us for payment.
In the event of any redemption, we will not be required to:
. issue, register the transfer of or exchange notes during a period
beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of notes to be redeemed and ending at
the close of business on the day of that mailing; or
. register the transfer of or exchange any note called for redemption,
except, in the case of any notes being redeemed in part, any portion not
being redeemed.
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Book-Entry System
Upon the issuance of a global note, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of the notes
represented by that global note to the accounts of institutions or persons,
commonly known as participants, that have accounts with DTC or its nominee. The
accounts to be credited will be designated by the underwriters, dealers or
agents. Ownership of beneficial interests in a global note will be limited to
participants or persons that may hold interests through participants. Ownership
of interests in a global note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by DTC
(with respect to participants' interests) and the participants (with respect to
the owners of beneficial interests in that global note). The laws of some
jurisdictions may require that some purchasers of securities take physical
delivery of the securities in definitive form. These limits and laws may impair
the ability to transfer beneficial interests in a global note.
So long as DTC, or its nominee, is the registered holder and owner of the
global note, DTC or its nominee, as the case may be, will be considered the
sole owner and holder for all purposes of the notes and for all purposes under
the Indenture. Except as described below, owners of beneficial interests in a
global note will not be entitled to have the notes represented by that global
note registered in their names, will not receive or be entitled to receive
physical delivery of notes in definitive form and will not be considered to be
the owners or holders of any notes under the Indenture or that global note.
Accordingly, each person owning a beneficial interest in a global note must
rely on the procedures of DTC and, if that person is not a participant, on the
procedures of the participant through which that person owns its interest, to
exercise any rights of a holder of notes under the Indenture of that global
note. We understand that under existing industry practice, in the event we
request any action of holders of notes or if an owner of a beneficial interest
in a global note desires to take any action that DTC, as the holder of that
global note is entitled to take, DTC would authorize the participants to take
that action, and that the participants would authorize beneficial owners owning
through them to take those actions or would otherwise act upon the instructions
of beneficial owners owning through them.
Payments of principal of and any premium and any interest on the notes
represented by a global note will be made to DTC or its nominee, as the case
may be, as the registered owner and holder of that global note, against
surrender of the notes at the principal corporate trust office of the Trustee.
Interest payments will be made at the principal corporate trust office of the
Trustee or by a check mailed to the holder at its registered address.
We expect that DTC, upon receipt of any payment of principal, and any premium
and any interest, in respect of a global note, will immediately credit the
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that global note as
shown on the records of the DTC. We expect that payments by participants to
owners of beneficial interests in a global note held through those participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in 'street name,' and will be the responsibility of those
participants. We, our agent, the Trustee and its agent will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in a global note or
for maintaining, supervising or reviewing any records relating to those
beneficial ownership interests or for any other aspect of the relationship
between DTC and its participants or the relationship between those participants
and the owners of beneficial interests in that global note owning through those
participants.
Unless and until it is exchanged in whole or in part for notes in definitive
form, a global note may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or a successor to DTC selected or
approved by us or to a nominee of that successor to DTC.
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The notes represented by a global note will be exchangeable for notes in
definitive form of like tenor as that global note in denominations of $1,000
and in any greater amount that is an integral multiple of $1,000 if:
. DTC notifies us and the Trustee that it is unwilling or unable to
continue as DTC for that global note or if at any time DTC ceases to be
a clearing agency registered under the Exchange Act and a successor
depositary is not appointed by us within 90 days; or
. there is, or continues to be, an Event of Default or there is an event
which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the notes.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for notes registered in the names which DTC will instruct the
Trustee. It is expected that DTC's instructions may be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interests in that global note. Subject to the foregoing, a global note is not
exchangeable except for a global note or global notes of the same aggregate
denominations to be registered in the name of DTC or its nominee.
Notices
Except as otherwise provided in the Indenture, notices to holders of notes
will be given by mail to the addresses of holders of the notes as they appear
in the Security Register.
Replacement Of Notes
Any mutilated note will be replaced by us at the expense of the holder upon
surrender of that note to the Trustee. Notes that become destroyed, stolen or
lost will be replaced by us at the expense of the holder upon delivery to the
Trustee of notes or evidence of the destruction, loss or theft of the notes
satisfactory to us and the Trustee. In the case of a destroyed, lost or stolen
note, an indemnity satisfactory to the Trustee and us may be required at the
expense of the holder of that note before a replacement note will be issued.
Governing Law
The Indenture, the notes and the registration rights agreement are governed
by, and construed in accordance with, the laws of the State of New York.
Information Regarding The Trustee
State Street Bank and Trust Company of California, N.A. is the Trustee,
Securities Registrar, Paying Agent and Conversion Agent under the Indenture.
Registration Rights of Holders of the Notes
We and the initial purchasers entered into the registration rights agreement
with respect to the notes and the common stock issuable upon conversion of the
notes.
Under the registration rights agreement, we generally will be required to:
. file, within 60 days after the closing date for this offering, a shelf
registration statement covering the notes and the common stock issuable
upon conversion of the notes;
. use our best efforts to cause the shelf registration to become effective
as promptly as practicable; and
. use our best efforts to keep the shelf registration statement effective
until the earlier of the sale of all the transfer restricted securities
pursuant to the shelf registration statement or two years after the
latest date of original issuance.
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When we use the term "transfer restricted securities" in this section, we
mean the notes and the common stock issued upon conversion of the notes until
the earlier of the following events:
. the date the note or common stock issued upon conversion has been
effectively registered under the Securities Act of 1933 and sold or
transferred pursuant to the shelf registration statement;
. the date on which the note or common stock issued upon conversion is
distributed to the public pursuant to Rule 144 under the Securities Act
of 1933 or is available for sale pursuant to Rule 144(k) under the
Securities Act of 1933; or
. the date the note or common stock issued upon conversion ceases to be
outstanding.
We will be required to pay predetermined liquidated damages if one of the
following "registration defaults" occurs:
. we do not file the shelf registration statement within 60 days after the
closing date for this offering;
. the Securities and Exchange Commission does not declare the shelf
registration statement effective within 120 days after the closing date
of this offering; or
. after it has been declared effective, the shelf registration statement
ceases to be effective or available for more than 90 days in any period
of 365 consecutive days.
If a registration default occurs, liquidated damages initially will accrue
(a) for the notes that are transfer restricted securities, at the rate of $.05
per week per $1,000 principal amount of the notes and (b) for any common stock
issued on conversion of the notes that are transfer restricted securities, at
an equivalent rate based on the conversion price. If the registration default
has not been cured within 90 days, the liquidated damages rate will increase by
$.05 per week per $1,000 principal amount of the notes that are transfer
restricted securities (and an equivalent amount for any common stock issued
upon conversion that are transfer restricted securities) for each subsequent
90-day non-compliance period, up to a maximum rate of $.25 per week per $1,000
principal amount of the notes that are transfer restricted securities.
Liquidated damages generally will be payable at the same time as interest
payments on the notes.
We may suspend the use of the shelf registration statement in certain
circumstances described in the registration rights agreement upon notice to the
holders of the transfer restricted securities, subject to the rights of the
holders of transfer restricted securities to receive liquidated damages in
accordance with the registration rights agreement. We will provide copies of
the prospectus and notify holders of notes and common stock issued upon
conversion when the shelf registration statement is filed and when it becomes
effective.
We will give notice to all holders of the filing and effectiveness of the
shelf registration statement. You will need to complete the notice and
questionnaire attached as Annex A to this offering memorandum prior to any
intended distribution of your transfer restricted securities pursuant to the
shelf registration statement. We refer to this form of notice and questionnaire
as the "questionnaire." You are required to complete and deliver the
questionnaire prior to the effectiveness of the shelf registration statement so
that you can be named as selling stockholders in the prospectus. Upon receipt
of your completed questionnaire after the effectiveness of the shelf
registration statement, we will, as promptly as practicable but in any event
within five business days of receipt, file any amendments or supplements to the
shelf registration statement so that you may use the prospectus, subject to our
right to suspend as set forth above. We will pay liquidated damages to you if
we fail to make this filing in the required time. If this filing requires a
post-effective amendment to the shelf registration statement, we will pay
liquidated damages if this amendment is not declared effective within 45
business days of the filing of the post-effective amendment. Under the
registration rights agreement, you will be required to deliver a prospectus to
purchasers and will be bound by the provisions of the agreement.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes the material United States federal income tax
consequences of purchasing, owning, and disposing of the notes and the common
stock into which you may convert the notes. This summary is not a complete
analysis of all the potential tax consequences that you may need to consider
before investing based on your particular circumstances.
This summary is based on the Internal Revenue Code of 1986, as amended, the
applicable Treasury regulations promulgated or proposed under the Internal
Revenue Code, judicial authority and administrative rulings as of the date
hereof. Any of these may change, possibly on a retroactive basis.
This summary deals only with beneficial owners of notes and common stock who
hold the notes and common stock into which the notes are converted as "capital
assets." It does not address tax consequences under any special tax rules.
Special rules may apply, for example, to banks, tax-exempt organizations,
pension funds, insurance companies, dealers in securities or foreign
currencies, persons participating in a hedging transaction, a "straddle,"
constructive sale transaction or "conversion transaction," or persons that have
a "functional currency" other than the U.S. dollar. In addition, this
discussion does not address the tax consequences to non-U.S. holders. This
summary discusses the tax consequences to holders who purchase the notes at
their "issue price" and subsequent purchasers of the notes. The "issue price"
is the first price at which a substantial portion of the notes is sold to the
public, and this summary assumes that the issue price is the original offering
price to investors. We have not sought any ruling from the Internal Revenue
Service (the "IRS") with respect to the statements and conclusions in this
summary. We cannot guarantee that the IRS will agree with these statements and
conclusions.
Before you invest in the notes, you should consult your own tax adviser to
determine how the United States federal income tax laws apply to your
particular situation and for information about any tax consequences arising
under other tax laws, such as United States federal estate tax laws and the
laws of any state, local or foreign taxing jurisdiction or under any applicable
tax treaty.
This summary applies to you if you are a U.S. holder. For purposes of this
discussion, the term "U.S. holder" means a beneficial owner of a note or common
stock that is for U.S. federal income tax purposes:
. a citizen or resident of the United States;
. a corporation or other entity created or organized in or under the laws
of the United States or any political subdivision thereof; or
. an estate or trust, the income of which is subject to United States
federal income taxation regardless of its source.
If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding notes or common stock should
consult their tax advisers.
Although the treatment of the notes and, in particular, the additional
payment that we may be required to make upon a provisional redemption of the
notes is not entirely clear, we intend to take the position that the notes will
be treated as described below.
Payment of Interest
You generally must include interest on notes in your income as ordinary
income at the time you receive or accrue the interest based on your method of
accounting for United States federal income tax purposes. We must pay
liquidated damages to you in specified circumstances. According to Treasury
regulations, the possibility of liquidated damages being paid to you will not
affect the amount of interest income you recognize, in advance of the payment
of any liquidated damages, if there is only a remote chance as of the date the
notes were issued that you will receive liquidated damages. We believe that the
likelihood that we will pay liquidated damages is remote. Therefore, we do not
intend to treat the potential payment of liquidated damages as part of the
yield to
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maturity of any notes. If we pay you liquidated damages, however, you would
treat the payments as interest income when you receive them. Similarly, we
intend to take the position that the likelihood of a redemption or repurchase
of the notes is remote, and likewise do not intend to treat the possibility of
any premium payable on a redemption or repurchase as affecting the yield to
maturity of any notes.
Sale, Exchange or Redemption of Notes
You generally will recognize gain or loss on the sale, exchange (other than a
conversion) or redemption of notes equal to the difference between (1) the
amount of cash proceeds and the fair market value of any property you receive
on the sale, exchange or redemption (except any portion that represents accrued
interest income, which is taxable as ordinary income) and (2) your adjusted tax
basis in the notes. Your adjusted tax basis generally will equal the cost of
the notes to you. Your gain or loss generally will be capital gain or loss,
except as set forth below under "Market Discount and Bond Premium." Capital
gain or loss will be long-term if you have held the notes for more than one
year and will be short-term if you have held the notes for one year or less.
Long-term capital gains for noncorporate taxpayers, including individuals, are
taxed at a maximum stated rate of 20%, and short-term capital gains at a
maximum stated rate of 39.6%. If you recognize capital loss, your deduction for
the loss may be limited. Corporate taxpayers pay a maximum regular stated tax
rate of 35% on all net capital gains and ordinary income.
Market Discount and Bond Premium
If you purchase a note after the original issue for an amount less than its
principal amount, then the difference will be treated as market discount. Under
the market discount rules, you will be required, subject to a de minimis
exception, to treat any principal payment on a note or any gain on the sale,
exchange, retirement or other disposition of a note, as ordinary income to the
extent of the market discount that has not previously been included in income
and that is treated as having accrued on such note at the time of such payment
or disposition. If a note with accrued market discount is converted into common
stock pursuant to the conversion feature, the amount of such accrued market
discount generally will be taxable as ordinary income upon the disposition of
the common stock. In addition, you may be required to defer, until the maturity
of the note or its earlier disposition in a taxable transaction, the deduction
of all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry such note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the note, unless you elect
to accrue on a constant interest method. You may elect to include market
discount in income currently as it accrues (on either a ratable or constant
interest method), in which case the rule described above regarding deferral of
interest deductions will not apply. This election to include market discount in
income currently, once made, applies to all market discount obligations
acquired by you on or after the first day of the first taxable year to which
the election applies and may not be revoked without the consent of the IRS.
If you purchase a note for an amount in excess of its stated principal
amount, plus accrued interest, you generally will be considered to have
purchased the note with "amortizable bond premium." You generally may elect to
amortize such premium from the purchase date to the note's maturity date under
a constant yield method. Amortizable bond premium generally is treated as an
offset to interest income on the note and not as a separate deduction.
Amortizable bond premium, however, will not include any premium attributable to
the note's conversion feature. Also, because the notes may be redeemed by us at
a price in excess of their principal amount, you may be required to amortize
any premium based on an earlier call date and the call price payable at that
time. An election to amortize amortizable bond premium on a constant yield
method, once made, generally applies to all debt obligations held or
subsequently acquired by you on or after the first day of the first taxable
year to which the election applies and my not be revoked without the consent of
the IRS.
You should consult your own tax advisors concerning the existence of, and tax
consequences of, market discount and amortizable bond premium.
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Conversion of Notes
You generally will not recognize any income, gain or loss on conversion of
notes into common stock, except for (i) common stock you receive with respect
to interest that has accrued but not included in income, (ii) any cash you
receive instead of a fractional share of common stock, as described below, and
(iii) to the extent described below, cash received as an additional payment if
you convert your notes after receiving notice of a provisional redemption. Upon
your conversion of a note into common stock, interest that has accrued but not
been included in income will be taxable to you as ordinary interest income.
Although the treatment of the additional payment that we will be required to
make to you if you convert your notes after receiving notice of a provisional
redemption is unclear, it is likely that you will be required to recognize
gain, if any, that you realize to the extent not in excess of such cash
payment. Any gain so recognized will generally be capital gain. Your tax basis
in the common stock will be the same as your adjusted tax basis in the notes at
the time of conversion, increased by the amount of gain, if any, recognized as
a result of accrued interest or the receipt of the cash payment described
above, and reduced by any basis attributable to fractional shares. For capital
gains purposes, your holding period for the common stock will generally include
your holding period for the notes you converted except that the holding period
of the common stock allocable to interest that has accrued but not been
included in income may commence with the conversion.
You should treat cash you receive instead of a fractional share of common
stock as a payment in exchange for the fractional share of common stock. This
will result in capital gain or loss (measured by the difference between the
cash you receive for the fractional share and your adjusted tax basis in the
fractional share after taking into account any increase in basis attributable
to gain recognized as a result of the receipt of a cash payment from us in
connection with a provisional redemption of notes).
Dividends on Common Stock
If we make a distribution on common stock, the distribution generally will be
treated as a dividend and taxed as ordinary income to the extent of our current
or accumulated earnings and profits. A distribution in excess of earnings and
profits is treated as a tax-free return of capital to the extent of your tax
basis in the common stock, on a share-by-share basis, and then as gain from the
sale or exchange of such stock.
A dividend to a corporate holder may qualify for a deduction of 70% of the
dividend received, subject to limitations in certain cases, if the holder owns
less than 20% of the voting power and value of our stock (disregarding certain
nonvoting, nonconvertible, nonparticipating preferred stock). A corporate
holder that owns 20% or more of the voting power and value of our stock
(similarly disregarding such preferred stock) generally will qualify for an 80%
dividends received deduction.
Adjustments to Conversion Price
The conversion price of the notes may change under certain circumstances. In
such a case, you may be treated as having received a constructive distribution
whether or not your notes are ever converted. Such a distribution will
generally be deemed to occur if, and to the extent that, the adjustment in the
conversion price increases your proportionate interest in our assets or
earnings and profits. The constructive distribution may be taxed as ordinary
income, subject to a possible dividends received deduction if you are a
corporate holder, to the extent of our current and/or accumulated earnings and
profits. For example, an adjustment to reflect a taxable dividend to holders of
common stock will result in a constructive distribution. Common stockholders
will generally be treated as having received a constructive distribution if
there is not a full adjustment to the conversion price of the notes to reflect
a stock dividend or other event that would (absent such adjustment) increase
the proportionate interest of the common stockholders in our assets or earnings
and profits. In such an event, the constructive distribution will be taxable as
ordinary income, subject to a possible dividends received deduction if you are
a corporate holder, to the extent of our current and/or accumulated earnings
and profits.
36
<PAGE>
Sale of Common Stock
On the sale or exchange of common stock, you generally will recognize capital
gain or loss equal to the difference between (1) the amount of cash and the
fair market value of any property you receive on the sale or exchange and (2)
your adjusted tax basis in the common stock. This capital gain or loss will be
long-term if you have held the stock for more than one year and will be short-
term if you have held the stock for one year or less. Long-term capital gains
for noncorporate taxpayers, including individuals, are taxed at a maximum
stated rate of 20%, and short-term capital gains at a maximum stated rate of
39.6%. A holder's basis and holding period in common stock received upon
conversion of notes are determined as discussed above under "Conversion of
Notes." If you recognize capital loss, your deduction for the loss may be
limited. Corporate taxpayers pay a maximum regular stated tax rate of 35% on
all net capital gains and ordinary income.
Information Reporting and Backup Withholding Tax
In general, a broker or we must report to the IRS payments of principal,
premium and interest on notes, payments of dividends on common stock, payments
of the proceeds of the sale or exchange of notes, and payments of the proceeds
of the sale or exchange of common stock. The payer or broker must backup
withhold at the rate of 31% if
. you fail to furnish a taxpayer identification number to the payer or
broker or establish an exemption from backup withholding;
. the IRS notifies the payer or broker that the number you furnished is
incorrect;
. you have underreported interest or dividends; or
. you have failed to certify under penalties of perjury that you are not
subject to backup withholding under the Internal Revenue Code.
Some holders, including all corporations, are exempt from backup withholding.
You may credit any amounts withheld under the backup withholding rules against
your United States federal income tax liability, or receive a refund, if you
furnish the required information to the IRS.
Treasury regulations that apply to payments made after December 31, 2000 will
modify current information reporting and backup withholding procedures and
requirements. These regulations provide certain presumptions regarding the
status of holders when payments to the holders cannot be reliably associated
with appropriate documentation provided to the payer. For payments made after
December 31, 2000, holders must provide certification, if applicable, that
conforms to the requirements of the regulations, subject to certain
transitional rules permitting certification in accordance with current Treasury
regulations until December 31, 2000. Because the application of these
regulations may depend on your particular circumstances, we urge you to consult
your tax adviser regarding the application of these regulations.
PLAN OF DISTRIBUTION
On January 25, 2000, we issued $75,000,000 aggregate principal amount of 7%
Convertible Subordinated Notes due 2005 to the initial purchasers. We agreed to
register the notes and the underlying conversion shares under the Securities
Act for resale from time to time to the public. Under the registration rights
agreement between EarthWeb and the initial purchasers, we must use our best
efforts to cause the registration statement, or a replacement, to be
continuously effective under the Securities Act until the earlier of (1) two
years from the original effective date of the registration statement of which
this prospectus forms a part or (2) such time as the selling securityholders
have sold all transfer restricted securities.
The sale of all or a portion of these securities by the selling
securityholders may be effected from time to time at prevailing market prices
at the time of such sales, at prices related to such prevailing prices, at
fixed prices that may be changed or at negotiated prices. The selling
securityholders may effect such transactions by selling directly to purchasers
in negotiated transactions, to dealers acting as principals or through one or
more
37
<PAGE>
brokers, or any combination of these methods of sale. In addition, securities
may be transferred in connection with the settlement of call options, short
sales or similar transactions that may be effected by the selling
securityholders. Dealers or brokers may receive compensation in the form of
discounts, concessions or commissions from the selling securityholders. The
selling stockholders and any brokers or dealers that participate in the
distribution may under certain circumstances be "underwriters" within the
meaning of the Securities Act, and any commissions received by such brokers or
dealers and any profits realized on the resale of shares by them may be
underwriting discounts and commissions under the Securities Act. EarthWeb and
the selling securityholders may agree to indemnify such brokers or dealers
against certain liabilities, including liabilities under the Securities Act.
To the extent required under the Securities Act or the rules of the
Securities and Exchange Commission, a supplemental prospectus will be filed
disclosing as appropriate:
. the name of any such brokers or dealers,
. the number of securities involved,
. the price at which such securities are to be sold,
. the commissions paid or discounts or concessions allowed to such brokers
or dealers, where applicable,
. that such brokers or dealers did not conduct any investigation to verify
the information set out in this prospectus and
. other facts material to the transaction.
We can give no assurance that any of the selling securityholders will sell
any or all of the notes or conversion shares.
The aggregate proceeds to the selling securityholders from the sale of the
notes or common stock into which the notes are convertible offered by them
hereby will be the purchase price of such notes or common stock less discounts
and commissions, if any. Each of the selling securityholders reserves the right
to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of notes or common stock to be made
directly or through agents. We will not receive any of the proceeds from this
offering.
Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
LEGAL MATTERS
The validity of the notes and the shares of common stock issuable upon
conversion of the notes offered hereby has been passed upon for EarthWeb by
Morrison & Foerster LLP, New York, New York.
EXPERTS
The balance sheets of EarthWeb Inc. as of December 31, 1998 and 1997 and the
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1998, the balance sheets of
D&L Online, Inc. as of December 31, 1998 and 1997 and the statements of
earnings, stockholders' equity and cash flows for the two years ended, and the
balance sheet of MicroHouse as of December 31, 1998 and the statement of
operations and comprehensive loss, stockholders' deficit and cash flows for the
year ended incorporated by reference in this prospectus and in the registration
statement have been included in reliance on the reports of
PricewaterhouseCoopers LLP, independent auditors, given on the authority of
that firm as experts in accounting and auditing.
38
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to EarthWeb and the securities offered hereby,
reference is made to the registration statement, including the exhibits and
schedules thereto. Statements contained in this prospectus as to the contents
of any contract or other document referred to in this prospectus are not
necessarily complete and, where this contract is an exhibit to the registration
statement, each statement is qualified in all respects by the provisions of
this exhibit. Copies of the registration statement, including the exhibits and
schedules thereto, may be examined without charge at the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street, N.W. Room
1024, Washington, D.C. 20549, and the Securities and Exchange Commission's
Regional Offices located at 500 West Madison Street, Suite 1400, Chicago, IL
60661, and 7 World Trade Center, 13th Floor, New York, NY 10048 or on the
Internet at http://www.sec.gov. Copies of all or a portion of the registration
statement can be obtained from the Public Reference Section of the Securities
and Exchange Commission upon payment of prescribed fees. Please call the SEC at
800-SEC-0330 for further information about the public reference room.
EarthWeb is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, under which it files periodic
reports, proxy statements and other information with the Securities and
Exchange Commission. These reports, proxy and information statements and other
information may also be inspected at the offices of Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006.
The Securities and Exchange Commission allows us to "incorporate by
reference" into this prospectus the information we file with it. This means
that we can disclose important business, financial and other information in our
Securities and Exchange Commission filings by referring you to the documents
containing this information. All information incorporated by reference is part
of this prospectus, unless and until that information is updated and superseded
by the information contained in this prospectus or any information incorporated
later. Any information that we subsequently file with the Securities and
Exchange Commission that is incorporated by reference will automatically update
and supersede any previous information that is part of this prospectus.
We incorporate by reference our documents listed below and any future filings
we make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, until
the termination of this offering:
. Annual Report on Form 10-K, filed March 19, 1999, as amended by Annual
Report on Form 10-K/A, filed April 16, 1999, for the fiscal year ended
December 31, 1998;
. Quarterly Report on Form 10-Q, filed May 17, 1999, for the fiscal quarter
ended March 31, 1999;
. Quarterly Report on Form 10-Q, filed August 13, 1999, for the fiscal
quarter ended June 30, 1999;
. Quarterly Report on Form 10-Q, filed November 12, 1999, for the fiscal
quarter ended September 30, 1999;
. Current Report on Form 8-K, filed February 16, 1999, as amended by
Current Report on Form 8-K/A, filed April 15, 1999;
. Current Report on Form 8-K, filed March 26, 1999, as amended by Current
Report on Form 8-K/A, filed May 26, 1999;
. Current Report on Form 8-K, filed January 13, 2000;
. Current Report on Form 8-K, filed January 14, 2000;
. Current Report on Form 8-K, filed January 25, 2000;
. The description of our common stock contained in our Registration
Statement on Form S-1 filed August 6, 1999, as amended.
39
<PAGE>
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
EarthWeb Inc.
3 Park Avenue
New York, NY 10016
Attention: Investor Relations
(212) 725-6550
40
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be paid by the registrant, in
connection with the issuance and distribution of the securities hereunder.
<TABLE>
<CAPTION>
Item Amount
- --------------------------------------------- --------
<S> <C>
SEC registration fee........................ $ 19,800
Nasdaq National Market Listing Fees......... --
*Accounting fees and expenses................ 10,000
*Legal fees and expenses..................... 40,000
*Printing costs.............................. 30,200
--------
*Total....................................... $100,000
========
</TABLE>
- --------
*Estimated.
Item 15. 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.
EarthWeb 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 EarthWeb 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 EarthWeb'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 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 regard EarthWeb's undertaking to submit to adjudication the
issue of indemnification for violation of the securities laws, see Item 17
hereof.
II-1
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- --------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated as of January 25, 2000, between the Registrant and
State Street Bank and Trust Company of California, N.A. as Trustee.
4.2 Registration Rights Agreement, dated as of January 19, 2000, between
the Registrant and the initial purchasers.
5 Opinion of Morrison & Foerster LLP
12 Statement re: Computation of Ratios
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Morrison & Foerster LLP (set forth in Exhibit 5)
24 Powers of Attorney (set forth in the signature page hereto)
25.1 Statement of Eligibility of Trustee
</TABLE>
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes the following:
(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 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.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, EarthWeb has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
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,
EarthWeb 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 Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amendment to the
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 31,
2000.
EarthWeb Inc.
/s/ Jack D. Hidary
By: _________________________________
Jack D. Hidary
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints and hereby authorizes Jack D. Hidary and Irene
Math, severally, such person's true and lawful attorneys-in-fact, with full
power of substitution or resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign on such person's
behalf, individually and in each capacity stated below, any and all amendments,
including post-effective amendments to this registration statement and to sign
any and all additional registration statements relating to the same offering of
securities as this registration statements that are filed pursuant to Rule
462(b) of the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact, or the substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on January 31, 2000.
<TABLE>
<S> <C>
Name and Signature Title
------------------ -----
/s/ Jack D. Hidary President, Chief Executive
___________________________________________ Officer and Director
Jack D. Hidary
/s/ Murray Hidary Executive Vice President,
___________________________________________ Secretary, Treasurer and
Murray Hidary Director
/s/ Peter Derow Director
___________________________________________
Peter Derow
/s/ Henry Kressel Director
___________________________________________
Henry Kressel
/s/ Cary Davis Director
___________________________________________
Cary Davis
/s/ Irene Math Senior Vice President, Finance
___________________________________________ (Principal Financial and
Irene Math Accounting Officer)
</TABLE>
II-3
<PAGE>
EXHIBIT 4.1
_______________________________________________________________________________
EARTHWEB INC.
and
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
INDENTURE
___________________
Dated as of January 25, 2000
____________________
7% Convertible Subordinated Notes due 2005
_______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
___________________
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 Definitions and Other Provisions of General Application
Section 1.01. Definitions............................................................ 1
Section 1.02. Other Definitions...................................................... 9
Section 1.03. Compliance Certificates and Opinions................................... 10
Section 1.04. Form of Documents Delivered to Trustee................................. 11
Section 1.05. Acts of Holders........................................................ 12
Section 1.06. Notices, Etc., to Trustee and Company.................................. 14
Section 1.07. Notice to Holders; Waiver.............................................. 14
Section 1.08. Effect of Headings and Table of Contents............................... 15
Section 1.09. Successors and Assigns................................................. 15
Section 1.10. Separability Clause.................................................... 15
Section 1.11. Benefits of Indenture.................................................. 15
Section 1.12. Governing Law.......................................................... 15
Section 1.13. Legal Holidays......................................................... 15
Section 1.14. Personal Immunity from Liability for Incorporators, Stockholders, Etc.. 16
Section 1.15. Conflict with Trust Indenture Act...................................... 16
ARTICLE 2 Securities Forms
Section 2.01. Forms of Securities.................................................... 16
Section 2.02. Form of Trustee's Certificate of Authentication........................ 17
Section 2.03. Securities Issuable in Global Form..................................... 17
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 3 The Securities
Section 3.01. Title and Term......................................................... 18
Section 3.02. Denominations.......................................................... 19
Section 3.03. Execution, Authentication, Delivery and Dating......................... 19
Section 3.04. Registration, Registration of Transfer and Exchange.................... 19
Section 3.05. Mutilated, Destroyed, Lost and Stolen Securities....................... 26
Section 3.06. Payment of Interest; Interest Rights Preserved......................... 27
Section 3.07. Persons Deemed Owners.................................................. 28
Section 3.08. Cancellation........................................................... 29
Section 3.09. Computation of Interest................................................ 29
Section 3.10. CUSIP Numbers.......................................................... 29
ARTICLE 4 Remedies
Section 4.01. Events of Default...................................................... 30
Section 4.02. Acceleration of Maturity; Rescission and Annulment..................... 32
Section 4.03. Collection of Indebtedness and Suits for Enforcement by Trustee........ 33
Section 4.04. Trustee May File Proofs of Claim....................................... 34
Section 4.05. Trustee May Enforce Claims Without Possession of Securities............ 34
Section 4.06. Application of Money Collected......................................... 35
Section 4.07. Limitation on Suits.................................................... 35
Section 4.08. Unconditional Right of Holders to Receive Principal, Premium,
If Any, and Interest................................................... 36
Section 4.09. Restoration of Rights and Remedies..................................... 36
Section 4.10. Rights and Remedies Cumulative......................................... 36
Section 4.11. Delay or Omission Not Waiver........................................... 37
Section 4.12. Control by Holders of Securities....................................... 37
Section 4.13. Waiver of Past Defaults................................................ 37
Section 4.14. Waiver of Usury, Stay or Extension Laws................................ 38
Section 4.15. Undertaking for Costs.................................................. 38
ARTICLE 5 The Trustee
Section 5.01. General................................................................ 39
Section 5.02. Certain Rights of Trustee.............................................. 39
Section 5.03. Individual Rights of Trustee........................................... 41
Section 5.04. Trustee's Disclaimer................................................... 41
Section 5.05. Notice of Default...................................................... 41
Section 5.06. Conflicting Interests of Trustee....................................... 42
Section 5.07. Compensation and Indemnity............................................. 42
Section 5.08. Replacement of Trustee................................................. 43
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.09. Successor Trustee by Merger, Etc.................................... 44
Section 5.10. Eligibility......................................................... 44
Section 5.11. Money Held in Trust................................................. 44
Section 5.12. Preferential Collection of Claims................................... 44
Section 5.13. Trustee's Application for Instructions from the Company;
Liquidated Damages.................................................. 45
ARTICLE 6 Holders' Lists and Reports by Trustee and Company
Section 6.01. Disclosure of Names and Addresses of Holders........................ 45
Section 6.02. Reports by Trustee.................................................. 46
Section 6.03. Reports by Company.................................................. 46
Section 6.04. Company to Furnish Trustee Names and Addresses of Holders........... 47
ARTICLE 7 Consolidation, Merger, Sale, Lease or Conveyance
Section 7.01. Consolidations and Mergers of Company and Sales, Leases and
Conveyances Permitted Subject to Certain Conditions................. 47
Section 7.02. Rights and Duties of Successor Corporation.......................... 48
Section 7.03. Officers' Certificate and Opinion of Counsel........................ 48
ARTICLE 8 Supplemental Indentures
Section 8.01. Supplemental Indentures Without Consent of Holders.................. 49
Section 8.02. Supplemental Indentures with Consent of Holders..................... 50
Section 8.03. Execution of Supplemental Indentures................................ 51
Section 8.04. Effect of Supplemental Indentures................................... 51
Section 8.05. Conformity with Trust Indenture Act................................. 51
Section 8.06. Reference in Securities to Supplemental Indentures.................. 51
ARTICLE 9 Covenants
Section 9.01. Payment of Principal, Premium, If Any, and Interest................. 51
Section 9.02. Maintenance of Office or Agency..................................... 52
Section 9.03. Money for Securities Payments to Be Held in Trust................... 52
Section 9.04. Existence........................................................... 54
Section 9.05. Payment of Taxes and Other Claims................................... 54
Section 9.06. Statement as to Compliance.......................................... 54
Section 9.07. Waiver of Certain Covenants......................................... 54
Section 9.08. Rule 144A Information Requirement................................... 55
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 10 Redemption of Securities.
Section 10.01. Provisional and Optional Redemption by the Company............. 55
Section 10.02. Election to Redeem; Notice to Trustee.......................... 56
Section 10.03. Selection by Trustee of Securities to Be Redeemed.............. 56
Section 10.04. Notice of Redemption........................................... 57
Section 10.05. Deposit of Redemption Price.................................... 58
Section 10.06. Securities Payable on Redemption Date.......................... 59
Section 10.07. Securities Redeemed in Part.................................... 59
ARTICLE 11 Repurchase at Option of Holders upon Change in Control
Section 11.01. Right to Require Repurchase.................................... 60
Section 11.02. Conditions to the Company's Election to Pay the Repurchase
Price in Common Stock.......................................... 60
Section 11.03. Notices; Method of Exercising Repurchase Right, Etc............ 60
Section 11.04. Certain Definitions............................................ 64
Section 11.05. Change in Control.............................................. 64
ARTICLE 12 Conversion
Section 12.01. Conversion Privilege, Conversion Rate and Conversion Price..... 65
Section 12.02. Exercise of Conversion Privilege............................... 66
Section 12.03. Fractions of Shares............................................ 67
Section 12.04. Adjustment of Conversion Rate.................................. 68
Section 12.05. Notice of Adjustments of Conversion Rate....................... 74
Section 12.06. Notice of Certain Corporate Action............................. 74
Section 12.07. Company's Obligation Regarding Common Stock.................... 75
Section 12.08. Taxes on Conversions........................................... 76
Section 12.09. Covenant as to Common Stock.................................... 76
Section 12.10. Cancellation of Converted Securities .......................... 76
Section 12.11. Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets....................................... 77
Section 12.12. Company's Obligation........................................... 77
ARTICLE 13 Subordination
Section 13.01. Securities Subordinate to Senior Indebtedness.................. 78
Section 13.02. Payment over of Proceeds upon Dissolution, Etc................. 78
Section 13.03. No Payment When Senior Indebtedness in Default................. 79
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 13.04. Payment Permitted If No Default..................................... 80
Section 13.05. Subrogation to Rights of Holders of Senior Indebtedness............. 80
Section 13.06. Provisions Solely to Define Relative Rights......................... 81
Section 13.07. Trustee to Effectuate Subordination................................. 81
Section 13.08. No Waiver of Subordination Provisions............................... 82
Section 13.09. Notice to Trustee................................................... 82
Section 13.10. Reliance on Judicial Order or Certificate of Liquidating Agent...... 83
Section 13.11. Trustee Not Fiduciary for Holders of Senior Indebtedness............ 84
Section 13.12. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights................................................. 84
Section 13.13. Article Applicable to Paying Agents................................. 84
Section 13.14. Certain Conversions Deemed Payment.................................. 84
</TABLE>
SIGNATURES
EXHIBIT A - FORM OF SECURITY
<PAGE>
INDENTURE, dated as of January 25, 2000, between EARTHWEB INC., a Delaware
corporation (the "Company"), having its principal office at 3 Park Avenue, New
York, New York 10016 and STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
N.A., a national banking association organized under the laws of the United
States of America, as Trustee hereunder (the "Trustee"), having an office at 633
West 5/th/ Street, Los Angeles, CA 90071.
RECITALS OF THE COMPANY
The Company has duly authorized the issue of its 7% Convertible
Subordinated Notes due 2005 (the "Securities"), and to provide for such
issuance, the Company has duly authorized the execution and delivery of this
Indenture.
Upon qualification of this Indenture under the Trust Indenture Act of 1939
(the "TIA"), it will be subject to the provisions of such Act that are deemed to
be incorporated into this Indenture and shall, to the extent applicable, be
governed by such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all the holders of the Securities, as follows:
ARTICLE 1
Definitions and Other Provisions of General Application
Section 1.1. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular and
references to he or him or she or her are intended to be gender neutral;
(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them
therein, and the terms "cash transaction" and "self-liquidating paper,"
<PAGE>
as used in TIA Section 311, shall have the meanings assigned to them in the
rules of the Commission adopted under the TIA;
(3) the word "including" means "including without limitation," and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.05.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authorized Newspaper" means a newspaper, printed in the English language
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 4.01.
"Board of Directors" means the board of directors of the Company, the
executive committee of that board or any committee of that board duly authorized
to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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"Business Day," when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities, means,
any day, other than a Saturday or Sunday, that is neither a legal holiday nor a
day on which banking institutions in that Place of Payment or particular
location are authorized or required by law, regulation or executive order to
close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Stock" means the common stock of the Company, $0.01 par value, as
it exists on the date of this Indenture and any shares of any class or classes
of capital stock of the Company resulting from any reclassification or
reclassifications thereof.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chief Executive Officer, Chief
Financial Officer, the President or a Vice President of the Company and
delivered to the Trustee.
"Conversion Agent" means any Person authorized by the Company pursuant to
Section 9.02 to convert Securities in accordance with Article 12.
"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business as it relates to this Indenture
shall be principally administered, which office at the date hereof is located at
State Street Bank and Trust Company of California, N.A., 633 West 5th Street,
12th Floor, Los Angeles, CA 90071, Attention: Corporate Trust Administration
(EarthWeb Inc. 7% Convertible Subordinated Notes due 2005).
"corporation" means a corporation, association, partnership, company
(including limited liability company), joint-stock company or business trust.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
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<PAGE>
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"DTC" means The Depository Trust Company.
"Government Obligations" means securities that are (i) direct obligations
of the United States of America, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which is not callable or redeemable
at the option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the holder
of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Obligation or the specific payment of interest on or
principal of the Government Obligation evidenced by such depository receipt.
"Holder" means the Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means, with respect to any Person, and without duplication,
(a) all indebtedness, obligations and other liabilities, contingent or
otherwise, of such Person for borrowed money (including obligations of such
Person in respect of overdrafts, foreign exchange contracts, currency exchange
or similar agreements, interest rate protection, hedging or similar agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments) or evidenced by bonds, debentures, notes or similar
instruments (whether or not the recourse of the lender is to the whole of the
assets of such Person or to only a portion thereof) other than any account
payable or other accrued current liability or obligation, in each case incurred
in the ordinary course of business in connection with the obtaining of materials
or services; (b) all reimbursement obligations and other liabilities, contingent
or otherwise, of such Person with respect to letters of credit, bank guarantees,
bankers' acceptances, security purchase facilities or similar credit
transactions; (c) all obligations and liabilities, contingent or otherwise, in
respect of deferred and unpaid balances on any purchase price of any property;
(d) all obligations and liabilities (contingent or otherwise) in respect of
leases of such Person required, in conformity with
4
<PAGE>
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person and all obligations and
other liabilities, contingent or otherwise, under any lease or related document,
including, without limitation, the balance deferred and unpaid on any purchase
price of any property and a purchase agreement in connection with the lease of
real property that provides that such Person is contractually obligated to
purchase or cause a third party to purchase the leased property and thereby
guarantee a minimum residual value of the leased property to the lessor and the
obligations of such Person under such lease or related document to purchase or
to cause a third party to purchase such leased property; (e) all obligations of
such Person, contingent or otherwise, with respect to an interest rate or other
swap, cap or collar agreement or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement;
(f) all direct or indirect guarantees or similar agreements by such Person in
respect of, and obligations or liabilities, contingent or otherwise, of such
Person to purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of indebtedness, obligations or liabilities of another Person of
the kind described in clauses (a) through (f); (g) any indebtedness or other
obligations described in clauses (a) through (f) secured by any mortgage,
pledge, lien or other encumbrance existing on property that is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person; and (h) any and all deferrals,
renewals, extensions, refinancing, replacements, restatements and refundings of,
or amendments, modifications or supplements to, or any indebtedness, or
obligation issued in exchange for, any indebtedness, obligation or liability of
the kind described in clauses (a) through (g).
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and FleetBoston Robertson Stephens Inc.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Security.
"Maturity" means the date on which the principal of the Securities becomes
due and payable as therein or herein provided, whether at the Stated Maturity,
conversion or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
5
<PAGE>
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or who may be an employee of or other counsel for the Company
and who shall be reasonably satisfactory to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
or repayment at the option of the Holder, money in the necessary amount has
been theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Securities that have been paid pursuant to Section 3.05 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(iv) Securities converted into Common Stock pursuant to or in
accordance with this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding, except
that,
6
<PAGE>
in determining whether the Trustee shall be protected in making such calculation
or in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities that the Trustee knows to be so owned shall
be so disregarded. Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" means the place or places where the principal of (and
premium, if any), interest on and the Redemption Prices and the Repurchase Price
with respect to the Securities are payable as specified as contemplated by
Section 9.02.
"Predecessor Security" means every previous Security evidencing all or a
portion of the same debt as that evidenced by such Security; and, for the
purposes of this definition, any Security authenticated and delivered under
Section 3.05 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date," when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," means the Optional Redemption Price, in the event of an
Optional Redemption, or the Provisional Redemption Price, in the event of a
Provisional Redemption, as the case may be.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated January 25, 2000, between the Company and the Initial Purchasers.
7
<PAGE>
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities means the date specified for that purpose as contemplated by
Section 3.06, whether or not a Business Day.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the Corporate Trust Office of the Trustee and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of such officer's knowledge and familiarity with the
particular subject.
"Rule 144A" shall mean Rule 144A as promulgated under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Security" has the meaning stated in the first recital of this Indenture
and, more particularly, means any Security or Securities authenticated and
delivered under this Indenture.
"Senior Indebtedness" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and all other amounts
owed in respect of all Indebtedness of the Company, whether outstanding on the
date of this Indenture or thereafter created, incurred, assumed, guaranteed or
in effect guaranteed by the Company (including all deferrals, renewals,
extensions, refinancings, replacements, restatements or refundings of, or
amendments, modifications or supplements to, the foregoing); except for (i) any
such Indebtedness that is by its terms subordinated to or ranking equal with the
Securities, and (ii) any Indebtedness between or among the Company or any of its
Subsidiaries or its Affiliates, including all other debt securities and
guarantees in respect of those debt securities issued to any trust, or trustees
of any trust, partnership or other entity affiliated with the Company that is,
directly or indirectly, a financing vehicle used by the Company in connection
with the issuance by that financing vehicle of preferred securities or other
securities that rank equal with, or junior to, the Securities.
"Significant Subsidiary" means any Subsidiary that is a "significant
subsidiary" (as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
under the Securities Act) of the Company.
8
<PAGE>
"Special Record Date" for the payment of any Defaulted Interest on the
Securities means a date fixed by the Trustee pursuant to Section 3.06.
"Stated Maturity" means the date specified in the Securities as the fixed
date on which the principal of, or interest on, such Securities is due and
payable.
"Subsidiary" means a corporation a majority of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries of the Company, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
that ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as in
force on the date this Indenture is qualified thereunder; provided, however,
that in the event the Trust Indenture Act of 1939 or such rules and regulations
are amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 and such rules and
regulations as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder.
"United States" means the United States of America (including the states
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
<S> <C>
"Act"............................................................ 1.05
"Average Sale Price"............................................. 12.04
"Bankruptcy Law"................................................. 4.01
"Change in Control".............................................. 11.05
"Change in Control Purchase Notice".............................. 11.03
"Closing Price".................................................. 12.03
"Commencement Date".............................................. 12.04
"Company Notice"................................................. 11.03
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Conversion Price"............................................... 12.01
"Conversion Rate"................................................ 12.01
"Current Event".................................................. 12.04
"Custodian"...................................................... 4.01
"Defaulted Interest"............................................. 3.06
"Event of Default"............................................... Article 4
"Ex-Dividend Time"............................................... 12.04
"Expiration Time"................................................ 12.04
"Indemnities".................................................... 5.07
"Make-Whole Payment"............................................. 10.01
"Material Adverse Effect"........................................ 9.04
"Notice Date".................................................... 10.01
"Notice of Default".............................................. 4.01
"Optional Redemption"............................................ 10.01
"Other Event".................................................... 12.04
"Provisional Redemption"......................................... 10.01
"Provisional Redemption Date".................................... 10.01
"Purchased Shares"............................................... 12.04
"Redeemable Capital Stock"....................................... 11.05
"Reference Date"................................................. 12.04
"Repurchase Date"................................................ 11.01
"Repurchase Price"............................................... 11.01
"Restricted Securities".......................................... 3.04
"Security Register".............................................. 3.04
"Security Registrar"............................................. 3.04
"Senior Indebtedness Default Notice"............................. 13.03
"Time of Determination".......................................... 12.04
"Trading Day".................................................... 12.03
</TABLE>
Section 1.3. Compliance Certificates and Opinions. Upon any application
or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need
refurnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
10
<PAGE>
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.4. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion as to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters
in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which such certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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<PAGE>
Section 1.5. Acts of Holders. (a Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of the Outstanding Securities, may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agents duly appointed in writing. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and conclusive in favor of the Trustee and the Company and any
agent of the Trustee or the Company, if made in the manner provided in this
Section 1.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of the Securities shall be proved by the Security
Register.
(d) (i) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, in or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so; provided that the Company shall not
be entitled to set a record date for, and the provisions of this paragraph shall
not apply with respect to, the giving or making of any notice, declaration,
request or direction referred to in clause 1.05(d)(iii) below. Notwithstanding
TIA Section 316(c), such record date shall be the record date specified in or
pursuant to such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally in connection
therewith and not later than the
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<PAGE>
date such solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(ii) Subject to clause 1.05(d)(iii) below, in the absence of any such
record date fixed by the Company, regardless as to whether any solicitation of
the Holders is occurring on behalf of the Company or any Holder, the Trustee
may, at its option, fix in advance a record date for the determination of such
Holders entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Trustee shall have no obligation to do so.
Any such record date shall be a date not more than 30 days prior to the first
solicitation of Holders generally in connection therewith and no later than the
date of such solicitation.
(iii) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (A) any notice of default, (B) any declaration of acceleration
referred to in Section 4.02, (C) any request to institute proceedings referred
to in Section 4.07(b), or (D) any direction referred to in Section 4.12. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to any applicable expiration date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action (whereupon the record date
previously set shall automatically and without any action by any Person be
cancelled and of no effect), nor shall anything in this paragraph be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Company's expense, shall cause notice of such record date, the proposed action
by Holders and the applicable expiration date to be given to the Company in
writing and to each Holder of Securities in the manner set forth in Section
1.07.
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<PAGE>
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, any
Security Registrar, any Paying Agent, any Conversion Agent or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 1.6. Notices, Etc., to Trustee and Company. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration (EarthWeb Inc. 7% Convertible Subordinated Notes due
2005); provided that notices to the Trustee shall only be deemed given when
actually received by the Trustee,
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture or at any other address previously
furnished in writing to the Trustee by the Company.
Section 1.7. Notice to Holders; Waiver. Where this Indenture provides for
notice of any event to Holders by the Company or the Trustee, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each such Holder affected by such
event, at his address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders given as provided herein. Any notice mailed to a Holder in the
manner herein prescribed shall be conclusively deemed to have been received by
such Holder, whether or not such Holder actually receives such notice.
14
<PAGE>
If by reason of the suspension of or irregularities in regular mail service
or by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to Holders as shall be made with the approval of
the Trustee shall constitute a sufficient notification to such Holders for every
purpose hereunder.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Section 1.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 1.9. Successors and Assigns. All covenants and agreements in this
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
Section 1.10. Separability Clause. In case any provision in this
Indenture or in any Security shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.11. Benefits of Indenture. Nothing in this Indenture or in the
Securities, express or implied, shall give to any Person, other than the parties
hereto, any Security Registrar, any Paying Agent, any Conversion Agent and their
successors hereunder and the Holders any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12. Governing Law. This Indenture and the Securities shall be
governed by and construed in accordance with the law of the State of New York
without regard to conflicts of laws principles.
Section 1.13. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date, Stated Maturity or Maturity of any
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Security or the last date on which a Holder has the right to convert his
Securities shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or any Security), payment
of Redemption Price, Repurchase Price, interest or principal (and premium, if
any), or conversion of the Securities, need not be made at such Place of Payment
on such date, but may be made on the next succeeding Business Day at such Place
of Payment with the same force and effect as if made on the Interest Payment
Date, Redemption Date, Repurchase Date or at the Stated Maturity or Maturity or
on such last day for conversion; provided that no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repurchase Date, Stated Maturity or Maturity or on such last
day for conversion, as the case may be.
Section 1.14. Personal Immunity from Liability for Incorporators,
Stockholders, Etc. No recourse shall be had for the payment of the principal of
or premium, if any, or interest, if any, on any Security, or for any claim based
thereon, or otherwise in respect of any Security, or based on or in respect of
this Indenture or any indenture supplemental hereto, against any incorporator,
or against any past, present or future stockholder, director or officer, as
such, of the Company or of any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being expressly waived and released as
a condition of, and as consideration for, the execution of this Indenture and
the issue of Securities.
Section 1.15. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under such Act to be a part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be. To the extent a Security conflicts with a provision in the
Indenture, the Indenture governs.
ARTICLE 2
Securities Forms
Section 2.1. Forms of Securities. The Securities shall be in
substantially the form of Exhibit A hereto, and shall have notations, legends or
endorsements
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required by law, stock exchange rate or usage or as otherwise indicated in
Exhibit A hereto.
Section 2.2. Form of Trustee's Certificate of Authentication'.
The Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Securities described in the within-mentioned Indenture.
DATED: STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:___________________________
Authorized Signatory
Section 2.3. Securities Issuable in Global Form. Except as otherwise
provided in this Section 2.03 or in Section 3.04, the Securities shall be
issuable only in global form and deposited with the Trustee, at its Corporate
Trust Office, as custodian for DTC or the nominees thereof, and any such
Security shall represent such of the Outstanding Securities as shall be
specified therein and may provide that it shall represent the aggregate amount
of Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may from time to
time be increased or decreased to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount, or any increase or decrease in
the amount, of Outstanding Securities represented thereby shall be made by the
Trustee in such manner and upon instructions given by such Person or Persons as
shall be specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 3.03. Subject to the provisions of Section 3.03,
the Trustee shall deliver and redeliver any Security in global form in the
manner and upon instructions given by the Person or Persons specified therein or
in the applicable Company Order. If a Company Order pursuant to Section 3.03 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 1.03 and need not be
accompanied by an Opinion of Counsel.
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The provisions of the last sentence of Section 3.03 shall apply to any
Security represented by a Security in global form if such Security was never
issued and sold by the Company and the Company delivers to the Trustee the
Security in global form together with written instructions (which need not
comply with Section 1.03 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 3.03.
Notwithstanding the provisions of Section 3.07, payment of principal of and
any premium and interest on any Security in global form shall be made to the
Person or Persons specified therein.
All Securities issued in global form shall bear the following legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.
ARTICLE 3
The Securities
Section 3.1. Title and Term. The Securities shall be and are hereby
authorized to be designated as "7% Convertible Subordinated Notes due 2005",
limited in aggregate principal amount to $75,000,000 (up to $86,250,000 if the
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option set forth in Section 2(b) of the Purchase Agreement dated January 19,
2000 among the Company and the Initial Purchasers, is exercised in full). The
Securities shall mature and the principal thereof shall be due and payable,
together with all accrued and unpaid interest thereon, on January 25, 2005. The
Securities shall be convertible into shares of Common Stock.
Section 3.2. Denominations. The Securities shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by the Chief Executive
Officer, Chief Financial Officer, the President or a Vice President of the
Company. The signature of any of these individuals on the Securities may be a
manual or facsimile signature of such authorized officer and may be imprinted or
otherwise reproduced on the Securities.
Securities bearing the manual or facsimile signatures of individual who was
at any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the authentication and delivery of such Securities or did not hold such
office at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Section
2.02 duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Security to the Trustee for cancellation as provided in
Section 3.08 together with a written statement (which need not comply with
Section 1.03 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the Company, for all purposes of
this Indenture, such Security
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shall be deemed not to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
Section 3.4. Registration, Registration of Transfer and Exchange. (a The
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for the
Securities (the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of the Securities and of transfers of the Securities. The Security Register
shall be in written form or any other form capable of being converted into
written form within a reasonable time. The Trustee, at its Corporate Trust
Office, is hereby appointed "Security Registrar" for the purpose of registering
the Securities and transfers of the Securities on such Security Register as
herein provided. In the event that the Trustee shall cease to be Security
Registrar, it shall have the right to examine the Security Register at all
reasonable times.
Subject to the provisions of this Section 3.04 and except as otherwise
provided in any Security, including any legend thereon, upon surrender for
registration of transfer of any Security at any office or agency of the Company
in a Place of Payment, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities, of any authorized denominations and of
a like aggregate principal amount, bearing a number not contemporaneously
outstanding, and containing identical terms and provisions.
Subject to the provisions of this Section 3.04, at the option of the
Holder, the Securities may be exchanged for other Securities, of any authorized
denomination or denominations and of a like aggregate principal amount,
containing identical terms and provisions, upon surrender of the Securities to
be exchanged at any such office or agency. Whenever any such Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities that the Holder making the exchange is
entitled to receive.
Notwithstanding the foregoing, any global Security shall be exchangeable
only as provided in this paragraph. The depositary for the global Securities
shall be DTC, and the global Securities may be transferred, in whole but not in
part, only to a nominee of DTC, or by a nominee of DTC to DTC, or to a successor
to DTC for such global Security selected or approved by the Company or to a
nominee of such successor to DTC. If at any time DTC notifies the Company that
it is unwilling or unable to continue as depositary for the applicable global
Security or Securities or if at any time DTC ceases to be a clearing agency
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registered under the Securities Exchange Act of 1934 if so required by
applicable law or regulation, the Company shall appoint a successor depositary
with respect to such global Security or Securities. If (x) a successor
depositary for such global Security or Securities is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such unwillingness, inability or ineligibility, or (y) an Event of Default
has occurred and is continuing and the beneficial owners representing a majority
in principal amount of the applicable Securities represented by such global
Security or Securities advise DTC to cease acting as depositary for such global
Security or Securities, then the Company shall execute, and the Trustee shall
authenticate and deliver, definitive Securities of like rank, tenor and terms in
definitive form, registered in such names as DTC shall direct and bearing such
legends as the Company shall specify, in an aggregate principal amount equal to
the principal amount of such global Security or Securities. If a Security is
issued in exchange for any portion of a global Security after the close of
business at the office or agency where such exchange occurs on (i) any Regular
Record Date and before the opening of business at such office or agency on the
relevant Interest Payment Date or (ii) any Special Record Date and before the
opening of business at such office or agency on the related proposed date for
payment of Defaulted Interest, interest or Defaulted Interest, as the case may
be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of such Security, but will be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such global
Security is payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange or redemption shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 10.07 or 11.03(e) not involving any transfer.
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The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security is
among those selected for redemption during a period beginning at the opening of
business 15 days before selection of the Securities to be redeemed under Section
10.03 and ending at the close of business on the day of the mailing of the
relevant notice of redemption or (ii) to register the transfer of or exchange
any Security so selected for redemption in whole or in part, except, in the case
of any Security to be redeemed in part, the portion thereof not to be redeemed,
or (iii) to issue, register the transfer of or exchange any Security that has
been surrendered for repayment at the option of the Holder, except the portion,
if any, of such Security not to be so repaid.
(b) Every Security that bears or is required under this Section 3.04(b) to
bear the legend set forth in this Section 3.04(b) (together with any Common
Stock issued upon conversion of the Securities and required to bear the legend
set forth in Section 3.04(c), collectively, the "Restricted Securities") shall
be subject to the restrictions on transfer set forth in this Section 3.04(b)
(including one of the legends set forth below), unless such restrictions on
transfer shall be waived by written consent of the Company, and the holder of
each such Restricted Security, by such holder's acceptance thereof, agrees to be
bound by all such restrictions on transfer. As used in Sections 3.04(b) and
3.04(c), the term "transfer" encompasses any sale, pledge, transfer or other
disposition whatsoever of any Restricted Security.
Until two years after the original issuance date of any Security, any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof which shall bear the legend set forth in Section 3.04(c), if
applicable) shall bear a legend in substantially the following form (unless such
Securities have been transferred pursuant to a registration statement that has
been declared effective under the Securities Act (and which continues to be
effective at the time of such transfer), pursuant to the exemption from
registration provided by Rule 144 under the Securities Act, or unless otherwise
agreed by the Company in writing, with notice thereof to the Trustee):
THE NOTES EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT); (2) AGREES
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THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR
THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE. IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(C) ABOVE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA,
N.A., AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE SECURITY EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(C) OR 2(D) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL
ISSUANCE OF THE SECURITY EVIDENCED HEREBY.
Any Security (or Security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance with
their terms may, upon surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 3.04, be exchanged
for a new Security or Securities, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 3.04(b).
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Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 3.04(b)), the global Security may not be
transferred as a whole or in part except by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or by the depositary or any such nominee to a
successor depositary or a nominee of such successor depositary.
At such time as all interests in the global Security have been redeemed,
converted, canceled, repurchased or transferred, the global Security shall be,
upon receipt thereof, canceled by the Trustee in accordance with standing
procedures and instructions existing between the depositary and the Custodian.
(c) Until two years after the original issuance date of any Security,
any stock certificate representing Common Stock issued upon conversion of such
Security shall bear a legend in substantially the following form (unless such
Common Stock has been sold pursuant to the exemption from registration provided
by Rule 144 under the Securities Act or pursuant to a registration statement
that has been declared effective under the Securities Act, and which continues
to be effective at the time of such transfer, or such Common Stock has been
issued upon conversion of Securities that have been transferred pursuant to a
registration statement that has been declared effective under the Securities
Act, or unless otherwise agreed by the Company with written notice thereof to
the Trustee and any transfer agent for the Common Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE
COMMON STOCK EVIDENCED HEREBY WAS ISSUED, (1) IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE
TIME OF SUCH TRANSFER); (2) PRIOR TO
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ANY SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(D) ABOVE), IT WILL
FURNISH TO AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS TRANSFER AGENT, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO
WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(C) OR 1(D) ABOVE OR THE
EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE SECURITY UPON THE
CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like aggregate number of shares of Common
Stock, which shall not bear the restrictive legend required by this Section
3.04(c).
(d) Any Security or Common Stock issued upon the conversion or
exchange of a Security that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company or any Affiliate
thereof may not be resold by the Company or such Affiliate unless registered
under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction that results in
such Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
(e) Notwithstanding any provision of Section 3.04 to the contrary, in
the event Rule 144(k) as promulgated under the Securities Act (or any successor
rule) is amended to change the two-year period under Rule 144(k) (or the
corresponding period under any successor rule), from and after receipt by the
Trustee of the Officers' Certificate and Opinion of Counsel provided for in this
Section 3.04(e), (i) each reference in Section 3.04(b) to "two years" and in the
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restrictive legend set forth in such paragraph to "TWO YEARS" shall be deemed
for all purposes hereof to be references to such changed period, (ii) each
reference in Section 3.04(c) to "two years" and in the restrictive legend set
forth in such paragraph to "TWO YEARS" shall be deemed for all purposes hereof
to be references to such changed period and (iii) all corresponding references
in the Securities and the restrictive legends thereon shall be deemed for all
purposes hereof to be references to such changed period, provided that such
changes shall not become effective if they are otherwise prohibited by, or would
otherwise cause a violation of, the then-applicable federal securities laws. As
soon as practicable after the Company has knowledge of the effectiveness of any
such amendment to change the two-year period under Rule 144(k) (or the
corresponding period under any successor rule), unless such changes would
otherwise be prohibited by, or would otherwise cause a violation of, the then-
applicable securities law, the Company shall provide to the Trustee an Officers'
Certificate and Opinion of Counsel informing the Trustee of the effectiveness of
such amendment and the effectiveness of the foregoing changes to Sections
3.04(b) and 3.04(c) and the Notes. The provisions of this Section 3.04(e) will
not be effective until such time as the Opinion of Counsel and Officers'
Certificate have been received by the Trustee hereunder. This Section 3.04(e)
shall apply to successive amendments to Rule 144(k) (or any successor rule)
changing the holding period thereunder.
Section 3.5. Mutilated, Destroyed, Lost and Stolen Securities. If any
mutilated Security is surrendered to the Trustee or the Company, together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them or any agent of either of them harmless, the Company shall, at
the relevant Holder's expense, execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same principal amount,
containing identical terms and provisions and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company, at the relevant Holder's expense, shall execute and upon
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same principal amount,
containing identical terms and provisions and bearing a number not
contemporaneously outstanding, appertaining to such destroyed, lost or stolen
Security.
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Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a
new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security, shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.6. Payment of Interest; Interest Rights Preserved. Interest on
any Security that is payable, and is punctually paid or duly provided for, on
any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 9.02; provided,
however, that each installment of interest on any Security may at the Company's
option be paid by (i) mailing a check for such interest, payable to or upon the
written order of the Person entitled thereto pursuant to Section 3.07, to the
address of such Person as it appears on the Security Register or (ii) transfer
to an account maintained by the payee located inside the United States;
provided, however, that payments to DTC will be made by wire transfer of
immediately available funds to the account of DTC or its nominee. The term
"Regular Record Date" with respect to any Interest Payment Date shall mean the
January 10 or July 10 preceding January 25 or July 25, respectively.
Any interest on any Security that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause 3.06(a) or 3.06(b) below:
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(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment (which shall not be less than
30 days after such notice is received by the Trustee) and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities at his address as it appears in the Security
Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the
Company, cause a similar notice to be published at least once in an
Authorized Newspaper in each Place of Payment, but such publications shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.7. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any), and (subject to Sections 3.04 and 3.06)
interest on, such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.
Section 3.8. Cancellation. All Securities surrendered for payment,
redemption, repayment at the option of the Holder, registration of transfer or
exchange or for credit against any sinking fund payment shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee, and any such
Securities surrendered directly to the Trustee for any such purpose shall be
promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
that the Company may have acquired in any manner whatsoever, and may deliver to
the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder that the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. If the Company shall so acquire any of the Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities unless and until the same are
surrendered to the
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Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. Canceled Securities held by the Trustee
shall be destroyed by the Trustee and the Trustee shall deliver a certificate of
such destruction to the Company, unless by a Company Order the Company directs
their return to it.
Section 3.9. Computation of Interest. Interest on the Securities shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
Section 3.10. CUSIP Numbers. The Company in issuing the Securities shall
use "CUSIP" numbers, and the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders', provided however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE 4
Remedies
Section 4.1. Events of Default. "Event of Default," wherever used herein
with respect to the Securities, means any one of the following events (whatever
the reason for such Event of Default and whether or not it shall be occasioned
by the provisions of Article 13 or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security, when such
interest becomes due and payable, and continuance of such default for a period
of 30 days (whether or not such payment is prohibited by the provisions of
Article 13); or
(b) default in the payment of (i) the principal of (or premium, if any,
on) any Security when it becomes due and payable at its Maturity, or (ii) the
payment of the Redemption Price (including the Make-Whole Payment, if any) with
respect to any Security when it becomes due and payable (whether or not such
payment is prohibited by the provisions of Article 13); or
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(c) default in the payment of the Repurchase Price in respect of any
Security on the Repurchase Date therefor (whether or not such payment is
prohibited by the provisions of Article 13 hereof); or
(d) failure by the Company to deliver shares of Common Stock (together
with cash in lieu of fractional shares) when such Common Stock (or cash in lieu
of fractional shares) is required to be delivered following conversion of a
Security and continuation of such default for a period of 10 days; or
(e) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture with respect to any Security (other than a
covenant or warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with) and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding Securities
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(f) a default under any bonds, debentures, notes or other evidences of
indebtedness for money borrowed of the Company or under any mortgages,
indentures or instruments under which there may be issued or by which there may
be secured or evidenced any indebtedness for money borrowed by the Company,
whether such indebtedness now exists or shall hereafter be created, which
indebtedness, individually or in the aggregate, has a principal amount
outstanding in excess of $10,000,000, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or annulled,
within a period of 30 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Securities then
Outstanding, a written notice specifying such default and requiring the Company
to cause such indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of Default"
hereunder (unless such default has been cured or waived); or
(g) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case,
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(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors;
or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Significant Subsidiary
in an involuntary case,
(ii) appoints a Custodian of the Company or any Significant
Subsidiary or for all or substantially all of the property of any of them,
or
(iii) orders the winding up or liquidation of the Company or any
Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
As used in this Section 4.01 only, the term "Bankruptcy Law" means title
11, U.S. Code or any similar Federal or State law for the relief of debtors and
the term "Custodian" means any receiver, trustee, assignee, liquidator or other
similar official under any Bankruptcy Law.
Section 4.2. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default with respect to Securities at the time Outstanding occurs and
is continuing, then and in every such case the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities may declare the
principal of all the Securities to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal shall become immediately due and payable. If
an Event of Default specified in Section 4.01(g) or 4.01(h) occurs, the
principal of, and accrued interest on, all the Securities shall automatically,
and without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
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Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(i) all overdue installments of interest on all Outstanding
Securities,
(ii) the principal of (and premium, if any, on) any Outstanding
Securities that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates borne by or provided
for in such Securities,
(iii) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the rate or rates borne
by or provided for in such Securities, and
(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities, other than the
nonpayment of the principal of (or premium, if any) or interest on Securities
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 4.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 4.3. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if:
(a) default is made in the payment of any installment of interest
on any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Security at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, with
interest upon any overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any
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overdue installments of interest, if any, at the rate or rates borne by or
provided for in such Securities, and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities occurs and is continuing,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders of Securities by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 4.4. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal, premium, if any, or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities, of principal (and premium,
if any) and interest, owing and unpaid in respect of the Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
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(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby directed by
each Holder of Securities to make such payments to the Trustee, and in the event
that the Trustee shall request the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 5.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security, any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder of a Security in any
such proceeding; provided however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar official
and be a member of a creditors' or other similar committee.
Section 4.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or any of the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 4.6. Application of Money Collected. Any money collected by the
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities, or both, as the case may be, and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
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FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 5.07;
SECOND: To the holders of Senior Indebtedness to the extent required by the
provisions of Article 13.
THIRD: To the payment of the amounts then due and unpaid upon the
Securities for principal (and premium, if any) and interest payable, in respect
of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the aggregate amounts
due and payable on such Securities for principal (and premium, if any) and;
interest, respectively; and
FOURTH: To the payment of the remainder, if any, to the Company.
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Section 4.7. Limitation on Suits. No Holder of any Security shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
Section 4.8. Unconditional Right of Holders to Receive Principal, Premium,
If Any, and Interest. Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional to receive payment of the principal of, and premium, if any,
including the Redemption Prices and Make-Whole Payment upon redemption pursuant
to Article 10, and (subject to Sections 3.04 and 3.06) interest on such Security
on the respective due dates expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be) and to convert such Security in accordance with the provisions of this
Indenture and to institute suit for the enforcement of any such payment and
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right to convert, and such rights shall not be impaired without the consent of
such Holder.
Section 4.9. Restoration of Rights and Remedies. If the Trustee or any
Holder of a Security has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, the Company, the Trustee and the
Holders of Securities shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 4.10. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 3.05, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders of
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 4.11. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Securities, as the case may be.
Section 4.12. Control by Holders of Securities. The Holders of not less
than a majority in principal amount of the Outstanding Securities shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Securities, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
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(c) the Trustee need not take any action that might involve it in
personal liability or be unduly prejudicial to the Holders of Securities
not joining therein.
Section 4.13. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the Outstanding Securities may on behalf of the
Holders of all the Securities waive any past Default or Event of Default
hereunder with respect to such Securities and its consequences, except a Default
or Event of Default:
(a) in the payment of the principal of (or premium, if any) or
interest on any Security,
(b) in respect of the conversion by the Company of any Security into
Common Stock,
(c) in the payment of the Redemption Prices or Make-Whole Payment
pursuant to Article 10,
(d) in the payment of the Repurchase Price pursuant to Article 11, or
(e) in respect of a covenant or provision hereof that under Article 8
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
Section 4.14. Waiver of Usury, Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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Section 4.15. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Security by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of any undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption or repurchase, on or after the
Redemption Date or the Repurchase Date, respectively), or the right to convert
any Security in accordance with Article 12.
ARTICLE 5
The Trustee
Section 5.1. General. The Trustee, prior to the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (that has not
been cured or waived) the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
No provision of this Indenture shall be construed to relive the Trustee
from liability for its own negligent action, its own negligent failure to act,
its own willful misconduct, its own recklessness or its own bad faith.
Section 5.2. Certain Rights of Trustee. Subject to TIA Sections 315(a)
through (d):
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(a) the Trustee may rely, and shall be protected in acting or refraining
from acting, upon any resolution, certificate, statement, instrument, facsimile
transmission, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, made or presented by the
proper person and may accept and rely upon the same as conclusive evidence of
the truth and accuracy of the statement and opinions contained therein. The
Trustee need not investigate any fact or matter stated in any such document;
(b) before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to Section
1.03. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or opinion;
(c) the Trustee may consult with counsel and the written advice of such
counsel shall be full and complete authorization and protection with respect to
any action taken, suffered or omitted by it hereunder in good faith and reliance
thereon and may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the holders, unless such holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction;
(e) the Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers or for any action it takes or omits to take in accordance with the
written direction of the holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;
(f) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(g) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
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opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or attorney;
(h) the Trustee shall not be required to take notice or be deemed to
have notice of any default hereunder unless the Trustee be specifically notified
of such default in writing by the Company or any holder of the Securities, and
in the absence of such notice the Trustee may conclusively assume that there is
no default; provided that if the Trustee is acting as Paying Agent, the Trustee
shall be required to take and be deemed to have notice of its failure to receive
payments of interest or principal hereunder;
(i) except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility with respect to any
information in any offering memorandum or other disclosure material distributed
with respect to the Securities, and the Trustee shall have no responsibility for
compliance with securities laws in connection with the issuance and sale of the
Securities;
(j) in the event the Trustee shall receive inconsistent or conflicting
requests and indemnity from two or more groups of holders of the Securities,
each representing at least 25% (but less than 50%) of the aggregate principal
amount of the Securities then outstanding, the Trustee will act in accordance
with instructions received by the holders of the greater percentage thereof;
(k) except as otherwise expressly provided by the provisions of this
Indenture, the Trustee shall not be obligated and may not be required to give or
furnish any notice, demand, report, request, reply, statement, advice or opinion
to the holder of any Security or to the Company or any other Person, and the
Trustee shall not incur any liability for its failure or refusal to give or
furnish the same unless obligated or required to do so by the express provisions
hereof; and
(l) the Trustee shall not be required to give any bond or surety with
respect to the performance of its duties or the exercise of its powers under
this Indenture.
Section 5.3. Individual Rights of Trustee. The Trustee, any Paying Agent,
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company, its Subsidiaries or its Affiliates with the same
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rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent. Any registrar, co-registrar, paying agent,
conversion agent or authenticating agent may do the same with like rights.
However, upon qualification of this Indenture under the TIA the Trustee will be
subject to TIA Sections 310(b) and 311.
Section 5.4. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Securities and (iii) shall not be responsible for any
statement in the Securities other than its certificate of authentication.
Section 5.5. Notice of Default. If any Event of Default occurs and is
continuing and if the Trustee has actual knowledge of such Event of Default, the
Trustee shall mail to each holder in the manner and to the extent provided in
TIA Section 313(c) notice of the Event of Default within 90 days after it
occurs, unless such Event of Default has been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in
the interests of the Holders of the Securities; and provided further that in the
case of any Default or breach referred to in Section 4.01(e) with respect to the
Securities, no such notice to Holders shall be given until at least 90 days
after the occurrence thereof.
Section 5.6. Conflicting Interests of Trustee. If the Trustee has or
shall acquire a conflicting interest within the meaning of the TIA, the Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of the TIA and this Indenture.
Section 5.7. Compensation and Indemnity. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing for its services.
The compensation of the Trustee shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses and advances incurred or made
by the Trustee in accordance with this Indenture. Such expenses shall include
the reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee and its
directors, agents and employees (collectively the "Indemnities") against any and
all losses, liabilities, obligations, damages, penalties, fines, judgments,
actions, suits, proceedings, reasonable costs and expenses (including reasonable
fees and disbursements of counsel) of any kind whatsoever that may be incurred
by or
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imposed on the Indemnities or any of them arising out of or in connection with
the acceptance or administration of its duties under this Indenture; provided,
however, that the Company need not reimburse any expense or indemnify against
any loss, obligation, damage, penalty, fine, judgment, action, suit, proceeding,
reasonable cost or expense (including reasonable fees and disbursements of
counsel) of any kind whatsoever that may be incurred by Indemnities or any of
them which results from the negligence or willful misconduct of the Indemnities
or any of them. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder, unless the Company
is materially prejudiced thereby. The Company shall defend the claim and the
Trustee shall cooperate in the defense. Unless otherwise set forth herein, the
Indemnities of any of them may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld. The provisions of this Section 5.07 shall survive the termination of
this Indenture and the resignation or removal of the Trustee for any reason.
To secure the Company's payment obligations in this Section 5.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Securities.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in Section 4.01(g) or Section 4.01(h), the
expenses and the compensation for the services will be intended to constitute
expenses of administration under Title 11 of the United States Bankruptcy Code
or any applicable federal or state law for the relief of debtors.
Section 5.8. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
5.08.
The Trustee may resign at any time by so notifying the Company in writing
at least thirty days prior to the date of the proposed resignation. The holders
of a majority in principal amount of the Outstanding Securities may remove the
Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the prior consent of the Company. The Company may remove the
Trustee if: (i) the Trustee is no longer eligible under Section 5.10; (ii) the
Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or other public
officer takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting. The holders of a majority in aggregate principal amount of
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the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee that shall be deemed appointed as successor trustee
unless within ten days after notice to the Company of such nomination the
Company objects thereto, in which case the Trustee so removed or any Noteholder,
upon the terms and conditions and otherwise provided herein, may petition any
court of competent jurisdiction for an appointment of a successor trustee.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the Outstanding Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 5.08 within thirty days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
holders of a majority in principal amount of the Outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 5.07, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee
shall mail notice of its succession to each holder.
If the Trustee is no longer eligible under Section 5.10, any holder who
satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 5.08,
the Company's obligation under Section 5.07 shall continue for the benefit of
the retiring Trustee.
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Section 5.9. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business (including the administration of this
Indenture) to, another corporation or national banking association, the
resulting, surviving or transferee corporation or national banking association
without any further act shall be the successor Trustee with the same effect as
if the successor Trustee had been named as the Trustee herein.
Section 5.10. Eligibility. This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1). The Trustee (or the bank
holding company to which the Trustee is a member) shall have a combined capital
and surplus of at least $25 million as set forth in its most recent published
annual report of condition.
Section 5.11. Money Held in Trust. Subject to the provisions of Section
9.03 and Section 13.02, all monies received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received. The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 5.12. Preferential Collection of Claims. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).
Section 5.13. Trustee's Application for Instructions from the Company;
Liquidated Damages. (a) Any application by the Trustee for written
instructions from the Company (other than with regard to any action proposed to
be taken or omitted to be taken by the Trustee that affects the rights of the
holders of the Securities or holders of Senior Indebtedness under this
Indenture, including, without limitation, under Article 13 hereof) may, at the
option of the Trustee, set forth in writing any action proposed to be taken or
omitted by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be effective. The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than ten Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written
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instructions in response to such application specifying the action to be taken
or omitted.
(b) If liquidated damages are payable to Holders pursuant to the terms of
the Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such liquidated damages
that is payable and (ii) the date on which such amount of liquidated damages is
payable. Unless and until a Responsible Officer of the Trustee receives at the
Corporate Trust Office such a certificate, the Trustee may assume without
inquiry that no such liquidated damages are payable. Upon receipt of a Company
Request together with a sum sufficient to pay such liquidated damages so
becoming due, the Trustee shall pay such liquidated damages to the Holders in
the same manner as interest on the Securities. If the Company has paid
liquidated damages directly to the persons entitled to them, the Company shall
deliver to the Trustee a certificate setting forth the particulars of such
payment.
ARTICLE 6
Holders' Lists and Reports by Trustee and Company
Section 6.1. Disclosure of Names and Addresses of Holders. Every Holder
of Securities, by receiving and holding the same, agrees with the Company and
the Trustee that neither the Company nor the Trustee nor any Paying Agent nor
any Security Registrar shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders of Securities in
accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA Section
312(b).
Section 6.2. Reports by Trustee. Within 60 days after May 15 of each year
commencing with the first May 15 after the first issuance of Securities pursuant
to this Indenture, the Trustee shall transmit by mail to all Holders of
Securities as provided in TIA Section 313(c) a brief report dated as of such May
15 if required by TIA Section 313(a). A copy of each such report shall at the
time of such transmission to Holders be filed by the Trustee with the Company.
Section 6.3. Reports by Company. The Company will:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
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reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Company may be required
to file with the Commission pursuant to Sections 13(a) or 13(b) or Section
15(d) of the Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to any of such
Sections, then it will file with the Trustee, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(c) file with the Trustee and the Commission, if applicable, and
transmit by mail to the Holders of Securities, within thirty days after the
filing thereof with the Trustee, in the manner and to the extent provided
in TIA Section 313(c), such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission and other information as may be
required pursuant to the TIA at the time and in the manner provided
pursuant to such Act.
Section 6.4. Company to Furnish Trustee Names and Addresses of Holders.
(a) The Company will furnish or cause to be furnished to the Trustee:
(i) semi-annually, not later than 10 days after the Regular Record
Date for interest for the Securities, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of
Securities as of such Regular Record Date, or if there is no Regular Record
Date for interest for the Securities, semi-annually, upon such dates as are
set forth in a Board Resolution or indenture supplemental hereto; and
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(ii) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished,
provided, however, that, so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
(b) The Company shall provide the Trustee with at least thirty days'
prior notice of any change in location of its principal executive offices
or other principal place of business.
ARTICLE 7
Consolidation, Merger, Sale, Lease or Conveyance
Section 7.1. Consolidations and Mergers of Company and Sales, Leases
and Conveyances Permitted Subject to Certain Conditions. The Company may
consolidate with, or sell, lease, transfer, convey or otherwise dispose of
all or substantially all of its assets to, or merge with or into any other
Person, provided however, that in any such case, (1) either the Company
shall be the continuing corporation, or the Person (if other than the
Company) formed by such consolidation or into which the Company is merged
or the Person that acquires or leases the Company's assets substantially as
an entirety is a corporation organized and existing under the laws of any
United States jurisdiction and expressly assumes the due and punctual
payment of the principal of (and premium, if any) and any interest payable
pursuant to this Indenture on all of the Securities, according to their
tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Company
and shall have provided for conversion rights, if applicable, in accordance
with the provisions of Article 12 hereof, by supplemental indenture,
complying with Article 8 hereof, satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation and (2) immediately after
giving effect to such transaction and treating any indebtedness that
becomes an obligation of the Company or such Person or any Subsidiary as a
result thereof as having been incurred by the Company or such Subsidiary at
the time of such transaction, no Default or Event of Default, shall have
occurred and be continuing.
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Section 7.2. Rights and Duties of Successor Corporation. In case of any
such consolidation, merger, sale, lease or conveyance and upon any such
assumption by the successor Person, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the predecessor corporation, except
in the event of a lease, shall be relieved of any further obligation under this
Indenture and the Securities. Such successor Person thereupon may cause to be
signed, and may issue either in its own name or in the name of the Company, any
or all of the Securities issuable hereunder that theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities that previously shall have been
signed and delivered by the officers of the Company to the Trustee for
authentication, and any Securities that such successor Person thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities had
been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
Section 7.3. Officers' Certificate and Opinion of Counsel'. Any
consolidation, merger, sale, lease, transfer, conveyance or other dispositions
permitted under Section 7.01 is also subject to the condition that the Trustee
receive an Officers' Certificate and an Opinion of Counsel to the effect that
any such consolidation, merger, sale, lease, transfer or conveyance or other
dispositions and the assumption by any successor Person, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE 8
Supplemental Indentures
Section 8.1. Supplemental Indentures Without Consent of Holders. Without
the consent of any Holders of Securities, the Company, when authorized by or
pursuant to a Board Resolution, and the Trustee, at any time and from time
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to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and the Securities issued hereunder;
(b) to add to the covenants of the Company for the equal and ratable
benefit of the Holders of the Securities or to surrender any right, power
or option herein conferred upon the Company;
(c) to add any Events of Default for the benefit of the Holders of
the Securities; provided, however, that in respect of any such additional
Events of Default such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer than
that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the
Trustee upon such default or may limit the right of the Holders of a
majority in aggregate principal amount of those Securities to which such
additional Events of Default apply to waive such default;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to add
to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by
more than one Trustee;
(e) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision
herein; provided such provisions shall not adversely affect the interests
of the Holders of Securities in any material respect;
(f) to make any change that does not adversely affect the rights of
any holder of Securities or to surrender any right, power or option
conferred on the Company hereunder;
(g) to make any change to comply with any requirement of the
Commission in connection with the qualification of the Indenture under TIA;
or
(h) to provide for the issuance of uncertificated Securities in
addition to or in place of certificated Securities; provided, however that
the
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uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code of 1986.
Section 8.2. Supplemental Indentures with Consent of Holders. With the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Securities affected by such supplemental indenture, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by or pursuant to a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby:
(a) reduce the principal amount, Repurchase Price or Redemption
Price with respect to any Security, or extend the Stated Maturity of any
Security or alter the manner of payment or rate of interest on any Security
or make any Security payable in money or securities other than that stated
in the Security;
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver with respect to Securities (or compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture;
(c) make any change that adversely affects the right to convert
any Security;
(d) modify the provisions of the Indenture relating to the
ranking of the Securities in a manner adverse to the Holders of the
Securities; or
(e) impair the right to institute suit for the enforcement of
any payment with respect to, or conversion of, the Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
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Section 8.3. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Article 5)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.4. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 8.5. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
Section 8.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall, if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities
so modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE 9
Covenants
Section 9.1. Payment of Principal, Premium, If Any, and Interest. The
Company covenants and agrees for the benefit of the Holders of Securities that
it will duly and punctually pay the principal of (and premium, if any), interest
on, and the Repurchase Price, the Redemption Price and the Make-Whole Payment
with respect to the Securities in accordance with the terms of the Securities
and this Indenture. At the option of the Company, all payments of principal may
be paid by check to the registered Holder of the Security or other person
entitled thereto against surrender of such Security. The conversion of any
Securities
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pursuant to Article 12 hereof, together with any cash payments required to be
made in accordance with the terms of the Securities and this Indenture, will
satisfy the Company's obligations under this Section 9.01 with respect to such
Securities.
Section 9.2. Maintenance of Office or Agency. The Company shall maintain
a Place of Payment for the Securities in The City of New York, an office or
agency where the Securities may be presented or surrendered for payment or
conversion or redemption, where the Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Corporate Trust Office shall initially be such office or agency of the Company,
unless and until the Company shall designate and maintain some other office or
agency for one or more of such purposes. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of each
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee its agent to receive all such presentations, surrenders,
notices and demands.
The Company may from time to time designate one or more other offices or
agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all of such purposes, and may from time to
time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in accordance with the requirements set forth above for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 9.3. Money for Securities Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent with respect to any
Securities, it will, on or before each due date of the principal of (and
premium, if any), or interest on the Securities, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Securities, it will, before each due date of the principal of (and premium, if
any), or interest on, the Securities, deposit with a Paying Agent a sum
sufficient to pay
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the principal (and premium, if any) or interest, so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of principal of (and
premium, if any,) or interest on the Securities, in trust for the benefit
of the Persons entitled thereto, until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any such payment of
principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such default upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company upon Company Request or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment of such
principal of (and premium, if any) or interest on any Security, without interest
thereon, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
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before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining, will be repaid to the Company.
Section 9.4. Existence. Subject to Article 7, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect the corporate existence of the Company and its Subsidiaries, and their
respective rights (charter and statutory) and franchises, except to the extent
that the Board of Directors shall determine that the failure to do so would not
have a material adverse effect on the business, assets, financial condition or
results of operation of the Company (a "Material Adverse Effect"); provided,
however, that the Company shall not be required to preserve any right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 9.5. Payment of Taxes and Other Claims. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary and have a Material Adverse Effect; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 9.6. Statement as to Compliance. The Company will deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all terms, conditions and provisions under this Indenture and,
in the event of any noncompliance, specifying such noncompliance and the nature
and status thereof. For purposes of this Section 9.06, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
Section 9.7. Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any term, provision or condition set forth in
Sections 9.04 to 9.05, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of all outstanding
Securities, by
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Act of such Holders, either waive such compliance in such instance or generally
waive compliance with such covenant or condition, but no such waiver shall
extend to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
Section 9.8. Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any Holder or
beneficial owner of Securities that continue to be Restricted Securities, in
connection with any sale thereof and any prospective purchaser of Securities
from such holder or beneficial owner, the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any such holder or
beneficial owner of the Securities and it will take such further action as any
holder or beneficial owner of such Securities may reasonably request, all to the
extent required from time to time to enable such holder or beneficial owner to
sell its Securities without registration under the Securities Act within the
limitation of the exemption provided by Rule 144A, as such rule may be amended
from time to time.
ARTICLE 10
Redemption of Securities.
Section 10.1. Provisional and Optional Redemption by the Company. (a)
The Securities may be redeemed at the election of the Company, as a whole or
from time to time in part, at any time prior to January 25, 2003 (a "Provisional
Redemption"), upon notice as set forth in Section 10.04, at a redemption price
equal to $1,000 per $1,000 principal amount of the Securities redeemed plus
accrued and unpaid interest, if any (such amount, together with the Make-Whole
Payment described below, the "Provisional Redemption Price"), to but excluding
the date of redemption (the "Provisional Redemption Date") if (i) the Closing
Price of the Common Stock has exceeded 150% of the Conversion Price (as defined
in Article 12 and as such may be adjusted from time to time) then in effect for
at least 20 Trading Days in any consecutive 30-Trading Day period ending on the
Trading Day prior to the date of mailing of the provisional notice of redemption
pursuant to Section 10.04 (the "Notice Date"), and (ii) a registration
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statement covering resales of the Securities and the Common Stock issuable upon
conversion thereof is effective and available for use and is expected to remain
effective for the 30 days following the Provisional Redemption Date.
Upon any such Provisional Redemption, the Company shall make an additional
payment in cash (the "Make-Whole Payment") with respect to the Securities called
for redemption to holders on the Notice Date in an amount equal to $130.43 per
$1,000 principal amount of the Securities, less the amount of any interest
actually paid on such Securities prior to the Notice Date. The Company shall
make the Make-Whole Payment on all Securities called for Provisional Redemption,
including those Securities converted into Common Stock between the Notice Date
and the Provisional Redemption Date.
(b) The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on or after January 25, 2003,
and prior to maturity (an "Optional Redemption"), upon notice as set forth in
Section 10.04, at the following optional redemption prices (expressed as
percentages of the principal amount), together in each case with accrued and
unpaid interest, if any, up to but not including the date fixed for redemption
(the "Optional Redemption Price"), if redeemed during the periods described
below:
Period Redemption Price
------ ----------------
January 25, 2003 through January 24, 2004 102.8%
Thereafter 101.4%.
Section 10.2. Election to Redeem; Notice to Trustee. The election of the
Company to redeem any Securities shall be evidenced by a Board Resolution. In
case of any redemption at the election of the Company of all or any part of the
Securities pursuant to Section 10.01 (Provisional Redemption or Optional
Redemption), the Company shall, at least 45 days prior to the giving of the
notice of redemption in Section 10.04 (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of the Redemption Date and of
the principal amount of Securities to be redeemed. In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
Section 10.3. Selection by Trustee of Securities to Be Redeemed. If less
than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 60 days and not less than 30 days prior
to the Redemption Date by the Trustee, from the Outstanding Securities not
previously
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called for redemption, by lot, pro rata or any other method as the Trustee shall
deem fair and appropriate.
If any Security selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Security
so selected, the converted portion of such Security shall be deemed, solely for
purposes of determining the aggregate principal amount of the Securities to be
redeemed, to be the portion selected for redemption (provided, however, that the
Holder of such Security so converted and deemed redeemed shall not be entitled
to any additional interest payment as a result of such deemed redemption than
such Holder would have otherwise been entitled to receive upon conversion of
such Security). Securities that have been converted during a selection of
Securities to be redeemed may be treated by the Trustee as Outstanding for the
purpose of such selection.
Securities in denominations of $1,000 may only be redeemed in whole. The
Trustee may select for redemption portions (equal to $1,000 or any multiple
thereof) of the principal of Securities that have denominations larger than
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
The Trustee shall promptly notify the Company and the Security Registrar
(if other than itself) in writing of the Securities selected for redemption and,
in the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security which has been or is to be redeemed.
Section 10.4. Notice of Redemption. Notice of redemption shall be given
in the manner provided in Section 1.07, (i) no less than 10 Trading Days nor
more than 20 Trading Days prior to the Provisional Redemption Date in the case
of a Provisional Redemption, to each Holder of Securities to be redeemed, but
failure to give such notice in the manner herein provided to the Holder of any
Security designated for redemption as a whole or in part, or any defect in the
notice to any such Holder, shall not affect the validity of the proceedings for
the redemption of any other such Security or portion thereof and (ii) not less
than 30 days nor more than 60 days prior to the Redemption Date in the case of
an Optional Redemption.
All notices of redemption shall state:
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(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the principal
amount) of the particular Securities to be redeemed;
(d) in case any Security is to be redeemed in part only, the notice
that relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the holder will receive, without a
charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed;
(e) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security, or the portion thereof, to be redeemed
and, if applicable, that interest thereon shall cease to accrue on and
after said date;
(f) the Place or Places of Payment where such Securities are to be
surrendered for payment of the Redemption Price;
(g) that Securities called for redemption must be presented and
surrendered to the Paying Agent to collect the redemption price;
(h) the then current Conversion Price and Make-Whole Payment, if any;
(i) that the Securities called for redemption may be converted at any
time before the close of business on the last Business Day prior to the
Redemption Date;
(j) the CUSIP number of such Security, if any; and
(k) that a Holder of Securities who desires to convert Securities
must satisfy the requirements for conversion contained in such Securities.
Notice of redemption of Securities to be redeemed shall be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
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Section 10.5. Deposit of Redemption Price. Not later than 11:00 a.m. New
York City time on the Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 9.03) an amount of
money sufficient to pay on the Redemption Date, the Redemption Price of all the
Securities or portions thereof that are to be redeemed on that date, other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation or have been converted.
Section 10.6. Securities Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Company shall default in the
payment of the Redemption Price) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price
provided, however, that if the Provisional Redemption Date is an Interest
Payment Date, the semi-annual payment of interest becoming due on such date
shall be payable to the Holders of such Securities registered as such on the
relevant Regular Record Date according to their terms and the provisions of
Section 3.06, and with respect to a Provisional Redemption, the holder of any
Securities converted into Common Stock pursuant to the terms hereof after the
Notice Date and prior to the Provisional Redemption Date shall have the right to
the Make-Whole Payment regardless of the conversion of such Securities.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption Price, shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security and such Security
shall remain convertible into Common Stock until the Redemption Price, and any
such accrued interest, shall have been paid or duly provided for.
Section 10.7. Securities Redeemed in Part. Any Security that is to be
redeemed only in part (pursuant to the provisions of this Article) shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Security
without service charge a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
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ARTICLE 11
Repurchase at Option of Holders upon Change in Control
Section 11.1. Right to Require Repurchase. In the event that a Change in
Control shall occur, each Holder shall have the right, at the Holder's option,
to require the Company to repurchase (subject to the provisions of Section 13.03
hereof) all of such Holder's Securities, or any portion of the principal amount
thereof that is an integral multiple of $1,000 (provided that no single Security
may be repurchased in part unless the portion of the principal amount of such
Security to be outstanding after such repurchase is equal to $1,000 or an
integral multiple of $1,000), on the date (the "Repurchase Date") that is not
later than 45 Business Days after the date of the occurrence of a Change in
Control at a purchase price equal to 100% of the principal amount plus interest
accrued and unpaid to the Repurchase Date (the "Repurchase Price"). At the
option of the Company, the Repurchase Price may be paid in cash or, subject to
the fulfillment by the Company of the conditions set forth in Section 11.02, by
delivery of that number of shares of Common Stock equal to the quotient of (i)
the Repurchase Price divided by (ii) 95% of the average of the Closing Prices of
the Common Stock for the five consecutive Trading Days ending on and including
the third Trading Day immediately preceding the Repurchase Date.
Section 11.2. Conditions to the Company's Election to Pay the Repurchase
Price in Common Stock.
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 11.01 if and only if the following conditions
have been satisfied:
(a) The shares of Common Stock deliverable in payment of the Repurchase
Price shall be listed for trading on a U.S. national securities exchange or
approved for trading in the NASDAQ National Market; and
(b) All shares of Common Stock deliverable in payment of the Repurchase
Price shall be issued out of the Company's authorized but unissued Common Stock
and will, upon issue, be duly and validly issued and fully paid and non-
assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 11.02 are not satisfied
in accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
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Section 11.3. Notices; Method of Exercising Repurchase Right, Etc. (a)
Unless the Company shall have theretofore called for redemption all of the
Outstanding Securities, on or before the 15th Business Day after the occurrence
of a Change in Control, the Company shall give notice to all Holders of the
Securities and the Trustee (the "Company Notice") of the occurrence of the
Change in Control and of the repurchase right set forth herein arising as a
result thereof.
Each Company Notice shall state:
(i) the date of such Change in Control and, briefly, the events
causing such Change in Control;
(ii) the date by which the Change in Control Purchase Notice (as
defined below) must be delivered;
(iii) the Repurchase Date;
(iv) the Repurchase Price, and whether the Repurchase Price shall
be paid by the Company in cash or by delivery of shares of Common Stock;
(v) a description of the procedure that a Holder must follow to
exercise a repurchase right;
(vi) the procedures for withdrawing a Change in Control Purchase
Notice;
(vii) the place or places where such Securities are to be
surrendered for payment of the Repurchase Price or for conversion;
(viii) briefly, the conversion rights of Holders of Securities;
(ix) the Conversion Price and any adjustments thereto; and
(x) that Holders who want to convert Securities must satisfy the
requirements set forth in the Securities.
The Company will cause a copy of the Company Notice to be published in The
Wall Street Journal or another daily newspaper of national circulation.
(b) To exercise a repurchase right, a Holder must deliver to the Trustee
or a Paying Agent or an office or agency maintained by the Company for such
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purpose in the Borough of Manhattan, The City of New York, prior to the close of
business on or before the Repurchase Date written notice of the Holder's
exercise of such right (the "Change in Control Purchase Notice"), which notice
shall set forth (i) the name of the Holder, (ii) the certificate numbers of the
Securities with respect to which the repurchase right is being exercised, (iii)
the principal amount of the Securities to be repurchased (and, if any Security
is to be repurchased in part, the portion of the principal amount thereof to be
repurchased, which shall be in integral multiples of $1,000) and (iv) a
statement that an election to exercise the repurchase right is being made
thereby pursuant to the applicable provisions of the Securities.
(c) On or prior to the Repurchase Date, the Company shall deposit with
the Trustee or with the Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 9.03) an amount
of money sufficient to pay the Repurchase Price of the Securities that are to be
repaid on the Repurchase Date. On the Repurchase Date, the Trustee, a Paying
Agent (or, if the Company is acting as its own Paying Agent, the Company) shall
repurchase all such Securities validly tendered prior to such date.
In the event that a Holder has previously delivered a Change in Control
Purchase Notice, but failed to tender the Security with respect to which such
Change in Control Purchase Notice relates, then so long as the Trustee or the
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold on trust as provided in Section 9.03) holds money sufficient to pay the
Repurchase Price in respect of such Security shall cease to be Outstanding for
the purposes of this Indenture and all rights of the Holder thereof, other than
the right to receive the Repurchase Price together with any accrued interest
thereon, shall terminate.
(d) If any Security (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the Repurchase Price in respect of such
Security shall, until paid, bear interest from the Repurchase Date at the rate
borne by the Security and such Security shall remain convertible into Common
Stock until the Repurchase Price and any such accrued interest shall have been
paid or duly provided for.
(e) Any Security that is to be repurchased only in part shall be
surrendered to the Trustee or any such Paying Agent and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal
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amount equal to and in exchange for the portion of the principal of the Security
so surrendered that was not repurchased.
(f) Any Holder that has delivered a Change in Control Purchase Notice
shall have the right to withdraw such notice at any time prior to the close of
business on the Repurchase Date by delivery of a written notice of withdrawal to
the Trustee or any such Paying Agent prior to the close of business on the
Repurchase Date. The notice of withdrawal shall state the principal amount and
the certificate numbers of the Securities as to which the withdrawal notice
relates and the principal amount, if any, that remains subject to the notice of
exercise of a repurchase right. A Security in respect of which a Holder has
exercised its option to require repurchase upon a Change in Control may
thereafter be converted into Common Stock only if such Holder withdraws its
Change in Control Purchase Notice in accordance with the preceding sentence.
(g) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such repurchase shall be deemed to have become on the Repurchase Date the
holder or holders of record of the shares represented thereby; provided,
however, that any surrender for repurchase on a date when the stock transfer
books of the Company shall be closed shall constitute the person or persons in
whose name or names the certificate or certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open.
(h) No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon repurchase of Securities. If more than one Security
shall be repurchased from the same holder and the Repurchase Price shall be
payable in shares of Common Stock, the number of full shares that shall be
issued upon repurchase shall be computed on the basis of the aggregate principal
amount of the Securities (or specified portions thereof to the extent permitted
hereby) so repurchased from such Holder. If any fractional share of stock
otherwise would be issuable upon repurchase of any Security or Securities, the
Company shall make an adjustment therefor in cash at the price per share at
which the Common Stock is valued for purposes of Section 11.01 to the Holder of
Securities.
(i) The issue of stock certificates on repurchase of Securities shall be
made without charge to the Holder of Securities being repurchased for any tax in
respect of the issue thereof. The Company shall not, however, be required to
pay
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any tax that may be payable in respect of any transfer involved in the issue
and delivery of stock in any name other than that of the Holder of any Security
repurchased, and the Company shall not be required to issue or deliver any such
stock certificate unless and until the person or persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
Section 11.4. Certain Definitions. For purposes of this Article 11:
(a) the terms "beneficial owner" and "beneficial ownership" shall be
determined in accordance with Rules 13d-3 and 13d-5 promulgated by the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time; and
(b) the term "Person" shall include any syndicate or group that would be
deemed to be a "Person" under Section 13(d)(3) of the Exchange Act.
Section 11.5. Change in Control. A "Change in Control" shall be deemed to
have occurred at such time after the original issuance of the Securities as:
(a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), acquires the beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction, of more
than 50% of the Company's total outstanding voting stock other than an
acquisition by the Company, any of its Subsidiaries or any of its employee
benefit plans;
(b) the Company shall consolidate with, or merge with or into another
Person or convey, transfer, lease or otherwise dispose of all or substantially
all of its assets to any Person, or any Person, consolidates with or merges with
or into the Company, in any event pursuant to a transaction in which the
Company's outstanding voting stock is converted into or exchanged for cash,
securities or other property, other than any such transactions where:
(i) the Company's voting stock is not converted or exchanged at all
(except to the extent necessary to reflect a change in the Company's
jurisdiction of incorporation) or is converted into or exchanged for voting
stock (other than Redeemable Capital Stock) of the surviving or transferee
corporation, and
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(ii) immediately after such transaction, no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the
beneficial owner of more than 50% of the total outstanding voting stock of
the surviving or transferee corporation;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election to such Board of Directors, or whose nomination for
election by the Company's stockholders, was approved by a vote of a majority of
the directors then still in office who were either directors at the beginning of
such period of whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office;
(d) a special resolution is passed by the Company's stockholders approving
the plan of liquidation or dissolution other than in a transaction that complies
with the provisions described in Article 7.
"Redeemable Capital Stock" means any class or series of capital stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is, or upon the happening of an
event or passage of time would be, required to be redeemed prior to the Stated
Maturity of the Securities or is redeemable at the option of the holder thereof
at any time prior to such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final stated
maturity; provided, however, that Redeemable Capital Stock shall not include any
Common Stock the holder of which has the right to put to the Company upon
termination of employment.
ARTICLE 12
Conversion
Section 12.1. Conversion Privilege, Conversion Rate and Conversion Price.
Subject to and upon compliance with the provisions of this Article 12, at the
option of the Holder thereof, any Security or any portion of the principal
amount thereof that is $1,000 or an integral multiple of $1,000 may be converted
at any time after original issuance thereof through the close of business on
January 25, 2005 into that number of fully paid and non-assessable shares of
Common Stock obtained by multiplying the Conversion Rate then in effect by each
$1,000 principal amount of Securities surrendered for conversion. In case a
Security or portion thereof has previously been called for redemption at the
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election of the Company, such conversion right in respect of the Security or
portion so called shall expire at the close of business, New York City time, on
the last Business Day prior to the Redemption Date, unless the Company defaults
in making the payment due upon redemption. A Security in respect of which a
Holder has delivered a Change in Control Purchase Notice (as defined in Article
11 hereof) exercising the option of such Holder to require the Company to
purchase such Security may be converted only if such notice and the Security is
withdrawn by a written notice of withdrawal delivered by the Holder to the
Trustee or any Paying Agent prior to the close of business on the Repurchase
Date, in accordance with the terms of this Indenture.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $39.10 per
share of Common Stock, which is equal to a conversion rate of 25.5754 shares per
$1,000 principal amount of the Securities (the "Conversion Rate"). The
Conversion Rate shall be adjusted in certain instances as provided in Section
12.04 and, in every instance in which an adjustment is made to the Conversion
Rate, a corresponding adjustment shall be made to the Conversion Price.
Section 12.2. Exercise of Conversion Privilege. In order to exercise the
conversion privilege with respect to any Security in definitive form, the Holder
of any Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency maintained by the
Company pursuant to Section 9.02 of this Indenture, accompanied by (a) written
notice to the Company in substantially the form of conversion notice attached to
the form of Security attached as Exhibit A hereto at such office or agency that
the Holder elects to convert such Security or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted, (b) the
funds, if any, required by this Section 12.02, and (c) if shares or any portion
of such Security not to be converted are to be issued in the name of a Person
other than the Holder thereof, the name of the Person in which to issue such
shares and the transfer taxes, if any, required to be paid by the Holder
pursuant to Section 12.08.
In order to exercise the conversion privilege with respect to any interest
in a global Security, the beneficial owner must complete, or cause to be
completed, the appropriate instruction form for conversion pursuant to the
depositary's book-entry conversion program, deliver, or cause to be delivered,
by book-entry delivery an interest in such global Security, furnish appropriate
endorsements and transfer documents if required by the Company or the Trustee or
other agent, and pay the funds if any required by this Section 12.02 and any
transfer taxes if required pursuant to Section 12.08.
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As promptly as practicable after satisfaction of the requirements for
conversion set forth above, the Company shall issue and shall deliver to such
Holder a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such Security or portion thereof in
accordance with the provisions of this Article and bearing the legend set forth
in Section 3.04(c) and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 12.03. In case any Security of a denomination greater than $1,000 shall
be surrendered for partial conversion, and subject to Article 2, the Company
shall execute and the Trustee shall authenticate and deliver to the holder of
the Security so surrendered, without charge, a new Security or Securities in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Security.
Each conversion shall be deemed to have been effected as to any such
Security (or portion thereof) on the date on which the requirements set forth
above in this Section 12.02 have been satisfied as to such Security (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided however that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Rate in effect on the date upon which such
Security shall be surrendered.
Any Security or portion thereof surrendered for conversion during the
period from the close of business on the record date for any interest payment
date to the close of business on the Business Day next preceding the following
interest payment date that has not been called for redemption during such
period, shall be accompanied by payment, in immediately available funds or other
funds acceptable to the Company, of an amount equal to the interest otherwise
payable on such interest payment date on the principal amount being converted;
provided however that no such payment need be made to the extent any overdue
interest shall exist at the time of conversion with respect to any such Security
or portion thereof. Except as provided above in this Section 12.02, no payment
or other adjustment shall be made for interest accrued on any Security converted
or for dividends on any shares issued upon the conversion of such Security as
provided in this Article.
Upon the conversion of an interest in a global Security, the Trustee (or
other conversion agent appointed by the Company), shall make a notation on such
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global Security as to the reduction in the principal amount represented thereby.
The Company shall notify the Trustee in writing of any conversions of Securities
effected through any conversion agent other than the Trustee.
Section 12.3. Fractions of Shares. No fractional shares of Common Stock
shall be issued upon conversion of Securities. If more than one Security shall
be surrendered for conversion at one time by the same Holder, the number of full
shares that shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities (or specified portions
thereof) so surrendered. Instead of any fractional share of Common Stock that
would otherwise be issuable upon conversion of any Security (or specified
portions thereof), the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Closing Price per share
of the Common Stock at the close of business on the Trading Day immediately
preceding such day.
"Trading Day" shall mean each day on which the primary securities exchange
or quotation system that is used to determine the Closing Price is open for
trading or quotation.
"Closing Price" of a single share of Common Stock on any Trading Day shall
mean the closing sale price per share for the Common Stock (or if no closing
sale price is reported, the average of the bid and ask prices) on such Trading
Day on the principal United States national securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national stock exchange, as reported by the National Association of Securities
Dealers Automated Quotation System.
Section 12.4. Adjustment of Conversion Rate. (a) In case the Company
shall pay or make a dividend or other distribution on its Common Stock
exclusively in Common Stock, the Conversion Rate in effect at the opening of
business on the earlier of the day next following such dividend or other
distribution or the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be adjusted so that a Holder
upon conversion will be entitled to receive that number of shares of Common
Stock it would have been entitled to after such dividend or other distribution
if it had converted its Security immediately prior to such dividend or other
distribution.
(b) In case the Company shall pay or make a dividend or other distribution
on its Common Stock consisting exclusively of, or shall otherwise issue to all
holders of its Common Stock, rights, warrants or options entitling the holders
thereof, for a period not exceeding 45 days, to subscribe for or purchase shares
of Common Stock at a price per share less than the current market price per
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share (determined as provided in Section 12.04(g)) of the Common Stock on the
date fixed for the determination of stockholders entitled to receive such
rights, warrants or options, the Conversion Rate in effect at the opening of
business on the day following the date fixed for such determination shall be
increased by multiplying such Conversion Rate by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock so offered for subscription or purchase and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate price of the total number of shares so offered
would purchase at the current market price per share (determined as provided in
Section 12.04(g)), such increase to become effective immediately after the
opening of business on the day following the date fixed for such determination.
(c) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of any
class of capital stock, securities, cash or assets (excluding any rights,
warrants or options referred to in Section 12.04(b), any dividend or
distribution paid exclusively in cash and any dividend or distribution referred
to in Section 12.04(a)), the Conversion Rate shall be adjusted by multiplying
the Conversion Rate in effect immediately prior to the earlier of such
distribution or the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the current market
price per share (determined as provided in Section 12.04(g)) and the denominator
shall be such current market price less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution), on the date of such effectiveness, of the
portion of the evidences of indebtedness, shares of capital stock, securities,
cash and assets so distributed applicable to one share of Common Stock, such
adjustment to become effective immediately prior to the
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opening of business on the day next following the later of (i) the date fixed
for the payment of such distribution and (ii) the date 20 days after the notice
relating to such distribution is given pursuant to Section 12.06 (such later
date of (i) and (ii) being referred to as the "Reference Date"). The provisions
of this Section 12.04(d) shall not be applicable to an event covered by Section
12.04(j). For purposes of this Section 12.04(d) and Sections 12.04(a) and
12.04(b), any dividend or distribution for which an adjustment is being made
pursuant to this Section 12.04(d) that also includes shares of Common Stock or
rights, warrants or options to subscribe for or purchase shares of Common Stock
shall be deemed instead to be (A) a dividend or distribution of the evidences of
indebtedness, cash, property, shares of capital stock or securities other than
such shares of Common Stock or such rights, warrants or options (making any
Conversion Rate adjustment required by this Section 12.04(d)) immediately
followed by (B) a dividend or distribution of such shares of Common Stock or
such rights (making any further Conversion Rate adjustment required by Sections
12.04(a) or 12.04(b)), except (1) the record date of such dividend or
distribution as defined in this Section 12.04(d) shall be substituted as "the
date fixed for the determination of stockholders entitled to receive such
dividend or other distributions", "the date fixed for the determination of
stockholders entitled to receive such rights, warrants or options" and "the date
fixed for such determination" within the meaning of Sections 12.04(a) and
12.04(b) and (2) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of this 12.04(a).
(e) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no Conversion Rate adjustment pursuant to this Section 12.04(e) has
been made and (ii) the aggregate of any cash plus the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of the
tender or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by the Company or a Subsidiary for all or any
portion of the Common Stock concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no Conversion Rate
adjustment pursuant to this Section 12.04(e) has been made, exceeds 10% of the
product of the current market price per share (determined as provided in Section
12.04(g)) of the Common Stock as of the Trading Day immediately preceding the
record date fixed for stockholders entitled to receive such distribution times
the number of
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shares of Common Stock outstanding on such record date, the Conversion Rate
shall be increased so that the same shall equal the price determined by
multiplying the Conversion Rate in effect immediately prior to the close of
business on the date fixed for the determination of the stockholders of record
entitled to such distribution by a fraction of which the denominator shall be
the current market price per share (determined as provided in Section 12.04(g))
on such date less an amount equal to the quotient of (x) the excess of such
combined amount over such 10% and (y) the number of shares of Common Stock
outstanding on the record date and (iii) the numerator of which shall be equal
to the current market price on such date, such adjustment to become effective
immediately prior to the opening of business on the day following the record
date fixed for the payment of such distribution.
(f) In case a successful tender or exchange offer, other than an odd lot
offer, made by the Company or any Subsidiary for all or any portion of the
Common Stock shall involve an aggregate consideration having a fair market value
(as determined in good faith by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) that, together with (i) the aggregate of
the cash plus the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of the other tender or exchange offer referred
to below, of consideration payable in respect of any other tender or exchange
offer by the Company or a Subsidiary for all or any portion of the Common Stock
concluded within the preceding 12 months and in respect of which no Conversion
Rate adjustment pursuant to this Section 12.04(f) has been made and (ii) the
aggregate amount of any distributions to all holders of the Common Stock made
exclusively in cash within the preceding 12 months and in respect of which no
Conversion Rate adjustment pursuant to Section 12.04(e) has been made, exceeds
10% of the product of the current market price per share (determined as provided
in Section 12.04(g)) of the Common Stock outstanding (including any tendered
shares) on the Expiration Time, the Conversion Rate shall be adjusted by
multiplying the Conversion Rate in effect immediately prior to the Expiration
Time by a fraction of which the denominator shall be (i) the product of the
current market price per share (determined as provided in Section 12.04(g)) of
the Common Stock on the Trading Day next succeeding the Expiration Time times
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
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as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and the numerator shall be
the product of (i) such current market price per share (determined in accordance
with Section 12.04(g)) on the Trading Day next succeeding the Expiration Time
times (ii) such number of outstanding shares at the Expiration Time less the
number of Purchased Shares, such increase to become effective immediately prior
to the opening of business on the day following the Expiration Time.
(g) For the purpose of any computation under Sections 12.04(b), (d) and
(e), the current market price per share of Common Stock on any date in question
shall be deemed to be the average of the daily Closing Prices per share of
Common Stock for the ten consecutive Trading Days immediately prior to the date
in question; provided, however, that (i) if the "ex" date (as hereinafter
defined) for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Rate pursuant to
Section 12.04(a), (b), (c), (d), (e) or (f) ("Other Event") occurs on or after
the 20th Trading Day prior to the date in question and prior to the "ex" date
for the issuance or distribution requiring such computation (the "Current
Event"), the Closing Price for each Trading Day prior to the "ex" date for such
Other Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Rate is so required to be
adjusted as a result of such Other Event, (ii) if the "ex" date for any Other
Event occurs after the "ex" date for the Current Event and on or prior to the
date in question, the Closing Price for each Trading Day on and after the "ex"
date for such Other Event shall be adjusted by multiplying such Closing Price by
the fraction by which the Conversion Rate is so required to be adjusted as a
result of such Other Event, (iii) if the "ex" date for any Other Event occurs on
the "ex" date for the Current Event, one of those events shall be deemed for
purposes of clauses (i) and (ii) of this proviso to have an "ex" date occurring
prior to the "ex" date for the Other Event, and (iv) if the "ex" date for the
Current Event is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the Closing
Price for each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date in
question (as determined in good faith by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section 12.04(d)
or (e), whose determination shall be conclusive and described in a Board
Resolution) of the portion of the rights, warrants, options, evidences of
indebtedness, shares of capital stock, securities, cash or property being
distributed applicable to one share of Common Stock. For the purpose of any
computation under Section 12.04(f), the current market price per share of Common
Stock on
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any date in question shall be deemed to be the average of the daily Closing
Prices for the five consecutive Trading Days selected by the Company commencing
on or after the latest (the "Commencement Date") of (i) the date 20 Trading Days
before the date in question, (ii) the date of commencement of the tender or
exchange offer requiring such computation and (iii) the date of the last
amendment, if any, of such tender or exchange offer involving a change in the
maximum number of shares for which tenders are sought or a change in the
consideration offered, and ending not later than the Trading Day next succeeding
the Expiration Time of such tender or exchange offer (or, if such Expiration
Time occurs before the close of trading on a Trading Day, not later than the
Trading Day during which the Expiration Time occurs); provided, however, that if
the "ex" date for any Other Event (other than the tender or exchange offer
requiring such computation) occurs on or after the Commencement Date and on or
prior to the Trading Day next succeeding the Expiration Time for the tender or
exchange offer requiring such computation, the Closing Price for each Trading
Day prior to the "ex" date for such Other Event shall be adjusted by multiplying
such Closing Price by the reciprocal of the same fraction by which the
Conversion Rate is so required to be adjusted as a result of such other event.
For purposes of this paragraph, the term "ex" date, (i) when used with respect
to any issuance or distribution, means the first date on which the Common Stock
trades regular way on the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive such issuance or
distribution, (ii) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when used with respect
to any tender or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the Expiration Time
of such tender or exchange offer.
(h) The Company may make such increases in the Conversion Rate, in
addition to those required by paragraphs (a), (b), (c), (d), (e) and (f) of this
Section 12.04, as it considers to be advisable.
(i) No adjustment in the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate; provided, however, that any adjustments, which by reason of
this Section 12.04(i) are not required to be made, shall be carried forward and
taken into account in any subsequent adjustment.
(j) In the event that the Company distributes assets, debt securities,
rights, warrants or options (other than those referred to in Section 12.04(b)
above)
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pro rata to holders of Common Stock, and the fair market value of the portion of
assets, debt securities, rights, warrants or options applicable to one share of
Common Stock distributed to holders of Common Stock exceeds the Average Sale
Price (as defined below) per share of Common Stock, or such Average Sale Price
exceeds such fair market value by less than $1.00, then so long as any such
assets, debt securities, rights, options or warrants have not expired or been
redeemed by the Company, the Company shall make proper provision so that the
Holder of any Security upon conversion, rather than being entitled to an
adjustment in the Conversion Rate, will be entitled to receive upon such
conversion, in addition to the shares of Common Stock otherwise issuable upon
conversion, the kind and amount of assets, debt securities, rights, warrants and
options such Holder would have received had such Holder converted its Security
immediately prior to the date of determination of the holders entitled to such
distribution.
"Average Sale Price" means the average of the Closing Prices of the Common
Stock for the shorter of (i) 30 consecutive Trading Days ending on the last full
Trading Day prior to the Time of Determination (as defined below) with respect
to the rights, options, warrants or distribution in respect of which the Average
Sale Price is being calculated, or (ii) the period (x) commencing on the date
next succeeding the first public announcement of (a) the issuance of rights,
options or warrants or (b) the distribution, in each case, in respect of which
the Average Sale Price is being calculated and (y) proceeding through the last
full Trading Day prior to the Time of Determination with respect to the rights,
options, warrants or distribution in respect of which the Average Sale Price is
being calculated, or (iii) the period, if any, (x) commencing on the date next
succeeding the Ex-Dividend Time (as defined below) with respect to the next
preceding (a) issuance of rights, warrants or options or (b) distribution, in
each case, for which an adjustment is required by the provisions of Section
12.04(b) or Section 12.04(j) and (y) proceeding through the last full Trading
Day prior to the Time of Determination with respect to the rights, options,
warrants, or distribution in respect of which the Average Sale Price is being
calculated. If the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto) with
respect to a dividend, subdivision, combination or reclassification to which
Section 12.04(a) or (b) applies occurs during the period applicable for
calculating "Average Sale Price" pursuant to the definition in the preceding
sentence, "Average Sale Price" shall be calculated for such period in a manner
determined in good faith by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the Closing Price of
the Common Stock during such period.
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"Time of Determination" means the time and date of the earlier of (i) the
determination of stockholders entitled to receive rights, warrants or options or
a distribution, in each case, to which this Section 12.04 applies and (ii) the
time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend"
trading for such rights, options, warrants or distribution on the New York Stock
Exchange or such other national or regional exchange or market on which the
shares of Common Stock are listed or quoted.
Section 12.5. Notice of Adjustments of Conversion Rate. Whenever the
Conversion Rate and Conversion Price are adjusted as herein provided, the
Company shall compute the adjusted Conversion Rate and Conversion Price in
accordance with Section 12.04 and shall prepare a certificate signed by the
Chief Financial Officer of the Company setting forth the adjusted Conversion
Rate and Conversion Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed (with a
copy to the Trustee) at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 9.02; and the Company shall
forthwith cause a notice setting forth the adjusted Conversion Rate and
Conversion Price to be mailed, first class postage prepaid, to each Holder of
Securities at its address appearing on the Security Register. Unless and until
the Trustee shall receive such notice, the Trustee may assume without inquiry
that the Conversion Rate and Conversion Price have not been, and are not
required to be, adjusted and that the last Conversion Rate and Conversion Price
of which it has written notice remain in effect.
Section 12.6. Notice of Certain Corporate Action. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require a Conversion Rate
adjustment pursuant to Section 12.04(e); or
(b) the Company shall authorize the granting to all holders of its
Common Stock of rights, warrants or options to subscribe for or purchase
any shares of capital stock of any class or of any other rights (excluding
rights distributed pursuant to any stockholder rights plan); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
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required, or of the sale or transfer of all or substantially all of the
assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding, up of the Company; or
(e) the Company or any Subsidiary of the Company shall commence a
tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer);
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant to Section 9.02,
and shall cause to be mailed to all Holders at their last addresses as they
shall appear in the Security Register, at least 20 days (or 10 days in any case
specified in clause 12.06(a) or 12.06(b) above) prior to the applicable record,
effective or expiration date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights, warrants or options, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights, warrants or options are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or (z) the date on which such tender offer commenced, the date on which such
tender offer is scheduled to expire unless extended, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto).
Section 12.7. Company's Obligation Regarding Common Stock. The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of Securities, the whole number of shares of Common Stock then
issuable upon the conversion in full of all outstanding Securities.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Securities, the Company will take all corporate
action that may, in the opinion of its counsel, be necessary in order that the
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Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that if any shares of Common Stock to be provided for
the purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as practicable endeavor to secure such registration
or approval, as the case may be.
The Company further covenants that so long as the Common Stock shall be
listed or quoted on the New York Stock Exchange, the Nasdaq Stock Market
(National Market), or any other national securities exchange the Company will,
if permitted by the rules of such exchange, list and keep listed so long as the
Common Stock shall be so listed on such market or exchange, all Common Stock
issuable upon conversion of the Securities.
Section 12.8. Taxes on Conversions. The Company will pay any and all
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and
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.
Section 12.9. Covenant as to Common Stock. The Company covenants that all
shares of Common Stock that may be issued upon conversion of Securities shall
upon issue be newly issued (and not treasury shares) and be duly authorized,
validly issued, fully paid and nonassessable and, except as provided in Section
12.08, the Company shall pay all taxes, liens and charges with respect to the
issue thereof.
Section 12.10. Cancellation of Converted Securities. All Securities
delivered for conversion shall be delivered to the Trustee to be cancelled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 3.08 of this Indenture.
Section 12.11. Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets. In the event that the Company shall be a party to any
transaction (including any (i) recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from
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no par value to par value, or as a result of a subdivision or combination of the
Common Stock), (ii) any consolidation of the Company with, or merger of the
Company into, any other person, any merger of another person into the Company
(other than a merger that does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company),
(iii) any sale or transfer of all or substantially all of the assets of the
Company or (iv) any compulsory share exchange) pursuant to which the Common
Stock is converted into the right to receive other securities, cash or other
property, then lawful provision shall be made as part of the terms of such
transaction whereby the Holder of each Security then Outstanding shall have the
right thereafter to convert such Security only into (subject to funds being
legally available for such purpose under applicable law at the time of such
conversion) the kind and amount of securities, cash and other property
receivable upon such transaction by a holder of the number of shares of Common
Stock into which such Security might have been converted immediately prior to
such transaction. The Company or the person formed by such consolidation or
resulting from such merger or that acquired such assets or that acquired the
Company's shares of Common Stock, as the case may be, shall execute and deliver
to the Trustee a supplemental indenture establishing such rights. Such
supplemental indenture shall provide for adjustments that, for events subsequent
to the effective date of such supplemental indenture, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 12.11 shall similarly apply to
successive transactions of the foregoing type.
Section 12.12. Company's Obligation. All calculations, adjustments,
conversions and other determinations under this Article 12 shall be the sole
responsibility and obligation of the Company. The Trustee (a) shall have no
obligation to review, challenge or contest any such calculation, adjustment,
conversion or other determination and (b) shall not be liable for any default or
error by the Company under this Article 12.
ARTICLE 13
Subordination
Section 13.1. Securities Subordinate to Senior Indebtedness. The Company
covenants and agrees, and each Holder of Securities, by such Holder's acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article 13, the indebtedness represented by the
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Securities and the payment of the principal of (and premium, if any), and
interest on and all other amounts payable under the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness.
Section 13.2. Payment over of Proceeds upon Dissolution, Etc. In the
event of any payment by, or distribution of the assets of, the Company in
connection with (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or its assets, (b) any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Company, then and in any such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due in
respect of all Senior Indebtedness, or provision shall be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Senior Indebtedness, before the Holders of the Securities are entitled to
receive any payment on account of principal of (or premium, if any), or interest
on or any other amount payable under the Securities, ratably according to the
aggregate amounts remaining unpaid on account of such Senior Indebtedness held
by them, for application to the payment thereof, any payment or distribution of
any kind or character, whether in cash, property or securities, that may be
payable or deliverable in respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding-up or event, after giving
effect to any concurrent payment or distribution, or provision therefore, to the
holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this Section
13.02, the Trustee or the Holder of Securities shall have received any payment
or distribution of assets of the Company prohibited by the foregoing paragraph
of any kind or character, whether in cash, property or securities, before all
Senior Indebtedness is paid in full or payment thereof provided for, and if, at
or prior to the time of such payment or distribution, written notice that such
payment or distribution is prohibited by the foregoing paragraph shall have been
actually given to a Responsible Officer of the Trustee or, as the case may be,
such Holder, then and in such event such payment or distribution shall be paid
over or delivered forthwith to holders of such Senior Indebtedness remaining
unpaid or their representatives to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution, or provision therefore, to the holders of such Senior
Indebtedness.
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For purposes of this Article 13 only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment that in
either case are subordinated in right of payment to all Senior Indebtedness that
may at the time be outstanding to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article 13. The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article 7
shall not be deemed a dissolution, winding-up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Section 13.02 if the Person formed by
such consolidation or into which the Company is merged or that acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article 7.
Section 13.3. No Payment When Senior Indebtedness in Default. (a) In the
event and during the continuation of any default in the payment of principal of
(or premium, if any) or interest on any Senior Indebtedness beyond any
applicable grace period with respect thereto (unless and until such payment
default shall have been cured or waived in writing by the holders of such Senior
Indebtedness), or (b) any default (other than a payment default) with respect to
Senior Indebtedness occurs and is continuing that permits the acceleration of
the maturity thereof and judicial proceedings shall be pending with respect to
any such default or the Company receives written notice of such default (a
"Senior Indebtedness Default Notice"), then no payment shall be made by the
Company on account of principal of (or premium, if any) or interest on the
Securities or on account of all other amounts payable under the Securities.
Notwithstanding the foregoing, payments with respect to the Securities may
resume and the Company may acquire Securities for cash or property when (x) the
default with respect to the Senior Indebtedness is cured or waived or ceases to
exist or (y) in the case of a default described in (b) above, 179 or more days
pass after the Senior Indebtedness Default Notice is received by the Company.
If the Company receives a Senior Indebtedness Default Notice, then a similar
notice received within nine months thereafter relating to the same default on
the same issue of Senior Indebtedness shall not be effective to prevent the
payment or acquisition of the Securities as described in the first sentence of
this Section 13.03(a). In addition, no payment may be made on the Securities if
any Securities are declared due and payable prior to their Stated Maturity by
reason of the occurrence of an
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Event of Default resulting from the acceleration of the maturity of any Senior
Indebtedness until the earlier of (i) 120 days after the date of such
acceleration or (ii) the payment in full of all Senior Indebtedness, but only if
such payment is then otherwise permitted under the terms of this Indenture.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of Securities prohibited by the
foregoing provisions of this Section 13.03 before all Senior Indebtedness is
paid in full, or effective provisions made for its payment, and if, at or prior
to the time of such payment, written notice that such payment is prohibited by
the foregoing paragraph shall have been actually given to a Responsible Officer
of the Trustee or, as the case may be, such Holder, then and in such event (but
subject to the provisions of Section 13.09) such payment shall be paid over and
delivered forthwith to the holders of such Senior Indebtedness remaining unpaid
or their representatives to the extent necessary to pay all Senior Indebtedness
in full, after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness.
The provisions of this Section 13.03 shall not apply to any payment with
respect to which Section 13.02 would be applicable.
Section 13.4. Payment Permitted If No Default. Nothing contained in this
Article 13 or elsewhere herein or in any of the Securities shall prevent (a) the
Company, at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding-up, assignment for the benefit of
creditors or other marshaling of assets and liabilities of the Company referred
to in Section 13.02, except under the conditions described in Section 13.03,
from making payments at any time of principal of (and premium, if any), or
interest on, or any other amount payable under the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any), or interest
on, or any other amount payable under the Securities, or the retention of such
payment by the Holders, if, two Business Days prior to such application by the
Trustee, the Trustee had not received written notice that such payment would be
prohibited by the provisions of this Article 13.
Section 13.5. Subrogation to Rights of Holders of Senior Indebtedness.
Upon payment in full of all Senior Indebtedness, the Holders of the Securities
shall be subrogated (equally and ratably with the holders of all Indebtedness of
the Company that by its express terms is subordinated to Indebtedness of the
Company to substantially the same extent as the Securities are subordinated to
Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to
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the Senior Indebtedness to the extent that payments and distributions otherwise
payable to Holders of Securities have been applied to the payment of Senior
Indebtedness as provided by this Article 13. For purposes of such subrogation,
no payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled, except for the provisions of this Article 13, and no
payments over pursuant to the provisions of this Article 13 to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among
the Company, its creditors other than holders of Senior Indebtedness and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
Section 13.6. Provisions Solely to Define Relative Rights. The provisions
of this Article 13 are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities on the one hand and the holders
of Senior Indebtedness on the other hand. Nothing contained in this Article 13
or elsewhere herein or in the Securities is intended to or shall:
(a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article 13 of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of (and premium, if any), and interest
on, and any other amount payable under the Securities, as and when the same
shall become due and payable in accordance with their terms;
(b) affect the relative rights against the Company of the Holders of the
Securities and other creditors of the Company, other than Holders' rights in
relation to the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Securities from exercising
all remedies available upon a Default or Event of Default under this Indenture,
subject to the rights, if any, under this Article 13 of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
Section 13.7. Trustee to Effectuate Subordination. Each Holder of
Securities by its acceptance thereof authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 13 and appoints the Trustee its attorney-
in-fact for any and all such purposes, including the immediate filing of a
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claim for the unpaid balance of such Holder's Securities in any insolvency or
bankruptcy proceeding, or any receivership, liquidation, reorganization or
similar case or proceeding in the form required in such proceeding and cause
such claim to be approved. If the Trustee does not file a proper claim in the
form required in such proceeding on or prior to thirty days before the
expiration of the time to file such claim or claims, then the holders of Senior
Indebtedness or their representatives are hereby authorized to file such claim
for and on behalf of the Holders.
Section 13.8. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article 13 or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness, or otherwise amend
or supplement in any manner Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness;
(d) exercise or refrain from exercising any rights against the
Company and any other Person.
Section 13.9. Notice to Trustee. The Company shall give prompt written
notice to the Trustee if, to the Company's knowledge, any payment to or by the
Trustee in respect of the Securities is prohibited by this Article 13.
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Notwithstanding the provisions of this Article 13 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge that any payment to
or by the Trustee in respect of the Securities is prohibited by this Article 13,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 1.05, shall be entitled in all
respects to assume that no facts exist that would prohibit any payment in
respect of the Securities; provided, however, that if a Responsible Officer of
the Trustee shall not have received at the Corporate Trust Office of the Trustee
the notice provided for in this Section 13.09 at least two Business Days prior
to the date upon which by the terms hereof any money may become payable for any
purpose (including the payment of the principal of (and premium, if any) or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
Subject to the provisions of Article 5, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing itself
to be a holder of Senior Indebtedness (or a representative thereof) to establish
that such notice has been given by a holder of Senior Indebtedness (or a
representative thereof). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 13, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article 13, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 13.10. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article 13, the Trustee, subject to the provisions of Article 5, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the
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Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 13.
Section 13.11. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall in
good faith mistakenly pay over or distribute to Holders of Securities or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article 13 or
otherwise.
Section 13.12. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights'. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article 13 with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article 13 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 5.07.
Section 13.13. Article Applicable to Paying Agents. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article 13 shall in
such case (unless the context otherwise requires) be construed as extending to
and including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article 13 in addition to or
in place of the Trustee; provided, however, that Section 13.13 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
Section 13.14. Certain Conversions Deemed Payment. For the purposes of this
Article 13 only, (1) the issuance and delivery of junior securities upon
conversion of Securities in accordance with Article 12 shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on Securities or on account of the redemption, purchase or other
acquisition of Securities, and (2) the payment, issuance or delivery of cash,
property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section 13.14, the term "junior
securities"
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means (a) shares of any stock of any class of the Company and (b) securities of
the Company that are subordinated in right of payment to the prior payment in
full of all Senior Indebtedness that may be outstanding at the time of issuance
or delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article 13. Nothing contained in this Article 13 or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right, which is absolute and unconditional, of the Holder of any
Security to convert such Security in accordance with Article 12.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed all as of the day and year first above written.
EARTHWEB INC.
By: ________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: ________________________________
Joni D'Amico Vice President
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EXHIBIT A
EarthWeb Inc.
7% CONVERTIBLE SUBORDINATED NOTE DUE 2005
No. $ ___________
CUSIP 27032 CAA6
EARTHWEB INC., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the "Company", which term includes any
successor entity under the Indenture hereinafter referred to), for value
received, hereby promises to pay to [ ] or registered assigns, the
principal sum of $ at the office or agency of the Company referred to below, on
January 25, 2005 in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest on said principal sum semiannually on January 25 and
July 25 of each year, commencing July 25, 2000 (each an "Interest Payment
Date"), at said office or agency, in like coin or currency, at the rate of 7%
per annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the January 10 or July 10 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for such purpose,
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which initially will be Corporate Trust Office of the Trustee referred to on the
reverse side hereof, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
provided that the Company may make such payment either by (i) mailing a check
for such interest, payable to or upon the written order of the Person entitled
thereto pursuant to Section 3.07 of the Indenture (as defined herein) or (ii)
transfer to an account maintained by the payee located inside the United States.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
---------- ------------- --------
DATED: EARTHWEB INC.
By:
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
DATED: STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:_________________________
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
EarthWeb Inc.
7% CONVERTIBLE SUBORDINATED NOTE DUE 2005
This Security is one of a duly authorized issue of securities of the
Company designated as its 7% Convertible Subordinated Notes due 2005 (herein
called the "Securities"), limited in aggregate principal amount to $75,000,000
(up to $86,250,000 if the option set forth in section 2(b) of the Purchase
Agreement dated January 19, 2000 among the Company and the Initial Purchasers
named therein is exercised in full), which may be issued under an Indenture,
dated as of January 25, 2000 (the "Indenture"), between the Company and State
Street Bank and Trust Company of California, N.A., as Trustee for the Holders of
Securities issued under said Indenture (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Indebtedness and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at its option, at any time on or before
maturity of the Securities, or in case this Security or a portion hereof is
called for redemption, then in respect of this Security or such portion hereof
until and including, but (unless the Company defaults in making the payment due
upon redemption or repurchase) not after, the close of business on the Business
Day immediately preceding the Redemption Date or Repurchase Date, as the case
may be, to convert this Security (or any portion of the principal amount hereof
which is U.S.$1,000 or an integral multiple thereof), at the principal amount
hereof, or of such portion, into fully paid and nonassessable shares of Common
Stock of the Company at a Conversion Rate of 25.5754 shares of common stock per
$1,000 principal amount of the Securities (or at the current adjusted Conversion
Rate if an adjustment has been made as provided in Article 12 of the Indenture)
by surrender of this Security, duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency maintained for such purpose,
accompanied by the conversion notice hereon executed by the Holder hereof
evidencing such Holder's election to convert this Security, or if less than the
entire principal amount hereof is to be converted, the portion hereof to be
converted, and, in case
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such surrender shall be made during the period from the close of business on any
Regular Record Date to the opening of business on the corresponding Interest
Payment Date (unless this Security or the portion hereof being converted has
been called for redemption on a Redemption Date within such period between and
including such Regular Record Date and such Interest Payment Date), also
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted. Subject to the aforesaid requirement for
payment of interest and, in the case of a conversion after the close of business
on any Regular Record Date and on or before the corresponding Interest Payment
Date, to the right of the Holder of this Security (or any Predecessor Security)
of record at such Regular Record Date to receive an installment of interest
(even if the Security has been called for redemption on a Redemption Date within
such period), no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends on the Common Stock issued on conversion. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest the Company shall pay a cash
adjustment as provided in Article 12 of the Indenture. The Conversion Rate and
Conversion Price are subject to adjustment as provided in Article 12 of the
Indenture. In addition, the Indenture provides that in case of certain
reclassifications, consolidations, mergers, sales or transfers of assets or
other transactions pursuant to which the Common Stock is converted into the
right to receive other securities, cash or other property, the conversion
privilege shall be modified so that this Security, if then outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the transaction by a holder of the number of shares of
Common Stock into which this Security might have been converted immediately
prior to such transaction.
The Securities may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time prior to January 25, 2003 (a
"Provisional Redemption"), at a Redemption Price equal to $1,000 per $1,000
principal amount of the Securities plus accrued and unpaid interest, if any, to
but excluding the date of redemption (the "Provisional Redemption Date") if (i)
the Closing Price of the Common Stock has exceeded 150% of the Conversion Price
(as defined in Article 12 of the Indenture and as such may be adjusted from time
to time) then in effect for at least 20 Trading Days in any consecutive 30-
Trading Day period ending on the Trading Day prior to the date of mailing of the
provisional notice of redemption pursuant to Section 10.04 (the "Notice Date"),
and (ii) a registration statement covering resales of the Securities and Common
Stock issuable upon the conversion thereof is effective and available for use
and is
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expected to remain effective for the 30 days following the Provisional
Redemption Date.
Upon any such Provisional Redemption, the Company shall make an additional
payment in cash (the "Make-Whole Payment") to holders of the Securities called
for redemption, including those Securities converted into Common Stock between
the Notice Date and the Provisional Redemption Date, in an amount equal to
$130.43 per $1,000 principal amount of the Securities, less the amount of any
interest actually paid on the Securities before the Notice Date.
The Securities (other than those Securities that have been converted in
accordance with the terms of the Indenture) are subject to redemption at the
option of the Company upon not less than 30 days' or more than 60 days' notice
by mail (unless a shorter notice is deemed satisfactory by the Trustee), as a
whole or from time to time in part, at any time on or after January 25, 2003.
The redemption prices (expressed as percentages of the principal amount) shall
be as set forth below for Securities redeemed during the following periods
described below:
Period Redemption Price
- ------ ----------------
January 25, 2003 through January 24, 2004 102.8%
Thereafter 101.4%
together, in the case of any such redemption, with accrued interest to (but not
including) the Redemption Date (subject to the right of holders of record on the
Regular Record Date to receive interest on the related Interest Payment Date).
Any redemption of Securities must be in integral multiples of $1,000.
If fewer than all of the Securities are to be redeemed, the Trustee will
select the Securities to be redeemed in principal amounts at maturity of $1,000
or integral multiples thereof by lot, pro rata or by another method the Trustee
considers fair and appropriate. If a portion of a Holder's Securities is
selected for partial redemption and that holder converts a portion of those
Securities prior to the redemption, the converted portion shall be deemed,
solely for purposes of determining the aggregate principal amount of the
Securities to be redeemed by the Company, to be of the portion selected for
redemption.
In certain circumstances involving a Change in Control, each Holder shall
have the right to require the Company to repurchase all or part of its
Securities at a repurchase price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest through the Repurchase Date (subject
to the right of
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holders of record on the Regular Record Date to receive interest on the related
Interest Payment Date). At the option of the Company, the Repurchase Price may
be paid in cash or, subject to the conditions provided in the Indenture, by
delivery of shares of Common Stock.
The Securities do not have the benefit of any sinking fund.
In the event of redemption, conversion or repurchase of this Security in
part only, a new Security or Securities for the unredeemed, unconverted or
unrepurchased portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of all
the Securities may be declared due and payable in the manner and with the effect
provided in Article 4 of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security .
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest
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on this Security at the times, place and rate, and in the coin or currency,
herein prescribed or to convert this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the Corporate
Trust Office duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
No service charge shall be made to a Holder for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day year
of twelve 30-day months. In the event that any date on which interest is payable
on the Securities is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay).
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES.
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FORM OF CONVERSION NOTICE
CONVERSION NOTICE
To: EARTHWEB INC.
The undersigned Holder of this Security hereby irrevocably exercises the
option to convert this Security, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, at any time following the date of
original issuance thereof, into shares of Common Stock in accordance with the
terms of the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment for
a fractional share and any Security representing any unconverted principal
amount hereof, be issued and delivered to the registered owner hereof unless a
different name has been provided below. If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith a certificate in proper form certifying that
the applicable restrictions on transfer have been complied with. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated:
By:____________________________
Signature*
If shares or Securities are to be Principal amount to be converted (if
registered in the name of a Person less than all):$______,000
other than the Holder, please print
such Person's name and address:
_____________________________
Name
_____________________________
Social Security or Taxpayer
Identification Number
_____________________________
Street Address
______________________________
City, State and Zip Code
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* Signature(s) must be guaranteed by an eligible guarantor institution (banks,
stock brokers, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program) pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be delivered,
or unconverted Securities are to be issued, other than to and in the name of the
registered owner.
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EXHIBIT 4.2
7.0% CONVERTIBLE SUBORDINATED NOTES
DUE 2005
REGISTRATION RIGHTS AGREEMENT
Dated as of January 25, 2000
by and among
EARTHWEB INC.,
as the Company,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and
FLEETBOSTON ROBERTSON STEPHENS INC.,
as Initial Purchasers
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Definitions........................1
SECTION 2. Shelf Registration Statement.......5
SECTION 3. Liquidated Damages.................7
SECTION 4. Registration Procedures............9
SECTION 5. Registration Expenses.............15
SECTION 6. Indemnification...................17
SECTION 7. Underwritten Registration.........20
SECTION 8. Miscellaneous.....................20
</TABLE>
<PAGE>
This Registration Rights Agreement is made and entered into as of January
25, 2000 by and among EARTHWEB INC., a Delaware corporation (the "Company"),
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and FLEETBOSTON ROBERTSON
STEPHENS INC. (the "Initial Purchasers") who have purchased or have the right to
purchase up to $75,000,000 principal amount of 7.0% Convertible Subordinated
Notes due 2005 (the "Notes") of the Company with the option to purchase a
further $11,250,000 in principal amount of Notes pursuant to the Purchase
Agreement (as such term is defined below).
This Agreement is made pursuant to the Purchase Agreement, dated January
19, 2000, among the Company and the Initial Purchasers (the "Purchase
Agreement"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
provided for in this Agreement to the Initial Purchasers and their respective
direct and indirect transferees (i) for the benefit of the Initial Purchasers,
(ii) for the benefit of the holders from time to time of the Notes (including
the Initial Purchasers), (iii) for the benefit of the holders from time to time
of the Common Stock issuable or issued upon conversion of the Notes, and (iv)
for the benefit of the holders from time to time of the securities constituting
the Transfer Restricted Securities. The execution of this Agreement is a
condition to the closing of the transactions contemplated by the Purchase
Agreement, and each Holder (as defined below) by participating in a Registration
Statement agrees to be bound by this Agreement.
The parties hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
Act: As defined in this Section 1.
Affiliate: An affiliate of any specified person shall mean any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
<PAGE>
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
Closing Date: January 25, 2000.
Common Stock: Common Stock, $.01 par value per share, of the Company and
any other shares of common stock as may constitute "Common Stock" for purposes
of the Indenture as issuable or issued upon conversion of the Notes.
Company: EarthWeb Inc., a Delaware corporation, and any successor
corporation thereto.
Controlling Person: As defined in Section 6(a) hereof.
Damages Payment Date: Each of the semi-annual interest payment dates
provided in the Notes.
Effectiveness Period: As defined in Section 2(a) hereof.
Effectiveness Target Date: The 120th day following the Closing Date.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Filing Date: The 60th day after the Closing Date.
Holder: Each owner of any Transfer Restricted Securities.
Indemnified Person: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated as of the date hereof, between the Company
and the Trustee, pursuant to which the Notes are to be issued, as the same may
be amended, modified or supplemented from time to time in accordance with the
terms thereof.
Initial Purchasers: As defined in the first paragraph hereof.
Liquidated Damages: As defined in Section 3(a) hereof.
Notice and Questionnaire: The Notice and Questionnaire attached hereto as
Exhibit A.
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<PAGE>
Proceeding: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the resale
of any of the Transfer Restricted Securities covered by such Registration
Statement, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all materials incorporated by reference
or deemed to be incorporated by reference, if any, in such prospectus.
Purchase Agreement: As defined in the second paragraph hereof.
Record Holder: (i) with respect to any Damages Payment Date relating to
any shares of Common Stock as to which any such Liquidated Damages have accrued,
the registered Holder of such shares 15 days prior to the next succeeding
Damages Payment Date; and (ii) with respect to any Damages Payment Date relating
to any Notes as to which any such Liquidated Damages has accrued, the registered
Holder of such Notes 15 days prior to the next succeeding Damages Payment Date.
Registration Default: As defined in Section 3(a) hereof.
Registration Statement: Any registration statement of the Company filed
with the SEC pursuant to the Securities Act that covers the resale of any of the
Transfer Restricted Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement.
Requisite Information: As defined in Section 2(c) hereof.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
3
<PAGE>
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities Act,
as such Rule may be amended from time to time, or any successor rule or
regulation.
Rule 430A: Rule 430A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any successor rule or
regulation.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated by the SEC thereunder.
Shelf Registration Statement: As defined in Section 2(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated by the SEC thereunder.
Transfer Restricted Securities: The Notes, the shares of Common Stock into
which such Notes are converted or convertible (including any shares of Common
Stock issued or issuable thereon upon any stock split, stock combination, stock
dividend or the like), upon original issuance thereof and at all times
subsequent thereto, and associated related rights, if any, until the earliest of
(i) the date on which the resale thereof has been effectively registered under
the Securities Act and disposed of in accordance with the Registration Statement
relating thereto, (ii) the date on which such security has been distributed to
the public pursuant to Rule 144 or is saleable pursuant to paragraph (k) of
Rule 144 or (iii) the date on which it ceases to be outstanding.
Transfer Agent: The registrar and transfer agent for the Company's Common
Stock.
Trustee: The trustee under the Indenture.
References herein to the term "Holders of a majority in interest of
Transfer Restricted Securities" or words to a similar effect shall mean, with
respect to any
4
<PAGE>
request, notice, demand, objection or other action by the Holders hereunder or
pursuant hereto (each, an "Act"), registered Holders of a number of shares of
then outstanding Common Stock constituting Transfer Restricted Securities and an
aggregate amount of then outstanding Notes constituting Transfer Restricted
Securities, such that the sum of such shares of Common Stock and the shares of
Common Stock issuable upon conversion of such Notes constitutes in excess of 50%
of the sum of all of the then outstanding shares of Common Stock constituting
Transfer Restricted Securities and the number of shares of Common Stock issuable
upon conversion of then outstanding Notes constituting Transfer Restricted
Securities. For purposes of the preceding sentence, Transfer Restricted
Securities owned, directly or indirectly, by the Company or its Affiliates shall
be deemed not to be outstanding.
Section 2. Shelf Registration Statement.
(a) The Company agrees to file with the SEC as soon as reasonably
practicable after the Closing Date, but in no event later than the Filing Date,
a Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities or
separate Registration Statements for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Common Stock and Notes
constituting Transfer Restricted Securities, respectively (such Registration
Statement or Statements, collectively, the "Shelf Registration Statement").
Each Shelf Registration Statement shall be on Form S-3 under the Securities Act
or another appropriate form selected by the Company permitting registration of
such Transfer Restricted Securities for resale by the Holders in the manner or
manners reasonably designated by Holders of a majority in interest of Transfer
Restricted Securities being sold. The Company shall not permit any securities
other than the Transfer Restricted Securities to be included in any Shelf
Registration Statement. The Company shall use all reasonable efforts to cause
each Shelf Registration Statement to be declared effective pursuant to the
Securities Act as soon as reasonably practicable following the filing thereof
and to keep each Shelf Registration Statement continuously effective under the
Securities Act for two years after the date on which all of the Transfer
Restricted Securities are sold (including those sold pursuant to the option
granted to the Initial Purchasers in the Purchase Agreement) to the Initial
Purchasers (the "Effectiveness Period"), or such shorter period ending when
there cease to be any Transfer Restricted Securities outstanding.
(b) Supplements and Amendments. The Company shall use all reasonable
efforts to keep each Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if
5
<PAGE>
required by the rules, regulations or instructions applicable to the
registration form used for such Shelf Registration Statement, if required by the
Securities Act or if reasonably requested by the Holders of a majority in
interest of the Transfer Restricted Securities or by any underwriter of such
Transfer Restricted Securities.
(c) Selling Securityholder Information. Each Holder wishing to sell
Transfer Restricted Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire that confirms
such Holder's agreement to be bound by the terms of this Agreement and includes
such information regarding it and the distribution of its Transfer Restricted
Securities as is required by law to be disclosed by the Holder in the applicable
Registration Statement (the "Requisite Information") to the Company prior to any
intended distribution of Transfer Restricted Securities under the Shelf
Registration Statement. The Company shall not be required to include in any
Shelf Registration Statement and related Prospectus the Transfer Restricted
Securities of any Holder that does not provide the Company with a Notice and
Questionnaire in accordance with this Section 2(c). The Company shall file,
within five Business Days after the receipt of a Notice and Questionnaire from
any Holder which includes the Requisite Information with respect to such Holder,
a Prospectus supplement pursuant to Rule 424 or otherwise amend or supplement
such Registration Statement to include in the Prospectus the Requisite
Information as to such Holder (and the Transfer Restricted Securities held by
such Holder), and the Company shall provide such Holder within five Business
Days after receipt of such Notice and Questionnaire with a copy of such
Prospectus as so amended or supplemented containing the Requisite Information in
order to permit such Holder to comply with the Prospectus delivery requirements
of the Securities Act in a timely manner with respect to any proposed
disposition of such Holder's Transfer Restricted Securities and to file the same
with the SEC. Each Holder shall promptly notify the Company of any material
changes to the Requisite Information contained in the Notice and Questionnaire
provided to the Company by such Holder. If the Company shall fail to file the
appropriate supplement or amendment within five Business Days of receipt of such
notice, the Company shall pay the Holder Liquidated Damages in the manner set
forth in Section 3. Furthermore, if the filing requires a post-effective
amendment to the Registration Statement and such amendment is not declared
effective within 45 Business Days of the filing of the post-effective amendment,
the Company shall pay the Holder Liquidated Damages in the manner set forth in
Section 3.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require, in the event that such reference to such Holder by
name or otherwise is not required by the Securities Act or any similar Federal
statute
6
<PAGE>
then in force, the deletion of the reference to such Holder in such Registration
Statement at any time subsequent to the time that such reference ceases to be
required.
(d) Material Events; Suspension of Sales. Notwithstanding the
provisions contained in this Section 2, in the event that, in the judgment of
the Company's Board of Directors, it is advisable to suspend use of the
Prospectus due to pending corporate developments, public filings with the SEC or
similar events, the Company shall promptly deliver a written certificate to each
registered Holder, the Trustee, the Transfer Agent and the managing
underwriters, if any, to the effect that the use of the Prospectus is to be
suspended until the Company shall deliver a written notice that the use of the
Prospectus may be resumed. Thereafter, the use of the Prospectus shall be
suspended, and the Company shall not be required to maintain the effectiveness
of, or amend or update the Shelf Registration Statement, or amend or supplement
the Prospectus; provided, however, that the Company shall only be permitted to
suspend the use of the Prospectus for a period not to exceed 30 days in any six-
month period or two periods not to exceed an aggregate of 60 days in any 12-
month period. The Company will use its best efforts to ensure that the use of
the Prospectus may be resumed as soon as, in the judgment of the Company's Board
of Directors, disclosure of the material relating to such pending development,
filing or event would not have a material adverse effect on the Company.
(e) Additional Agreements of Holders. Each Holder agrees not to dispose
of Transfer Restricted Securities pursuant to the Shelf Registration Statement
without complying with the prospectus delivery requirements under the Act and
the provisions of paragraph (d) above regarding use of the Prospectus. Each
Holder further agrees that it will comply fully with applicable federal and
state securities laws in connection with the distribution of any Transfer
Restricted Securities pursuant to the Shelf Registration Statement. Each Holder
further acknowledges having been advised by the Company that applicable federal
securities laws prohibit Holders from trading in securities of the Company at
any time while in possession of material non-public information about the
Company.
Section 3. Liquidated Damages.
(a) The Company and the Initial Purchasers agree that the Holders will
suffer damages if the Company fails to fulfill its obligations pursuant to
Section 2 hereof and that it would not be possible to ascertain the extent of
such damages. Accordingly, the Company hereby agrees to pay liquidated damages
("Liquidated Damages") to each Holder under the circumstances and to the extent
set forth below:
7
<PAGE>
(i) if the Shelf Registration Statement has not been filed with
the SEC on or prior to the Filing Date; or
(ii) if each Shelf Registration Statement is not declared effective
by the SEC on or prior to the applicable Effectiveness Target Date; or
(iii) any Shelf Registration Statement ceases to be effective or
usable at any time during the Effectiveness Period (without being succeeded
on the same day immediately by a post-effective amendment or supplement to
such Registration Statement that cures such failure and that is itself, in
the case of post-effective amendment, immediately declared effective) for a
period of time which shall exceed 90 days in the aggregate in any period of
365 consecutive days; (any of the foregoing, a "Registration Default").
In the event of a Registration Default, the Company will pay Liquidated
Damages to each holder of Transfer Restricted Securities, during the first 90-
day period immediately following the occurrence of such Registration Default in
an amount equal to $0.05 per week per $1,000 principal amount of Notes adjusted
to an equivalent per share basis in accordance with the conversion price. The
rate of accrual of the Liquidated Damages will increase by $0.05 per week per
$1,000 principal amount of Notes or Common Stock constituting Transfer
Restricted Securities (adjusted to an equivalent per share basis in accordance
with the conversion price for Common Stock constituting Transfer Restricted
Securities) for each subsequent 90-day period until the applicable Registration
Statement is filed, the applicable Registration Statement is declared effective
and becomes available for effecting sales of securities, or the Shelf
Registration Statement again becomes effective and becomes available for
effecting sales of securities, as the case may be, up to a maximum amount of
Liquidated Damages of $0.25 per week per $1,000 principal amount of Notes
adjusted to an equivalent per share basis in accordance with the conversion
price. Following the cure of a Registration Default, Liquidated Damages will
cease to accrue with respect to such Registration Default (without in any way
limiting the effect of any subsequent Registration Default). All accrued
Liquidated Damages shall be paid to the holders of (i) Notes constituting
Transfer Restricted Securities, pursuant to the terms of the Indenture with
respect to the payment of interest and (ii) shares of Common Stock, in the
manner as interest payments on the Notes on semiannual payment dates that
correspond to interest payment dates for the Notes. The parties hereto agree
and acknowledge that the payment of Liquidated Damages to holders of Common
Stock upon a Registration Default pursuant to this Agreement shall not be a
dividend on such shares of Common Stock.
8
<PAGE>
(b) The Company shall notify the Transfer Agent or the Trustee, as the
case may be, within one Business Day after each and every date on which a
Registration Default occurs. Liquidated Damages shall be paid by the Company to
the Record Holders of Common Stock on each Damages Payment Date by wire transfer
of immediately available funds to the accounts specified by them or by mailing
checks to their registered addresses as they appear in the register of the
Company for the Common Stock, if no such accounts have been specified in the
Notice and Questionnaire on or before the Damages Payment Date; and Liquidated
Damages shall be paid by the Company to the Record Holders of the Notes on each
semi-annual interest payment date together with interest to be paid on the Notes
pursuant to the terms of the Indenture, by wire transfer of immediately
available funds to the accounts specified by them or by mailing checks to their
registered addresses as they appear in the Notes Register (as defined in the
Indenture) if no such accounts have been specified in the Notice and
Questionnaire on or before the Damages Payment Date; provided, however, that any
Liquidated Damages accrued with respect to any Notes or portion thereof called
for redemption on a redemption date, repurchased on a repurchase date, or
converted into shares of Common Stock on a conversion date prior to the Damages
Payment Date shall, in any such event, be paid instead to the Holder who
submitted such Notes or portion thereof for redemption, repurchase or conversion
on the applicable redemption date, repurchase date or conversion date, as the
case may be, on such date.
Section 4. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form selected by the Company to permit the resale of Transfer
Restricted Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
reasonably possible:
(a) No fewer than five Business Days prior to the initial filing of a
Registration Statement or Prospectus and no fewer than two Business Days prior
to the filing of any amendment or supplement thereto (excluding, unless
requested, any document that would be incorporated or deemed to be incorporated
therein by reference and then only to the Holder who so requested), furnish to
the Holders and the managing underwriters, if any, copies of all such documents
proposed to be filed (excluding, unless requested, those incorporated or deemed
to be incorporated by reference and then only to the Holder who so requested)
and cause the officers and directors of the Company, counsel to the Company and
independent certified public accountants to the Company to respond to such
inquiries as shall be necessary in connection with such Registration Statement,
in the opinion of counsel to such underwriters, to conduct a reasonable
investigation
9
<PAGE>
within the meaning of the Securities Act. The Company shall not file any such
Registration Statement or related Prospectus or any amendments or supplements
thereto (excluding any document that would be incorporated or deemed
incorporated by reference) to which the Holders of a majority in interest of the
Transfer Restricted Securities or the managing underwriters, if any, shall
reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments, including post-
effective amendments, to each Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the applicable time
period set forth in Section 2(a) hereof; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended method or methods
of disposition by the Holder set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented (including, without limitation,
the filing of any Prospectus supplement pursuant to Rule 424 in order to add or
change any selling security holder information (including any such supplements
or amendments pursuant to Section 2(c) hereof, provided such Holder to which
such change applies complies with the Requisite Information requirements of
Section 2(c) hereof)).
(c) Notify the Holders and the managing underwriters, if any, promptly
(and in the case of an event specified by clause (i)(A) of this paragraph in no
event fewer than two Business Days prior to such filing), and (if requested by
any such person), confirm such notice in writing, (i) (A) when a Prospectus or
any Prospectus supplement or post-effective amendment is proposed to be filed,
and, (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request of the SEC or
any other Federal or state governmental authority for amendments or supplements
to such Registration Statement or related Prospectus or for additional
information related thereto, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use or the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time any of the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated by Section 4(m) hereof are not true and correct in all material
respects, (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Transfer Restricted Securities for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose,
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<PAGE>
and (vi) of the existence of any fact and the happening of any event that makes
any statement made in such Registration Statement or related Prospectus untrue
in any material respect, or that requires the making of any changes in such
Registration Statement or Prospectus so that in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and that, in the case of the Prospectus,
such Prospectus will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use all reasonable efforts to avoid the issuance of, or, if issued,
to obtain the withdrawal of any stop order or order enjoining or suspending the
use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e) If requested by the managing underwriters, if any, or the Holders of
a majority in interest of the Transfer Restricted Securities being sold in
connection with such offering, (i) promptly include in a Prospectus supplement
or post-effective amendment such information as the managing underwriters, if
any, and such Holders agree should, in their reasonable judgment, be included
therein, and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as reasonably practicable after the
Company has received notification of the matters to be included in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 4(e)
that, in the opinion of counsel for the Company, would violate applicable law;
(f) Furnish to each Holder who so requests and each managing
underwriter, if any, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits, unless requested in writing
by such Holder or any managing underwriter);
(g) Deliver to each Holder and the underwriters, if any, without charge,
as many copies of the Prospectus or Prospectuses (including each form of
Prospectus) and each amendment or supplement thereto to as such persons may
reasonably request; and, unless the Company shall have given notice to such
Holder pursuant to Section 2(d), the Company hereby consents to the use of such
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Prospectus and each amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Securities and the underwriters, if any, in
connection with the offering and sale of the Transfer Restricted Securities
covered by such Prospectus and any amendment or supplement thereto, provided,
however, that no Holder shall be entitled to use the Prospectus unless and until
such Holder shall have furnished to the Company any and all Requisite
Information pursuant to Section 2(c) hereof;
(h) Use all reasonable efforts to register or qualify, or cooperate with
the Holders of Transfer Restricted Securities to be sold or tendered for, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary legally to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified, take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or subject the
Company to any tax in any such jurisdiction where it is not then so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders and the managing underwriters,
if any, to (i) facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which certificates shall
not bear any restrictive legends, shall bear a CUSIP number different from the
CUSIP number for the Transfer Restricted Securities and shall be in a form
eligible for deposit with The Depository Trust Company and (ii) enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may reasonably
request at least two Business Days prior to any sale of Transfer Restricted
Securities;
(j) Use all reasonable efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States, except as may be required as a consequence of the nature of a
Holder's business, in which case the Company will cooperate in all reasonable
respects
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<PAGE>
with the filing of such Registration Statement and the granting of such
approvals as may be reasonably necessary to enable the seller or sellers thereof
or the underwriters, if any, to consummate the disposition of such Transfer
Restricted Securities; provided, however, that the Company shall not be required
to register the Transfer Restricted Securities in any jurisdiction that would
require the Company to qualify to do business in any jurisdiction where it is
not then so qualified, subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject or to;
(k) Upon the occurrence of any event contemplated by Section 4(c)(vi)
hereof, as promptly as reasonably practicable (subject to any suspension of
sales pursuant to Section 2(d) hereof), prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, to provide a CUSIP number for
the Transfer Restricted Securities to be sold pursuant to the Registration
Statement;
(m) Enter into such agreements (including any underwriting agreements in
form, scope and substance as are customary in underwritten offerings) reasonably
satisfactory to the Company and take all such other reasonable actions in
connection therewith (including those reasonably requested by the managing
underwriters, if any, or the Holders of a majority in interest of the Transfer
Restricted Securities being sold) in order to expedite or facilitate the sale of
such Transfer Restricted Securities; provided, however, that the Company is not
required to facilitate an underwritten offering without its consent. In such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, the Company will (i)
make such representations and warranties to the Holders of such Transfer
Restricted Securities and the underwriters, if any, with respect to the business
of the Company and its subsidiaries (including with respect to businesses or
assets acquired or to be acquired by any of them), and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and scope as
are customarily made by issuers to underwriters in underwritten offerings and
reasonably
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<PAGE>
acceptable to the Company, and confirm the same if and when requested; (ii) seek
to obtain opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the managing underwriters, if any, addressed to each selling Holder of Transfer
Restricted Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings (including
any such matters as may be reasonably requested by such underwriters); (iii) use
all reasonable efforts to obtain customary "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed (where reasonably possible) to each
selling Holder of Transfer Restricted Securities and each of the underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable to the
selling Holders of Transfer Restricted Securities and the underwriters, if any,
than those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to Holders of a majority in interest of the Transfer
Restricted Securities covered by such Registration Statement and the managing
underwriters); and (v) deliver such documents and certificates as may be
reasonably requested by the Holders of majority interest of the Transfer
Restricted Securities being sold or the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) of this Section 4(m) and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company;
(n) Make available for inspection by a representative of the Holders of
Transfer Restricted Securities being sold, any underwriter participating in any
such disposition of Transfer Restricted Securities, if any, and any attorney,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries as they may reasonably request, and cause the officers,
directors, agents and employees of the Company and its subsidiaries to supply
all information in each case reasonably requested by any such representative,
underwriter, attorney, consultant or accountant in connection with such
Registration Statement, provided, however, that such persons shall first agree
in writing with the Company that any information that is reasonably and in good
faith designated by the Company in writing as confidential at the time of
delivery
14
<PAGE>
or inspection (as the case may be) of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration Statement or
the use of any Prospectus), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to safeguard by
any such person or (iv) such information becomes available to any such person
from a source other than the Company and such source is not bound by a
confidentiality agreement.
(o) Use all reasonable efforts to cause the Indenture to be qualified
under the TIA not later than the effective date of the first Registration
Statement relating to the Transfer Restricted Securities; and in connection
therewith, cooperate with the Trustee and the Holders of Notes or Common Stock
constituting Transfer Restricted Securities to effect such changes to the
Indenture, if any, as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its best efforts to
cause the Trustee to execute, all customary documents as may be required to
effect such changes, and all other forms and documents (including Form T-1)
required to be filed with the SEC to enable the Indenture to be so qualified
under the TIA in a timely manner.
(p) Comply with applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act or Rule 158 (or any similar
rule promulgated under the Securities Act), no later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Transfer Restricted Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule 158;
and
(q) (i) list all shares of Common Stock covered by any Registration
Statements on any securities exchange on which the Common Stock is then listed
or (ii) authorize for quotation on the SmallCap Market or the National Market of
the National Association of Securities Dealers Automated Quotation System
("Nasdaq") all Common Stock covered by all such Registration Statements if the
Common Stock is then so authorized for quotation.
Section 5. Registration Expenses.
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<PAGE>
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by it whether or not any
Registration Statement is filed or becomes effective and whether or not any
securities are offered or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filings fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (B) in compliance
with securities or Blue Sky laws (including, without limitation and in addition
to that provided for in (b) below, fees and disbursements of counsel for the
underwriters in connection with Blue Sky qualifications of the Transfer
Restricted Securities and determination of the eligibility of the Transfer
Restricted Securities for investment under the laws of such jurisdictions as the
managing underwriters, if any, or Holders of a majority in interest of Transfer
Restricted Securities, may designate)), (ii) printing expenses (including,
without limitation, of printing Prospectuses if the printing of Prospectuses is
required by the managing underwriters, if any, or by the Holders of a majority
in interest of the Transfer Restricted Securities included), (iii) messenger,
telephone and delivery expenses, (iv) reasonable fees and disbursements of
counsel for the Company (plus any local counsel deemed appropriate by the
Holders of a majority in interest of the Transfer Restricted Securities) in
accordance with the provisions of Section 5(b) hereof, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 4(m)(iii) (including, without limitation, the expenses of any special
audit and "comfort" letters required by or incident to such performance), (vi)
fees and expenses of all other persons retained by the Company. In addition,
the Company shall pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of an annual audit and the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange or the Nasdaq SmallCap Market or the Nasdaq National
Market. Notwithstanding anything in this Agreement to the contrary, each Holder
shall pay all underwriting discounts and brokerage commissions with respect to
any Transfer Restricted Securities sold by it.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each of the
Initial Purchasers, (ii) each Holder, (iii) each person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) any of the foregoing (any of the persons referred to in this
clause (iii) being hereinafter referred to as a "controlling person"), and (iv)
the respective officers, directors, partners, employees, representatives and
agents of the Initial Purchasers,
16
<PAGE>
the Holders (including predecessor Holders), or any controlling person (any
person referred to in clause (i), (ii), (iii) or (iv) may hereinafter be
referred to as an "Indemnified Person"), from and against any and all losses,
claims, damages, liabilities, expenses and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages, liabilities,
expenses or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Indemnified Person furnished to the Company by or on behalf of such Indemnified
Person expressly for use therein (which shall include, without limitation, the
Requisite Information in the Notice and Questionnaire provided to the Company by
such Indemnified Person); provided, however, that the foregoing indemnity with
respect to any preliminary Prospectus shall not inure to the benefit of any
Indemnified Person from whom the person asserting such losses, claims, damages,
liabilities, expenses and judgments purchased securities if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary Prospectus is eliminated or remedied in the Prospectus and a copy of
the Prospectus shall not have been furnished to such person in a timely manner
due to the wrongful action or wrongful inaction of such Indemnified Person,
whether as a result of negligence or otherwise.
(b) In case any action shall be brought against any Indemnified Person,
based upon any Registration Statement or any such Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against the
Company, such Indemnified Person shall promptly notify the Company in writing
and the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person and payment of all
fees and expenses. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) such Indemnified Person
or Persons shall have been advised by counsel that there may be a conflict
between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action or
proceeding or that there may be legal defenses available to such Indemnified
Person or Persons
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<PAGE>
different from or in addition to those available to the indemnifying party or
parties (in which case the Company shall not have the right to assume the
defense of such action on behalf of such Indemnified Person, it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Indemnified Persons, which firm
shall be designated in writing by such Indemnified Persons, and that all such
fees and expenses shall be reimbursed as they are incurred). The Company shall
not be liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Indemnified Person from and against
any loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to which any
Holder (or predecessor Holder) sold or offered for resale Transfer Restricted
Securities, such Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, officers, employees, representatives and
agents and any person controlling the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Indemnified Person but only
with reference to information relating to such Indemnified Person furnished by
or on behalf of such Indemnified Person expressly for use in such Registration
Statement (which shall include, without limitation, the Requisite Information in
the Notice and Questionnaire provided to the Company by such Indemnified
Person). In case any action shall be brought against the Company, any of its
directors, officers, employees, representatives and agents, or any person
controlling the Company based on such Registration Statement and in respect of
which indemnity may be sought against any Indemnified Person, the Indemnified
Person shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Indemnified Person shall
not be required to do so, but may employ separate counsel therein and
participate in defense thereof but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person), and the Company, its directors,
officers, employees, representatives and agents, and any person controlling the
Company
18
<PAGE>
shall have the rights and duties given to the Indemnified Person by Section 6(b)
hereof.
(d) If the indemnification provided for in this Section 6 is applicable
by its terms but unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, expenses and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and each Indemnified Person on the other hand pursuant
to the Purchase Agreement or from the offering for resale of the Transfer
Restricted Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and each such Indemnified Person in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and each such Indemnified
Person shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company or such Indemnified
Person and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Holders and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Indemnified Person were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Indemnified Person shall be required to contribute any amount in
excess of the amount by which the total net profit received by it in connection
with the sale of the Transfer Restricted Securities pursuant to this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of
19
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Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Indemnified
Persons' obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective amount of Transfer Restricted Securities included
in and sold pursuant to any such Registration Statement by each Indemnified
Person and not joint.
Section 7. Underwritten Registration.
If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be investment bankers of recognized national
standing selected by the Holders of a majority in interest of such Transfer
Restricted Securities included in such offering, subject to the consent of the
Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up agreements and other documents reasonably required under the
terms of such underwriting arrangements.
Section 8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of
any of their respective obligations under this Agreement, each Holder or the
Company, in addition to being entitled to exercise all rights granted by law,
including, without limitation, recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate. This Section 8(a) shall not apply to any
breach for which Liquidated Damages have been specifically provided hereunder.
(b) No Inconsistent Agreements. The Company shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The Company is not currently a party to any agreement
20
<PAGE>
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority in interest of the Transfer
Restricted Securities, the Company shall not grant to any person the right to
request it to register any of its securities under the Securities Act unless the
rights so granted are subject in all respect to the prior rights of the Holders
set forth herein, and are not otherwise in conflict or inconsistent with the
provisions of this Agreement.
(c) No Adverse Action Affecting the Transfer Restricted Securities. The
Company will not take any action with respect to the Transfer Restricted
Securities which would adversely affect the ability of any of the Holders to
include such Transfer Restricted Securities in a registration undertaken
pursuant to this Agreement.
(d) No Piggyback on Registrations. After the date hereof, the Company
shall not grant to any of its security holders (other than the Holders in such
capacity) the right to include any of its securities in any Shelf Registration
Statement.
(e) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof, may not be
given, without the written consent of the Holders of a majority in interest of
the Transfer Restricted Securities; provided, however, that, for the purposes of
this Agreement, Transfer Restricted Securities that are owned, directly or
indirectly, by either the Company or an Affiliate of the Company are not deemed
outstanding. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being sold pursuant
to an underwritten offering and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in interest of the
Transfer Restricted Securities being sold by such Holders pursuant to such an
underwritten offering; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(f) Notices. All notices and other communications provided for herein
shall be made in writing by hand-delivery, next day air courier, certified
first-class mail, return receipt requested or telecopy:
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(i) if to a Holder, to the address of such Holder as it appears in
the Notice and Questionnaire, or, if not so specified, in the Common Stock
or Notes register of the Company, as applicable;
(ii) if to the Company, to:
EarthWeb Inc.
3 Park Avenue
New York, NY 10016
Attn.: Jack D. Hidary
Telecopy No.: 212-725-6599
Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given, when delivered by hand, if personally
delivered; one Business Day after being timely delivered to a next-day air
courier, five Business Days after being deposited in the mail, postage prepaid,
if mailed; and when receipt is acknowledged by the recipient's telecopier
machine, if telecopied.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each existing and future Holder. The
Company may not assign its rights or obligations hereunder without the prior
written consent of the Holders of a majority in interest of the Transfer
Restricted Securities, other than by operation of law pursuant to a merger or
consolidation to which the Company is a party.
(h) Counterparts. This Agreement may be executed in any number of
counterparts by the parties hereto, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(j) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
22
<PAGE>
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
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IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
EARTHWEB INC.
By:_________________________
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed and
agreed to as of the date first
written above:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
FLEETBOSTON ROBERTSON STEPHENS INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:______________________________________
Authorized Signatory
Acting on behalf of itself and the Initial Purchasers
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Exhibit A
Notice
The undersigned beneficial owner (the "Selling Securityholder") of Transfer
Restricted Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Transfer Restricted Securities beneficially owned
by it and listed below in Item (3), unless otherwise specified in Item (3),
pursuant to the Shelf Registration Statement. The undersigned, by signing and
returning this Notice and Questionnaire, understands and agrees that it will be
bound by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the undersigned has agreed
to indemnify and hold harmless the Company, the Company's directors and the
Company's officers who sign the Shelf Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), from and against certain losses arising in connection with
statements concerning the undersigned made in the Shelf Registration Statement
or the related prospectus in reliance upon the information provided in this
Notice and Questionnaire.
The undersigned hereby provides the following information to the Company
and represents and warrants that such information is accurate and complete:
Questionnaire
1. (a) Full Legal Name of Selling Securityholder:
___________________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a) above)
through which Transfer Restricted Securities listed in Item (3) below
are held:
___________________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) through which Transfer Restricted Securities listed in
Item (3) below are held:
___________________________________________________________________________
2. Address for Notices to Selling Securityholder:
A-1
<PAGE>
_________________________________________________________________________
Telephone: ______________________________________________________________
Fax: ____________________________________________________________________
Contact Person: _________________________________________________________
3. Beneficial Ownership of Transfer Restricted Securities:
(a) Type and Amount of Transfer Restricted Securities beneficially
owned:
____________________________________________________________________
(b) CUSIP No(s). of such Transfer Restricted Securities beneficially
owned:
____________________________________________________________________
(c) Type and Amount of Transfer Restricted Securities to be registered:
____________________________________________________________________
4. Beneficial Ownership of Other Securities of the Company owned by the Selling
Securityholder:
Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of the Company other
than the Transfer Restricted Securities listed above in Item (3).
(a) Type and Amount of Other Securities beneficially owned:
____________________________________________________________________
____________________________________________________________________
(b) CUSIP No(s). of such Other Securities beneficially owned:
____________________________________________________________________
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during
the past three years.
State any exceptions here:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
6. Plan of Distribution:
A-2
<PAGE>
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Transfer Restricted Securities listed
above in Item (3) pursuant to the Shelf Registration Statement only as
follows (if at all): Such Transfer Restricted Securities may be sold from
time to time directly by the undersigned or alternatively, through
underwriters, broker-dealers or agents. If the Transfer Restricted
Securities are sold through underwriters or broker-dealers, the Selling
Securityholder will be responsible for underwriting discounts and
commissions and/or agent's commissions. Such Transfer Restricted
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. Such sales may
be effected in transactions (which may involve cresses or block
transactions) (i) on any national securities exchange or quotation
service on which the Transfer Restricted Securities may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or services or in the over-
the-counter market, or (iv) through the writing of options. In connection
with sales of the Transfer Restricted Securities or otherwise, the
undersigned may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the Transfer Restricted
Securities in the course of hedging the positions they assume. The
Selling Securityholder may also sell Transfer Restricted Securities short
and deliver Transfer Restricted Securities to close out such short
positions, or loan or pledge Transfer Restricted Securities to broker-
dealers that in turn may sell such securities.
State any exceptions here:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Transfer Restricted Securities without the
prior agreement of the Company.
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M thereunder (or any successor
rules or regulations), in connection with any offering of Transfer Restricted
Securities pursuant to the Shelf Registration Statement. The undersigned agrees
that neither it nor any person acting on its behalf will engage in any
transaction in violation of such provisions.
A-3
<PAGE>
The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein. Pursuant to the Registration Rights Agreement, the Company
has agreed under certain circumstances to indemnify the Selling Securityholders
against certain liabilities.
In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing, by hand
delivery, first-class mail or air courier guaranteeing overnight delivery at the
address set forth below. In the absence of any such notification, the Company
shall be entitled to continue to rely on the accuracy of the information in this
Notice and Questionnaire.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
inclusion of such information in the Shelf Registration Statement and the
Prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation, amendment or
supplementation of the Shelf Registration Statement and the Prospectus.
The terms of this Notice and Questionnaire, and the representations and
warranties contained herein, shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective successors, heirs, personal
representatives, and assigns of the Company and the Selling Securityholder with
respect to the Transfer Restricted Securities beneficially owned by the Selling
Securityholder and listed in Item (3) above. This agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York applicable to contracts made in the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Date: ______________________________________________
Selling Securityholder (Print or type full
legal name of beneficial owner of Transfer
Restricted Securities)
A-4
<PAGE>
By:________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
EarthWeb Inc.
3 Park Place
32/nd/ Floor
New York, NY 10016
Attention: Jack D. Hidary
with a copy to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: John R. Hempill, Esq.
A-5
<PAGE>
EXHIBIT 5
[Morrison & Foerster LLP Letterhead]
February 1, 2000
EarthWeb Inc.
Three Park Avenue
32nd Floor
New York, NY 10016
Re: Registration of $75,000,000 in Principal Amount of 7% Convertible
Subordinated Notes due 2005 and Certain Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to EarthWeb Inc., a Delaware Corporation (the
"Company") in connection with the Registration Statement on Form S-3 (No. 333-
_________), as filed with the Securities and Exchange Commission (the
"Registration Statement"), relating to the registration under the Securities Act
of 1933, as amended, of $75,000,000 principal amount of 7% Convertible
Subordinated Notes due 2005 (the "Notes"), and of such indeterminate number
shares of the Company's common stock, $.01 par value (the "Stock"), as are
issuable upon conversion of the Notes. The Notes are being issued pursuant to
the terms and conditions of an indenture, dated as of January 25, 2000 (the
"Indenture"), by and between the Company and the State Street Bank and Trust
Company of California, N.A. (the "Trustee"). The Indenture has been filed as an
exhibit to the Registration Statement.
We have examined the originally executed Indenture and the Notes. In
addition, we have examined such records, documents, certificates of public
officials and the Company, made inquiries of officials of the Company, and
considered such questions of law as we have deemed necessary for the purpose of
rendering the opinions set forth herein. As counsel to the Company, we have
examined the proceedings taken by the Company in connection with the issuance
and sale by the Company of the Notes and the underlying Stock.
In conducting our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents.
We have also assumed that each party to the Indenture and the Notes, other than
the Company, has the power and authority to execute and deliver, and to perform
and observe the provisions of, the Indenture and the Notes, and has duly
authorized,
<PAGE>
executed and delivered the Indenture and the Notes, that the Indenture
constitutes the legal, valid and binding obligations of the Trustee, and that
the Indenture has been duly authenticated by the Trustee and will be duly
qualified under the Trust Indenture Act of 1939, as amended. We have also
assumed compliance with all applicable state securities and "Blue Sky" laws.
The opinions herein after expressed are subject to the following
qualifications and exceptions:
(i) The effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, or other similar laws relating to or effecting the
rights of creditors generally, including, without limitation, laws relating to
fraudulent transfers or conveyances, preferences and equitable subordination;
(ii) We express no opinion as to the enforceability of the waiver of
stay or extension laws contained in Section 4.14 of the Indenture;
(iii) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the Notes
and the Indenture; and the effect of judicial decisions that have held that
certain provisions are unenforceable where their enforcement would violate
implied covenants of good faith and fair dealing, or would be commercially
unreasonable, or where their breach is not material;
(iv) We express no opinion as to the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Indenture or
the Notes (other than the Company) with any laws or regulations applicable to
it, or (b) the legal or regulatory status or the nature of the business of any
such party;
(v) The effect of judicial decisions that may permit the
introduction of extrinsic evidence to supplement the terms of the Indenture or
the Notes or to aid in the interpretation of the Indenture or the Notes;
(vi) We express no opinion as to the enforceability of provisions of
the Indenture and the Notes imposing, or which are construed as effectively
imposing, penalties;
(vii) The enforceability of provisions of the Indenture or the Notes
that purport to establish evidentiary standards or make determinations
conclusive; and
(viii) We express no opinion as to the enforceability of any choice of
law provisions contained in the Indenture or the Notes or the enforceability of
any provisions that purport to establish a particular court as the forum for
adjudication of any controversy relating to the Indenture or the Notes or that
purport to cause any party to waive or alter any right to a trial by jury or
that waive objection to jurisdiction.
Based upon and subject to the foregoing, we are of the following opinions:
<PAGE>
1. The Notes, assuming due authentication of the Notes by the
Trustee, constitute valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms.
2. The shares of Stock, when issued and delivered against payment
therefor in accordance with the terms of the Indenture and the Notes, will be
legally issued, fully paid and nonassessable.
We express no opinion as to matters governed by laws of any jurisdiction
other than the following as in effect on the date hereof: the laws of the State
of New York, the General Corporation Law of the State of Delaware and the
federal laws of the United States of America.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, the prospectus constituting a part thereof and any amendments
thereto.
Very truly yours,
/s/ Morrison & Foerster LLP
<PAGE>
EXHIBIT 12
EARTHWEB INC.
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
Year Nine Months
Ended December 31, Ended September 30,
---------------------------- -------------------
1995 1996 1997 1998 1999
---- ------ ------ ------ -------------------
<S> <C> <C> <C> <C> <C>
Net loss..................... (640) (2,046) (7,821) (8,970) (24,938)
Plus fixed charges:
Interest expense............ 16 3 3 4 364
Assumed interest element
included in rent
expense(1)................. 31 56 130 192 393
---- ------ ------ ------ -------
Adjusted loss................ (593) (1,987) (7,688) (8,774) (24,181)
Fixed charges................ (47) (59) (133) (196) (757)
---- ------ ------ ------ -------
(640) (2,046) (7,821) (8,970) (24,938)
==== ====== ====== ====== =======
</TABLE>
(1) Total rent expense for the period divided by three This is the portion of
rental expense which the Company believes to be representative of interest.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of (i) our report dated January 21, 1999, relating to the
financial statements, which appears in EarthWeb Inc.'s Annual Report on Form
10-K for the year ended December 31, 1998, (ii) our report dated January 22,
1999 relating to the financial statements of D&L Online Inc., which appears in
the Current Report on Form 8-K/A dated April 15, 1999 and (iii) our report
dated April 23, 1999 relating to the financial statements of MicroHouse
International Inc., which appears in the Current Report on Form 8-K/A dated May
26, 1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
January 28, 2000
1
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
----------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)[X]
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
United States 06-1143380
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(Address of principal executive offices) (Zip Code)
Lynda A. Vogel, Senior Vice President and Managing Director
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(213) 362-7399
(Name, address and telephone number of agent for service)
Earthweb Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3899472
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Park Place 32nd Floor, New York, New York 10016
(Address of principal executive offices) (Zip Code)
7% Convertible Subordinated Notes due 2005
(TYPE OF SECURITIES)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Comptroller of the Currency, Western District Office, 50 Fremont
Street, Suite 3900, San Francisco, California, 94105-2292
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Bank and Trust Company.
(See notes on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as an
Exhibit with corresponding exhibit number to the Form T-1of Western
Digital Corporation, filed pursuant to Section 305(b)(2) of the Trust
Indenture Act of 1939, as amended (the "Act"), on May 12, 1998
(Registration No. 333-52463), and is incorporated herein by reference.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A Certificate of Corporate Existence (with fiduciary powers)
from the Comptroller of the Currency, Administrator of National Banks
is on file with the Securities and Exchange Commission as an Exhibit
with corresponding exhibit number to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and is incorporated herein by
reference.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
Authorization of the Trustee to exercise fiduciary powers
(included in Exhibits 1 and 2; no separate instrument).
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as an Exhibit with
corresponding exhibit number to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May 12,
1998 (Registration No. 333-52463), and is incorporated herein by
reference.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company of California,
National Association, a national banking association, organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Los Angeles, and State of California, on the 31st
day of January, 2000.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /S/ Joni D'Amico
----------------------------------
NAME Joni D'Amico
TITLE Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the issuance by Earthweb, Inc. of its 7%
Convertible Subordinated Notes due 2005, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /S/ Joni D'Amico
----------------------------------
NAME: Joni D'Amico
TITLE: Vice President
Dated: January 31, 2000
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition and Income for A Bank With Domestic Offices
Only and Total Assets of Less Than $100 Million of State Street Bank and Trust
Company of California, a national banking association duly organized and
existing under and by virtue of the laws of the United States of America, at the
close of business December 31, 1999, published in accordance with a call made by
-----------------
the Federal Deposit Insurance Corporation pursuant to the required law: 12
U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember
banks); and 12 U.S.C. Section 161 (National banks).
<TABLE>
<CAPTION>
Thousands
ASSETS of Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................... 4,987
Interest-bearing balances ............................................ 0
Securities ..................................................................... 37
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary .................................. 0
Loans and lease financing receivables:
Loans and leases, net of unearned income ............................. 0
Allowance for loan and lease losses .................................. 0
Allocated transfer risk reserve....................................... 0
Loans and leases, net of unearned income and allowances .............. 0
Assets held in trading accounts ................................................ 0
Premises and fixed assets ...................................................... 34
Other real estate owned ........................................................ 0
Investments in unconsolidated subsidiaries ..................................... 0
Customers' liability to this bank on acceptances outstanding ................... 0
Intangible assets .............................................................. 0
Other assets ................................................................... 1,143
----------
Total assets ................................................................... 6,201
==========
LIABILITIES
Deposits:
In domestic offices .................................................. 0
Noninterest-bearing ........................................ 0
Interest-bearing ........................................... 0
In foreign offices and Edge subsidiary ............................... 0
Noninterest-bearing ........................................ 0
Interest-bearing ........................................... 0
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary .................................. 0
Demand notes issued to the U.S. Treasury and Trading Liabilities ............... 0
Other borrowed money ........................................................... 0
Subordinated notes and debentures .............................................. 0
Bank's liability on acceptances executed and outstanding ....................... 0
Other liabilities .............................................................. 2,685
Total liabilities .............................................................. 2,685
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus .................................. 0
Common stock ................................................................... 500
Surplus ........................................................................ 750
Undivided profits and capital reserves/Net unrealized holding gains (losses) ... 2,266
Cumulative foreign currency translation adjustments ............................ 0
Total equity capital ........................................................... 3,516
----------
Total liabilities and equity capital ........................................... 6,201
==========
</TABLE>
4
<PAGE>
I, John J. Saniuk, Vice President and Comptroller of the above named bank do
hereby declare that this Report of Condition and Income for this report date
have been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true to the best of my knowledge
and belief.
/S/ John J. Saniuk
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
/S/ Alan D. Greene
/S/ Bryan R. Calder
/S/ Lynda A. Vogel
5
