Exhibit 10.1
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Jeff Adkisson ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Securities to Buyer shall be effected on the Closing Date by the delivery
of the Securities and execution of customary stock powers, duly guaranteed, and
other appropriate documents by Seller, as appropriate (collectively, the
"Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 1
(e) if the Year One Earn-out Threshold (as defined in Section 1.7) has
been achieved, then upon the one-year anniversary of the Closing Date (the "One-
Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal to
the product of (i) the Seller Percentage and (ii) $*** (such product, the "Year
One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the Year
One Earn-out Threshold has been achieved, then Seller shall receive 25% of the
Year One Earn-out Amount, but to be paid in the same manner as the Year One
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year One Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 2
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7) has
been achieved, then upon the two-year anniversary of the Closing Date (the "Two-
Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal to
the product of (i) the Seller Percentage and (ii) $*** (such product, the "Year
Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the Year
Two Earn-out Threshold has been achieved, then Seller shall receive 25% of the
Year Two Earn-out Amount, but to be paid in the same manner as the Year Two
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year Two Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 3
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year Three Earn-out Threshold has been achieved, then Seller shall
receive 25% of the Year Three Earn-out Amount, but to be paid in the same manner
as the Year Three Earn-out Amount; provided further, to the extent that between
$*** and $*** of the Year Three Earn-out Threshold has been achieved, then
Seller shall receive 25% of the Year Three Earn-out Amount plus an amount equal
to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a fraction
the numerator of which is the amount by which Invoiced Revenues (as defined
herein) exceeds $*** and the denominator of which is ***; in any case, to be
paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein, all
-----------------
cash payments from one party to another under this Agreement shall be made by
check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
(b) *** CONFIDENTIAL TREATMENT REQUESTED 4
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration, Buyer
may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's
acquisitions completed after the Closing Date of businesses substantially
similar to the Organic Business or assets of a business substantially
similar to the Organic Business; provided, however, this shall not include
any revenues generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on
or via its website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue
directly attributable to an Acquired Business for a given fiscal year in
excess of an amount of revenue for such Acquired Business determined by
multiplying (A) the revenues for such Acquired Business for the two (2)
full calendar months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted
for revenue recognized for the GAAP Revenue Period plus Acquired Revenues,
but net of returns of product, as well as allowances and write-offs of
uncollectible receivables (other than uncollectible receivables written off
in the ordinary course of business). Invoiced Revenue shall not be adjusted
for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 5
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
(ix) "Year Three Earn-out Threshold" shall refer to ***
Dollars ($***) of Invoiced Revenue for fiscal year ended
December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the
successful development and implementation of an integrated assessment
product by Kevin Brice in cooperation with EW Career Solutions, Inc.
("EW"), a subsidiary of Buyer that operates the Dice.com business,
utilizing adaptive learning technologies to assess the skill level of the
test taker and which shall be integrated into the EW system. The subject
areas for which this product shall be developed are identified on Exhibit C
hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all withholding,
-----------------------
if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is a
party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
--------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of
-------------------------------
Buyer Common Stock to Seller under this Agreement has been duly authorized by
all necessary corporate action, and, upon issuance in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
issued free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the options
has been paid to the Target and all options held by Seller have been converted
into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby and by the other Transaction Documents
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby and thereby will be reasonably
satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1
if it executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2
if it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
----------------
contemplated by this Agreement, the following documents or items shall be
executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents, (i)
------------------
set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this
Agreement has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more
of the conditions to its obligation to close set forth in Section 4.1 of
this Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to
the Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding
is commenced or threatened by any governmental agency or other person
directed against the consummation of the Closing or any other material
transaction contemplated under this Agreement or the other Transaction
Documents and the Buyer, on the advice of legal counsel, reasonably and in
good faith deems it impractical or inadvisable to proceed in view of such
legal proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by
mutual written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless
the Termination Date has been extended by the mutual written consent of
Seller and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
___________________________
Jeff Adkisson
ADDRESS: __________________
__________________
__________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 6
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Scott Hall ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Securities to Buyer shall be effected on the Closing Date by the delivery
of the Securities and execution of customary stock powers, duly guaranteed, and
other appropriate documents by Seller, as appropriate (collectively, the
"Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 7
(e) if the Year One Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the one-year anniversary of the Closing Date (the
"One-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year One Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year One Earn-out Threshold has been achieved, then Seller shall receive
25% of the Year One Earn-out Amount, but to be paid in the same manner as the
Year One Earn-out Amount; provided further, to the extent that between $***
and $*** of the Year One Earn-out Threshold has been achieved, then Seller
shall receive 25% of the Year One Earn-out Amount plus an amount equal to the
product of (i) 75% of the Year One Earn-out Amount and (ii) a fraction the
numerator of which is the amount by which Invoiced Revenues (as defined herein)
exceeds $*** and the denominator of which is ***; in any case, to be paid in
the same manner as the Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 8
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the two-year anniversary of the Closing Date (the
"Two-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year Two Earn-out Amount"). Notwithstanding the foregoing, if only $***, the
Year Two Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year Two Earn-out Amount, but to be paid in the same manner as the Year Two
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year Two Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is $***; in any case, to be paid in the same manner as the
Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 9
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year Three Earn-out Threshold has been achieved, then Seller shall
receive 25% of the Year Three Earn-out Amount, but to be paid in the same manner
as the Year Three Earn-out Amount; provided further, to the extent that between
$*** and $*** of the Year Three Earn-out Threshold has been achieved, then
Seller shall receive 25% of the Year Three Earn-out Amount plus an amount equal
to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a fraction
the numerator of which is the amount by which Invoiced Revenues (as defined
herein) exceeds $*** and the denominator of which is ***; in any case, to be
paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein,
-----------------
all cash payments from one party to another under this Agreement shall be made
by check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 10
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration, Buyer
may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target as
conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's acquisitions
completed after the Closing Date of businesses substantially similar to the
Organic Business or assets of a business substantially similar to the
Organic Business; provided, however, this shall not include any revenues
generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on or via its
website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue directly
attributable to an Acquired Business for a given fiscal year in excess of
an amount of revenue for such Acquired Business determined by multiplying
(A) the revenues for such Acquired Business for the two (2) full calendar
months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted for
revenue recognized for the GAAP Revenue Revenue Period plus Acquired
Revenues, but net of returns of product, as well as allowances and write-
offs of uncollectible receivables (other than uncollectible receivables
written off in the ordinary course of business). Invoiced Revenue shall
not be adjusted for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 11
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 12
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 13
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the successful
development and implementation of an integrated assessment product by Kevin
Brice in cooperation with EW Career Solutions, Inc. ("EW"), a subsidiary of
Buyer that operates the Dice.com business, utilizing adaptive learning
technologies to assess the skill level of the test taker and which shall be
integrated into the EW system. The subject areas for which this product
shall be developed are identified on Exhibit C hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all
-----------------------
withholding, if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is
a party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
---------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of
-------------------------------
Buyer Common Stock to Seller under this Agreement has been duly authorized by
all necessary corporate action, and, upon issuance in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
issued free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the options
has been paid to the Target and all options held by Seller have been converted
into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby and by the other Transaction Documents
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby and thereby will be reasonably
satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1 if it
executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2 if
it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
----------------
contemplated by this Agreement, the following documents or items shall be
executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents,
------------------
(i) set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this Agreement
has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more of the
conditions to its obligation to close set forth in Section 4.1 of this
Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to the
Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding is
commenced or threatened by any governmental agency or other person directed
against the consummation of the Closing or any other material transaction
contemplated under this Agreement or the other Transaction Documents and
the Buyer, on the advice of legal counsel, reasonably and in good faith
deems it impractical or inadvisable to proceed in view of such legal
proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by mutual
written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless the
Termination Date has been extended by the mutual written consent of Seller
and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:__________________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
_____________________________________
Scott Hall
ADDRESS: ___________________________
___________________________
___________________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 14
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this
13th day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Kenneth B. Williams ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by
Seller of the Securities to Buyer shall be effected on the Closing Date by the
delivery of the Securities and execution of customary stock powers, duly
guaranteed, and other appropriate documents by Seller, as appropriate
(collectively, the "Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 15
(e) if the Year One Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the one-year anniversary of the Closing Date (the
"One-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the
Year One Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year One Earn-out Amount, but to be paid in the same manner as the Year One
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year One Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 16
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the two-year anniversary of the Closing Date (the
"Two-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount, but to be paid in the same manner as the Year
Two Earn-out Amount; provided further, to the extent that between $*** and $***
of the Year Two Earn-out Threshold has been achieved, then Seller shall receive
25% of the Year Two Earn-out Amount plus an amount equal to the product of (i)
75% of the Year Two Earn-out Amount and (ii) a fraction the numerator of which
is the amount by which Invoiced Revenues (as defined herein) exceeds $*** and
the denominator of which is $***; in any case, to be paid in the same manner as
the Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 17
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year Three Earn-out Threshold has been achieved, then Seller shall
receive 25% of the Year Three Earn-out Amount, but to be paid in the same manner
as the Year Three Earn-out Amount; provided further, to the extent that between
$*** and $*** of the Year Three Earn-out Threshold has been achieved, then
Seller shall receive 25% of the Year Three Earn-out Amount plus an amount equal
to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a fraction
the numerator of which is the amount by which Invoiced Revenues (as defined
herein) exceeds $*** and the denominator of which is ***; in any case, to be
paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein,
-----------------
all cash payments from one party to another under this Agreement shall be made
by check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 18
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration,
Buyer may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's
acquisitions completed after the Closing Date of businesses substantially
similar to the Organic Business or assets of a business substantially
similar to the Organic Business; provided, however, this shall not include
any revenues generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on
or via its website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue
directly attributable to an Acquired Business for a given fiscal year in
excess of an amount of revenue for such Acquired Business determined by
multiplying (A) the revenues for such Acquired Business for the two (2)
full calendar months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted
for revenue recognized for the GAAP Revenue Revenue Period plus Acquired
Revenues, but net of returns of product, as well as allowances and write-
offs of uncollectible receivables (other than uncollectible receivables
written off in the ordinary course of business). Invoiced Revenue shall not
be adjusted for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 19
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 20
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 21
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the
successful development and implementation of an integrated assessment
product by Kevin Brice in cooperation with EW Career Solutions, Inc.
("EW"), a subsidiary of Buyer that operates the Dice.com business,
utilizing adaptive learning technologies to assess the skill level of the
test taker and which shall be integrated into the EW system. The subject
areas for which this product shall be developed are identified on Exhibit C
hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all
-----------------------
withholding, if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is
a party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to
---------------
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization
---------------------------
of or designation, declaration, or filing with any Authority on the part of
Buyer is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of
-------------------------------
Buyer Common Stock to Seller under this Agreement has been duly authorized by
all necessary corporate action, and, upon issuance in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
issued free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the
options has been paid to the Target and all options held by Seller have been
converted into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and by the other
Transaction Documents and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby and thereby
will be reasonably satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1 if
it executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2 if
it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the
----------------
transactions contemplated by this Agreement, the following documents or items
shall be executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents,
------------------
(i) set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several
------------
counterparts.
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as
follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this
Agreement has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more of
the conditions to its obligation to close set forth in Section 4.1 of this
Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to the
Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding is
commenced or threatened by any governmental agency or other person directed
against the consummation of the Closing or any other material transaction
contemplated under this Agreement or the other Transaction Documents and
the Buyer, on the advice of legal counsel, reasonably and in good faith
deems it impractical or inadvisable to proceed in view of such legal
proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by
mutual written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless the
Termination Date has been extended by the mutual written consent of Seller
and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By: ________________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
____________________________________
Kenneth B. Williams
ADDRESS: ___________________________
___________________________
___________________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 22
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Chad Dorn ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Securities to Buyer shall be effected on the Closing Date by the delivery
of the Securities and execution of customary stock powers, duly guaranteed, and
other appropriate documents by Seller, as appropriate (collectively, the
"Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED
(e) if the Year One Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the one-year anniversary of the Closing Date (the
"One-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $3,700,000 (such product,
the "Year One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount, but to be paid in the same manner as the Year
One Earn-out Amount; provided further, to the extent that between $*** and $***
of the Year One Earn-out Threshold has been achieved, then Seller shall receive
25% of the Year One Earn-out Amount plus an amount equal to the product of (i)
75% of the Year One Earn-out Amount and (ii) a fraction the numerator of which
is the amount by which Invoiced Revenues (as defined herein) exceeds $*** and
the denominator of which is ***; in any case, to be paid in the same manner as
the Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 32
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the two-year anniversary of the Closing Date (the
"Two-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount, but to be paid in the same manner as the Year
Two Earn-out Amount; provided further, to the extent that between $*** and $***
of the Year Two Earn-out Threshold has been achieved, then Seller shall receive
25% of the Year Two Earn-out Amount plus an amount equal to the product of (i)
75% of the Year Two Earn-out Amount and (ii) a fraction the numerator of which
is the amount by which Invoiced Revenues (as defined herein) exceeds $*** and
the denominator of which is ***; in any case, to be paid in the same manner as
the Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 33
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such
product, the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if
only $*** of the Year Three Earn-out Threshold has been achieved, then Seller
shall receive 25% of the Year Three Earn-out Amount, but to be paid in the same
manner as the Year Three Earn-out Amount; provided further, to the extent that
between $*** and $*** of the Year Three Earn-out Threshold has been achieved,
then Seller shall receive 25% of the Year Three Earn-out Amount plus an amount
equal to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a
fraction the numerator of which is the amount by which Invoiced Revenues (as
defined herein) exceeds $*** and the denominator of which is ***; in any case,
to be paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein, all
-----------------
cash payments from one party to another under this Agreement shall be made by
check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 34
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration, Buyer
may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's
acquisitions completed after the Closing Date of businesses substantially
similar to the Organic Business or assets of a business substantially
similar to the Organic Business; provided, however, this shall not include
any revenues generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on
or via its website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue
directly attributable to an Acquired Business for a given fiscal year in
excess of an amount of revenue for such Acquired Business determined by
multiplying (A) the revenues for such Acquired Business for the two (2)
full calendar months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted
for revenue recognized for the GAAP Revenue Period plus Acquired Revenues,
but net of returns of product, as well as allowances and write-offs of
uncollectible receivables (other than uncollectible receivables written off
in the ordinary course of business). Invoiced Revenue shall not be adjusted
for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 35
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 36
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 37
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the
successful development and implementation of an integrated assessment
product by Kevin Brice in cooperation with EW Career Solutions, Inc.
("EW"), a subsidiary of Buyer that operates the Dice.com business,
utilizing adaptive learning technologies to assess the skill level of the
test taker and which shall be integrated into the EW system. The subject
areas for which this product shall be developed are identified on Exhibit C
hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all withholding,
-----------------------
if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is a
party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
---------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of Buyer
-------------------------------
Common Stock to Seller under this Agreement has been duly authorized by all
necessary corporate action, and, upon issuance in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable and issued
free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the options
has been paid to the Target and all options held by Seller have been converted
into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby and by the other Transaction Documents
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby and thereby will be reasonably
satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1
if it executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2
if it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
----------------
contemplated by this Agreement, the following documents or items shall be
executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents, (i)
------------------
set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this
Agreement has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more of
the conditions to its obligation to close set forth in Section 4.1 of this
Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to the
Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding is
commenced or threatened by any governmental agency or other person directed
against the consummation of the Closing or any other material transaction
contemplated under this Agreement or the other Transaction Documents and
the Buyer, on the advice of legal counsel, reasonably and in good faith
deems it impractical or inadvisable to proceed in view of such legal
proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by
mutual written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless the
Termination Date has been extended by the mutual written consent of Seller
and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:_____________________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
________________________________________
Chad Dorn
ADDRESS: _______________________________
_______________________________
_______________________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 38
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Deanne Brown ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Securities to Buyer shall be effected on the Closing Date by the delivery
of the Securities and execution of customary stock powers, duly guaranteed, and
other appropriate documents by Seller, as appropriate (collectively, the
"Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 39
(e) if the Year One Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the one-year anniversary of the Closing Date (the
"One-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the
Year One Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year One Earn-out Amount, but to be paid in the same manner as the Year One
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year One Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 40
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7) has
been achieved, then upon the two-year anniversary of the Closing Date (the "Two-
Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal to
the product of (i) the Seller Percentage and (ii) $*** (such product, the "Year
Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the Year
Two Earn-out Threshold has been achieved, then Seller shall receive 25% of the
Year Two Earn-out Amount, but to be paid in the same manner as the Year Two
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year Two Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 41
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year Three Earn-out Threshold has been achieved, then Seller shall
receive 25% of the Year Three Earn-out Amount, but to be paid in the same manner
as the Year Three Earn-out Amount; provided further, to the extent that between
$*** and $*** of the Year Three Earn-out Threshold has been achieved, then
Seller shall receive 25% of the Year Three Earn-out Amount plus an amount equal
to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a fraction
the numerator of which is the amount by which Invoiced Revenues (as defined
herein) exceeds $*** and the denominator of which is ***; in any case, to be
paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein, all
-----------------
cash payments from one party to another under this Agreement shall be made by
check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 42
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration, Buyer
may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's
acquisitions completed after the Closing Date of businesses substantially
similar to the Organic Business or assets of a business substantially
similar to the Organic Business; provided, however, this shall not include
any revenues generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on
or via its website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue
directly attributable to an Acquired Business for a given fiscal year in
excess of an amount of revenue for such Acquired Business determined by
multiplying (A) the revenues for such Acquired Business for the two (2)
full calendar months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted
for revenue recognized for the GAAP Revenue Period plus Acquired Revenues,
but net of returns of product, as well as allowances and write-offs of
uncollectible receivables (other than uncollectible receivables written off
in the ordinary course of business). Invoiced Revenue shall not be adjusted
for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 43
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 44
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 45
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the
successful development and implementation of an integrated assessment
product by Kevin Brice in cooperation with EW Career Solutions, Inc.
("EW"), a subsidiary of Buyer that operates the Dice.com business,
utilizing adaptive learning technologies to assess the skill level of the
test taker and which shall be integrated into the EW system. The subject
areas for which this product shall be developed are identified on Exhibit C
hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all withholding,
-----------------------
if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is a
party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
--------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of Buyer
-------------------------------
Common Stock to Seller under this Agreement has been duly authorized by all
necessary corporate action, and, upon issuance in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable and issued
free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the options
has been paid to the Target and all options held by Seller have been converted
into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby and by the other Transaction Documents
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby and thereby will be reasonably
satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1
if it executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2
if it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
----------------
contemplated by this Agreement, the following documents or items shall be
executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents, (i)
------------------
set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this
Agreement has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more of
the conditions to its obligation to close set forth in Section 4.1 of this
Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to the
Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding is
commenced or threatened by any governmental agency or other person directed
against the consummation of the Closing or any other material transaction
contemplated under this Agreement or the other Transaction Documents and
the Buyer, on the advice of legal counsel, reasonably and in good faith
deems it impractical or inadvisable to proceed in view of such legal
proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by mutual
written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless the
Termination Date has been extended by the mutual written consent of Seller
and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:_________________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
____________________________________
Deanne Brown
ADDRESS: ___________________________
___________________________
___________________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 46
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Jack Freemen ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by
Seller of the Securities to Buyer shall be effected on the Closing Date by the
delivery of the Securities and execution of customary stock powers, duly
guaranteed, and other appropriate documents by Seller, as appropriate
(collectively, the "Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product
of (i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller
Percentage (the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price")during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the
"Three-Month Anniversary Date"), Buyer shall pay to Seller in cash, the product
of (i) Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii)
the Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
*** Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 47
(e) if the Year One Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the one-year anniversary of the Closing Date (the
"One-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the
Year One Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year One Earn-out Amount, but to be paid in the same manner as the Year One
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year One Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUESTED 48
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the two-year anniversary of the Closing Date (the
"Two-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the
Year Two Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year Two Earn-out Amount, but to be paid in the same manner as the Year Two
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year Two Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUESTED 49
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if only $***
of the Year Three Earn-out Threshold has been achieved, then Seller shall
receive 25% of the Year Three Earn-out Amount, but to be paid in the same manner
as the Year Three Earn-out Amount; provided further, to the extent that between
$*** and $*** of the Year Three Earn-out Threshold has been achieved, then
Seller shall receive 25% of the Year Three Earn-out Amount plus an amount equal
to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a fraction
the numerator of which is the amount by which Invoiced Revenues (as defined
herein) exceeds $*** and the denominator of which is ***; in any case, to be
paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein,
-----------------
all cash payments from one party to another under this Agreement shall be made
by check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 50
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration,
Buyer may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's acquisitions
completed after the Closing Date of businesses substantially similar to the
Organic Business or assets of a business substantially similar to the
Organic Business; provided, however, this shall not include any revenues
generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on or via its
website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue directly
attributable to an Acquired Business for a given fiscal year in excess of
an amount of revenue for such Acquired Business determined by multiplying
(A) the revenues for such Acquired Business for the two (2) full calendar
months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted for
revenue recognized for the GAAP Revenue Revenue Period plus Acquired
Revenues, but net of returns of product, as well as allowances and write-
offs of uncollectible receivables (other than uncollectible receivables
written off in the ordinary course of business). Invoiced Revenue shall
not be adjusted for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 51
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 52
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 53
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars
($***) of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the successful
development and implementation of an integrated assessment product by Kevin
Brice in cooperation with EW Career Solutions, Inc. ("EW"), a subsidiary of
Buyer that operates the Dice.com business, utilizing adaptive learning
technologies to assess the skill level of the test taker and which shall be
integrated into the EW system. The subject areas for which this product
shall be developed are identified on Exhibit C hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all
-----------------------
withholding, if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is a
party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
--------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of
-------------------------------
Buyer Common Stock to Seller under this Agreement has been duly authorized by
all necessary corporate action, and, upon issuance in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
issued free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the
options has been paid to the Target and all options held by Seller have been
converted into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and by the other
Transaction Documents and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby and thereby
will be reasonably satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1 if it
executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2 if
it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the
transactions contemplated by this Agreement, the following documents or items
shall be executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents,
------------------
(i) set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as
follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this Agreement
has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more of the
conditions to its obligation to close set forth in Section 4.1 of this
Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to the
Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding is
commenced or threatened by any governmental agency or other person directed
against the consummation of the Closing or any other material transaction
contemplated under this Agreement or the other Transaction Documents and
the Buyer, on the advice of legal counsel, reasonably and in good faith
deems it impractical or inadvisable to proceed in view of such legal
proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by mutual
written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless the
Termination Date has been extended by the mutual written consent of Seller
and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:______________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
___________________________
Jack Freeman
ADDRESS: __________________
__________________
__________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 54
Exhibit B
Employment Agreement
Exhibit C
EXECUTION COPY
OPTION HOLDER PURCHASE AGREEMENT
This Option Holder Purchase Agreement (this "Agreement") is made this 13th
day of January, 2000, by and between EarthWeb Inc., a Delaware corporation
("Buyer"), and Melissa Stover ("Seller").
R E C I T A L S:
WHEREAS, Buyer desires to purchase, and Seller desires to sell, assign and
transfer to Buyer all of the capital stock in Measure Up, Inc. ("Target") which
Seller owns (which amount of shares is set forth on Exhibit A to this Agreement)
or in which Seller has an interest (through options or otherwise), all on the
terms and subject to the conditions hereinafter set forth as part of that
certain Securities Purchase Agreement dated January 13, 2000, by and between
Buyer, Target, Kevin R. Brice and Robert M. M. Holtackers (the "Purchase
Agreement"). All of the securities or interests in securities of Target, which
are to be purchased by Buyer pursuant to this Agreement, are collectively
referred to hereinafter as the "Securities."
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties and covenants herein
contained, the parties hereby agree as follows:
SECTION 1
Closing
1.1. Closing Date. The closing (the "Closing") of the transactions
------------
contemplated hereby shall be held at the offices of counsel to Buyer, Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104-
0050 and shall take place no later than sixty (60) days from the date of this
Agreement (the "Termination Date") or such other date and place as may be
mutually agreed upon by the parties (the "Closing Date").
1.2. Purchase and Sale of Securities. On the terms and subject to the
-------------------------------
conditions herein set forth, Buyer shall purchase from Seller all of the
Securities, as of the Closing Date.
1.3. Method of Conveyance.
--------------------
(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Securities to Buyer shall be effected on the Closing Date by the delivery
of the Securities and execution of customary stock powers, duly guaranteed, and
other appropriate documents by Seller, as appropriate (collectively, the
"Instruments of Conveyance"), to Buyer.
(b) At the Closing, good and valid title to all of the Securities
shall be transferred, conveyed, assigned and delivered by Seller to Buyer
pursuant to this Agreement and the
1
Instruments of Conveyance, free and clear of any and all Liens (as defined
below). For the purposes of this Agreement, the term "Lien" shall mean any
pledge, security interest, encumbrance, lien or charge of any kind whatsoever.
1.4. Purchase Price.
--------------
The aggregate purchase price for the Securities (the "Purchase Price") is
up to a dollar amount determined by multiplying Twenty Five Million Dollars
($25,000,000) by the percentage ownership by Seller of the Target on a fully
diluted basis (as set forth in Exhibit A hereto; the percentage ownership by
Seller of the Target on a fully diluted basis is referred to herein as the
"Seller Percentage"):
(a) at the Closing, Buyer shall pay to Seller in cash, the product of
(i) Four Million Dollars ($4,000,000) multiplied by (ii) the Seller Percentage
(the "Closing Date Cash Payment");
(b) at the Closing, Buyer shall deliver to Seller the Seller
Percentage of registered shares of Buyer's common stock, $.01 par value ("Buyer
Common Stock"), having an aggregate value of Six Million Dollars ($6,000,000)
(the "Closing Date Block of Buyer Common Stock") multiplied by the Seller
Percentage, such number of shares to be determined by taking the average of the
closing prices of Buyer Common Stock on the Nasdaq National Market (the "Average
Price") during the five (5) trading days immediately preceding the Closing Date
and dividing such Average Price into $6,000,000 (the "Closing Price") (provided,
--------
however, that instead of delivering to Seller shares of Buyer Common Stock
- -------
having an aggregate value of $6,000,000 multiplied by the Seller Percentage,
Buyer may pay Seller all or part of such amount in cash);
(c) upon the three-month anniversary of the Closing Date (the "Three-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
(d) upon the six-month anniversary of the Closing Date (the "Six-
Month Anniversary Date"), Buyer shall pay to Seller in cash, the product of (i)
Two Million Five Hundred Thousand Dollars ($2,500,000) multiplied by (ii) the
Seller Percentage;
*** CONFIDENTIAL TREATMENT REQUESTED 55
(e) if the Year One Earn-out Threshold (as defined in Section 1.7) has
been achieved, then upon the one-year anniversary of the Closing Date (the "One-
Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal to
the product of (i) the Seller Percentage and (ii) $*** (such product, the
"Year One Earn-out Amount"). Notwithstanding the foregoing, if only $*** of the
Year One Earn-out Threshold has been achieved, then Seller shall receive 25% of
the Year One Earn-out Amount, but to be paid in the same manner as the Year One
Earn-out Amount; provided further, to the extent that between $*** and $*** of
the Year One Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year One Earn-out Amount plus an amount equal to the product of (i) 75%
of the Year One Earn-out Amount and (ii) a fraction the numerator of which is
the amount by which Invoiced Revenues (as defined herein) exceeds $*** and the
denominator of which is ***; in any case, to be paid in the same manner as the
Year One Earn-out
2
Amount; provided further, to the extent Target produces an Integrated Assessment
Product (as defined herein) (i) on or prior to June 30, 2000, the Seller shall
be entitled to receive the entire amount of the Year One Earn-out Amount it is
entitled to receive under the terms of this paragraph, (ii) after June 30, 2000
but on or prior to September 1, 2000, then Seller shall be entitled to receive
only 85% of the Year One Earn-out Amount it is entitled to receive under the
terms of this paragraph, (iii) after September 1, 2000, then Seller shall be
entitled to receive only 80% of the Year One Earn-out Amount it is entitled to
receive under the terms of this paragraph;
*** CONFIDENTIAL TREATMENT REQUEST 56
(f) if the Year Two Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the two-year anniversary of the Closing Date (the
"Two-Year Anniversary Date") Buyer shall pay to Seller, in cash, an amount equal
to the product of (i) the Seller Percentage and (ii) $*** (such product,
the "Year Two Earn-out Amount"). Notwithstanding the foregoing, if only $*** of
the Year Two Earn-out Threshold has been achieved, then Seller shall receive 25%
of the Year Two Earn-out Amount, but to be paid in the same manner as the Year
Two Earn-out Amount; provided further, to the extent that between $*** and $***
of the Year Two Earn-out Threshold has been achieved, then Seller shall receive
25% of the Year Two Earn-out Amount plus an amount equal to the product of (i)
75% of the Year Two Earn-out Amount and (ii) a fraction the numerator of which
is the amount by which Invoiced Revenues (as defined herein) exceeds *** and
the denominator of which is ***; in any case, to be paid in the same manner as
the Year Two Earn-out Amount; and
*** CONFIDENTIAL TREATMENT REQUEST 57
(g) if the Year Three Earn-out Threshold (as defined in Section 1.7)
has been achieved, then upon the three-year anniversary of the Closing Date (the
"Three-Year Anniversary Date") Buyer shall pay to Seller, in cash, the an amount
equal to the product of (i) the Seller Percentage and (ii) $*** (such
product, the "Year Three Earn-out Amount"). Notwithstanding the foregoing, if
only $*** of the Year Three Earn-out Threshold has been achieved, then Seller
shall receive 25% of the Year Three Earn-out Amount, but to be paid in the same
manner as the Year Three Earn-out Amount; provided further, to the extent that
between $*** and $*** of the Year Three Earn-out Threshold has been achieved,
then Seller shall receive 25% of the Year Three Earn-out Amount plus an amount
equal to the product of (i) 75% of the Year Three Earn-out Amount and (ii) a
fraction the numerator of which is the amount by which Invoiced Revenues (as
defined herein) exceeds *** and the denominator of which is ***; in any case,
to be paid in the same manner as the Year Three Earn-out Amount.
1.5. Method of Payment. Except as otherwise expressly provided herein, all
-----------------
cash payments from one party to another under this Agreement shall be made by
check or wire transfer in United States dollars to an address designated in
writing by the party to receive such payment. To the extent that any payment of
cash is scheduled to be made on an anniversary date of the Closing Date which is
not a Business Day (as defined in Section 6.12), then such payment or delivery
will be made on the Business Day immediately following such anniversary date.
1.6. Contingent Consideration and Post-Closing Consideration.
-------------------------------------------------------
(a) The consideration described in clauses 1.4(c), (d), (e), (f) and
(g) shall collectively be referred to herein as the "Post-Closing Consideration"
and the consideration
3
described in clauses 1.4(e), (f) and (g) shall collectively be referred to
herein as the "Contingent Consideration".
*** CONFIDENTIAL TREATMENT REQUESTED 58
(b) ***
(c) [RESERVED]
(d) To the extent required by applicable Tax laws, the Post-Closing
Consideration shall be treated as interest (or original issue discount) for Tax
purposes. For purposes of this Agreement, "Tax" or "Taxes" shall mean any
federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, property, franchise, profits,
withholding, social security (or similar), sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, imposed by any
United States federal, state or local taxing Authority, or any foreign taxing
Authority.
1.7. Conditions for Delivery of Contingent Consideration.
---------------------------------------------------
(a) For the purpose of computing the Contingent Consideration, Buyer
may be obligated to pay Seller:
(i) "Organic Business" shall refer to the business of the Target
as conducted as of the date hereof and other related web-based business or
certification and assessment business.
(ii) "Acquired Business" shall refer to any of Buyer's
acquisitions completed after the Closing Date of businesses substantially
similar to the Organic Business or assets of a business substantially
similar to the Organic Business; provided, however, this shall not include
any revenues generated by All Rossi, Inc. d/b/a CCPrep ("CCPrep") either on
or via its website or other on-line activities.
(iii) "Organic Revenues" shall mean the Target's revenues from the
conduct of the Organic Business as reflected in the September 1999
Financial Statements plus revenues generated by CCPrep either on or via its
website or other on-line activities excluding revenues derived from any on-
line banner advertising.
(iv) "Acquired Revenues" shall mean any amount of revenue
directly attributable to an Acquired Business for a given fiscal year in
excess of an amount of revenue for such Acquired Business determined by
multiplying (A) the revenues for such Acquired Business for the two (2)
full calendar months immediately preceding the
4
consummation of the acquisition of such Acquired Business by (B) six (6).
(v) "GAAP Revenue Recognition Period" shall mean the period of
time over which revenue is recognized in accordance with GAAP. This period
is currently nine months and, notwithstanding any changes to the duration
of such period in accordance with GAAP after the date hereof, the
calculation of the Contingent Consideration hereunder shall not be affected
by such changes.
(vi) "Invoiced Revenue" shall mean Organic Revenue not adjusted
for revenue recognized for the GAAP Revenue Period plus Acquired Revenues,
but net of returns of product, as well as allowances and write-offs of
uncollectible receivables (other than uncollectible receivables written off
in the ordinary course of business). Invoiced Revenue shall not be adjusted
for the GAAP Revenue Recognition Period.
*** CONFIDENTIAL TREATMENT REQUESTED 59
(vii) "Year One Earn-out Threshold" shall refer to *** Dollars ($***)
of Invoiced Revenue for fiscal year ended December 31, 2000.
*** CONFIDENTIAL TREATMENT REQUESTED 60
(viii) "Year Two Earn-out Threshold" shall refer to *** Dollars ($***)
of Invoiced Revenue for fiscal year ended December 31, 2001.
*** CONFIDENTIAL TREATMENT REQUESTED 61
(ix) "Year Three Earn-out Threshold" shall refer to *** Dollars ($***)
of Invoiced Revenue for fiscal year ended December 31, 2002.
(x) "Integrated Assessment Product" shall refer to the successful
development and implementation of an integrated assessment product by Kevin
Brice in cooperation with EW Career Solutions, Inc. ("EW"), a subsidiary of
Buyer that operates the Dice.com business, utilizing adaptive learning
technologies to assess the skill level of the test taker and which shall be
integrated into the EW system. The subject areas for which this product
shall be developed are identified on Exhibit C hereto.
(b) Each payment of Contingent Consideration required to be paid
pursuant to the terms of this Agreement shall be paid by Buyer to the Seller as
promptly as practicable following the first business day of April following the
applicable measurement period for the Invoiced Revenues (which shall be not
later than the fifth business day of April).
(c) In the event that Buyer sells all or substantially all of the
Organic Business, then Buyer shall ensure that all of its obligations hereunder
with respect to the payment of Contingent Consideration shall be assumed in all
material respects to the acquiror of such Organic Business.
(d) Buyer shall operate the Organic Business from and after the
Closing Date in the ordinary course of business.
1.8. Withholding for Options. Buyer and Seller agree that all withholding,
-----------------------
if any, will be made with respect to the Securities.
5
SECTION 2
Individual Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date of this Agreement as
follows:
2.1. Capital Stock. Seller is the owner, beneficially and of record, of
-------------
the Securities set forth opposite such person's name on Exhibit A hereto. The
Securities will not be subject to any liens or restrictions on transfer, other
than restrictions imposed by applicable securities laws and, upon the transfer
of the Securities to Buyer, Buyer will obtain good and marketable title to the
Securities, free and clear of all liens, claims and encumbrances of any kind.
At the Closing Date, other than the affirmative obligation of Seller to exercise
its options and convert them into shares of capital stock of Target, there will
be no authorized or outstanding option, subscription, warrant, call, right,
commitment or other agreement obligating Seller to issue or transfer any of its
Securities. Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the Securities.
2.2. Authorization; Consents; Enforceability.
---------------------------------------
(a) This Agreement and the Transaction Documents to which Seller is a
party or a signatory, have been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(b) No Consent is required to be obtained by Seller from, and no
notice or filing is required to be given by, Seller to or made by Seller with,
any Governmental Authority or other person in connection with the execution,
delivery and performance by Seller of this Agreement.
(c) The execution and delivery by Seller of this Agreement and the
Transaction Documents to which it is a party do not, and the consummation by
Seller of the transactions contemplated hereby or thereby will not (i) violate
or conflict with, or result (with the giving of notice or lapse of time or both)
in a violation of or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, agreement or other instrument or obligation to which
Seller is a party or by which any of its assets may be bound, except for such
violations or defaults (or rights of termination, cancellation or acceleration)
as to which requisite waivers or consents have been obtained or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its assets.
2.3. Litigation. There is no litigation, action, claim, proceeding or
----------
governmental investigation pending or, to the knowledge of Seller, threatened
against Seller which may affect Seller's ability to perform his obligations
under this Agreement.
SECTION 3
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as follows:
6
3.1. Requisite Power. Buyer has all requisite corporate power to execute
---------------
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement and the Transaction Documents to which it is a
party.
3.2. Authorization. All action on the part of Buyer necessary for the
-------------
authorization, execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party has been taken and remains in full
force and effect. This Agreement constitutes, and the Transaction Documents to
which Buyer is a party will each constitute, the valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
3.3. No Conflict. The execution, delivery and performance of this
-----------
Agreement and any of the Transaction Documents to which it is a party by Buyer
have not resulted and will not result in, nor will consummation of the
transactions contemplated hereby or thereby result in, any violation of, or
conflict with, or constitute a default under, any of its charter documents, or
result in any material violation of, or conflict with, or constitute a default
under, any of its material agreements; and there exists no such violation or
default that does or could materially and adversely affect the ability of Buyer
to consummate its obligations hereunder.
3.4. Governmental Consents, etc. No consent, approval or authorization of
--------------------------
or designation, declaration, or filing with any Authority on the part of Buyer
is required in connection with the valid execution and delivery of this
Agreement or any Transaction Document to which it is a party or the consummation
of the transactions contemplated thereby or thereby.
3.5. Brokers or Finders. Buyer has not incurred, and will not incur,
------------------
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.6. Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted and is qualified to do business
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not have a material adverse effect.
3.7. Validity of Shares to be Issued. The issuance of the shares of
-------------------------------
Buyer Common Stock to Seller under this Agreement has been duly authorized by
all necessary corporate action, and, upon issuance in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable and
issued free of pre-emptive rights.
3.8. No Brokers or Finders. No Person is or will be entitled to receive
---------------------
from Seller any brokers', finders' or similar fee or commission in connection
with the transaction contemplated by Agreement on account of services rendered
to Buyer.
3.9. Reports. Buyer has made available to Seller true and complete copies
-------
of the Shelf Registration Statement (as defined below) and any other reports or
registration statements filed by Buyer with the Securities Exchange Commission
("Commission") since November 1999, except for preliminary material, which are
all the documents that Buyer was required to file with the Commission since that
date (collectively, the "Buyer SEC Reports"). As of their respective
7
dates, the Buyer SEC Reports complied as to form in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), as the case may be, and the rules
and regulations of the Commission thereunder applicable to the Buyer SEC
Reports. As of their respective dates, the Buyer SEC Reports did not contain any
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.
3.10. Effectiveness of Registration of Buyer Stock. All of the registered
--------------------------------------------
Buyer Stock contemplated to by issued by Buyer pursuant to Section 1.5 of this
Agreement has been duly registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to the registration statement filed November
22, 1999 of Buyer on Form S-4 under the Securities Act pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement"). The Shelf
Registration Statement became effective on December 14, 1999 and remains
effective as of the date hereof.
SECTION 4
Closing
4.1. Conditions to Obligation of Buyer. The obligation of Buyer to
---------------------------------
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions;
(a) the representations and warranties set forth in Section 2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller shall have provided evidence reasonably satisfactory to
Buyer's counsel that prior to the Closing Date, Seller has exercised all of its
outstanding options of Target and converted such options into shares of capital
stock of Target;
(c) the exercise price to be paid by Seller in respect of the options
has been paid to the Target and all options held by Seller have been converted
into shares of common stock of the Target;
(d) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (C) affect adversely the right of Buyer to acquire the
Securities (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(e) Seller shall have delivered to Buyer a certificate signed by
Seller to the effect that each of the conditions specified above in Section
4.1(a) through (c) is true in all respects;
(f) Buyer shall have received, from or on behalf of Seller or other
applicable party, delivery of all the Closing Documents listed in Section 4.3
below;
8
(g) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(h) all actions to be taken by Seller in connection with consummation
of the transactions contemplated hereby and by the other Transaction Documents
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby and thereby will be reasonably
satisfactory in form and substance to Buyer.
Buyer may waive any condition specified in this Section 4.1
if it executes a writing so stating at the Closing.
4.2. Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) no action, suit, or proceeding is pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling or charge
shall be in effect);
(c) Seller shall have received from Buyer all of the Closing
Documents listed in Section 4.4 below;
(d) the closing of the transactions contemplated by the Purchase
Agreement shall be occurring; and
(e) Buyer shall have delivered to Seller a certificate signed by an
executive officer of Buyer to the effect that each of the conditions specified
above in Section 4.2(a) through (c) is true in all respects.
Seller may waive any condition specified in this Section 4.2
if it executes a writing so stating at the Closing.
4.3. Seller Deliveries. Simultaneously with the Closing of the
-----------------
transactions contemplated by this Agreement, the following documents shall be
executed and/or delivered by Seller to Buyer:
(a) the certificates representing Target's options, together with
stock powers executed in blank and any certificates or documents representing
the Target options;
(b) a release signed by Seller, of rights to options of Target set
forth on Exhibit A hereto
9
(c) the Employment Agreement between Seller and Buyer in
substantially the form annexed hereto as Exhibit B (the "Employment Agreement");
and
(d) the other Transaction Documents.
4.4. Buyer Deliveries. Simultaneously with the Closing of the transactions
----------------
contemplated by this Agreement, the following documents or items shall be
executed and/or delivered by Buyer to Seller or other applicable party:
(a) the Employment Agreement;
(b) the Closing Date Cash Payment; and
(c) the Closing Date Block of Buyer Common Stock.
SECTION 5
Covenants
5.1. Covenants Pending Closing.
-------------------------
(a) Each party shall cooperate in obtaining all required consents,
audits, and completion of other transactions contemplated to have occurred as of
the Closing and to use best efforts to cause the fulfillment of the conditions
to the other party's obligation to consummate the transactions contemplated
hereby. In that regard, Seller shall have the affirmative obligation to exercise
its options of Target prior to the Closing Date and pay the exercise price per
share in connection therewith.
(b) Each party will give to the other prompt written notice of any
material adverse change in any fact or circumstance respecting which a
representation, warranty, covenant or agreement has been made by it herein.
5.2. Post-Closing Covenants.
----------------------
(a) From and after the Closing, Seller shall execute all such
instruments or documents and take all such other actions as Buyer may reasonably
request to effectuate the transactions contemplated hereby, including, without
limitation obtaining of any necessary or advisable consents not required by
Buyer prior to Closing in connection with the transactions contemplated hereby.
(b) Seller shall indemnify (pro rata, based on the Purchase Price
receivable by each party comprising Seller), defend and hold harmless Buyer, its
officers, directors, employees, partners, members, shareholders, Affiliates (and
their officers, directors, employees, members, partners and shareholders) and
agents (collectively, the "Buyer Indemnified Parties") from and against any
action, loss, liability, damage, claim, fine, penalty, lien or expense,
including reasonable legal costs, attorneys' fees and expenses (collectively,
"Buyer Loss"), to the extent the same arises out of any breach by Seller of any
representation, warranty, agreement or covenant made by Seller herein or in any
Transaction Document.
10
(c) Buyer shall indemnify, defend and hold harmless Seller from and
against any action, loss, liability, damage, claim, fine, penalty, lien,
interest or expense, including without limitation, reasonable legal costs,
attorneys' fees and expenses (collectively, "Seller Loss"), to the extent the
same arises out of breach by Buyer of any representation, warranty, agreement or
covenant made by Buyer herein or in any Transaction Document.
(d) Seller hereby agrees that it will sell shares of Buyer Common
Stock only in compliance with applicable federal and state securities laws.
SECTION 6
Miscellaneous
6.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other that the State of New York).
6.2. Survival. The representations and warranties made herein shall
--------
survive any investigation made by the parties and the Closing of the
transactions contemplated hereby. Except as expressly provided otherwise
herein, the covenants and agreements made herein shall survive the Closing of
the transactions contemplated hereby for a period of 18 months from the Closing
Date; provided, that, notwithstanding the foregoing, the representations and
-------- ----
warranties set forth in Section 2.1 and Section 2.2(a) in their entirety shall
survive forever; provided, further, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement, with respect to any claim of intentional
fraud on the part of Seller, Seller will not have the benefit of any of the
limitations of this Section 6.2.
6.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
No party may assign any of its rights or obligations hereunder without the
express written consent of the other party hereto, which consent may not be
unreasonably withheld; provided, however, any party may assign any and all of
-------- -------
its rights and interests hereunder to one or more of its affiliates and
designate one or more of its affiliates to perform its obligations hereunder;
provided, however, that such party remains liable for full and total performance
of its obligations hereunder.
6.4. Notices. Any notices authorized to be given hereunder shall be in
-------
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
11
If to Buyer:
EarthWeb Inc.
Three Park Avenue, 38th Floor
New York, NY 10016
Facsimile: (212) 725-6559
Attention: Jack D. Hidary, President
and a copy to:
John Hempill, Esq.
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, NY 10104-0185
Facsimile: (212) 468-7900
If to Seller:
At the address set forth under Seller's name and signature on the
signature page hereto.
and a copy to:
Brian T. Casey, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Facsimile: (404) 365-9532
or if delivered by telecopier, on a Business Day before 4:00 PM local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or telecopy
number as any party shall specify to the other, pursuant to the foregoing notice
provisions.
6.5. Waiver; Amendments. This Agreement and the Transaction Documents, (i)
------------------
set forth the entire agreement of the parties respecting the subject matter
hereof, (ii) supersede any prior and contemporaneous understandings, agreements,
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof and (iii) may not be amended
orally, and no right or obligation of any party may be altered, except as
expressly set forth in a writing signed by such party.
6.6. Counterparts. This Agreement may be signed in several counterparts.
------------
6.7. Expenses. Each party shall bear its own expenses incurred with
--------
respect to the preparation of this Agreement and the consummation of the
transactions contemplated hereby.
12
6.8. Arbitration.
-----------
(a) If at any time there shall be a dispute arising out of or
relating to any provision of this Agreement, any Transaction Document or any
agreement contemplated hereby or thereby, such dispute shall be submitted for
binding and final determination by arbitration in accordance with the
regulations then obtaining of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) resulting from such arbitration
shall be in writing, and shall be final and binding upon all involved parties.
The site of any arbitration shall be within New York City, New York.
(b) This arbitration clause shall survive the termination of this
Agreement, any Transaction Document and any agreement contemplated hereby or
thereby.
6.9. Waiver of Jury Trial; Exemplary Damages. THE PARTIES HERETO HEREBY
---------------------------------------
WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING UNDER
THIS AGREEMENT AND ANY TRANSACTION DOCUMENT (OTHER THAN THE EMPLOYMENT
AGREEMENT). No party shall be awarded punitive or other exemplary damages
respecting any dispute arising under this Agreement or any Transaction Document
contemplated hereby.
6.10. Attorneys' Fees. The unsuccessful party to any court or other
---------------
proceeding arising out of this Agreement or any Transaction Document that is not
resolved by arbitration under Section 6.8 shall pay to the prevailing party all
attorneys' fees and costs actually incurred by the prevailing party, in addition
to any other relief to which it may be entitled. Otherwise, attorneys' fees
shall be paid in accordance with the judgment rendered. As used in this Section
6.10 and elsewhere in this Agreement, "actual attorneys' fees" or "attorneys'
fees actually incurred" means the full and actual cost of any legal services
actually performed in connection with the matter for which such fees are sought,
calculated on the basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys' fees" as the
term may be defined in statutory or decisional Authority.
6.11. Transaction Documents. When used in this Agreement, the term
---------------------
"Transaction Documents" shall mean this Agreement and the Employment Agreement.
6.12. Business Day. When used in this Agreement, the term "Business Day"
------------
shall mean a day other than a Saturday, Sunday or a day on which commercial
banks in New York City are generally closed for business.
6.13. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) at the election of Seller, if any one or more of the
conditions to its obligation to close set forth in Section 4.2 of this
Agreement has not been fulfilled as of the Closing Date;
13
(ii) at the election of the Buyer, if any one or more
of the conditions to its obligation to close set forth in Section 4.1 of
this Agreement has not been fulfilled as of the Closing Date;
(iii) at the election of Buyer or Seller if, prior to
the Closing, the other has breached any material representation, warranty,
covenant or agreement contained in this Agreement;
(iv) at the election of Buyer, if any legal proceeding
is commenced or threatened by any governmental agency or other person
directed against the consummation of the Closing or any other material
transaction contemplated under this Agreement or the other Transaction
Documents and the Buyer, on the advice of legal counsel, reasonably and in
good faith deems it impractical or inadvisable to proceed in view of such
legal proceeding or threat thereof;
(v) at any time on or prior to the Closing Date, by
mutual written consent of Seller and Buyer; or
(vi) by any party after the Termination Date, unless
the Termination Date has been extended by the mutual written consent of
Seller and Buyer.
(b) If any party terminates this Agreement pursuant to this Section
6.13(a), all rights and obligations of the parties hereunder shall terminate
without any liability of any party hereto to any other party (except for any
liability of any party then in breach).
14
IN WITNESS WHEREOF, the undersigned have executed this Securities Purchase
Agreement as of the date first written above.
EARTHWEB INC.
By:_________________________
Name: Murray Hidary
Title: Executive Vice President
SELLER:
____________________________
Melissa Stover
ADDRESS: ___________________
___________________
___________________
15
EXHIBIT A
*** CONFIDENTIAL TREATMENT REQUESTED 62
Exhibit B
Employment Agreement
Exhibit C