EXHIBIT 4.1
EARTHWEB INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of March 19, 1999, by and among EarthWeb Inc., a
Delaware corporation (the "Company"), and the persons listed on the signature
pages hereof (the "Holders"), who are holders of the Company's Common Stock, par
value $.01 per share ("Common Stock").
PREAMBLE
The Company desires to extend registration rights to the Holders.
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein, the Company and the Holders agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms shall
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have the following meanings:
(a) "Commission" shall mean the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(c) "Holders" shall have the meaning set forth in the preamble.
(d) "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws.
(e) "Registrable Securities" shall mean all of the following to the
extent the same have not been sold to the public: (i) any and all shares of
Common Stock issued at any time during the term of this Agreement to the Holders
pursuant to the Securities Purchase Agreement (the "Purchase Agreement") dated
as of March 12, 1999 by and among the Company and the Holders, among other
parties (whether pursuant to the conversion of the Notes or directly at the
Closing Date); or (ii) stock issued in respect of the securities referred to in
(i) as a result of a stock split, stock dividend, reclassification, exchange,
recapitalization or combination. Notwithstanding the foregoing, Registrable
Securities shall not include otherwise Registrable Securities (A) that have been
sold by a Holder in a transaction in which his rights under this Agreement are
not properly assigned; or (B) (I) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, (II)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale or (III) the registration rights
associated with such securities have been terminated pursuant to Section 10 of
this Agreement.
(f) "Rule 144" shall mean Rule 144 under the Securities Act or any
successor or similar rule as may be enacted by the Commission from time to time,
but shall not include Rule 144A.
(g) "Rule 144A" shall mean Rule 144A under the Securities Act or any
successor or similar rule as may be enacted by the Commission from time to time,
but shall not include Rule 144.
(h) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
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(i) "Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
(j) "Shelf Registration Statement" means a shelf registration statement
of this Company pursuant to the provisions of Section 2 hereof filed with the
Commission which covers some or all of the Registrable Securities, as
applicable, and, at the option of the Company, such shares of capital stock (or
other securities of the Company) as the Company shall designate therein (the
"Company Shelf Securities") on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission,
amendment and supplements to such registration statement, including post-
effective amendments, in each case including the prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
As used herein, all capitalized terms not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement.
Section 2. Shelf Registration.
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(a) The Company shall file within 60 days of the date of this Agreement
a Shelf Registration Statement relating to the offer and sale of the Registrable
Securities identified on Schedule A as registrable under the Shelf Registration
Statement by the Holders and of the Company Shelf Securities as registrable
under the Shelf Registration Statement by the Company, if any, from time to time
in accordance with the methods of distribution elected by such Holders, or the
Company, as the case may be, and set forth in such Shelf Registration Statement.
Thereafter, the Company shall use commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective under the Act as promptly
as practicable; provided, however, that no Holder shall be entitled to have the
Registrable Securities held by him covered by such Shelf Registration unless
such Holder is in compliance with the terms of this Agreement.
(b) The Company shall use commercially reasonable efforts (i) to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be useable by the Holders until two (2) years
from its effective date or such shorter period that will terminate when all the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement, and (ii) after the
effectiveness of the Shelf Registration Statement, promptly upon the request of
any Holder to take any action reasonably necessary to register the sale of any
Registrable Securities of such Holder and to identify such Holder as a selling
security holder.
(c) In connection with any Shelf Registration Statement, the Company
shall:
(i) prepare and file with the Commission a Shelf Registration
Statement, on an appropriate form pursuant to Rule 415 of the Securities Act and
which the Company is eligible to use, with respect to such shares and use its
best efforts to cause such Shelf Registration statement to become and remain
effective as provided herein;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Act with respect to the
disposition of all shares covered by such registration statement, including such
amendments and supplements as may be necessary to reflect the intended method of
disposition from time to time of the prospective seller of such Registrable
Securities; and
(iii) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities or
blue sky or other applicable laws of such jurisdiction within the United States
as each prospective seller shall reasonably request, to enable such seller to
consummate the public sale or other disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided, however, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not at the time so qualified or to take any action that would
subject it to service of process in suits other than those arising out of the
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offer or sale of the Registrable Securities covered by such registration
statement in any jurisdiction where it is not at the time so subject.
(d) (i) Notwithstanding the other provisions of this Section 2, if at any
time the Company desires to effect a registered offering of securities (pursuant
to the Shelf Registration Statement or otherwise) and simultaneously therewith
any Holder desires to effect an underwritten offering pursuant to a Shelf
Registration Statement and if the underwriter, determines that (i) marketing
factors require a limitation of the total number of shares to be underwritten,
or (ii) the offering price per share would be reduced by the inclusion of the
securities of the Company, then the number of shares to be included in the
underwriting shall first be allocated among those holders of securities to be
registered pursuant to such Shelf Registration Statement under the terms of that
certain Registration Rights Agreement of the Company and the other parties
thereto dated February 2, 1999, then the remainder, if any, among all Holders
who indicated to the Company their decision to distribute any of their
Registrable Securities through such underwriters in proportion, as nearly as
practicable, to the respective numbers of shares of Registrable Securities which
such Holders indicated initially they wished to be included in the underwriting,
then the remainder, if any, to the Company.
(i) hidden text
(ii) Anything in this Agreement to the contrary notwithstanding, the
Holders shall not offer any Registrable Securities pursuant to the Shelf
Registration Statement if such offering would require the Company (i) to furnish
any financial statements other than as of the end of a fiscal quarter or (ii) to
furnish any audited financial statements other than as of the end of a fiscal
year. In addition to the foregoing, in the event of a proposed offering by a
Holder pursuant to the Shelf Registration Statement, at such time as any
registration statement would be required to include audited financial statement
as of a fiscal year-end, the Company may delay the dissemination of the required
notice and the taking of any action to effect a supplement to the Shelf
Registration Statement until such time as such audited financial statements are
available in the ordinary course of business.
(iii) No Holder shall offer any Registrable Securities pursuant to the
Shelf Registration Statement within 30 days after the effectiveness of any other
registration of the Company's capital stock (other than a registration statement
(A) on Form S-8 or any successor form to such Form or in connection with any
employee or director welfare, benefit or compensation plan, (B) on Form S-4 or
any successor form to such Form or in connection with an exchange offer or
merger transaction, (C) in connection with a rights offering exclusively to
existing holders of shares of Common Stock, (D) connection solely with an
offering to employees of the Company or its subsidiaries or (E) relating to a
transaction pursuant to Rule 145 of the Securities Act).
Section 3. Expenses of Registration. In addition to the fees and expenses
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contemplated by Section 4 hereof, and all expenses incurred in connection with
one registration pursuant to Section 2 hereof, including without limitation all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits of
the Company's financial statements incidental to or required by such
registration, shall be borne by the Company, except that the Company shall not
be required to pay underwriters' fees, discounts or commissions relating to
Registrable Securities sold for the account of any Holder or fees of legal
counsel for the Holders.
Section 4. Registration Procedures. In the case of each registration effected
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by the Company pursuant to this Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense the Company will:
(a) promptly prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act;
(b) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
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(c) use reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction, at the earliest possible moment;
(d) subject to Section 2(c)(iii), register or qualify such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as any Holder or underwriter reasonably requires;
(e) cause all Registrable Securities covered by such registrations to be
listed on each securities exchange, including NASDAQ, on which similar
securities issued by the Company are then listed;
(f) cause its accountants to issue to the underwriter, if any, or the
Holders, if there is no underwriter, comfort letters and updates thereof, in
customary form and covering matters of the type customarily covered in such
letters with respect to underwritten offerings;
(g) cause its counsel to issue to the underwriter, if any, or to the
Holders, if there is no underwriter, opinions in customary form and covering
matters of the type customarily covered in such opinions with respect to
underwritten offerings;
(h) enter into such customary agreements (including underwriting agreements
in customary form);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) immediately notify each Holder, at any time a prospectus covered by
such registration statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and
(k) take such other actions as shall be reasonably requested by any Holder.
Section 5. Indemnification.
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(a) In the event of a registration, qualification or compliance of any of
the Registrable Securities under the Securities Act pursuant to Section 2, the
Company will indemnify and hold harmless each Holder of such Registrable
Securities thereunder, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such Holder,
underwriter or controlling person may become subject under the Securities Act,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, any offering circular or other offering document or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities law or
rule or regulation promulgated under the Securities Act or any state securities
law applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any reasonable legal and any
other expenses incurred in connection with investigating, defending or settling
any such
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claim, loss, damage, liability or action; provided, that, notwithstanding the
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foregoing, the Company will not be liable in any such case to the extent that
any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by an instrument duly executed by such Holder or underwriter
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable to such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company and each underwriter within the meaning of the Securities
Act, and each other Holder, each of such other Holder's officers, directors and
partners and each person controlling such other Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other offering document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other offering document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder specifically for use therein; provided, however, the total amount for
which any Holder, its officers, directors and partners, and any person
controlling such Holder, shall be liable under this Section 5(b) shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of shares sold
by such Holder under such registration statement bears to the total public
offering price of all securities sold thereunder but not to exceed, in any
event, the aggregate proceeds received by such Holder from the sale of
Registrable Securities sold by such Holder in such registration, qualification
or compliance.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claims as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
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Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. The Indemnifying Party shall not be liable to indemnify
any Indemnified Party for any settlement of any such action effected without the
Indemnifying Party's consent. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
(d) Notwithstanding the foregoing, to the extent that the provisions on
indemnification contained in the underwriting agreements entered into among the
selling Holders, the Company and the underwriters in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall be controlling as to the
Registrable Securities included in the public offering.
(e) If the indemnification provided for in this Section 5 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other hand in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the
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Indemnifying Party and the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, the amount
any Holder shall be obligated to contribute pursuant to this Section 5(e) shall
be limited to an amount equal to the proceeds to such Holder of the Registrable
Securities sold pursuant to the registration statement which gives rise to such
obligation to contribute.
(f) The indemnification provided by this Section 5 shall be a continuing
right to indemnification and shall survive the registration and sale of any
securities by any definition entitled to indemnification hereunder and the
expiration or termination of this Agreement.
Section 6. Lockup Agreement. In consideration for the Company agreeing to its
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obligations under this Agreement, each Holder agrees in connection with any
underwritten registration of the Company's securities upon the request of the
Company and the underwriters managing the underwritten offering of the Company's
securities, not to publicly sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of any Registrable Securities (other
than those included in the registration) without the prior written consent of
the Company and such underwriters for such period of time from the effective
date of such registration as the Company and the underwriters may specify (the
"Lock Up"); provided that for any such underwritten registration in which the
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Holders do not participate, the Lock Up applicable to them shall be for no more
than thirty days.
Section 7. Information by Holder. The Holder or Holders of Registrable
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Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
reasonably required in connection with any registration' referred to herein.
Section 8. Sales. (a) With a view to making available to Holders of
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Registrable Securities the benefits of certain rules and regulations of the
Commission which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees at all times prior to the termination
of this Agreement:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 and Rule 144A;
(ii) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each Holder so long as such Holder owns any
Registrable Securities forthwith, upon written request, a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act (to the extent that it is then subject
to any such reporting requirements), a copy of the most recent annual and
quarterly report of the Company, and such other reports and documents filed by
the Company under the Exchange Act as may be reasonably requested by such Holder
in connection with availing the Holder of any rule or regulation of the
Commission permitting the selling of such securities without registration.
(b) Each Holder hereby agrees that any and all sales made by such
Holder, whether pursuant to Section 2 hereof, Rule 144 or any other
exemption from the registration requirements of the Securities Act,
shall not exceed, in the aggregate with all other Holders in any
calendar quarter of the Company, that number of shares set forth on
Schedule A hereto with respect to such calendar quarter; provided,
that in the event the Holders are unable to sell any shares saleable
during a calendar quarter pursuant to Schedule A due to the actions
of the Company (including subsection 2(d)(iii), Section 6 and
subsection 11(d) hereunder), such shares shall be deemed saleable in
the immediately succeeding calendar quarter, in addition to any
other shares saleable in such quarter pursuant to Schedule A. In
addition, all sales made by any Holder shall only be effected
through X.X. Xxxxxx & Company or such other
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underwriter which makes a market in the Common Stock which may be
designated by the Company. Furthermore, Schedule A shall be amended
to reflect any stock splits or other similar corporate events.
Section 9. Transfer of Registration Rights. The rights to cause the Company to
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register Registrable Securities of a Holder and keep information available
granted to a Holder by the Company under Section 2, may be assigned by a Holder
to any partner or shareholder of such Holder, to one or more affiliated
partnerships managed by such Holder, any other Holder, to any "Affiliate" of the
Holder; or to a transferee or assignee who receives at least 20% of the
Registrable Securities held by such Holder; provided that the Company is given
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written notice by the Holder at the time of or within a reasonable time after
said transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, and that said transferee or assignee agrees in writing to be
bound by the terms and provisions of this Agreement as if an original signatory
thereto.
Section 10. Termination of Rights. This Agreement shall terminate at 5:00 p.m.
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Eastern time on March 18, 2001.
Section 11. Miscellaneous.
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(a) Amendments. This Agreement constitutes the entire agreement of the
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parties within respect to the subject matter hereof and may be amended or
modified only by a writing signed by the Company and the Holders. The Holders
hereby consent to future amendments to this Agreement that permit future
investors to be made parties hereto and to become Holders of Registrable
Securities.
(b) Counterparts. This Agreement may be executed in any number of
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counterparts, all of which shall constitute a single instrument.
(c) Notices, Etc. All notices and other communications required or
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permitted hereunder shall be in writing and may be sent initially by facsimile
transmission and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (i) if to a
Holder, at such Holder's address set forth on the books of the Company, or at
such other address as such Holder shall have furnished to the Company in
writing, or (ii) if to any other holder of any Registrable Securities, at such
address as such holder shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such securities who has so furnished an address to
the Company, or (iii) if to the Company, one copy should be sent to the
Company's current address at 0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other address as the Company shall have furnished to the Holders. All such
notices shall be effective and deemed duly given when received or when attempted
delivery is refused.
(d) Non-Public Information. Any other provisions of this agreement to
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the contrary notwithstanding, the Company's obligation to file a registration
statement, or cause such registration statement to become and remain effective,
shall be suspended for a period not to exceed 60 days (and for periods not
exceeding, in the aggregate, 120 days in any 24-month period) if there exists at
the time material non-public information relating to the Company which, in the
reasonable opinion of the Company, should not be disclosed.
(e) Severability. If any provision of this Agreement shall be held to
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be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
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(f) Governing Law. This Agreement shall be governed by and construed
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under the laws of the State of New York without regard to principles of conflict
of law.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
EARTHWEB INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Executive Vice President
Holders
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
ASCENT PARTNERS
/s/ Xxx Xxxxxxxxxx
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Name: Xxx Xxxxxxxxxx
Title: President
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