<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TMP WORLDWIDE INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3906555
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
</TABLE>
--------------------------
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 977-4200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
ANDREW J. MCKELVEY
CHAIRMAN OF THE BOARD AND CEO
TMP WORLDWIDE INC.
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 977-4200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
<TABLE>
<S> <C>
GREGG BERMAN, ESQ. DEANNA L. KIRKPATRICK, ESQ.
FULBRIGHT & JAWORSKI L.L.P. DAVIS POLK & WARDWELL
666 FIFTH AVENUE 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10103 NEW YORK, NEW YORK 10017
(212) 318-3000 (212) 450-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value per share 4,600,000 $131.00 $602,600,000 $159,086.40
</TABLE>
(1) The price per unit is estimated in accordance with Rule 457(c) under the
Securities Act of 1933, as amended, solely for the purpose of calculating
the registration fee and is $131.00, the average of the high and low prices
of the common stock of TMP Worldwide Inc. as reported by The Nasdaq Stock
Market on December 16, 1999.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED DECEMBER 20, 1999
4,000,000 SHARES
[LOGO]
COMMON STOCK
--------------
TMP WORLDWIDE INC. IS OFFERING 4,000,000 SHARES OF ITS COMMON STOCK.
-------------------
THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"TMPW." ON DECEMBER 16, 1999, THE LAST SALE PRICE OF THE COMMON STOCK WAS $130
PER SHARE.
-------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------- ------------- -----------
<S> <C> <C> <C>
PER SHARE..................................... $ $ $
TOTAL......................................... $ $ $
</TABLE>
TMP WORLDWIDE INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN
ADDITIONAL 600,000 SHARES OF COMMON STOCK TO COVER OVER-ALLOTMENTS.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES OF COMMON STOCK
TO PURCHASERS ON JANUARY , 2000.
-------------------
MORGAN STANLEY DEAN WITTER GOLDMAN, SACHS & CO. SALOMON SMITH BARNEY
DEUTSCHE BANC ALEX. BROWN PAINEWEBBER INCORPORATED U.S. BANCORP PIPER JAFFRAY
, 2000
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION) [INTERNATIONAL COVER PAGE]
ISSUED DECEMBER 20, 1999
4,000,000 SHARES
[LOGO]
COMMON STOCK
--------------
TMP WORLDWIDE INC. IS OFFERING 4,000,000 SHARES OF ITS COMMON STOCK.
-------------------
THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"TMPW." ON DECEMBER 16, 1999, THE LAST SALE PRICE OF THE COMMON STOCK WAS $130
PER SHARE.
-------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.
-------------------
PRICE $ A SHARE
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------- ------------- -----------
<S> <C> <C> <C>
PER SHARE..................................... $ $ $
TOTAL......................................... $ $ $
</TABLE>
TMP WORLDWIDE INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN
ADDITIONAL 600,000 SHARES OF COMMON STOCK TO COVER OVER-ALLOTMENTS.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES OF COMMON STOCK
TO PURCHASERS ON JANUARY , 2000.
-------------------
MORGAN STANLEY DEAN WITTER GOLDMAN SACHS INTERNATIONAL
SALOMON SMITH BARNEY INTERNATIONAL
DEUTSCHE BANK
PAINEWEBBER INTERNATIONAL
U.S. BANCORP PIPER JAFFRAY
, 2000
<PAGE>
Photo Page
A collage of pictures of the Monster.com(SM) home pages (U.S. and international
versions) will appear on the inside front cover.
A collage of stills from our Monster Talent Market promotion will appear on the
inside back cover.
A collage of stills from Monster.com(SM)'s recent advertising campaign will
appear on the outside back cover.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.................... 4
Special Note Regarding Forward-Looking
Information......................... 9
Risk Factors.......................... 9
Use of Proceeds....................... 16
Dividend Policy....................... 16
Price Range of Common Stock........... 16
Capitalization........................ 17
Selected Consolidated Financial
Information......................... 18
</TABLE>
<TABLE>
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
<CAPTION>
PAGE
--------
<S> <C>
Business.............................. 37
Material U.S. Federal Income Tax
Considerations for Non-U.S.
Holders............................. 48
Underwriters.......................... 51
Legal Matters......................... 53
Experts............................... 53
Where You Can Find More Information... 53
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. We are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. AS USED IN THIS
PROSPECTUS, "GROSS BILLINGS" REFERS TO BILLINGS FOR ADVERTISING PLACED ON THE
INTERNET, ON OUR CAREER WEB SITES, IN NEWSPAPERS AND IN TELEPHONE DIRECTORIES BY
OUR CLIENTS, AND ASSOCIATED FEES FOR RELATED SERVICES AND FEES FOR SEARCH AND
SELECTION AND TEMPORARY CONTRACTING SERVICES. WE EARN COMMISSIONS BASED ON A
PERCENTAGE OF THE BILLING FOR MEDIA ADVERTISING PURCHASED IN TRADITIONAL MEDIA
AS WELL AS ON THIRD PARTY WEB SITES AT A RATE ESTABLISHED BY THE RELATED
PUBLISHER AND ASSOCIATED FEES FOR RELATED SERVICES. AS A RESULT, THE TRENDS IN
OUR GROSS BILLINGS DIRECTLY AFFECT OUR COMMISSIONS AND FEES. ALL AMOUNTS
REFERRED TO BELOW REFLECT THE AMOUNTS DISCLOSED IN OUR SUPPLEMENTAL CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS AND OUR SUPPLEMENTAL CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED IN OUR CURRENT REPORT ON FORM 8-K DATED DECEMBER 1, 1999.
"WE," "US" AND "OUR," WHEN USED IN THIS PROSPECTUS, REFER TO TMP WORLDWIDE INC.
OUR COMPANY
We have built Monster.com(SM) (http://www.monster.com) into the Internet's
leading career destination portal. We are also one of the world's largest
recruitment advertising agencies and one of the world's largest executive search
and selection firms. In addition to offering these career solutions, we are the
world's largest yellow page advertising agency. We have more than 31,000
clients, including over 90 of the Fortune 100 and over 450 of the Fortune 500
companies.
Job seekers look to manage their careers through us by posting their resumes
on Monster.com(SM), by searching Monster.com's(SM) database of over 260,000 paid
job postings, either directly or through the use of customized job search
agents, and by utilizing our extensive career resources. In addition, employers,
who are our clients, look to us to help them find the right employee, whether
they are searching for an entry level candidate or a CEO, which we refer to as
our "intern to CEO" strategy. We believe the Internet offers a substantial
opportunity for us to grow our revenue. We believe our growth will primarily
come from strengthening our leadership position in the online recruitment
market, which is estimated by Forrester Research to grow from $105 million in
1998 to $1.7 billion in 2003, with additional revenue growth opportunities from
the $8 billion executive search and selection market, the $13 billion global
recruitment advertising market, the $130 billion temporary staffing market and
the more than $100 billion which third parties estimate corporations spend on
unassisted recruiting activities. Our strategies to address this opportunity are
to:
- continue to promote the Monster.com(SM) brand through online and
traditional advertising and select affiliations
- leverage our more than 5,100 client service, marketing and creative
personnel to expand Monster.com(SM)
- continue to pursue strategic acquisitions
OUR SERVICES
MONSTER.COM(SM). Monster.com(SM) (http://www.monster.com), the flagship of
our Internet properties, is the nucleus of our intern to CEO strategy. In
October 1999:
- Neilson I/Pro reported that Monster.com(SM) attracted more than 10 million
visitors who spent an average of over 14 minutes per visit
- Media Metrix reported that 4.3% of the U.S. Internet population visited
Monster.com(SM), reaching almost twice as many unique visitors as its
closest competitor, and that an average of 31.3 unique pages were viewed
by each visitor
4
<PAGE>
- Based on Media Metrix statistics, Monster.com(SM) reported a power ranking
of 134.6 (reach of 4.3 multiplied by average page views of 31.3), compared
to 37.7 for its closest competitor and 91.1 for its six closest
competitors combined
We believe that the power ranking is significant because, by taking into
account reach and page views, it indicates the products' recognition among and
usefulness to job seekers. Through Monster.com(SM), our clients have access to
over 2.0 million unique resumes of which 1.6 million are active, and our resume
database is growing by an average of more than 6,000 resumes daily. To attract
job seekers to Monster.com(SM), we continue to refine and refresh the site by
introducing value-added features. For example, we have 1.6 million job search
agents, which allow our job seekers to express their specific job preferences
and receive e-mail notification of job matches, and 5.0 million job seeker
accounts, which allow our job seekers to manage their careers online. We have
also recently introduced Monster Talent Market, which allows independent
professionals to offer their services to the highest bidder. We believe our
clients have recognized the value of online recruitment, as evidenced by the
more than 260,000 paid job postings currently on Monster.com(SM).
Although Monster.com(SM) had 1.0 million more unique visitors than its
nearest competitor in October 1999, as reported by Media Metrix, we continually
look for ways to drive and retain site traffic. To that end, in December 1999,
we entered into a content and marketing agreement with America Online, Inc.
whereby, for the payment of $100 million over four years, Monster.com(SM) will
be the exclusive provider for four years in the United States and Canada of
career search services to 21 million AOL users across seven AOL brands: AOL, AOL
Canada, Compuserve, ICQ, AOL.com, Netscape and Digital City. We also customize
Monster.com(SM), in both language and content, for other countries. Currently,
local versions of Monster.com(SM) operate in Canada, the United Kingdom, the
Netherlands, Australia, Belgium, France, Singapore and New Zealand. For the nine
months ended September 30, 1999, Monster.com(SM) generated approximately $66.9
million in gross billings and $66.2 million in commissions and fees. Our total
Internet gross billings and Internet commissions and fees for this period were
$93.7 million and $83.0 million, respectively, reflecting the inclusion of
amounts from Internet related services from our traditional recruitment and
yellow page advertising clients, as well as from searches for permanent
employees and temporary contracting services identified and screened through the
Internet, which were $8.5 million, $3.2 million, $4.0 million and $0.9 million,
respectively.
RECRUITMENT ADVERTISING. We prospect talent for our clients through
recruiting programs that sell, market and brand employers to job seekers
searching for entry level positions to positions paying up to $100,000,
annually. We provide a broad range of recruitment advertising services
including:
- planning and producing advertising campaigns
- media research, planning and buying in both traditional media and on the
Internet
- planning and executing on-campus recruitment programs
SEARCH AND SELECTION. We offer an advanced and comprehensive range of
search and selection services aimed at identifying the appropriate professional
or executive from mid-level to CEO for our clients. Executive search identifies
senior executives who typically earn in excess of $250,000 annually, while
selection identifies mid-level professionals or executives, who typically earn
between $70,000 and $150,000, annually. We entered the executive search field in
1998 because recruitment and online advertising traditionally did not target the
senior executive candidate. Our specialized search and selection services
include:
- identification of candidates
- competence measurement
- assessment of candidate/company cultural fit
5
<PAGE>
- transaction negotiation and closure
With the addition of our executive search services, we believe that we can now
accommodate all of our clients' employee recruitment needs. We also believe that
our search and selection services will help to broaden the universe of both job
seekers and employers who utilize Monster.com(SM).
YELLOW PAGE ADVERTISING. We develop yellow page marketing programs for
national accounts, which are clients who sell products or services in multiple
markets. The national segment of the U.S. yellow page advertising market was
approximately $1.9 billion in 1998. During the period of 1990 through 1998, the
market grew at a compound annual rate of approximately 6.2%. Yellow page
advertising is a complex process involving the creation of effective imagery and
message, and the development of media plans which evaluate approximately 7,000
yellow page directories, of which our larger accounts utilize over 2,000.
Coordinating the placement of advertisements in this number of directories
requires an extensive effort at the local level, and our yellow page sales,
marketing and customer service staff of approximately 850 people provides an
important competitive advantage in marketing and executing yellow page
advertising programs.
We take a proactive approach to yellow page advertising by undertaking
original research on the efficacy of the medium, and by working to quantify the
effectiveness of individual advertising campaigns. We also have a rigorous
quality assurance program designed to ensure client satisfaction. We believe
that this program has enabled us to maintain a yellow page client retention
rate, year to year, in excess of 90%.
For the year ended December 31, 1998 and the nine months ended
September 30, 1999, respectively, our gross billings were $1.7 billion and
$1.4 billion, total commissions and fees were $657.5 million and
$561.5 million, net income (loss) was $20.5 million and $(4.9) million and
EBITDA was $79.1 million and $32.6 million.
Our executive offices are located at 1633 Broadway, New York, New York
10019, our telephone number is (212) 977-4200 and our Internet address is
http://www.tmpw.com.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by TMP.................. 4,000,000
Common stock to be outstanding after this
offering................................... 44,604,263 shares
Use of proceeds.............................. Repayment of indebtedness and general
corporate purposes. See "Use of Proceeds."
Nasdaq National Market Symbol................ TMPW
</TABLE>
The number of shares of common stock to be outstanding after this offering
excludes 5,856,194 shares of common stock subject to outstanding stock options.
This number also assumes that the underwriters' over-allotment option to
purchase up to 600,000 shares will not be exercised. If the underwriters do
exercise this option in full there will be 45,204,263 shares of common stock
outstanding following this offering.
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Commissions & fees.......................................... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
---------- ---------- ---------- ---------- ----------
Operating expenses:
Salaries and related costs................................ 232,249 310,168 382,689 288,045 327,046
Office and general expenses............................... 115,191 152,824 190,204 136,639 173,053
Merger & integration costs................................ -- -- 22,412 9,577 46,262
Restructuring charges..................................... -- -- 3,543 -- 2,789
Amortization of intangibles............................... 4,732 6,866 10,185 7,394 8,564
Special compensation and special CEO bonus................ 52,019 1,500 1,250 1,125 --
---------- ---------- ---------- ---------- ----------
Total operating expenses.................................. 404,191 471,358 610,283 442,780 557,714
---------- ---------- ---------- ---------- ----------
Operating income (loss)................................... (5,152) 70,470 47,203 54,092 3,767
---------- ---------- ---------- ---------- ----------
Other expense:
Interest expense, net..................................... (14,358) (8,443) (9,828) (7,035) (6,272)
Other, net................................................ (370) 821 (2,042) (932) (851)
---------- ---------- ---------- ---------- ----------
Total other expense, net................................ (14,728) (7,622) (11,870) (7,967) (7,123)
---------- ---------- ---------- ---------- ----------
Income (loss) before provision for income taxes, minority
interests and equity in income (losses) of affiliates..... (19,880) 62,848 35,333 46,125 (3,356)
Provision for income taxes.................................. 11,058 20,565 14,367 16,637 1,154
---------- ---------- ---------- ---------- ----------
Income (loss) before minority interests and equity in income
(losses) of affiliates.................................... (30,938) 42,283 20,966 29,488 (4,510)
Minority interests.......................................... 1,017 296 28 (18) 107
Equity in income (losses) of affiliates..................... 114 (33) (396) (297) (300)
---------- ---------- ---------- ---------- ----------
Net income (loss)........................................... (31,841) 41,954 20,542 29,209 (4,917)
Preferred stock dividend and redemption premium............. (210) (123) -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917)
========== ========== ========== ========== ==========
Net income (loss) per common and Class B common share:
Basic....................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12)
========== ========== ========== ========== ==========
Diluted..................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12)
========== ========== ========== ========== ==========
Weighted average shares outstanding:
Basic....................................................... 30,954 36,333 38,736 38,696 39,611
Diluted..................................................... 30,954 36,954 39,639 39,802 39,611
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Current assets.............................................. $529,878 $ 947,206
Current liabilities......................................... 505,869 505,869
Total assets................................................ 883,684 1,301,012
Long-term debt, less current portion........................ 101,198 16,426
Total stockholders' equity.................................. 260,045 762,145
</TABLE>
- ------------------------------
(1) Adjusted to give effect to our sale of 4,000,000 shares of common stock at a
public offering price of $130.00 per share and the application of the net
proceeds as described in "Use of Proceeds."
7
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT NUMBER OF EMPLOYEES AND OFFICES)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Gross billings:
Internet.................................................. $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734
Recruitment advertising................................... 369,979 642,872 849,563 646,141 615,488
Search & selection........................................ 194,848 244,153 277,304 215,630 221,699
Temporary contracting..................................... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising................................... 466,230 497,848 520,129 406,349 413,692
---------- ---------- ---------- ---------- ----------
Total gross billings........................................ $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479
========== ========== ========== ========== ==========
Number of employees......................................... 3,910 5,651 6,278 6,270 6,412
Number of offices........................................... 161 213 254 254 247
</TABLE>
8
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes or incorporates forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can identify these forward-looking
statements by our use of the words "believes," "anticipates," "plans,"
"expects," "may," "will," "would," "intends," "estimates," and similar
expressions, whether in the negative or affirmative. We cannot guarantee that we
actually will achieve these plans, intentions or expectations. Actual results or
events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements we make. We have included important
factors in the cautionary statements in this prospectus, particularly under the
heading "Risk Factors," that we believe could cause our actual results to differ
materially from the forward-looking statements that we make. The forward-looking
statements do not reflect the potential impact of any future acquisitions,
mergers or dispositions. We do not assume any obligation to update any
forward-looking statement we make.
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.
WE MAY NOT BE ABLE TO MANAGE OUR GROWTH
Our business has grown rapidly in recent periods. As an example, we
completed 80 mergers and acquisitions from January 1, 1996 through October 31,
1999. We entered the executive search field in 1998 and we believe that our
recent acquisition of LAI Worldwide, Inc. has made us one of the largest
executive search firms in the world. This growth of our business has placed a
significant strain on our management and operations. Our expansion has resulted,
and is expected in the future to result, in substantial growth in the number of
our employees. In addition, this growth is expected to result in increased
responsibility for both existing and new management personnel and incremental
strain on our existing operations, financial and management information systems.
Our success depends to a significant extent on the ability of our executive
officers and other members of senior management to operate effectively both
independently and as a group. If we are not able to manage existing or
anticipated growth, our business, financial condition and operating results will
be materially adversely affected.
OUR SUCCESS DEPENDS ON THE VALUE OF OUR BRANDS, PARTICULARLY MONSTER.COM(SM)
Our success depends on our brands and their value. Our business would be
adversely affected if we were unable to adequately protect our brand names
particularly Monster.com(SM). We are also susceptible to others imitating our
products, particularly Monster.com(SM), and infringing our intellectual property
rights. We may not be able to successfully protect our intellectual property
rights, upon which we are materially dependent. In addition, the laws of many
foreign countries do not protect intellectual property rights to the same extent
as the laws of the United States. Imitation of our products, particularly
Monster.com(SM), or infringement of our intellectual property rights could
diminish the value of our brands or otherwise adversely affect our revenues.
WE DEPEND ON TRADITIONAL MEDIA
A substantial portion of our total commissions and fees comes from designing
and placing recruitment advertisements in traditional media such as newspapers
and trade publications. This business constituted approximately 27.0% and 24.0%
of our total commissions and fees for the year ended December 31, 1998 and the
nine months ended September 30, 1999, respectively. We also receive a
substantial portion of our commissions and fees from placing advertising in
yellow page directories. This business constituted approximately 16.2% and 14.2%
of total commissions and fees for the year ended December 31, 1998 and the nine
months ended September 30, 1999, respectively. We cannot assure you that the
total commissions
9
<PAGE>
and fees we receive in the future will equal the total commissions and fees
which we have received in the past.
In addition, new media, like the Internet, may cause yellow page directories
and other forms of traditional media to become less desirable forms of
advertising media. If we are not able to generate Internet advertising fees to
offset any decrease in commissions from traditional media, our business,
financial condition and operating results will be materially adversely affected.
WE FACE RISKS RELATING TO DEVELOPING TECHNOLOGY, INCLUDING THE INTERNET
The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require our continuous improvement in performance,
features and reliability of our Internet content, particularly in response to
competitive offerings. We cannot assure you that we will be successful in
responding quickly, cost effectively and sufficiently to these developments. In
addition, the widespread adoption of new Internet technologies or standards
could require us to make substantial expenditures to modify or adapt our Web
sites and services. This could affect our business, financial condition and
operating results. New Internet services or enhancements which we have offered
or may offer in the future may contain design flaws or other defects that could
require expensive modifications or result in a loss of client confidence. Any
disruption in Internet access or in the Internet generally could have a material
adverse effect on our business, financial condition and operating results.
WE ARE VULNERABLE TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS BROUGHT AGAINST
US BY OTHERS
Successful intellectual property infringement claims against us could result
in monetary liability or a material disruption in the conduct of our business.
We cannot be certain that our products, content and brand names do not or will
not infringe valid patents, copyrights or other intellectual property rights
held by third parties. We expect that infringement claims in our markets will
increase in number as more participants enter the markets. We may be subject to
legal proceedings and claims from time to time relating to the intellectual
property of others in the ordinary course of our business. We may incur
substantial expenses in defending against these third party infringement claims,
regardless of their merit.
COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS
Computer viruses may cause our systems to incur delays or other service
interruptions and could damage our reputation and have a material adverse effect
on our business, financial condition and operating results. The inadvertent
transmission of computer viruses could expose us to a material risk of loss or
litigation and possible liability. Moreover, if a computer virus affecting our
system is highly publicized, our reputation could be materially damaged and our
visitor traffic may decrease.
THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN
Use of the Internet by consumers is at an early stage of development, and
market acceptance of the Internet as a medium for information, entertainment,
commerce and advertising remains subject to a high level of uncertainty. Most of
our clients have only limited experience with the Internet as an advertising
medium and have not devoted a significant portion of their advertising budgets
to Internet-based advertising in the past. There can be no assurance that
advertisers will allocate or continue to allocate portions of their budgets to
Internet-based advertising. If Internet-based advertising is not widely accepted
by our clients, our business, financial condition and operating results,
including our expected rate of commissions and fees growth, will be materially
adversely affected. Although we generated Internet gross billings of $56.7
million and commissions and fees of $50.2 million for the year ended
December 31, 1998 and Internet gross billings of $93.7 million and commissions
and fees of $82.9 million for the nine months
10
<PAGE>
ended September 30, 1999, we cannot assure you that we will continue to generate
substantial Internet-based commissions and fees in the future.
INTERNET USERS MAY NOT ACCEPT OUR INTERNET CONTENT
Our future growth depends in part on our ability to attract Internet users
who are valuable to our advertising clients. This in turn depends on our ability
to deliver original and compelling services to these Internet users. We cannot
assure you that our content will be attractive to enough Internet users to
generate material advertising commissions and fees. We also cannot assure you
that we will be able to anticipate, monitor and successfully respond to rapidly
changing consumer tastes and preferences to continue to attract a sufficient
number of Internet users to our Web sites.
Internet users can freely navigate and instantly switch among a large number
of Web sites, many of which offer original content. It is difficult for us to
distinguish our content and attract users. In addition, many other Web sites
offer very specific, highly targeted content. These sites could have greater
appeal than our sites to particular groups within our target audience.
WE FACE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY
We expect our growth to continue, in part, by acquiring businesses. The
success of this strategy depends upon several factors, including:
- the continued availability of financing;
- our ability to identify and acquire businesses on a cost-effective basis;
- our ability to integrate acquired personnel, operations, products and
technologies into our organization effectively; and
- our ability to retain and motivate key personnel and to retain the clients
of acquired firms.
We cannot assure you that financing for acquisitions will be available on
terms we find acceptable, or that we will be able to identify or consummate new
acquisitions, or manage and integrate our recent or future expansions
successfully. Any inability to do so would materially adversely affect our
business, financial condition and operating results. We also cannot assure you
that we will be able to sustain the rates of growth that we have experienced in
the past.
OUR MARKETS ARE HIGHLY COMPETITIVE
The markets for our services are highly competitive. They are characterized
by pressures to:
- reduce prices;
- incorporate new capabilities and technologies; and
- accelerate job completion schedules.
Furthermore, we face competition from a number of sources. These sources
include:
- national and regional advertising agencies;
- Internet portals;
- specialized and integrated marketing communication firms;
- traditional media companies;
- executive search firms; and
- search and selection firms.
In addition, many advertising agencies and publications have started either
to internally develop or acquire new media capabilities, including Internet. We
are also competing with established companies that provide integrated
specialized services like Web advertising services or Web site design, and are
11
<PAGE>
technologically proficient. Many of our competitors or potential competitors
have long operating histories, and some may have greater financial, management,
technological development, sales, marketing and other resources than we do. In
addition, our ability to maintain our existing clients and attract new clients
depends to a large degree on the quality of our services and our reputation
among our clients and potential clients.
We have no significant proprietary technology that would preclude or inhibit
competitors from entering the online advertising, executive search, recruitment
advertising, or yellow page advertising markets. We cannot assure you that
existing or future competitors will not develop or offer services and products
which provide significant performance, price, creative or other advantages over
our services. This could have a material adverse effect on our business,
financial condition and operating results.
OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER
Our quarterly operating results have fluctuated in the past and may
fluctuate in the future. These fluctuations are a result of a variety of
factors, including:
- the timing of acquisitions;
- the timing of yellow page directory closings, the largest number of which
currently occur in the third quarter; and
- the receipt of additional commissions, from yellow page publishers for
achieving a specified volume of advertising, which are typically reported
in the fourth quarter.
Generally our quarterly commissions and fees earned from recruitment
advertising tend to be highest in the first quarter and lowest in the fourth
quarter. Additionally, recruitment advertising commissions and fees tend to be
more cyclical than yellow page commissions and fees. To the extent that a
significant percentage of our commissions and fees are derived from recruitment
advertising, our operating results may be subject to increased cyclicality.
EFFECT OF GLOBAL ECONOMIC FLUCTUATIONS
Demand for our services is significantly affected by the general level of
economic activity in the regions and industries in which we operate. When
economic activity slows, many companies hire fewer permanent employees.
Therefore, a significant economic downturn, especially in regions or industries
where our operations are heavily concentrated, could have a material adverse
effect on our business, financial condition and operating results. Further, we
may face increased pricing pressures during such periods. There can be no
assurance that during these periods our results of operations will not be
adversely affected.
WE DEPEND ON OUR CONSULTANTS
The success of our executive search business depends upon our ability to
attract and retain consultants who possess the skills and experience necessary
to fulfill our clients' executive search needs. Competition for qualified
consultants is intense. We believe that we have been able to attract and retain
highly qualified, effective consultants as a result of our reputation and our
performance-based compensation system. Consultants have the potential to earn
substantial bonuses based on the amount of revenue they generate by:
- obtaining executive search assignments;
- executing search assignments; and
- assisting other consultants to obtain or complete executive search
assignments.
Bonuses represent a significant proportion of consultants' total
compensation. Any diminution of our reputation could impair our ability to
retain existing or attract additional qualified consultants. Our inability to
attract and retain qualified consultants could have a material adverse effect on
our executive search business, financial condition and operating results.
12
<PAGE>
OUR CONSULTANTS MAY DEPART WITH EXISTING EXECUTIVE SEARCH CLIENTS
The success of our executive search business depends upon the ability of our
consultants to develop and maintain strong, long-term relationships with
clients. Usually, one or two consultants have primary responsibility for a
client relationship. When a consultant leaves an executive search firm and joins
another, clients that have established relationships with the departing
consultant may move their business to the consultant's new employer. The loss of
one or more clients is more likely to occur if the departing consultant enjoys
widespread name recognition or has developed a reputation as a specialist in
executing searches in a specific industry or management function. Historically,
we have not experienced significant problems in this area. However, a failure to
retain our most effective consultants or maintain the quality of service to
which our clients are accustomed could have a material adverse effect on our
business, financial condition and operating results. Also, the ability of a
departing consultant to move business to his or her new employer could have a
material adverse effect on our business, financial condition and operating
results.
WE FACE RISKS MAINTAINING OUR PROFESSIONAL REPUTATION AND BRAND NAME
Our ability to secure new executive search engagements and hire qualified
professionals is highly dependent upon our overall reputation and brand name
recognition as well as the individual reputations of our professionals. We
obtain a majority of our new engagements from existing clients or from referrals
by existing clients. Therefore, the dissatisfaction of any client could have a
disproportionate, adverse impact on our ability to secure new engagements. Any
factor that diminishes our reputation or the reputation of any of our personnel
could make it more difficult for us to compete successfully for both new
engagements and qualified consultants. This could have an adverse effect on our
executive search business, financial condition and operating results.
WE FACE RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS
Either by agreement with clients or for marketing or client relationship
purposes, executive search firms frequently refrain, for a specified period of
time, from recruiting certain employees of a client, and possibly other entities
affiliated with such client, when conducting executive searches on behalf of
other clients. This is known as a "blocking" arrangement. Blocking arrangements
generally remain in effect for one or two years following completion of an
assignment. The actual duration and scope of any blocking arrangement, including
whether it covers all operations of a client and its affiliates or only certain
divisions of a client, generally depends on such factors as:
- the length of the client relationship;
- the frequency with which the executive search firm has been engaged to
perform executive searches for the client; and
- the number of assignments the executive search firm has generated or
expects to generate from the client.
Some of our executive search clients are recognized as industry leaders and/or
employ a significant number of qualified executives who are potential candidates
for other companies in that client's industry. Blocking arrangements with a
client of this nature, or the awareness by a client's competitors of such an
arrangement, may make it difficult for us to obtain executive search assignments
from, or to fulfill executive search assignments for, competitors while
employees of that client may not be solicited. As our client base grows,
particularly in our targeted business sectors, blocking arrangements
increasingly may impede our growth or ability to attract and serve new clients.
This could have an adverse effect on our executive search business, results of
operations and financial condition.
13
<PAGE>
WE FACE RISKS RELATING TO OUR FOREIGN OPERATIONS
We conduct operations in various foreign countries, including Australia,
Belgium, Canada, France, Germany, Japan, the Netherlands, New Zealand,
Singapore, Spain and the United Kingdom. In 1998 and the nine months ended
September 30, 1999, approximately 44.0% and 46.0% of our total commissions and
fees were earned outside of the United States. Such amounts are collected in the
local currency. In addition, we generally pay operating expenses in the
corresponding local currency. Therefore, we are at risk for exchange rate
fluctuations between such local currencies and the dollar. We do not conduct any
significant hedging activities.
We are also subject to taxation in foreign jurisdictions. In addition,
transactions between us and our foreign subsidiaries may be subject to United
States and foreign withholding taxes. Applicable tax rates in foreign
jurisdictions differ from those of the United States, and change periodically.
The extent, if any, to which we will receive credit in the United States for
taxes we pay in foreign jurisdictions will depend upon the application of
limitations set forth in the Internal Revenue Code of 1986, as well as the
provisions of any tax treaties which may exist between the United States and
such foreign jurisdictions.
Other risks inherent in transacting foreign operations include changes in
applicable laws and regulatory requirements, tariffs and other trade barriers
and political instability.
WE DEPEND ON OUR KEY PERSONNEL
Our continued success will depend to a significant extent on our senior
management, including Andrew J. McKelvey, our Chairman of the Board and CEO. The
loss of the services of Mr. McKelvey or of one or more key employees could have
a material adverse effect on our business, financial condition and operating
results. In addition, if one or more key employees join a competitor or form a
competing company, the resulting loss of existing or potential clients could
have a material adverse effect on our business, financial condition and
operating results. If we were to lose a key employee, we cannot assure you that
we would be able to prevent the unauthorized disclosure or use of our
procedures, practices, new product development or client lists.
WE ARE CONTROLLED BY A PRINCIPAL STOCKHOLDER
Following completion of this offering, Andrew J. McKelvey will beneficially
own all of our outstanding Class B common stock and 10,944,580 shares of our
common stock, which together represent approximately 53% of the combined voting
power of all classes of our voting stock. Mr. McKelvey can direct the election
of all of the members of our board. He can also exercise a controlling influence
over our business and affairs. This includes any determinations with respect to
mergers or other business combinations, the acquisition or disposition of our
assets, whether or not we incur indebtedness, the issuance of any additional
common stock or other equity securities and the payment of dividends with
respect to common stock. Similarly, Mr. McKelvey may determine matters submitted
to a vote of our stockholders without the consent of our other stockholders and
he has the power to prevent a change of control.
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT OUR ACQUISITION
Some of the provisions of our certificate of incorporation, bylaws and
Delaware law could, together or separately:
- discourage potential acquisition proposals;
- delay or prevent a change in control; and
- limit the price that investors might be willing to pay in the future for
shares of our common stock.
In particular, our board of directors may issue up to 800,000 shares of
preferred stock with rights and privileges that might be senior to our common
stock, without the consent of the holders of the common
14
<PAGE>
stock. Our certificate of incorporation and bylaws provide, among other things,
for advance notice of stockholder proposals and director nominations.
THERE MAY BE VOLATILITY IN OUR STOCK PRICE
The market for our common stock has, from time to time, experienced extreme
price and volume fluctuations. Factors such as announcements of variations in
our quarterly financial results and fluctuations in advertising commissions and
fees, including the percentage of our commissions and fees derived from
Internet-based services and products could cause the market price of our common
stock to fluctuate significantly. Further, due to the volatility of the stock
market generally, the price of our common stock could fluctuate for reasons
unrelated to our operating performance.
The market price of our common stock is based in large part on professional
securities analysts' expectations that our business will continue to grow and
that we will achieve certain levels of net income. If our financial performance
in a particular quarter does not meet the expectations of securities analysts,
this may adversely affect the views of those securities analysts concerning our
growth potential and future financial performance. If the securities analysts
who regularly follow our common stock lower their ratings of our common stock or
lower their projections for our future growth and financial performance, the
market price of our common stock is likely to drop significantly.
WE FACE RISKS ASSOCIATED WITH GOVERNMENT REGULATION
As an advertising agency which creates and places print and Internet
advertisements, we are subject to Sections 5 and 12 of the U.S. Federal Trade
Commission Act. These sections regulate advertising in all media, including the
Internet, and require advertisers and advertising agencies to have
substantiation for advertising claims before disseminating advertisements. The
FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair
advertising, and grants the Federal Trade Commission enforcement powers to
impose and seek civil penalties, consumer redress, injunctive relief and other
remedies upon advertisers and advertising agencies which disseminate prohibited
advertisements. Advertising agencies like us are subject to liability under the
FTC Act if the agency actively participated in creating the advertisement, and
knew or had reason to know that the advertising was false or deceptive.
In the event that any advertising that we have created is found to be false,
deceptive or misleading, the FTC Act could potentially subject us to liability.
The fact that the FTC has recently brought several actions charging deceptive
advertising via the Internet, and is actively seeking new cases involving
advertising via the Internet, indicates that the FTC Act could pose a somewhat
higher risk of liability to the advertising distributed via the Internet. The
FTC has never brought any actions against us.
In addition, we cannot assure you that other current or new government laws
and regulations, or the application of existing laws and regulations will not:
- subject us to significant liabilities;
- significantly dampen growth in Internet usage;
- prevent us from offering certain Internet content or services; or
- otherwise have a material adverse effect on our business, financial
condition and operating results.
WE HAVE NEVER PAID DIVIDENDS
We currently intend to retain earnings, if any, to support our growth
strategy. We do not anticipate paying dividends on our stock in the foreseeable
future. In addition, payment of dividends on our stock is restricted by our
financing agreement.
15
<PAGE>
USE OF PROCEEDS
Our net proceeds from the sale of the 4,000,000 shares of common stock,
assuming a public offering price of $130.00 per share, are estimated to be
$502.1 million, after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us.
We will use approximately $120 million of the net proceeds to repay debt
held by our primary lender, which was approximately $110 million at
September 30, 1999, including $25 million which is reflected as a reduction of
accounts receivable. The interest rate on the debt is the higher of (a) the
prime rate or (b) the Federal Funds rate less 0.5% or (c) LIBOR plus a margin
determined by the ratio of debt to EBITDA. At September 30, 1999, this margin
was 0.75%. At September 30, 1999, we were paying interest at the rate of
approximately 6.15%, annually. Our financing agreement provides for borrowings
of up to $185 million at any time outstanding and expires November 4, 2003. The
remaining net proceeds will be used for general corporate purposes, including
working capital. Pending such use, the net proceeds will be invested in short
term, interest bearing, investment grade securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our stock. We currently
anticipate that we will retain all future earnings to support our growth
strategy. Accordingly, we do not anticipate paying cash dividends on our stock
for the foreseeable future. Currently, our financing agreement restricts the
payment of dividends on our stock. The payment of any future dividends will be
at the discretion of our Board of Directors and will depend upon, among other
things, future earning, operations, capital requirements, our general financial
condition, contractual restrictions and general business conditions.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the ticker
symbol "TMPW." The following table sets forth for the periods indicated the high
and low reported closing sale prices per share for our common stock as reported
by Nasdaq.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 HIGH LOW
- ---------------------------- -------- --------
<S> <C> <C>
First Quarter........................................... $ 69.88 $39.00
Second Quarter.......................................... 89.38 43.00
Third Quarter........................................... 65.63 44.13
Fourth Quarter (through December 16, 1999).............. 131.25 50.00
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
- ---------------------------- -------- --------
First Quarter. $ 32.62 $ 21.25
<S> <C> <C>
Second Quarter.......................................... 34.88 25.50
Third Quarter........................................... 38.88 27.88
Fourth Quarter.......................................... 42.00 20.50
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 HIGH LOW
- ---------------------------- -------- --------
First Quarter. $ 21.00 $ 12.88
<S> <C> <C>
Second Quarter.......................................... 24.25 17.00
Third Quarter........................................... 25.00 20.00
Fourth Quarter.......................................... 28.50 15.00
</TABLE>
There were approximately 1,400 stockholders of record of our common stock on
December 16, 1999. On December 16, 1999, the last reported sale price of our
common stock as reported by Nasdaq was $130.00.
16
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1999,
(i) on a historical basis and (ii) on a historical basis, as adjusted, to give
effect to our sale of 4,000,000 shares of common stock at an assumed offering
price of $130.00 per share, assuming the underwriters' over-allotment option is
not exercised, and our application of the net proceeds. The table set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and the consolidated
financial statements and notes thereto incorporated by reference in this
prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------
AS
ACTUAL ADJUSTED
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt........................... $ 8,898 $ 8,898
======== ========
Long-term debt, less current portion........................ $101,198 $ 16,426
-------- --------
Stockholders' equity:
Preferred stock, $.001 par value.
Authorized--800,000 shares; issued and outstanding--none
actual and as adjusted.................................. -- --
Common stock, $.001 par value.
Authorized--200,000,000 shares; issued and outstanding--
actual 37,788,761 and as adjusted 41,788,761............ 38 42
Class B common stock, $.001 par value.
Authorized--39,000,000 shares; issued and outstanding--
actual 2,381,000 and as adjusted 2,381,000.............. 2 2
Additional paid-in capital................................ 300,413 802,509
Other comprehensive loss.................................. (4,363) (4,363)
Deficit................................................... (36,045) (36,045)
-------- --------
Total stockholders' equity.............................. 260,045 762,145
-------- --------
Total capitalization................................ $361,243 $778,571
======== ========
</TABLE>
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information with respect to
our financial position as of December 31, 1996, 1997 and 1998 and our results of
operations for each of the years ended December 31, 1996, 1997 and 1998 have
been derived from our audited consolidated financial statements which are
incorporated by reference in this prospectus. The selected consolidated
financial information with respect to the results of our operations for the nine
months ended September 30, 1998 and 1999 and with respect to our financial
position as of September 30, 1998 and 1999 have been derived from the unaudited
consolidated financial statements which, in the opinion of our management, have
been prepared on the same basis as the audited financial statements and include
all normal and recurring adjustments necessary for a fair presentation of the
information set forth therein. The results for the nine months ended
September 30, 1999 are not necessarily indicative of future results. The
selected consolidated financial information presented below should be read in
conjunction with our supplemental consolidated financial statements and our
supplemental consolidated condensed financial statements and notes thereto,
incorporated by reference in this prospectus, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this prospectus. The Other Data presented below has not been audited.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Commissions & fees........................................ $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
---------- ---------- ---------- ---------- ----------
Operating expenses:
Salaries and related costs.............................. 232,249 310,168 382,689 288,045 327,046
Office and general expenses............................. 115,191 152,824 190,204 136,639 173,053
Merger & integration costs.............................. -- -- 22,412 9,577 46,262
Restructuring charges................................... -- -- 3,543 -- 2,789
Amortization of intangibles............................. 4,732 6,866 10,185 7,394 8,564
Special compensation and special CEO bonus.............. 52,019(1) 1,500 1,250 1,125 --
---------- ---------- ---------- ---------- ----------
Total operating expenses................................ 404,191 471,358 610,283 442,780 557,714
---------- ---------- ---------- ---------- ----------
Operating income (loss)................................. (5,152) 70,470 47,203 54,092 3,767
---------- ---------- ---------- ---------- ----------
Other expense:
Interest expense, net................................... (14,358) (8,443) (9,828) (7,035) (6,272)
Other, net.............................................. (370) 821 (2,042) (932) (851)
---------- ---------- ---------- ---------- ----------
Total other expense, net.............................. (14,728) (7,622) (11,870) (7,967) (7,123)
---------- ---------- ---------- ---------- ----------
Income (loss) before provision for income taxes, minority
interests and equity in income (losses) of affiliates... (19,880) 62,848 35,333 46,125 (3,356)
Provision for income taxes................................ 11,058 20,565 14,367 16,637 1,154
---------- ---------- ---------- ---------- ----------
Income (loss) before minority interests and equity in
income (losses) of affiliates........................... (30,938) 42,283 20,966 29,488 (4,510)
Minority interests........................................ 1,017 296 28 (18) 107
Equity in income (losses) of affiliates................... 114 (33) (396) (297) (300)
---------- ---------- ---------- ---------- ----------
Net income (loss)......................................... (31,841) 41,954 20,542 29,209 (4,917)
Preferred stock dividend and redemption premium........... (210) (123) -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common and Class B common
stockholders............................................ $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917)
========== ========== ========== ========== ==========
Net income (loss) per common and Class B common share:
Basic..................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12)
========== ========== ========== ========== ==========
Diluted................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12)
========== ========== ========== ========== ==========
Weighted average shares outstanding:
Basic..................................................... 30,954 36,333 38,736 38,696 39,611
Diluted................................................... 30,954 36,954 39,639 39,802 39,611
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets.............................................. $321,761 $444,144 $475,082 $522,240 $529,878
Current liabilities......................................... 320,038 414,278 431,443 447,827 505,869
Total assets................................................ 475,519 721,066 802,535 825,312 883,684
Long-term debt, less current portion........................ 78,151 130,011 123,106 133,745 101,198
Minority interests.......................................... 3,705 431 509 431 --
Total stockholders' equity.................................. 65,257 166,445 228,750 231,639 260,045
</TABLE>
- ------------------------------
(1) For 1996, special compensation of $52.0 million consists of a non-cash,
non-recurring charge that reflects the value of shares issued in connection
with the acquisition of the minority interests in our predecessors because
the stockholders had received such shares for nominal or no consideration
and, accordingly, were not considered to have made a substantive investment
for their shares. The value of such shares was based on the per share
initial public offering price of $14.00 for our common stock.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT NUMBER OF EMPLOYEES AND OFFICES)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Gross billings:
Internet................................................ 6,939 20,553 56,666 36,077 93,734
Recruitment advertising................................. $ 369,979 $ 642,872 $ 849,563 $ 646,141 $ 615,488
Search & selection...................................... 194,848 244,153 277,304 215,630 221,699
Temporary contacting.................................... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising................................. 466,230 497,848 520,129 406,349 413,692
---------- ---------- ---------- ---------- ----------
Total gross billings...................................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479
========== ========== ========== ========== ==========
Number of employees....................................... 3,910 5,651 6,278 6,270 6,412
Number of offices......................................... 161 213 254 254 247
</TABLE>
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
A substantial part of our growth in recruitment advertising and yellow page
advertising has been achieved through acquisitions. For the period January 1,
1996 through September 30, 1999, we completed 58 acquisitions which were
accounted for under the purchase method and which had estimated annual gross
billings of approximately $662.7 million, based on annual gross billings for the
fiscal year immediately preceding the respective acquisition. Given the
significant number of acquisitions in each of the periods presented, the results
of operations from period to period may not necessarily be comparable. In
addition, for the period May 1, 1998 through October 31, 1999, we completed 20
mergers which were accounted for as poolings of interests.
Of the pooling of interests mergers, the seven completed prior to April 1,
1999 are Johnson, Smith & Knisely Inc. ("JSK"), TASA Holding AG ("TASA"),
Stackig, Inc. ("Stackig"), Recruitment Solutions Inc., Sunquest L.L.C. d.b.a.
The SMART Group and The Consulting Group (International) Limited ("TCG"), in
1998 (the "1998 Mergers"), and Morgan & Banks Limited ("M&B") in January 1999
(the "M&B Merger"). In connection with these mergers, we issued approximately
8.7 million shares of our common stock in exchange for all of the outstanding
common stock of these seven companies. From April 1, 1999 through June 30, 1999,
we completed pooling of interests mergers (the "Second Quarter 1999 Mergers"),
with six companies, Interquest, Pty. Limited ("Interquest"), LIDA
Advertising Inc. ("LIDA"), Maes & Lunau ("M&L"), IN2, Inc. ("IN2"), Lemming &
LeVan, Inc. ("L&L"), and Yellow Pages Unlimited, Inc. ("YPU"), (the "Second
Quarter 1999 Pooled Companies"). In connection with the Second Quarter 1999
Mergers we issued a total of approximately 0.9 million shares of our common
stock in exchange for all of the outstanding stock of the Second Quarter 1999
Pooled Companies. From July 1, 1999 through September 30, 1999, we completed
pooling of interests mergers (the "Third Quarter 1999 Mergers"),with the five
companies, Cameron-Newell Advertising, Inc. ("CNA"), Brook Street Bureau (QLD)
Pty Ltd ("Brook St."), LAI Worldwide, Inc. ("LAI"), Fox Advertising Inc. ("Fox")
and Lampen Group Limited ("Lampen") (the "Third Quarter 1999 Pooled Companies").
In connection with the Third Quarter 1999 Mergers we issued a total of
approximately 2.2 million shares of our common stock in exchange for all of the
outstanding stock of the Third Quarter 1999 Pooled Companies. Furthermore, from
October 1, 1999 through November 19, 1999, we completed mergers with the two
companies listed below (the "Fourth Quarter 1999 Pooled Companies"), which
provided for the exchange of all of the outstanding stock of such companies for
a total of 758,613 shares of our common stock and which were accounted for as
poolings of interests (the "Fourth Quarter 1999 Mergers").
<TABLE>
<CAPTION>
NATURE OF REGION OF NUMBER OF TMP
ENTITY OPERATIONS OPERATIONS ACQUISITION DATE SHARES ISSUED
- ------ ------------------ -------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Highland Search Group
L.L.C.
("Highland")....... Search & selection North America October 21, 1999 699,333
TMC S.r.l. ("Amrop
Italy")............ Search & selection Continental Europe October 27, 1999 59,280
</TABLE>
Accordingly, the following discussion reflects the foregoing mergers which
were accounted for as poolings of interest.
Gross billings refer to billings for advertising placed on the Internet, in
newspapers and telephone directories by our clients, and associated fees for
related services, fees earned for search and selection and related services, and
net fees from temporary contracting services. Gross billings for recruitment
advertising and yellow page advertising are not included in our consolidated
financial statements, because they include a substantial amount of funds that
are collected from our clients but passed through to publishers
20
<PAGE>
for advertisements. However, the trends in gross billings in these businesses
directly impact the commissions and fees earned because, for recruitment and
yellow page advertising, we earn commissions based on a percentage of the media
advertising purchased at a rate established by the related publisher. We also
earn associated fees for related services. Publishers and third party Web sites
typically bill us for the advertising purchased on the website and we in turn
bill our clients for this amount. Generally, the payment terms with yellow page
clients require payment to us prior to the date payment is due to publishers.
The payment terms with recruitment advertising clients typically require payment
when payment is due to publishers. Historically, we have not experienced
substantial problems with unpaid accounts.
Commissions and fees related to our Internet business are derived from:
- recruitment advertising and related services placed on the Internet,
primarily our own Web site, Monster.com(SM),
- searches for permanent employees and temporary contracting services
conducted through the Internet,
- services provided to our yellow page clients and
- the providing of interactive advertising services and technologies, which
allow advertisers to measure and track sales, repeat traffic and other key
statistics to enable such advertisers to greatly reduce costs, while
driving only the most qualified users to their websites.
For recruitment advertising placements in the U.S., publisher commissions
historically average 15% of recruitment advertising gross billings. We also earn
fees from related services such as campaign development and design, retention
and referral programs, brochures and other collateral services, research and
other creative and administrative services. Outside of the U.S., where,
collectively, we derive the majority of our recruitment advertising commissions
and fees, our commission rates for recruitment advertising vary, historically
ranging from approximately 10% in Australia to 15% in Canada and the United
Kingdom.
Through our search and selection services, we identify and screen candidates
for hiring by clients based on criteria established by such clients. We entered
the executive search business in 1998 by acquiring JSK, the 12th largest
executive search firm in the U.S. according to Kennedy Publications, an official
ranking service for the search industry, TASA, an international executive search
firm, both of which were accounted for as poolings of interests, and five
regional European firms, including TCG, whose acquisition was accounted for as a
pooling of interests. In the first quarter of 1999 we merged with M&B, the
largest search and selection firm in Australia, in a pooling of interests
transaction and acquired two European search and selection firms (one with
operations in eastern Europe and one in Belgium). In the second quarter of 1999,
in pooling of interests transactions, we merged with three companies with
search and selection operations, M&L in the Netherlands, L&L in the United
States and Interquest in Australia. In the third quarter of 1999, in a pooling
of interests transaction, we merged with LAI, the 5th largest executive search
firm in the U.S. (according to Hunt-Scanlon Publishing, Inc., a publication that
follows the executive search industry). In the fourth quarter of 1999, in
pooling of interests transactions, we merged with Highland, based in the United
States, and Amrop Italy. We provide executive search services on a retained
basis whereby we are generally paid a contractually agreed-to fee. In addition,
we expanded our temporary contracting services in Australia, New Zealand and the
United Kingdom with the additions of Brook St. and Lampen, which also have
selection operations in those regions. In general, we bill our temporary
contracting clients for the cost of the temporary contract employees plus a
margin for providing the service. Commissions and fees for temporary contracting
however are reported in our financial statements after deducting the costs of
the temporary contractors.
We design and execute yellow page advertising programs, receiving an
effective commission rate from directory publishers which historically
approximated 20% of yellow page gross billings. However, due to reductions in
commission rates by the publishers and higher discounts granted by us to
clients, the rate has
21
<PAGE>
declined and for 1999 is approximately 19% and is expected to decline to
approximately 18% by the middle of 2000. In general, publishers consider orders
renewed unless formally canceled. In addition to base commissions, certain
yellow pages publishers pay increased commissions for volume placement by
advertising agencies. We typically recognize this additional commission, if any,
in the fourth quarter when it is certain that such commission has been earned.
The amounts reported in the fourth quarters of 1998, 1997 and 1996 were
$0.9 million, $2.2 million and $3.5 million, respectively.
Internet commissions and fees increased from $6.9 million in 1996 to
$50.2 million in 1998 reflecting an increase in the acceptance of our Internet
products by existing and new clients and the effect of increased sales and
marketing activities. Recruitment advertising commissions and fees increased
from $76.6 million in 1996 to $177.8 million in 1998 as a result of acquisitions
made from January 1, 1996 through December 31, 1998 and which are included in
our financial statements using the purchase method of accounting from their
respective dates of acquisition. Search and selection commissions and fees grew
from $185.4 million in 1996 to $276.1 million in 1998 primarily as a result of
increased demand for these services by new and existing clients. Temporary
contracting commissions and fees increased from $29.2 million in 1996 to
$47.0 million in 1998 reflecting a greater demand for executive and information
technology temporary contract personnel. Yellow page advertising commissions and
fees increased from $100.9 million in 1996 to $106.5 million in 1998, as a
result of acquisitions made from January 1, 1996 through December 31, 1998 and
which are included in the financial statements using the purchase method of
accounting. We are continuously monitoring the marketplace for opportunities to
expand our presence in recruitment advertising on the Internet, search and
selection, temporary contracting and yellow page advertising, and intend to
continue our acquisition strategy to supplement our internal growth and the
expansion of our businesses.
Based on our consolidated results for the years ended December 31, 1998,
1997 and 1996, 44%, 42%, and 40%, respectively, of our consolidated commissions
and fees were attributable to clients outside the U.S.
Our total operating expenses have increased significantly since 1996
primarily as a result of acquisitions and added expenses to support gross
billings growth for our Internet and recruitment businesses and marketing for
our Internet business.
Salaries and related costs increased $150.5 million to $382.7 million for
the year ended December 31, 1998 from $232.2 million for the year ended
December 31, 1996, a 64.8% increase, supporting a $683.4 million or a 64.0%
increase in gross billings over the same period. When measured as a percent of
gross billings, salaries and related costs for the year ended December 31, 1998
were 21.9%, up slightly from 21.8% for the comparable 1996 period. Salaries and
related costs include total payroll and associated benefits as well as payroll
taxes, sales commissions, recruitment fees and training costs.
Office and general expenses increased $75.0 million to $190.2 million for
the year ended December 31, 1998 from $115.2 million for the year ended
December 31, 1996, a 65.1% increase. This increase is due primarily to increased
costs needed to support the increased gross billings, the expansion of
recruitment and search and selection offices through acquisitions in the U.S.
and foreign markets, and expansion of our infrastructure and marketing costs to
promote the growth of our Internet business. When measured as a percent of gross
billings, office and general expenses for the year ended December 31, 1998 were
10.9%, a slight increase from 10.8% for the comparable 1996 period. This cost
category includes expenses for office operations, business promotion, market
research, advertising, professional fees and fees paid to our primary lending
institution for its services in the processing and collection of payments for
accounts receivable, gains or losses from the sale of operating assets, and
costs associated with legal settlements.
Merger and integration costs are expenses incurred in connection with
business combinations accounted for under the pooling of interests method of
accounting. In general, these costs are comprised of transaction costs (such as
advisory, legal and accounting fees, printing costs and costs incurred for the
subsequent registration of shares in connection with the transactions), stay
bonuses, costs to eliminate
22
<PAGE>
redundant facilities and personnel, costs to integrate operations of the pooled
entities and acceleration of benefits and separation pay in accordance with
pre-existing contractual change in control provisions.
For the year ended December 31, 1998, we expensed merger and integration
costs of $22.4 million in connection with the 1998 Mergers and the M&B Merger.
These costs consist of (1) $11.9 million of non-cash employee stay bonuses,
(2) $1.5 million of stay bonuses paid as cash to key personnel of the 1998
Pooled Companies and (3) $9.0 million of transaction related costs, including
legal, accounting and advisory fees and the costs incurred for the subsequent
registration of shares issued in the mergers.
For the nine months ended September 30, 1999, we expensed merger and
integration costs of $46.3 million compared with $9.6 million for the same
period in 1998 an increase of $36.7 million or 383.1%. These costs are related
to the 1998 Mergers, the M&B Merger, the Second Quarter 1999 Mergers, and the
Third Quarter 1999 Mergers. The increase of $36.7 million primarily resulted
from the pooling of interests transactions that occurred in the quarter ended
September 30, 1999 and the planned integration of such companies. The increase
is due to: (1) $4.8 million for separation pay and accelerated vesting of
employee stock and stock option grants, both in accordance with pre-existing
contractual change in control provisions, (2) $7.8 million more of transaction
related costs, which include legal, accounting, printing and advisory fees and
the costs incurred for the subsequent registration of shares issued in the
transactions and (3) $25.2 million of office integration costs, which include
the closing of excess leased facilities, the write-off of fixed assets which
will not be used in the future and a reserve for the effect, after reduction for
related compensation, of uncollectible search fees recorded as a result of a
loss of executive search consultants, partially offset by $4.4 million less for
employee stay bonuses paid with our shares and options to certain key personnel
of the merged companies. Approximately $18.5 million of the $46.3 million are
non-cash charges. The after tax effect of these charges on diluted earnings per
share is $(0.73) and $(0.16) for the nine months ended September 30, 1999 and
1998, respectively. We expect to incur additional integration costs in
connection with the Third Quarter 1999 Mergers in future periods. These costs
will be primarily related to severance and will be recorded when the associated
integration plans are finalized. Furthermore, we will incur merger and
integration costs associated with the Fourth Quarter 1999 Mergers, including
amortization of the cost of 160,120 shares of our common stock that were issued
as stay bonuses to certain key employees of Highland and that will vest one year
from the date of grant.
Restructuring costs for the year ended December 31, 1998 were $3.5 million
or, on an after tax basis, $(0.05) per diluted share. These charges relate to
LAI's closing of its London office, and include the write-off of leasehold
improvements and fixed assets, severance benefits and costs for consolidation of
facilities related to the restructuring.
Amortization of intangibles includes amortization of acquisition related
charges, including the costs in excess of fair market value of net assets of
business acquisitions accounted for under the purchase method and capitalized
costs for non-compete arrangements with the principals of acquired companies.
This acquisition related amortization was $10.2 million, $6.9 million and
$4.7 million for the years ended December 31, 1998, 1997 and 1996, respectively
and $8.6 million and $7.4 million for the nine months ended September 30, 1999
and 1998, respectively.
The special CEO bonus for the years ended December 31, 1998 and 1997 of
$1.3 million and $1.5 million reflects a non-cash charge, recorded in compliance
with Staff Accounting Bulletin No. 79 ("SAB 79"), for a bonus mandated by Andrew
J. McKelvey's employment contract, even though such bonus was irrevocably
waived. The contractual obligation to pay such bonus was eliminated as of
November 1998. The special compensation for the year ended December 31, 1996,
reflects a non-cash, non-recurring charge of approximately $52.0 million
resulting from the issuance of approximately 3.6 million shares of our common
stock to stockholders of our predecessor companies in exchange for their shares
in those companies. This charge was incurred because these stockholders had
received such shares for nominal or no consideration as employees or as
management of such companies and, accordingly, were not considered to have made
substantive investments for their shares.
23
<PAGE>
Net interest expense includes interest: (i) on loans made by our primary
lender under our financing agreement with such lender, (ii) to certain vendors,
(iii) on capitalized lease obligations, (iv) on net amounts payable to the
holders of seller financed notes and (v) on a term loan related to the purchase
of certain transportation equipment. In addition, 1996 net interest expense
includes a non-recurring charge of approximately $2.6 million to reflect, upon
exercise of the warrant issued in connection with our financing agreement, the
difference between the value of the stock issued at the initial public offering
price of $14.00 per share and the value recorded for the warrant when it was
originally issued.
RESULTS OF OPERATIONS
The following table sets forth our gross billings, commissions and fees,
commissions and fees as a percentage of gross billings, EBITDA and cash flow
information.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
GROSS BILLINGS:
Internet(1)........................ $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734
Recruitment advertising............ 369,979 642,872 849,563 646,141 615,488
Search & selection................. 194,848 244,153 277,304 215,630 221,699
Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising............ 466,230 497,848 520,129 406,349 413,692
---------- ---------- ---------- ---------- ----------
Total billings..................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479
========== ========== ========== ========== ==========
COMMISSIONS & FEES:
Internet(1)........................ $ 6,939 $ 19,470 $ 50,158 $ 32,688 $ 82,952
Recruitment advertising............ 76,601 134,291 177,774 133,858 134,928
Search & selection................. 185,406 242,841 276,110 214,765 219,213
Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising............ 100,883 103,941 106,455 82,534 79,522
---------- ---------- ---------- ---------- ----------
Total commissions & fees........... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
========== ========== ========== ========== ==========
COMMISSIONS AND FEES AS A
PERCENTAGE OF GROSS BILLINGS:
Internet........................... 100.0% 94.7% 88.5% 90.6% 88.5%
Recruitment advertising............ 20.7 20.9 20.9 20.7 21.9
Search & selection................. 95.2 99.5 99.6 99.6 98.9
Temporary contracting.............. 100.0 100.0 100.0 100.0 100.0
Yellow page advertising............ 21.6 20.9 20.5 20.3 19.2
Total commissions & fees........... 37.4 37.5 37.6 37.2 40.4
EBITDA(3).......................... $ 7,755 $ 92,420 $ 79,075 $ 77,492 $ 32,591
Cash provided by operating
activities....................... 37,097 51,251 63,617 32,686 55,846
Cash used in investing
activities....................... (46,401) (89,726) (66,519) (79,985) (31,952)
Cash provided by (used in)
financing activities............. 13,368 65,524 20,093 32,680 (28,782)
Effect of exchange rate changes on
cash............................. (151) (298) (7) (56) (648)
</TABLE>
- ------------------------
(1) Represents fees earned in connection with recruitment advertising placed on
the Internet, primarily Monster.com(SM), searches for permanent employees
and temporary contracting services conducted through the Internet, Internet
services provided to yellow page clients and from providing interactive
advertising services and technologies.
(2) Amounts for temporary contracting are reported after deducting the costs of
the temporary contractors.
(3) Earnings before interest, income taxes, depreciation and amortization
("EBITDA") is presented to provide additional information about our ability
to meet our future debt service, capital expenditures
24
<PAGE>
and working capital requirements and is one of the measures which determines
our ability to borrow under our credit facility. EBITDA should not be
considered in isolation or as a substitute for operating income, cash flows
from operating activities and other income or cash flow statement data
prepared in accordance with generally accepted accounting principles or as a
measure of our profitability or liquidity.
EBITDA for the indicated periods is calculated as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net income (loss)........................... $(31,841) $41,954 $20,542 $29,209 $(4,917)
Interest expense, net....................... 14,358 8,443 9,828 7,035 6,272
Income tax expense.......................... 11,058 20,565 14,367 16,637 1,154
Depreciation and amortization............... 14,180 21,458 34,338 24,611 30,082
-------- ------- ------- ------- -------
EBITDA...................................... $ 7,755 $92,420 $79,075 $77,492 $32,591
======== ======= ======= ======= =======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
Gross billings for the nine months ended September 30, 1999 were
$1,389.5 million, a net increase of $52.3 million or 3.9% from $1,337.2 million
for the nine months ended September 30, 1998. Commissions and fees for the nine
months ended September 30, 1999 were $561.5 million, an increase of
$64.6 million or 13.0% from $496.9 million in the first nine months of 1998.
Internet commissions and fees for the nine months ended September 30, 1999 were
$83.0 million, an increase of 153.8% or $50.3 million as compared with
$32.7 million for the nine months ended September 30, 1998. This increase in
Internet commissions and fees is due to: (i) an increasing acceptance of our
Internet services and products from existing clients, new clients and Internet
users, (ii) the benefits of Monster.com(SM)'s marketing campaign,
(iii) increases in the services and content available on our Websites,
(iv) expansion into certain European markets and (v) price increases on certain
products. Recruitment commissions and fees were $134.9 million for the nine
months ended September 30, 1999 compared with $133.9 million for the nine months
ended September 30, 1998, an increase of $1.0 million or 0.8% due primarily to
lower discounts to clients and increased ancillary services in North America
offset, in part, by a loss of business in the Asia\Pacific Region which was
ameliorated by an increase in business in Europe. Search and selection
commissions and fees were $219.2 million, an increase of $4.4 million or 2.1%
from $214.8 million for the comparable nine months of 1998, due primarily to
acquisitions and growth in Continental Europe offset by a decline in executive
search due to a loss of consultants, as anticipated, at LAI and TASA, which
resulted from the merger and integration of these companies. Temporary
contracting commissions and fees were $44.9 million, up $11.9 million or 35.8%
from $33.0 million for the period ended September 30, 1998. Our temporary
contracting operations are primarily conducted in Australia and New Zealand. The
35.8% increase reflects an increase in the number of contractors placed,
particularly information technology personnel and executives, which have higher
margins than general and support staff. Yellow page commissions and fees were
$79.5 million for the nine months ended September 30, 1999, a decrease of
$3.0 million or 3.6% from $82.5 million in the first nine months of 1998
primarily due to increased discounts to clients and lower commissions paid by
publishers offset, in part by higher gross billings from internal growth and
acquisitions.
Operating expenses for the nine months ended September 30, 1999 were
$557.7 million compared with $442.8 million for the same period in 1998. The
increase of $114.9 million or 25.9% is due to an increase of $36.7 million in
merger and integration costs related to mergers accounted for as poolings of
interests, acquisitions accounted for as purchases, higher operating and
marketing costs to support our expanding Internet operations and $2.8 million in
restructuring expenses resulting from the closings of LAI's Hong Kong and London
offices.
25
<PAGE>
Salaries and related costs for the nine months ended September 30, 1999 were
$327.0 million or 58.2% of total commissions and fees, compared with
$288.0 million or 58.0% of total commissions and fees for the same period in
1998. The increase of $39.0 million or 13.5% is primarily due to increased staff
for Internet operations additions and acquisitions in search and selection.
Office and general expenses for the nine months ended September 30, 1999
were $173.1 million or 30.8% of total commissions and fees, compared with
$136.6 million or 27.5% of commissions and fees for the same period in 1998. The
increase of $36.5 million or 26.6% is primarily due to acquisitions and higher
costs for our Internet operations, partially offset by reductions in expenses
for the yellow page advertising and recruitment advertising businesses, due to
improved efficiencies. Included in the increase for Internet was $15.9 million
more in marketing costs for Monster.com and $13.8 million for search related
Internet services at LAIcompass and Highland. The higher ratio of 30.8% compared
to 27.5% is due primarily to marketing costs for search related Internet
services, a slight increase in costs at LAI and a decline in commissions and
fees.
Merger and integration costs for the nine months ended September 30, 1999
were $46.3 million compared with $9.6 million for the same period in 1998 an
increase of $36.7 million or 383.1%. This increase primarily resulted from the
pooling of interests transactions that occurred in the quarter ended
September 30, 1999 and the planned integration of such companies and is due to:
(1) $4.8 million for separation pay and accelerated vesting of employee stock
and stock option grants, both in accordance with pre-existing contractual change
in control provisions, (2) $7.8 million more of transaction related costs, which
include legal, accounting, printing and advisory fees and the costs incurred for
the subsequent registration of shares issued in the transactions and
(3) $25.2 million of office integration costs, which include the closing of
excess leased facilities, the write-off of fixed assets which will not be used
in the future and a reserve for the effect, after reduction for related
compensation, of uncollectible search fees recorded as a result of a loss of
executive search consultants, partially offset by $4.4 million less for employee
stay bonuses paid with our shares and options to certain key personnel of the
merged companies. Approximately $18.5 million of the $46.3 million are non-cash
charges. The after tax effect of these charges on diluted earnings per share is
$(0.73) and $(0.16) for the nine months ended September 30, 1999 and 1998,
respectively.
Restructuring charges for the nine months ended September 30, 1999 were
$2.8 million or, on an after tax basis, $(0.04) per diluted share. These charges
relate to LAI's closing of its London and Hong Kong offices, and include
$0.5 million for the write-off of leasehold improvements and fixed assets,
$1.3 million for severance benefits payable to 24 employees and $1.0 million for
consolidation of facilities related to the restructuring.
As a result of the above, operating income for the nine months ended
September 30, 1999 decreased $50.3 million or 91.7% to $3.8 million from
$54.1 million for the comparable period last year.
Net interest expense for the nine months ended September 30, 1999 was
$6.3 million, a decrease of $0.7 million or 10.8% from $7.0 million for the same
period in 1998, reflecting lower interest rates and borrowing costs resulting
from the amended and restated financing agreement entered into by the Company on
November 5, 1998, partially offset by increased borrowings.
Taxes on income for the nine months ended September 30, 1999 were
$1.2 million on a $2.7 million pretax loss, resulting in an effective tax rate
of (43.4)% compared with a tax expense of $16.6 million on a $46.1 million
pretax profit, resulting in an effective tax rate of 36.1% for the same period
last year. The negative effective tax rate for the 1999 period is caused by
expenses that are not tax deductible. Such expenses are primarily related to
merger costs from pooling of interests transactions and amortization of
intangible assets. For both periods the effective tax rate is benefited by
profits from Highland which were not taxed at the corporate level prior to our
merger.
26
<PAGE>
As a result of the above, the net loss applicable to common and Class B
common stockholders for the nine months ended September 30, 1999 was $(0.12) per
diluted share, a decrease of $0.85 per diluted share or 116.4% from the $0.73
per diluted share for the comparable 1998 period.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
Gross billings for the year ended December 31, 1998 were $1,750.7 million, a
$304.0 million or 21.0% increase when compared to gross billings of
$1,446.7 million for the year ended December 31, 1997. This increase in gross
billings resulted primarily from acquisitions in recruitment advertising, growth
in our Internet business and growth in our temporary contracting business.
Total commissions and fees for the year ended December 31, 1998 were
$657.5 million, an increase of $115.7 million or 21.3% from $541.8 million for
the year ended December 31, 1997. Internet commissions and fees for the year
ended December 31, 1998 were $50.2 million, an increase of 157.6% or
$30.7 million from $19.5 million for the year ended December 31, 1997. The
increase in Internet commissions and fees is due to (i) an increasing acceptance
of our Internet services and products from existing clients and Internet users,
(ii) the benefits of Monster.com(SM)'s marketing campaign, (iii) increases in
the service and content available on our Websites, (iv) expansion into certain
European markets and (v) price increases on certain products. Recruitment
advertising commissions and fees were $177.8 million for the year ended
December 31, 1998 compared with $134.3 million for the year ended December 31,
1997, an increase of $43.5 million or 32.4%. This increase was primarily due to
acquisitions, which contributed approximately $25.1 million, and approximately
$21.4 million from increased client spending and new clients partially offset by
client losses and a decrease in foreign currency translation rates, which had a
negative effect of approximately $3.0 million. Search and selection commissions
and fees were $276.1 million compared with $242.8 million for the year ended
December 31, 1997, an increase of $33.3 million or 13.7%, due primarily to
acquisitions and increased business from existing clients and new clients.
Temporary contracting commissions and fees increased to $47.0 million from
$41.3 million, an increase of $5.7 million or 13.8%. This increase is primarily
due to a greater number of temporary contract workers placed during 1998 as
compared with the prior period, and reflects growth in the executive temporary
contracting business, and to a lesser extent growth for clerical and support
staff. Yellow page commissions and fees were $106.5 million for the year ended
December 31, 1998 compared with $103.9 million for the year ended December 31,
1997, an increase of 2.4% or $2.6 million due primarily to acquisitions.
Total operating expenses for the year ended December 31, 1998 were
$610.3 million, compared with $471.4 million for 1997. The increase of
$138.9 million or 29.5% is due primarily to acquisitions and internal growth,
together with the addition of $22.4 million for merger and integration costs
related to pooling of interests transactions and $3.5 million in restructuring
charges for the closing of LAI's London, England office.
Salaries and related costs for the year ended December 31, 1998 were
$382.7 million or 58.2% of total commissions and fees, compared with
$310.2 million or 57.2% of total commissions and fees for the same period in
1997, representing an increase of $72.5 million or 23.4%. This increase reflects
acquisitions in search and selection and recruitment advertising and growth in
Internet operations.
Office and general expenses increased $37.4 million to $190.2 million for
the year ended December 31, 1998, as compared with $152.8 million for the prior
period primarily due to acquisitions and added marketing and other expenses to
grow our Internet businesses. As a percent of total commissions and fees, office
and general expenses increased to 28.9% for the year ended December 31, 1998
from 28.2% for the year ended December 31, 1997.
Restructuring charges for the year ended December 31, 1998 were
$3.5 million or, on an after tax basis, $(0.05) per diluted share and relate to
LAI's plan to close its international office in London, England. These charges
include $1.1 million for severance, and $2.4 million for the write-off of
leasehold improvements and other costs to close these facilities.
27
<PAGE>
In connection with the 1998 Mergers and the M&B Merger, we expensed
merger and integration costs of $22.4 million for the year ended December 31,
1998, consisting of (1) $11.9 million of non-cash employee stay bonuses, which
included (a) $3.6 million for the amortization for our shares set aside for key
personnel of JSK and TCG, who must remain employees for a full year in order to
earn such shares and (b) $8.3 million for our shares to key personnel of TASA
and Stackig as employee stay bonuses, (2) $1.5 million of stay bonuses paid as
cash to key personnel of one of the companies merged in 1998 and
(3) $9.0 million of transaction related costs, including fees for legal,
accounting and advisory services and the costs incurred for the subsequent
registration of shares issued in the acquisitions. The after tax effect of this
charge is $16.7 million or $(0.43) per diluted share. (See Notes 1 and 5 to our
Supplemental Consolidated Financial Statements as of December 31, 1998 and 1997,
and for each of the three years in the period ended December 31, 1998
incorporated by reference in this prospectus.)
Amortization of intangibles was $10.2 million for the year ended
December 31, 1998 compared to $6.9 million for the year ended December 31, 1997.
The increase is due to our continued growth through acquisitions. As a
percentage of total commissions and fees, amortization of intangibles was 1.5%
and 1.3% for the year ended December 31, 1998 and 1997, respectively.
As a result of all of the above, operating income decreased $23.3 million to
$47.2 million for the year ended December 31, 1998 as compared with operating
income of $70.5 million for the year ended December 31, 1997 and, as a percent
of total commissions and fees, operating income decreased to 7.2% from 13.0%.
Net interest expense increased $1.4 million to $9.8 million for the year
ended December 31, 1998 as compared to $8.4 million for the year ended
December 31, 1997, reflecting a net increase in debt as a result of acquisitions
and capital expenditures. In addition, our effective interest rate was 10.8% for
the year ended December 31, 1998 compared with 10.4% for the year ended
December 31, 1997.
Taxes on income decreased $6.2 million to $14.4 million for the year ended
December 31, 1998 from $20.1 million for the year ended December 31, 1997
primarily due to lower pre-tax income. The effective tax rate for the year ended
December 31, 1998 was 40.7% compared with 32.7% for the year ended December 31,
1997. The higher effective rate in 1998 reflects the inability to deduct for
tax, certain costs associated with the 1998 Mergers and the M&B Merger.
For the year ended December 31, 1998, equity in losses of affiliates was
$396,000, reflecting losses at our minority owned real estate advertising
affiliate, as compared with a $33,000 loss for the same period in 1997. Minority
interests in consolidated earnings for the year ended December 31, 1998 were
$28,000 compared with $296,000 for the year ended December 31, 1997.
As a result of all of the above, the net income applicable to common and
Class B common stockholders was $20.5 million for the year ended December 31,
1998, or $0.52 per diluted share, compared with net income of $41.8 million, or
$1.13 per diluted share for the year ended December 31, 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
Gross billings for the year ended December 31, 1997 were $1,446.7 million, a
$379.5 million or 35.6% increase when compared to gross billings of
$1,067.2 million for the year ended December 31, 1996. The growth is primarily
due to acquisitions in recruitment advertising, rate increases in yellow page
advertising, increased clients and higher client spending for search and
selection, and a growing acceptance of our Internet products.
Total commissions and fees increased to $541.8 million for the year ended
December 31, 1997 from $399.0 million for the year ended December 31, 1996, an
increase of $142.8 million or 35.8%. This reflects increases, as compared to the
prior year period, in commissions and fees for (a) Internet of $12.5 million or
180.6%, (b) recruitment advertising of $57.6 million or 75.3%, (c) search and
selection of $57.4 million
28
<PAGE>
or 31.0%, (d) temporary contracting of $12.1 million or 41.3% and (e) yellow
page advertising of $3.1 million or 3.0%. Fees derived from Internet were
generated from job searches and recruitment advertising placed on the Internet,
primarily on our wholly owned Web sites Monster.com(SM) and occ.com, and
reflects the continued customer acceptance of our Internet products both from
our existing clients as well as new clients and price increases on certain
products. A substantial portion of the increase in commissions and fees for
recruitment advertising was due to acquisitions, including $15.5 million from
Austin Knight, acquired in August 1997, and the remainder was due to higher
client spending and new clients. The increase in commissions and fees for search
and selection was primarily due to the healthy economy and related employment
markets in the U.S. The increase in temporary contracting commissions and fees
is due to expansion of the temporary contracting market in Australia. The
increase in commissions and fees for yellow page advertising was due primarily
to increased rates by the yellow page publishers and an acquisition,
substantially offset by lower publisher incentives and the full year effect of
accounts lost and resigned in 1996.
Salaries and related costs increased $77.9 million to $310.2 million for the
year ended December 31, 1997 but as a percent of total commissions and fees,
salaries and related costs decreased to 57.2% for the year ended December 31,
1997 from 58.2% for the year ended December 31, 1996. This $77.9 million
increase was primarily due to additional staff required to service increased
recruitment advertising billings, increased sales staffing for Internet, and
generally higher salaries and related costs for search and selection operations.
Office and general expenses increased $37.6 million to $152.8 million for
the year ended December 31, 1997 as compared with $115.2 million for the prior
period. The increase was primarily due to growth across all lines of business.
However, as a percent of total commissions and fees, office and general expenses
decreased to 28.2% for the year ended December 31, 1997 from 28.9% for the year
ended December 31, 1996. This decrease was primarily due to (1) consolidation of
offices, which slowed the growth of office related expenses, (2) increased
growth in recruitment advertising commissions and fees combined with the
relatively fixed nature of some of these expenses and (3) increased temporary
contracting operations which have relatively stable office and general expenses.
Amortization of intangibles was $6.9 million for the year ended
December 31, 1997 compared to $4.7 million for the year ended December 31, 1996.
The increase is due to our continued growth through acquisitions. As a
percentage of total commissions and fees, amortization of intangibles was 1.3%
and 1.2%, respectively, for the years ended December 31, 1997 and 1996.
For 1996, special compensation of $52.0 million consists of a non-cash,
non-recurring charge that reflects the value of shares issued in connection with
the acquisition of the minority interests in our predecessors because the
stockholders had received such shares for nominal or no consideration and,
accordingly, were not considered to have made a substantive investment for their
shares. The value of such shares was based on the per share initial public
offering price of $14.00 for our common stock.
As a result of the above, operating income for the year ended December 31,
1997 increased $75.7 million to $70.5 million as compared with an operating loss
of $5.2 million for the year ended December 31, 1996 and as a percent of total
commissions and fees increased to 13.0% from (1.3)% for the year ended
December 31, 1996.
Net interest expense decreased $5.9 million to $8.4 million for the year
ended December 31, 1997 as compared to $14.3 million for the year ended
December 31, 1996. This decrease in interest expense is due primarily to the
repayment of a portion of the debt with the net cash proceeds of our initial
public and supplemental offerings. In addition, in 1996 there was a
$2.6 million non-cash, non-recurring charge to reflect, upon exercise of a
warrant issued in connection with our financing agreement, the value of the
stock issued at our initial public offering price of $14.00 per share and the
value recorded for the warrant when it was originally issued. Our effective
interest rate was 10.4% for the year ended December 31, 1997 compared with 15.8%
for the year ended December 31, 1996.
29
<PAGE>
Taxes on income increased $9.5 million to $20.6 million for the year ended
December 31, 1997 from $11.1 million for the year ended December 31, 1996
primarily due to higher pre-tax income. The effective tax rate for the year
ended December 31, 1997 was 32.7% compared with (55.6)% for the year ended
December 31, 1996. The effective tax rate for 1997 was lower than the U.S.
Federal statutory rate of 34.0% primarily due to profits of pooled entities
taxed directly to owners, partially offset by nondeductible expenses of
approximately $2.9 million and state taxes of $1.1 million. The effective tax
rate for 1996 reflects the non-deductability of a non-cash special compensation
charge of $52.0 million, non-cash interest expense of $2.6 million and state
taxes of $0.4 million, as well as our inability to offset profits at certain
subsidiaries with losses incurred by others.
As a result of all of the above, the net income applicable to common and
Class B common stockholders was $41.8 million for the year ended December 31,
1997, or $1.13 per diluted share, compared with net loss of $32.1 million, or
$(1.04) per diluted share for the year ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements have been to fund (i) acquisitions,
(ii) working capital, (iii) capital expenditures and (iv) marketing and
development of our Internet business. Our working capital requirements are
generally higher in the quarters ending March 31 and June 30 during which
payments to the major yellow page directory publishers are at their highest
levels. We have met our liquidity needs over the last three years through
(a) funds provided by operating activities, (b) equity offerings, (c) long-term
borrowings, (d) capital leases and (e) vendor financing in 1996. In
December 1996, we completed our initial public offering of an aggregate of
4,147,408 shares of common stock at a purchase price of $14.00 per share in an
underwritten public offering managed by Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation and Ladenburg Thalmann &
Co. Inc. In the initial public offering, certain stockholders sold an additional
aggregate of 652,592 shares of common stock. The net proceeds that we received
from the initial public offering of $50.8 million were used to repay debt and,
in early 1997, to pay down accounts payable and to redeem preferred stock. In
September 1997, we completed a second public offering of an aggregate of
2,400,000 shares of common stock at a purchase price of $23.00 per share in an
underwritten public offering managed by Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co., BT Alex Brown Incorporated, Montgomery Securities and
Ladenburg Thalmann & Co. Inc. In addition, certain stockholders sold an
aggregate of 1,600,000 shares of common stock in such offering. Our net proceeds
from this offering of $63.4 million, including net repayment of borrowings of
$12.2 million, paid to us by certain stockholders were used to repay debt. In
1998, LAI received $41.4 million in net proceeds from its second public
offering. Such proceeds were used to support its international expansion,
support enhancements to its technology-based infrastructure, acquire two search
and selection companies and provide additional working capital.
Net cash provided by operating activities for the nine months ended
September 30, 1999 was $55.8 million compared with $32.7 million provided by
operating activities for the nine months ended September 30, 1998, an increase
of $23.1 million. This increase was primarily due to (a) the net increase in
funds from a $23.5 million greater increase in deferred revenue for the 1999
period over the 1998 period, related mostly to Internet operations, (b) an
$18.0 million increase in cash from work-in-process and prepaid and other
assets, (c) $6.2 million more from tax benefits from the exercise of employee
stock options, (d) a $3.8 million effect from inclusion of losses from companies
accounted for as poolings of interests, in both the current period and the
previous year, because of overlapping reporting periods and (e) a $0.3 million
net increase in the use of funds from increases in accounts receivable over
increases in accounts payable and accrued expenses for the 1999 period over the
1998 period, reduced by a $28.6 million decline in earnings after adjusting for
non-cash items. EBITDA was $32.6 million for the nine months ended
September 30, 1999, a decrease of $44.9 million or 57.9% from $77.5 million for
the nine months ended September 30, 1998. The decrease primarily reflects, for
the 1999 period, a $50.3 million
30
<PAGE>
decrease in operating profits partially offset by $5.5 million more in
depreciation and amortization costs. As a percentage of commissions and fees,
EBITDA decreased to 5.8% for the nine months ended September 30, 1999 as
compared with 15.6% for the nine months ended September 30, 1998. The lower
percent reflects the increase in merger and integration and restructuring costs,
which were 8.7% and 1.9% of commissions and fees for the 1999 and 1998 periods,
respectively.
Our investing activities for the nine months ended September 30, 1999 used
cash of $32.0 million, which is $48.0 million less than the $80.0 million for
the nine months ended September 30, 1998. This decrease was primarily due to the
use in 1998 of $33.4 million more in investments by a pooled company and
$2.0 million more used for business acquisitions combined with $9.8 million
received from the sale of fixed assets, primarily our plane, in the 1999 period.
We estimate that our expenditures for computer equipment and software,
furniture and fixtures and leasehold improvements will be approximately
$30 million for the year ended 1999 and $60 million for the year ended 2000.
Our financing activities include borrowings and repayments under our bank
financing agreements and issuance of and payments against installment notes used
principally to finance acquisitions and equipment. Our financing activities for
the nine months ended September 30, 1999 used net cash of $28.8 million but
provided $32.7 million for the nine months ended September 30, 1998. The change
of $61.5 million resulted primarily from $41.4 million in proceeds from a common
stock offering by LAI in the 1998 period and net repayments in the 1999 period
of $29.9 million against credit facilities and capitalized lease obligations
compared with a net borrowing of $1.5 million in the prior year period, offset
in part by a $6.8 million increase in cash received from the exercise of
employee stock options and a $4.3 million decline in dividends paid by pooled
companies in the 1999 period from the 1998 period.
Net cash provided by operating activities for the years ended December 31,
1998, 1997 and 1996 was $63.6 million, $51.3 million and $37.1 million,
respectively. The increase in cash of $12.3 million from operating activities
for 1998 over 1997 was primarily due to an increase of $17.9 million in accounts
payable, accrued expenses and other current liabilities, a $12.9 million
increase in depreciation and amortization costs, $8.3 million for the
utilization of our common stock to pay bonuses, a decrease of $7.3 million in
accounts receivable and a $3.2 million increase in deferred revenue, partially
offset by decreases in net income of $21.4 million, $8.1 million in deferred
income taxes and $10.7 million in prepaid and other assets. In addition, in 1998
we paid approximately $13.6 million for restructuring. Such amount was applied
against a reserve set up during 1997 in connection with acquisitions accounted
for using the purchase method. This reserve was increased in 1998 by a
$3.5 million charge to earnings and by $10.1 million, with a corresponding
increase to intangible assets, and reduced by payments of $13.6 million, leaving
a restructuring reserve at December 31, 1998 of $16.7 million. (See Note 5 to
our Supplemental Consolidated Financial Statements as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998
incorporated by reference in this prospectus.) The increase in cash from
operating activities for 1997 over 1996 was primarily due to increased net
income, after adding back the effect of non-cash charges in 1996, partially
offset by higher payments of accounts payable, including amounts to
substantially repay vendor financed payables.
EBITDA was $79.1 million for the year ended December 31, 1998, a decrease of
$13.3 million from $92.4 million for the year ended December 31, 1997. As a
percentage of total commissions and fees, EBITDA decreased to 12.0% for the year
ended December 31, 1998 from 17.1% for the year ended December 31, 1997. The
decrease resulted primarily from the $18.0 million charge for merger costs
($22.4 million less $4.4 million in amortization of deferred compensation),
which was 2.7% of total commissions and fees for the year ended December 31,
1998, offset, in part, by increased depreciation and amortization of
$12.9 million. For the year ended December 31, 1997, EBITDA was $92.4 million,
an increase of $84.6 million from $7.8 million for the year ended December 31,
1996. As a percent of total commissions & fees, EBITDA increased to 17.1% for
the year ended December 31, 1997 as compared to
31
<PAGE>
1.9% for the year ended December 31, 1996 due to a higher operating profit. For
the year ended December 31, 1996, EBITDA was $7.8 million primarily due to the
$52.0 million non-cash special compensation charge.
Net cash used in investing activities for the years ended December 31, 1998,
1997 and 1996 was $66.5 million, $89.7 million and $46.4 million, respectively.
The $23.2 million decrease in 1998 as compared with 1997 was primarily due to
$34.1 million less in payments for acquisitions, reflecting the use of company
stock to make acquisitions of businesses, offset in part by $0.4 million more in
capital expenditures and during 1997 our receipt of a net $11.4 million from
Andrew J. McKelvey and certain other stockholders, who repaid borrowings with
funds received primarily from their sale of shares included with our second
public offering. Payments for businesses acquired using the purchase method of
accounting, excluding $5.5 million in our stock, were $32.8 million in 1998,
$66.9 million in 1997, of which $47.2 million was for Austin Knight, and
$31.3 million in 1996. Capital expenditures, primarily for computer equipment
and furniture and fixtures, were $31.9 million, $31.6 million and $15.4 million
for the years ended December 31, 1998, 1997 and 1996, respectively. In addition,
in 1997, we acquired certain transportation equipment and made capital
improvements for a total of $6.8 million, replacing the transportation equipment
sold during 1996 for $6.1 million, and simultaneously entered into a
$7.8 million financing agreement to fund the purchase and provide additional
operating funds. In December 1996, we sold certain transportation equipment for
$6.1 million receiving a note for $2.7 million and retained $1.2 million in
cash, after payment of related debt.
Our financing activities include equity offerings, borrowings and repayments
under our financing agreement and payments on (i) installment notes, principally
to finance acquisitions, and (ii) capital leases. In the fourth quarter of 1996,
we completed our initial public offering of 4,147,408 shares of common stock for
net proceeds of $50.8 million and in the third quarter of 1997, we completed our
second public offering of 2,400,000 shares of common stock for net proceeds of
$51.2 million. With a portion of the proceeds received from our initial public
offering, in January 1997, we redeemed all of the shares of the cumulative
preferred stock issued by a subsidiary, reported as a minority interest, and our
previously issued preferred stock for approximately $3.1 million and
$2.1 million, respectively. Such redemptions included approximately $100,000
each of premiums. Our financing activities provided net cash of $20.1 million,
$65.5 million and $13.4 million in 1998, 1997 and 1996, respectively. In
November, 1998 and 1997 we amended our financing agreement with our primary
lender to provide for borrowings, under a revolving credit facility, of a
minimum of $175 million. In May 1999 we increased this amount to $185 million.
This facility is used to finance our acquisitions and for working capital
requirements. As of December 31, 1998, there was $97.7 million outstanding and
approximately $77.3 million available under such facility. Our current interest
rate under the agreement is LIBOR plus 75 basis points. In addition, we had
secured lines of credit aggregating $49.0 million for LAI and our operations in
Australia, France, Belgium and the Netherlands of which approximately
$42.5 million was unused at December 31, 1998. Upon consummation of LAI's merger
with us, we eliminated LAI's $25.0 million line of credit. We believe we will be
able to fund our short-term cash needs through funds from operations, our credit
facilities in the United States, the United Kingdom, Canada and Australia and,
to a lesser extent, equipment leases. The borrowings are secured by a lien on
substantially all of our assets. In addition, the financing agreement contains
certain covenants which restrict, among other things, our ability to borrow, pay
dividends, acquire businesses, guarantee debts of others and lend funds to
affiliated companies and contains criteria on the maintenance of certain
financial statement amounts and ratios.
At September 30, 1999, we had a $185 million committed line of credit from
our primary lender pursuant to a revolving credit agreement expiring June 30,
2001. Of such line, at September 30, 1999, approximately $58.2 million was
unused and accounts receivable as defined in the agreement is sufficient to
allow draw down of the entire amount. In addition, we have lines of credit
aggregating $20.6 million for our operations in Australia, New Zealand, France,
Belgium and the Netherlands of which approximately $12.0 million was unused at
September 30, 1999.
32
<PAGE>
Cash and cash equivalents at September 30, 1999 were $68.0 million, an
increase of $26.4 million from $41.6 million at September 30, 1998.
Part of our acquisition strategy is to pay, over time, a portion of the
purchase price of certain acquisitions through seller financed notes.
Accordingly, such notes are included in long-term debt, are generally payable
over five years and totaled approximately $13.8 million at December 31, 1998.
We intend to continue our acquisition strategy and marketing and promotion
of our Internet business through the use of operating profits, borrowings
against our long-term debt facility and seller financed notes. We believe that
our anticipated cash flow from operations, as well as the availability of funds
under our existing financing agreements and access to public equity and debt
markets, will provide us with liquidity to meet our current foreseeable cash
needs for at least the next year. However, if we determine that conditions are
favorable, we would consider additional corporate equity or debt transactions.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities" ("SFAS No. 133"), which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS
No. 133 is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. We do not expect the adoption of this statement to have a
significant impact on our results of operations, financial position or cash
flows.
YEAR 2000 ISSUE
Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
STATE OF READINESS. Since early in 1999, we have been working to position
ourselves as Year 2000 ready before December 31, 1999. We have developed a
comprehensive plan to deal with the Year 2000 issue and have engaged internal
and external resources to focus on this effort. It is an evolving plan as we
continue to acquire and integrate companies throughout 1999. The plan is
intended to achieve three basic objectives: to ensure that computer systems and
other equipment function in the same manner after December 31, 1999 as it did
before the century date change, to ensure that each business unit follows a
consistent approach for assessment renovation, and validation of all IT and
non-IT assets, and to track the status of all Year 2000 efforts. In addition to
our internal assets, we are assessing and monitoring the Year 2000 readiness of
our key vendors and service providers. We are also monitoring the readiness of
public infrastructure service providers such as power, communications, and
transportation providers.
Our Year 2000 task force has conducted an inventory of and has developed
testing procedures for all software and other systems that we believe might be
affected by Year 2000 issues. Since third parties developed and currently
support many of the systems used, a significant part of this effort will be to
ensure that these third-party systems are Year 2000 ready. Our plan is to
confirm this readiness by obtaining representations by these third parties that
their products' are year 2000 ready and through specific testing of these
systems. We have substantially completed this process as of the end of the third
quarter of 1999 and will fully complete this process by the end of the fourth
quarter. Until such testing is completed and such vendors and providers are
contacted, we will not be able to completely evaluate whether our systems will
need to be revised or replaced.
33
<PAGE>
COSTS. During 1999, we expect to incur approximately $3.0 million,
globally, in connection with identifying, evaluating and addressing Year 2000
readiness issues. Most of these costs relate to time spent by employees and
consultants in making our systems Year 2000 ready. Such costs are not expected
to have a material adverse effect on our business, results of operations and
financial condition.
RISKS. While we are making every effort to address the Year 2000 issue,
there are inherent risks. We are not currently aware of any Year 2000 readiness
problems relating to our systems that would have a material adverse effect on
our business, results of operations and financial condition, without taking into
account our efforts to avoid or fix such problems. There can be no assurance
that we will not discover Year 2000 readiness problems in our systems and
equipment that will require substantial revision. In addition, there can be no
assurance that third-party software, hardware or services incorporated into our
material systems will not need to be revised or replaced, all of which could be
time-consuming and expensive. Our failure to fix or replace our internally
developed proprietary software or third-party software, hardware or services on
a timely basis could result in lost commissions and fees, increased operating
costs, the loss of customers and other business interruptions, any of which
could have a material adverse effect on our business, results of operations and
financial condition. Moreover, the failure to adequately address Year 2000
readiness issues in our internally developed proprietary software could result
in claims of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend.
We are heavily dependent on a significant number of third party vendors to
provide both network services and equipment. A significant Year 2000 related
disruption of the network, services or equipment that third-party vendors
provide to us could cause our members and visitors to consider seeking alternate
providers or cause an unmanageable burden on our technical support, which in
turn could materially and adversely affect our business, financial condition and
results of operations.
In addition, we cannot assure you that governmental agencies, utility
companies, internet access companies, third party service providers and others
outside of our control will be Year 2000 ready. The failure by such entities to
be Year 2000 ready could result in a systemic failure beyond our control, such
as a prolonged Internet, telecommunications or electrical failure, which could
also prevent us from delivering our services to our customers, decrease the use
of the Internet or prevent users from accessing our websites which could have a
material adverse effect on our business, results of operations and financial
condition.
CONTINGENCY PLAN. Although we believe our systems are Year 2000 ready, we
have developed contingency plans for critical systems and equipment in the event
of a failure. The results of our Year 2000 simulation testing and the responses
received from third-party vendors and service providers have been taken into
account in determining the nature and extent to which our contingency plans will
be implemented. In addition, we have developed an event planning procedure to
monitor the function of our global operations before, during and after the
century date change.
FLUCTUATIONS OF QUARTERLY RESULTS
Our quarterly commissions and fees are affected by the timing of yellow page
directory closings which currently have a concentration in the third quarter.
Yellow page publishers may change the timing of directory publications which may
have an effect on our quarterly results. Our yellow page advertising results are
also affected by commissions earned for volume placements for the year, which
are typically reported in the fourth quarter. Our quarterly commissions and fees
for recruitment advertising are typically highest in the first quarter and
lowest in the fourth quarter. However, the cyclicality in the economy and our
clients' employment needs have an overriding impact on our quarterly results in
recruitment advertising, search and selection and temporary contracting. (See
Note 2 to our Supplemental Consolidated Financial Statements incorporated by
reference in this prospectus.)
34
<PAGE>
The following table sets forth summary quarterly unaudited financial
information for the nine months ended September 30, 1999 and the years ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1999 QUARTERS
------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,
--------- -------- -------------
(IN MILLIONS, EXCEPT SHARE AND PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Commissions & fees:
Internet.................................................... $ 20.5 $ 25.8 $ 36.7
Recruitment advertising..................................... 45.6 46.3 43.0
Search & selection.......................................... 66.3 70.2 82.7
Temporary contracting....................................... 12.8 16.6 15.5
Yellow page advertising..................................... 23.8 27.2 28.5
------ ------ ------
Total commissions & fees.................................... $169.0 $186.1 $206.4
====== ====== ======
Operating income (loss)..................................... $ (1.2) $ 7.4 $ (2.4)
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ (2.3) $ 3.2 $ (5.8)
Net income (loss) per common and Class B common share:
Basic....................................................... $(0.06) $ 0.08 $(0.15)
Diluted..................................................... $(0.06) $ 0.08 $(0.15)
Weighted average shares outstanding (in thousands):
Basic....................................................... 39,323 39,876 39,992
Diluted..................................................... 39,323 41,596 39,992
</TABLE>
<TABLE>
<CAPTION>
1998 QUARTERS
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Commissions & fees:
Internet.......................................... $ 8.0 $ 11.0 $ 13.7 $ 17.5
Recruitment advertising........................... 45.8 45.7 42.3 43.9
Search & selection................................ 69.9 74.0 70.9 61.3
Temporary contracting............................. 5.6 13.6 13.8 14.0
Yellow page advertising........................... 23.3 27.1 32.1 23.9
------ ------ ------ ------
Total commissions & fees.......................... $152.6 $171.4 $172.8 $160.6
====== ====== ====== ======
Operating income (loss)........................... $ 17.2 $ 21.2 $ 15.7 $ (6.9)
Net income (loss) applicable to common and Class B
common stockholders............................. $ 9.7 $ 11.6 $ 7.9 $ (8.7)
Net income (loss) per common and Class B common
share:
Basic............................................. $ 0.25 $ 0.30 $ 0.20 $(0.22)
Diluted........................................... $ 0.24 $ 0.29 $ 0.20 $(0.22)
Weighted average shares outstanding (in
thousands):
Basic............................................. 38,421 38,748 38,811 38,857
Diluted........................................... 39,735 39,806 39,970 38,857
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
1997 QUARTERS
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Commissions & fees:
Internet.......................................... $ 4.0 $ 4.7 $ 5.0 $ 5.8
Recruitment advertising........................... 27.7 30.8 35.4 40.4
Search & selection................................ 56.8 63.4 59.6 63.0
Temporary contracting............................. 5.3 24.2 5.8 6.0
Yellow page advertising........................... 21.9 25.1 30.6 26.3
------ ------ ------ ------
Total commissions & fees.......................... $115.7 $148.2 $136.4 $141.5
====== ====== ====== ======
Operating income.................................. $ 18.5 $ 19.4 $ 19.9 $ 12.7
Net income applicable to common and Class B common
stockholders.................................... $ 11.2 $ 11.9 $ 11.0 $ 7.7
Net income per common and Class B common share:
Basic............................................. $ 0.32 $ 0.33 $ 0.31 $ 0.20
Diluted........................................... $ 0.31 $ 0.33 $ 0.30 $ 0.20
Weighted average shares outstanding (in
thousands):
Basic............................................. 35,355 35,578 36,171 38,257
Diluted........................................... 35,798 36,204 36,847 38,896
</TABLE>
Earnings (loss) per share calculations for each quarter include the weighted
average effect for the quarter; therefore, the sum of the quarters may not equal
the full year earnings (loss) per share amount, which reflects the weighted
average effect on an annual basis. In addition, diluted earnings per share
calculations for each quarter include the effect of stock options and warrants,
when dilutive to the quarter.
36
<PAGE>
BUSINESS
We provide a comprehensive range of career services and solutions through
our flagship Internet property, Monster.com(SM), and through our recruitment
advertising and executive search businesses. We are also the world's largest
yellow page advertising agency.
INDUSTRY OVERVIEW
INTERNET. The Internet is an increasingly significant global medium for
communications, content and commerce. Growth in Internet usage has been fueled
by a number of factors, including the availability of a growing number of useful
products and services, the large and growing installed base of personal
computers in the workplace and home, advances in the performance and speed of
personal computers and modems, improvements in network infrastructure, easier
and cheaper access to the Internet and increased awareness of the Internet among
businesses and consumers.
The increasing functionality, accessibility and overall usage of the
Internet and online services have made them an attractive commercial medium.
Thousands of companies have created corporate Web sites that feature information
about their product offerings and advertise employment opportunities. Through
the Web, Internet content providers are able to deliver timely, personalized
content in a manner not possible through traditional media. Internet content can
be continuously updated, distributed to a large number of consumers on a
real-time basis, and accessed by users at any time. Industry publications
indicate that the historical and projected adoption of online/Internet services
represents a faster rate of penetration than occurred with traditional media,
such as radio, broadcast television and cable television.
For job seekers, online recruiting can provide the ability to rapidly and
more easily build, update and distribute their resumes, conduct job searches and
gather information about employers. Online recruiting can also help to reduce
the time of a job search by permitting job seekers to define their specific job
needs and be contacted automatically when desired jobs become available. Online
recruiting is also proving to be attractive to employers because online job
advertisements can be accessed by job seekers anywhere in the world at anytime
and more cost effectively than print media. Forrester Research estimates that
online spending by employers for recruitment will grow from $105 million in 1998
to $1.7 billion in 2003.
THE RECRUITMENT ADVERTISING MARKET. Recruitment advertising consists
primarily of creating and placing recruitment advertisements in the classified
advertising sections of newspapers. While the recruitment advertising market has
historically been cyclical, during the period of 1990 through 1997, the U.S.
market grew at a compound annual rate of approximately 12%. Classified
readership by job seekers has remained constant over the last ten years and
approximately 85% of companies use newspapers to attract potential employees.
The services provided by recruitment advertising agencies can be complex and
range from the design and placement of classified advertisements to the creation
of comprehensive image campaigns which internationally "brand" a client as a
quality employer. Further, shortages of qualified employees in many industries,
particularly in the technology area, have increased the need for recruitment
advertising agencies to expand the breadth of their service offerings to effect
national and sometimes global recruitment campaigns. For the year ended
December 31, 1998, global spending (billings) in the recruitment classified
advertisement section of newspapers was approximately $13 billion. Agencies
which place recruitment classified advertising are paid commissions generally
equal to 15% of recruitment advertising placed in newspapers and earn fees for
providing additional recruitment services.
THE EXECUTIVE SEARCH AND SELECTION MARKET. The market for executive search
firms is generally separated into two broad categories: retained executive
search firms and contingency executive search firms. Retained executive search
firms service their clients' senior management needs by acting in an ongoing
client-consultant relationship to actively identify, evaluate, assess and
recommend to the client suitable candidates for senior level positions. Retained
search firms are generally engaged on an exclusive basis and paid a
contractually agreed-to fee. Contingency executive search firms typically do not
focus on the senior executives and are generally paid a percentage of the hired
candidate's salary only when a
37
<PAGE>
candidate is successfully placed with the client. Contingency firms are
generally not hired on an exclusive basis and do not focus on the assessment,
evaluation or recommendation of a candidate other than to determine if the
candidate's resume qualifies him/her for the position. We provide executive
search services on a retained basis. We also provide search services on a
retained or a contingency basis to identify for our clients the mid-level
executive, those who earn from $70,000 to $150,000, annually. We refer to this
as selection.
THE TEMPORARY CONTRACTING MARKET. According to the Staffing Industry
Report, the United States temporary staffing industry grew from approximately
$29 billion in revenue in 1993 to approximately $62 billion in revenue in 1998.
In addition, third party sources estimate the worldwide temporary staffing
market at more than $130 billion. Our gross revenue for temporary contracting
was $258.4 million and $245.0 million for the year ended December 31, 1998 and
the nine months ended September 30, 1999, respectively. However, temporary
contracting commissions and fees reflect the net of gross revenue reduced by the
cost of the temporary contractors. The temporary staffing industry has
experienced significant growth in response to the changing work environment.
These changes are a result of increasing automation that has resulted and we
believe will continue to result in shorter technological cycles, and global
competitive pressures. Many employers responded to these challenges by turning
to temporary and contract personnel to keep personnel costs variable, achieve
maximum flexibility, outsource highly specialized skills, and avoid the negative
effect of layoffs. We believe fundamental changes in the employer-employee
relationship continue to occur, with employers developing increasingly stringent
criteria for permanent employees, while moving toward project-oriented temporary
and contract hiring.
THE YELLOW PAGE ADVERTISING MARKET. Yellow page directories have been
published in the U.S. since at least the 1890's and, traditionally, have been
published almost exclusively by telephone utilities. In the early 1980's, due in
part to telephone deregulation, independent companies began publishing an
increasing number of directories. Currently, approximately 7,000 yellow
page directories are published annually by 200 publishers and, in the U.S., many
cities with populations in excess of 80,000 are served by multiple directories.
The percentage of adults who use the yellow pages has remained relatively
constant over the last ten years at over 56%, and such readers consult the
yellow pages approximately two times weekly. Accordingly, yellow page
directories continue to be a highly effective advertising medium.
For the year ended December 31, 1998, total spending on yellow page
advertisements in the U.S. was $12.0 billion. Of this amount, approximately
$10.1 billion was spent by local accounts and approximately $1.9 billion was
spent by national accounts. As those terms are used in the yellow
page industry, "local" refers to an advertisement solicited by a yellow
page publisher's own sales staff and "national" refers to an advertisement that
is placed by an advertising agency and that meets certain criteria specified by
the publisher. Local accounts are typically merchants who primarily conduct
their business within the geographic area served by the publisher's directories.
The national account market consists of companies which sell products or
services in multiple markets and is the market in which we compete. Most
national accounts use independent advertising agencies to design and implement
their yellow page advertising programs to create a consistent brand image and
compelling message, to develop an effective media plan and to execute the
placement of the advertising at the local level. Agencies which place national
yellow page advertising are paid commissions by yellow page publishers. The
market has grown each year since 1981. During the period of 1990 through 1998,
the market has grown at a compound average rate of approximately 6.2%.
STRATEGY
Key elements of our strategy are to:
CONTINUE BRANDING MONSTER.COM(SM). We believe our superior content and
service as well as prior advertising campaigns have already branded
Monster.com(SM) (http://www.monster.com) as the leading career destination
portal on the Internet. Our goal is for job seekers to view Monster.com(SM) not
only as the
38
<PAGE>
leading career destination portal, but also as the premier tool with which to
manage their careers by posting their resumes and job search agents on the site.
To move to this next level of brand recognition and loyalty, we are working on a
new advertising campaign which will commence during the 2000 Super Bowl and will
focus on building relationships with job seekers.
DIRECT AN INCREASING NUMBER OF JOB SEEKERS AND EMPLOYERS TO
MONSTER.COM(SM). Our more than 5,100 client service, marketing and creative
personnel constantly promote the advantages of Monster.com(SM) as well as the
Internet generally. Our traditional recruitment advertising and executive search
and selection businesses have already contributed to Monster.com's(SM) job
postings and we believe will continue to contribute an increasing number of job
postings to Monster.com(SM) particularly as the number of job seekers utilizing
Monster.com(SM) continues to grow. In addition, our executive search and
selection consultants are driving more job seekers to Monster.com(SM) as a way
to broaden the job seekers options. We also look for other ways to expand
traffic to Monster.com(SM). An example of this is our recent content and
marketing agreement with America Online, Inc. This arrangement provides that for
the payment of $100 million over four years Monster.com(SM) will be the
exclusive provider of career search services in the United States and Canada for
four years to certain AOL properties, thereby driving additional traffic to
Monster.com(SM).
CONTINUE TO GROW OUR NON-INTERNET BUSINESSES. We plan to continue to grow
and enhance our recruitment advertising, executive search and selection and
yellow page advertising businesses through acquisitions and internal growth.
From January 1, 1996 through October 31, 1999, we completed 80 acquisitions. We
intend to pursue additional acquisitions and believe that the fragmented nature
of the recruitment advertising and the executive search businesses gives us the
opportunity to be a leader in the consolidation of these industries. We also
intend to selectively pursue acquisitions in the yellow page advertising
business.
OUR CAREER SOLUTIONS
MONSTER.COM(SM) Monster.com(SM) (http://www.monster.com), the flagship of
our Internet properties, is the nucleus of our intern to CEO strategy. For the
nine months ended September 30, 1999, gross billings and commissions and fees
were $66.9 million and $66.2 million, respectively, and our total Internet gross
billings and commissions and fees were $93.7 million and $83.0 million,
respectively.
Based on experience with our clients, we believe that only 20% to 30% of
open job positions are advertised using traditional print media. We also believe
that online solutions will significantly expand the recruitment advertising
market because of their global reach and continuous availability. Furthermore,
online advertising is extremely cost effective when compared to other
traditional recruitment methods such as print media. Our Internet recruitment
services have been actively marketed since May 1995 and Monster.com(SM) was one
of the first 1,000 commercial web sites out of more than 158,000,000 which
currently exist.
According to Nielson I/PRO, Monster.com(SM) had approximately 10.0 million
visits (the gross number of occasions on which a user looked up a site) in
October 1999 with the average length of each visit exceeding fourteen minutes.
Media Metrix reported that for October 1999, 4.3% of the U.S. Internet
population visited Monster.com(SM), almost twice as many unique visitors as its
closest competitor. In addition, for this month, an average of 31.3 unique pages
were viewed by each visitor, resulting in a power ranking of 134.6 (reach of 4.3
multiplied by average page views of 31.3) compared to 37.7 for its closest
competitor and 91.1 for its six closest competitors combined. We believe that
the power ranking is significant because, by taking into account reach and page
views, it indicates the products usefulness and recognition.
Monster.com(SM) allows users to create their own personalized career
page--My Monster. Using My Monster, job seekers can store their resume and cover
letters and create multiple job searches. They can also track how many times
their resume has been viewed by employers. My Monster is at the center of the
39
<PAGE>
Monster.com(SM) job seeker experience, with over 5.0 million job seeker accounts
as of December 1, 1999. Monster.com's(SM) Job Search Agent continuously seeks to
find the desired job for the job seeker. Job seekers can sign up for this free
service on the site by creating a simple personal profile indicating the
industry and location in which they want to work and any job-specific keywords.
The Job Search Agent then continually scans the entire Monster.com(SM) job
database for opportunities that match the requirements and delivers the leads to
job seekers' desktops--even while they are off-line. As of December 1, 1999,
Monster.com(SM) contained over 1.6 million Job Search Agent profiles. In
addition, job seekers can post their resume free of charge in a confidential
searchable access-restricted database. This database can be searched, using
keyword searches, by employers who pay for the service. Monster.com's(SM) resume
database currently contains over 2.0 million resumes of which 1.6 million are
active, and is growing by an average of more than 6,000 resumes daily. We have
also recently introduced Monster Talent Market which allows independent
professionals to offer their services to the highest bidder. Job seekers can
search Monster.com's(SM) database of employment opportunities by location, job
category, industry and/or keyword. Keyword searches allow a user to enter
specific keywords to match skills, job titles or other requirements.
As of December 1, 1999, Monster.com(SM) listed approximately 260,000 jobs
from clients such as Blockbuster Entertainment Inc., McDonald's, Adecco,
Procter & Gamble Co., and Dell Computer Corporation.
We have developed private label applications of our interactive recruitment
products. For example, we adapted Monster.com(SM) technology to create a
database of jobs for Fidelity Investments which resides, through a hyper-link,
on the Fidelity home page. The search features have the look and ease of use
associated with Monster.com(SM) while appearing to the user as a seamless part
of the Fidelity site. We intend to continue to market private label products as
a way to increase the size of our databases.
To attract the maximum amount of volume to our Web sites, we intend to
continue to develop additional value-added content, while developing strategic
alliances with other on-line content providers. For example, we recently entered
into a content and marketing arrangement with America Online, Inc., pursuant to
which Monster.com(SM) for the payment of $100 million will be the exclusive
provider of career search services in the United States and Canada for four
years to 21 million AOL members across seven AOL properties: AOL, AOL Canada,
Compuserve, ICQ, AOL.com, Netscape and Digital City.
In addition to the U.S., Monster.com(SM) has been customized, in language
and content, for Canada, the U.K., the Netherlands, Australia, Belgium, France,
Singapore and New Zealand.
RECRUITMENT ADVERTISING. We entered the recruitment advertising business in
1993 and have grown both through acquisitions and internally. For the year ended
December 31, 1998 and the nine months ended September 30, 1999, we had
recruitment advertising gross billings of $849.5 million and $615.5 million,
respectively, and recruitment advertising commissions and fees of $177.8 million
and $134.9 million, respectively. In addition to our worldwide offices, we
maintain relationships with unaffiliated agencies throughout the world to
further enhance our ability to reach qualified job candidates. As a full service
agency, we offer our clients comprehensive recruitment advertising services
including creation and placement of classified advertising, development of
employer image campaigns, creation of collateral materials such as recruiting
brochures and implementation of alternative recruitment programs such as job
fairs, employee referral programs and campus recruiting. We specialize in
designing recruitment advertising campaigns for clients in high growth
industries and in industries with high employee turnover rates. Further, we
believe that as employers find it more difficult to attract qualified employees,
they will increasingly seek out agencies that can implement national and, in
some cases, global recruitment strategies.
CREATING AND PLACING THE ADVERTISEMENT. Our task in formulating and
implementing a global recruitment advertising program is to design the creative
elements of the campaign and to select the appropriate media and/or other
recruitment methods. This is done in the context of the client's staffing
40
<PAGE>
parameters which generally include skill requirements, job location and
advertising budget. In addition, while executing a given campaign, we will often
undertake basic research with respect to demographic profiles of selected
geographic areas to assist the client in developing an appropriate overall
strategy.
We have historically found that the strongest recruitment advertising
campaigns "brand" the client's image, demonstrate the client's unique selling
points and stress the client's employee benefits and corporate culture.
Effectively differentiating one employer from another has become particularly
important in the technology and healthcare sectors where there is an acute
shortage of qualified job candidates. The success of the campaign may depend on
whether an organization is seen as sufficiently distinct from its competitors.
After completing the design of an advertisement's creative elements, we
develop an appropriate media plan. Typically, a variety of media is used,
including newspapers, trade journals, the Internet, billboards, direct mail,
radio and television. If we recommend use of newspapers, we may recommend
certain newspapers or editions of a particular newspaper which are targeted to a
specific demographic segment of the population. We may also recommend a variety
of advertisement sizes and vary the frequency with which an advertisement
appears.
After an advertisement is placed, we conduct extensive customer analysis to
assure satisfaction, including monitoring the effectiveness of the chosen media.
As an example, for a transportation client, we analyzed cost-per-response,
cost-per-application and cost-per-hire data for over a dozen media vehicles
running in approximately 30 markets in an effort to determine the return on
investment of each media vehicle. Our recruitment advertising division also
maintains a quality assurance program for its larger clients which involves
formal creative reviews by our clients as well as soliciting client feedback.
In the U.S., we receive commissions generally equal to 15% of recruitment
advertising gross billings. Outside of the U.S., where, collectively, we derive
the majority of our recruitment advertising commissions and fees, our commission
rates for recruitment advertising vary, ranging from approximately 10% in
Australia to 15% in Canada and the United Kingdom. In the U.S., we also earn
fees from value-added services such as design, research and other creative and
administrative services which resulted in aggregate commissions and fees equal
to approximately 21% and 22% of recruitment advertising gross billings for the
year ended December 31, 1998 and the nine months ended September 30, 1999
respectively.
SEARCH AND SELECTION. Traditionally, recruitment and online advertising did
not target the senior or mid-level executive. Therefore, in order to expand the
range of services we offer to our recruitment advertising clients, we entered
the executive search field. We currently have 55 executive search offices in 25
countries. We believe that our expansion into the executive search field will
enable us to attract and service new major clients because we can now market
ourselves as a full service firm that can accommodate all of our clients'
employment and recruitment advertising needs. For the nine months ended
September 30, 1999, search and selection gross billings and commissions and fees
were $221.7 million and $219.2 million, respectively.
Our retained executive search process typically targets senior level
executives (those earning over $250,000, annually) and includes the following
steps:
- a TMP executive search consultant interviews the client in order to
analyze the senior executive position that needs to be filled, the general
environment of the client's work place and the character and quality of
candidates that have successfully performed as an executive of the client;
- our consultant then prepares a written synopsis of the position to be
filled in order to attract a suitable, qualified, successful candidate;
- the synopsis is then forwarded to other recruiters in order to assist with
the search for a candidate that fits the criteria set forth in the
synopsis;
- a pool of suitable candidates is gathered and the consultants begin to
schedule interviews;
41
<PAGE>
- the candidates are then interviewed and analyzed by the consultants on our
premises to determine if the candidate meets the requisite experience and
potential cultural fit outlined by the consultant and the client;
- reports of the most suitable candidates are prepared by the consultant and
presented to the client, who then chooses the candidates to be met;
- the consultant then organizes a mutually convenient time and place for the
client to personally meet and interview such candidates;
- the consultant will follow up with the successful candidate to obtain any
supplemental information needed or requested by the client, including
references and other documentary materials; and
- the consultant then assists the client in structuring and negotiating the
final compensation package and other benefits for the hired executive
based on all relevant factors researched by the consultant, including
industry comparisons, the experience levels of the executive and future
trends.
Candidates for mid-level positions, the search for whom we term "selection,"
are normally attracted by classified advertising or chosen through a
computerized database file search, as opposed to the detailed search process
used for senior executives. We screen and interview applicants prior to
providing the client with a short list. Upon acceptance of the short list of
suitable candidates, the client then proceeds to interview the selected
candidates. The next steps in the process include reference checking,
negotiation of an offer, confirmation of acceptances and start date, and
performance follow-up at the end of one and three months.
For assignments involving mid-level executives, we have developed and are
introducing the Executive Resourcing process, which is designed to evaluate a
person's capacity to perform in a current or future role. It can be used for
internal and external candidates and is based on the premise that if the
requirements for an individual job are understood, it is possible to develop
testing protocols which assess a candidate's ability to succeed in filling the
position. Tools and exercises include aptitude testing, job simulations,
behavioral and situational interviews, leadership and team exercises, group
discussions, role plays and work sample tests. The goals of the Executive
Resourcing process are to put the right people in the right job, boosting both
individual job satisfaction and productivity.
TEMPORARY CONTRACTING. We provide temporary contract employees in
Australasia and the United Kingdom ranging from executives to clerical workers.
The demand for contract employee services was created by organizations' need for
flexible work forces with the types of skills required to meet their particular
circumstances in a changing market. For the nine months ended September 30, 1999
gross billings were $44.9 million, commissions and fees were $44.9 million and
revenue before deducting the cost of the temporary contractor was
$245.0 million.
We place qualified executives, professionals, clerical and trade labor in
temporary positions, or for specific short term projects. Contractors can be
used for emergency support or to complement the skills of a client's core,
permanent staff. Contracting can be linked to the permanent placement, with the
client employing a "try before you buy" strategy. The period for the contracting
assignment can vary from as little as one day to over 12 months.
In addition to the more general contracting assignments, we provide
executives on a contract basis with our Australian clients, whereby a specific
task is managed by us but staffed by contract executives.
OUR YELLOW PAGE BUSINESS
We entered the yellow page business in 1967 and have grown to become the
largest yellow page advertising agency in the world based on yellow page gross
billings. For the nine months ended
42
<PAGE>
September 30, 1999 we had yellow page gross billings and commissions and fees of
$413.7 million and $79.5 million, respectively.
CREATING AND PLACING YELLOW PAGE ADVERTISEMENTS. There are currently
approximately 7,000 yellow page directories in the U.S. Each has a separate
closing date for accepting advertisements and one or more of these closings
occur on every working day of the year. The steps involved in placing an
advertisement are numerous and can take as long as nine months.
The first step in the process is the formulation of the advertising
program's creative elements including illustrations, advertising copy, slogans
and other elements which are designed to attract a potential customer's
attention. To assess the effectiveness of a proposed campaign, we generally
undertake extensive research to determine which alternatives best reach the
client's target market. This research typically includes focus group testing and
the running of split-run advertisements. Focus group testing involves forming
groups of potential customers and gauging their reaction to a variety of
potential advertisements. Split-run testing measures the results of specific
campaigns by placing more than one version of an advertisement in various
editions of the same yellow page directory. By using multiple phone numbers and
various monitoring methods, we can then determine which advertisements generate
the most effective response.
After designing an advertising program, we create a media plan which targets
client's customer base in a cost-effective manner. We analyze targeted
directories to determine circulation, rate of usage and demographic profile. We
then recommend advertisements ranging from a full page to as little as a one
line listing. For some of our larger yellow page clients, advertisements are
placed in over 2,000 directories.
To ensure client satisfaction, we maintain an extensive quality control
program. Account teams have frequent in-person client contact as well as formal
annual creative reviews. We also solicit feedback through client interviews,
written surveys and other methods consisting of focus groups made up of yellow
page users and yellow page user pollings. The principal aims of this program are
client retention and sales growth. We believe our focus on customer service has
enabled us to maintain our client retention rate, year to year, in excess of
90%.
In addition to traditional advertising, we offer selected yellow page
clients a variety of value-added services ranging from managing the maintenance
and installation of telephone lines for branch locations to the staffing and
operation of fulfillment centers which respond to toll-free calls requesting
product brochures and other information. While beyond the typical scope of
services provided by an advertising agency, these ancillary services are
designed to further integrate us into client processes for the mutual benefit of
both parties.
CLIENTS. Our yellow page clients generally determine the content of their
advertising programs on a centralized basis. Placement of the advertising,
however, requires an extensive local selling and quality control effort because
many of our clients are franchisors or manufacturers who are dependent upon
franchisees or independent dealers for distribution. The participation of
franchisees and dealers in the yellow page program is discretionary and must be
solicited at the local level. As an example of the scale of this task, in 1998,
we visited or had contact with over 570,000 individual store locations.
We have a yellow page sales, marketing and customer service staff of
approximately 1,000 people to implement this local effort. We believe the size
and breadth of this staff, its local client relationships and its databases of
client branch locations, franchisors and dealers provide us with a strong
competitive advantage in executing the yellow page programs of existing clients.
We believe these resources are critical in marketing our services to potential
new clients and in marketing and executing our Internet-based service offerings.
43
<PAGE>
SALES AND MARKETING
At December 1, 1999, we had approximately 5,100 employees focused on our
sales, marketing and customer service efforts worldwide. Our sales, marketing
and customer service staff is divided into two groups: (i) new business
generation (approximately 400 employees) and (ii) existing client relationship
maintenance and improvement (approximately 4,700 employees). Within each group,
we maintain separate sales and marketing staffs for our recruitment advertising
business, yellow page advertising business and Internet business. In addition to
specializing by product, each group is accountable for, and incentivized to,
cross sell our other products. Our Internet sales staff has targeted our
recruitment advertising and yellow page clients to capitalize on the
interactivity and additional services that our Internet products can cost
effectively provide to such clients. In addition to pursuing cross-selling
opportunities within our existing client base, each product sales force also
designs targeted selling campaigns for potential new clients. We assign a
marketing manager to our clients in order to work closely with the client to
develop and design the appropriate marketing and advertising campaign. Our
customer service representative works closely with the marketing manager and the
client to implement the marketing and advertising campaign, evaluate the
effectiveness of the campaign and monitor client satisfaction levels.
At December 1, 1999, we had 95 sales, marketing and customer service offices
located in the United States and 137 offices in the rest of the world. We also
maintained relationships with 16 international recruitment advertising agencies
throughout the world, further enhancing our ability to reach qualified job
candidates.
CLIENTS
At December 1, 1999, we had more than 31,000 clients, including more than 90
of the Fortune 100 companies and approximately 450 of the Fortune 500 companies.
Our clients include: The Home Depot, Inc., Ford Motor Company, CVS Corporation,
Hewlett-Packard Company, Sears, Roebuck and Co., The Allstate Corporation,
Sprint Corporation, United Parcel Service, Inc., Mobil Corporation, Merck & Co.,
Inc., MCI Worldcom, Inc., AT&T Corp., Motorola, Inc., GTE Corporation and Morgan
Stanley Dean Witter & Co. No one client accounts for more than 5% of the
Company's total annual commissions and fees.
COMPETITION
The markets for our services and products are highly competitive and are
characterized by pressure to reduce prices, incorporate new capabilities and
technologies, and accelerate job completion schedules.
We face competition from a number of sources. These sources include national
and regional advertising agencies, media companies, as well as specialized and
integrated marketing communication firms. Many advertising agencies and media
companies have started to either internally develop or acquire new media
capabilities. New boutique businesses that provide integrated or specialized
services (such as advertising services or Web site design) and are
technologically proficient, especially in the new media arena, are also
competing with us. Many of our competitors or potential competitors have long
operating histories, and some have greater financial, management, technological,
development, sales, marketing and other resources than do we. In addition, our
ability to maintain our existing clients and generate new clients depends to a
significant degree on the quality of our services, pricing and our reputation
among our clients and potential clients.
We believe that our largest competitors in online recruiting are
Headhunter.net, HotJobs.com, CareerPath.com, Dice.com, CareerMosaic.com and
CareerBuilder.com although, as illustrated below, for the first ten months of
1999, Monster.com(SM) attracted the greatest number of visitors (derived from
Media
44
<PAGE>
Metrix data) and in October 1999, Monster.com(SM) had the greatest power ranking
(reach multiplied by average page views per visitor):
MONTHLY VISITOR TRENDS
JANUARY TO OCTOBER 1999
(IN THOUSANDS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAREERBUILDER.COM CAREERMOSAIC.COM CAREERPATH.COM HEADHUNTER.NET HOTJOBS.COM MONSTER.COM
<S> <C> <C> <C> <C> <C> <C>
Jan 252 795 917 574 388 1779
Feb 275 882 1019 636 810 2322
Mar 256 965 1111 576 344 2067
Apr 282 753 861 481 258 1739
May 336 790 1052 599 436 2416
Jun 353 808 1585 777 669 2605
Jul 293 800 1115 810 760 2515
Aug 376 742 727 949 882 2457
Sep 326 584 734 1004 687 2582
Oct 471 607 891 654 1668 2737
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR THE MONTH OF OCTOBER 1999
AVERAGE
PAGES
PER POWER
CAREER SITE REACH VISITOR RANKING*
------------------- --- ---- -----
1 -- Monster.com 4.3 31.3 134.6
2 -- HeadHunter.net 2.6 14.5 37.7
3 -- HotJobs.com 1.0 15.4 15.4
4 -- CareerPath.com 1.4 9.2 12.9
5 -- Dice.com 0.4 27.7 11.1
6 -- CareerMosaic.com 1.0 8.8 8.8
7 -- CareerBuilder.com 0.7 7.4 5.2
* Source: Media Metrix.
(reach multiplied by average page per visitor)
</TABLE>
45
<PAGE>
We believe that our three largest competitors in the recruitment advertising
segment are Bernard Hodes Advertising, Inc., a subsidiary of Omnicom, Nationwide
Advertising Service, Inc., controlled by the Gund Brothers, and JWT Specialized
Communications, a subsidiary of the WPP Group USA, Inc. We also compete with
hundreds of Internet content providers. We believe that our largest competitors
in the executive search segment are Korn/Ferry International, Heidrick &
Struggles International Inc., Spencer Stuart & Associates and Russell Reynolds
Associates, Inc.
INTELLECTUAL PROPERTY
Our success and ability to compete is dependent in part on the protection of
our original content for the Internet and on the goodwill associated with our
trademarks, trade names, service marks and other proprietary rights. We rely on
copyright laws to protect the original content that we develop for the Internet.
In addition, we rely on Federal trademark laws to provide additional protection
for the appearance of our Internet sites. A substantial amount of uncertainty
exists concerning the application of copyright laws to the Internet, and there
can be no assurance that existing laws will provide adequate protection for our
original content. In addition, because copyright laws do not prohibit
independent development of similar content, there can be no assurance that
copyright laws will provide any competitive advantage to us.
We also assert common law protection on certain names and marks that we have
used in connection with our business activities.
We rely on trade secret and copyright laws to protect the proprietary
technologies that we have developed to manage and improve our Internet sites and
advertising services, but there can be no assurance that such laws will provide
sufficient protection to us, that others will not develop technologies that are
similar or superior to ours, or that third parties will not copy or otherwise
obtain and use our technologies without authorization. We have filed patent
applications with respect to certain of our software systems, methods and
related technologies, but there can be no assurance that such applications will
be granted or that any future patents will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide us with a
competitive advantage. In addition, we rely on certain technology licensed from
third parties, and may be required to license additional technology in the
future, for use in managing our Internet sites and providing related services to
users and advertising customers. Our ability to generate fees from Internet
commerce may also depend on data encryption and authentication technologies that
we may be required to license from third parties. There can be no assurance that
these third party technology licenses will be available or will continue to be
available to us on acceptable commercial terms or at all. The inability to enter
into and maintain any of these technology licenses could have a material adverse
effect on our business, financial condition and operating results.
Policing unauthorized use of our proprietary technology and other
intellectual property rights could entail significant expense and could be
difficult or impossible, particularly given the global nature of the Internet
and the fact that the laws of other countries may afford us little or no
effective protection of our intellectual property. In addition, there can be no
assurance that third parties will not bring claims of copyright or trademark
infringement against us or claim that our use of certain technologies violates a
patent. We anticipate an increase in patent infringement claims involving
Internet-related technologies as the number of products and competitors in this
market grows and as related patents are issued. Further, there can be no
assurance that third parties will not claim that we have misappropriated their
creative ideas or formats or otherwise infringed upon their proprietary rights
in connection with our Internet content. Any claims of infringement, with or
without merit, could be time consuming to defend, result in costly litigation,
divert management attention, require us to enter into costly royalty or
licensing arrangements or prevent us from using important technologies or
methods, any of which could have a material adverse effect on our business,
financial condition or operating results.
46
<PAGE>
GOVERNMENT REGULATION
As an advertising agency which creates and places print and Internet
advertisements, we are subject to Sections 5 and 12 of the Federal Trade
Commission Act (the "FTC Act") which regulate advertising in all media,
including the Internet, and require advertisers and advertising agencies to have
substantiation for advertising claims before disseminating advertisements. The
FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair
advertising, and grants the Federal Trade Commission ("FTC") enforcement powers
to impose and seek civil penalties, consumer redress, injunctive relief and
other remedies upon advertisers and advertising agencies which disseminate
prohibited advertisements. Advertising agencies are subject to liability under
the FTC Act if the agency actively participated in creating the advertisement,
and knew or had reason to know that the advertising was false or deceptive.
In the event that any advertising created by us was found to be false,
deceptive or misleading, the FTC Act could potentially subject us to liability.
The fact that the FTC has recently brought several actions charging deceptive
advertising via the Internet, and is actively seeking new cases involving
advertising via the Internet, indicates that the FTC Act could pose a somewhat
higher risk of liability to the advertising distributed via the Internet. The
FTC has never brought any actions against us.
There can be no assurance that other current or new government laws and
regulations, or the application of existing laws and regulations, will not
subject us to significant liabilities, significantly dampen growth in Internet
usage, prevent us from offering certain Internet content or services or
otherwise cause a material adverse effect on our business, financial condition
or operating results.
EMPLOYEES
At December 1, 1999, we employed approximately 6,400 people, of whom
approximately 3,300 were client services personnel, approximately 400 were sales
and marketing personnel, approximately 1,100 were search and selection personnel
and approximately 300 were creative and graphics personnel. The remainder of our
personnel are information systems, financial and administrative personnel. Our
employees are not represented by a labor union or a collective bargaining
agreement. We regard our employee relations as generally excellent.
47
<PAGE>
MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a general discussion of the material U.S. federal income
and estate tax considerations with respect to the ownership and disposition of
common stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is
any holder other than
- a citizen or resident of the United States
- a corporation created or organized in the United States or under the laws
of the United States or of any state
- an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source
- a trust if
-- a court within the United States is able to exercise primary
supervision over the administration of the trust, and
-- one or more U.S. persons have the authority to control all
substantial decisions of the trust
This discussion is based on current provisions of the Internal Revenue Code,
Treasury Regulations promulgated under the Internal Revenue Code, judicial
opinions, published positions of the Internal Revenue Service, and all other
applicable authorities, all of which are subject to change, possibly with
retroactive effect. This discussion does not address all aspects of income and
estate taxation or any aspects of state, local, or non U.S. taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder that may be subject to special treatment under the U.S. federal
income tax laws, such as insurance companies, tax-exempt organizations,
financial institutions, brokers, dealers in securities, and U.S. expatriates.
ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX
CONSIDERATIONS OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder will be subject to U.S.
withholding tax at a 30% rate of the gross amount, or a lower rate prescribed by
an applicable income tax treaty, unless the dividends are effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States. Dividends effectively connected with such a U.S. trade or business
generally will not be subject to U.S. withholding tax if the Non-U.S. holder
files the required forms, including Internal Revenue Service Form 4224, or any
successor form, with the payor of the dividend, and generally will be subject to
U.S. federal income tax on a net income basis, in the same manner as if the
Non-U.S. Holder were a resident of the United States. A Non-U.S. Holder that is
a corporation may be subject to an additional branch profits tax at a rate of
30%, or such lower rate as may be specified by an applicable income tax treaty,
on the repatriation from the United States of its "effectively connected
earnings and profits," subject to adjustments. To determine the applicability of
a tax treaty providing for a lower rate of withholding under the currently
effective Treasury Regulations, the "Current Regulations", and published
Internal Revenue Service positions, dividends paid to an address in a foreign
country are presumed to be paid to a resident of that country absent knowledge
to the contrary. Under Treasury Regulations issued on October 6, 1997, the
"Final Regulations", and generally effective for payments made after
December 31, 2000, however, a Non-U.S. Holder, including, for some Non-U.S.
Holders that are entities, the owner or owners of such entities, will be
required to satisfy certification requirements in order to claim a reduced rate
of withholding under an applicable income tax treaty.
48
<PAGE>
GAIN OR SALE OR OTHER DISPOSITION OF COMMON STOCK
In general, a Non-U.S. Holder will not be subject to U.S. federal income tax
on any gain realized upon the sale or other disposition of the holder's shares
of common stock unless
- the gain is effectively connected with a trade or business carried on by
the Non-U.S. Holder within the United States, in which case the branch
profits tax discussed above may also apply if the Non-U.S. Holder is a
corporation
- the Non-U.S. Holder is an individual who holds shares of common stock as a
capital asset and is present in the United States for 183 days or more in
the taxable year of disposition and meets other tests
- the Non-U.S. Holder is subject to tax under the provisions of the Internal
Revenue Code regarding the taxation of U.S. expatriates, or
- we are or have been a U.S. real property-holding corporation for U.S.
federal income tax purposes, which we do not believe that we have been,
currently are, or will become, at any time within the shorter of the
five-year period preceding such disposition and such Non-U.S. Holder's
holding period
If we were or were to become a U.S. real property holding corporation at any
time during this period, gains realized upon a disposition of common stock by a
Non-U.S. Holder that did not directly or indirectly own more than 5% of the
common stock during this period generally would not be subject to U.S. federal
income tax, provided that common stock is "regularly traded on an established
securities market (within the meaning of Section 897(c)(3) of the Code)."
ESTATE TAX
Common stock owned or treated as owned by an individual who is not a citizen
or resident, as defined for U.S. federal estate tax purposes, of the United
States at the time of death will be includible in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
provided otherwise, and therefore may be subject to U.S. federal estate tax.
INFORMATION REPORTING, BACKUP WITHHOLDING AND OTHER REPORTING REQUIREMENTS
Generally, we must report annually to the Internal Revenue Service and to
each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of this information also may be made available under the provisions of a
specific treaty or agreement with the tax authorities in the country in which
the Non-U.S. Holder resides or is established.
Under the Current Regulations, U.S. backup withholding tax, which generally
is imposed at the rate of 31% on applicable payments to persons that fail to
furnish the information required under the U.S. information reporting
requirements, as well as information reporting requirements, other than those
discussed in the previous paragraph, generally will not apply to dividends paid
on common stock to a Non-U.S. Holder at an address outside the United States.
Backup withholding and information reporting generally will apply, however, to
dividends paid on shares of common stock to a Non-U.S. Holder at an address in
the United States if the holder fails to establish an exemption or to provide
other required information to the payor.
Under the Current Regulations, the payment of proceeds from the disposition
of common stock to or through a U.S. office of a broker will be subject to
information reporting and backup withholding, unless the beneficial owner, under
penalties of perjury, certifies, among other things, its status as a Non-U.S.
Holder or otherwise establishes an exemption. The payment of proceeds from the
disposition of common
49
<PAGE>
stock to or through a Non-U.S. office of a broker generally will not be subject
to backup withholding and information reporting, unless the payee is
- A U.S. person
- a "controlled foreign corporation" for U.S. federal income tax purposes,
or
- a foreign person 50% or more of whose gross income from a specified period
is effectively connected with a U.S. trade or business, information
reporting, but not backup withholding, will apply unless the broker has
documentary evidence in its files that the owner is a Non U.S. Holder and
other conditions are satisfied, or the beneficial owner otherwise
establishes an exemption, and the broker has no actual knowledge to the
contrary
Under the Final Regulations, generally effective for payments made after
December 31, 2000, the payment of dividends or the payment of proceeds from the
disposition of our common stock to a Non-U.S. Holder may be subject to
information reporting and backup withholding unless the recipient satisfies the
certification requirements of the Final Regulations or otherwise establishes an
exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a non-U.S. Holder can be refunded or
credited against the Non-U.S. Holder's U.S. federal income tax liability, if
any, PROVIDED that the required information is furnished to the Internal Revenue
service in a timely manner.
THE FOREGOING DISCUSSION OF THESE U.S. FEDERAL INCOME TAX CONSIDERATIONS IS
NOT TAX ADVICE AND IS NOT BASED ON AN OPINION OF COUNSEL. ACCORDINGLY, EACH
PROSPECTIVE NON-U.S. HOLDER OF COMMON STOCK SHOULD CONSULT THAT HOLDER'S OWN TAX
ADVISER WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON STOCK.
50
<PAGE>
UNDERWRITERS
WITH RESPECT TO THE OFFERING OF SHARES IN THE UNITED STATES AND CANADA,
MORGAN STANLEY & CO. INCORPORATED AND GOLDMAN, SACHS & CO. ARE ACTING AS JOINT
BOOK-RUNNING MANAGERS AND SALOMON SMITH BARNEY INC. IS ACTING AS CO-LEAD
MANAGER. WITH RESPECT TO THE OFFERING OF SHARES OUTSIDE OF THE UNITED STATES AND
CANADA, MORGAN STANLEY & CO. INTERNATIONAL LIMITED AND GOLDMAN SACHS
INTERNATIONAL ARE ACTING AS JOINT BOOK-RUNNING MANAGERS AND SALOMON BROTHERS
INTERNATIONAL LIMITED IS ACTING AS CO-LEAD MANAGER.
Under the terms and subject to the conditions contained in the underwriting
agreement, dated the date of this prospectus, the U.S. underwriters named below,
for whom Morgan Stanley & Co., Incorporated, Goldman, Sachs & Co., Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Paine Webber Incorporated and U.S.
Bancorp Piper Jaffray Inc. are acting as U.S. representatives, and the
international underwriters named below for whom Morgan Stanley & Co.
International Limited, Goldman Sachs International, Salomon Brothers
International Limited, Deutsche Bank AG London, PaineWebber International (U.K.)
Ltd. and U.S. Bancorp Piper Jaffray Inc. are acting as international
representatives, have severally agreed to purchase, and we have agreed to sell
to them, the respective number of shares of common stock set forth opposite the
names of these underwriters below:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................................................
Goldman, Sachs & Co. ........................................................................
Salomon Smith Barney Inc. ...................................................................
Deutsche Bank Securities Inc. ...............................................................
PaineWebber Incorporated.....................................................................
U.S. Bancorp Piper Jaffray Inc. .............................................................
-----------
Subtotal................................................................................... 3,200,000
-----------
International Underwriters:
Morgan Stanley & Co. International Limited...................................................
Goldman Sachs International..................................................................
Salomon Brothers International Limited.......................................................
Deutsche Bank AG London......................................................................
PaineWebber International (U.K.) Ltd.........................................................
U.S. Bancorp Piper Jaffray Inc. .............................................................
-----------
Subtotal................................................................................... 800,000
-----------
Total.................................................................................... 4,000,000
===========
</TABLE>
The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively referred
to as the underwriters and the representatives, respectively. The underwriting
agreement provides that the obligations of the several underwriters to pay for
and accept delivery of the shares of common stock offered in this prospectus are
subject to the approval of specified legal matters by their counsel and to other
conditions. The underwriters are obligated to take and pay for all the shares of
common stock offered hereby, except those shares covered by the U.S.
underwriters' over-allotment option described below, if any shares are taken.
The underwriters initially propose to offer a portion of the shares of
common stock directly to the public at the public offering price set forth on
the cover page of this prospectus and a portion to some dealers at a price that
represents a concession not in excess of $ per share under the public
offering price. Any underwriter may allow, and these dealers may reallow, a
concession not in excess of $ per share to other underwriters or to other
dealers. After the initial offering of the shares of common stock, the offering
price and other selling terms may be varied by the representatives.
51
<PAGE>
We have granted to the U.S. underwriters an option, exercisable for 30 days
from the date of this prospectus to purchase up to an aggregate of 600,000
additional shares at the public offering price set forth on the cover page of
this prospectus, less underwriting discounts and commissions. The U.S.
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares
offered in this prospectus. To the extent this option is exercised, each U.S.
underwriter will become obligated, subject to specified conditions, to purchase
about the same percentage of additional shares as the number set forth next to
the U.S. underwriter's name in the preceding table bears to the total number of
shares set forth next to the names of all U.S. underwriters in the preceding
table. If the U.S. underwriters' option is exercised in full, the total price to
the public for the offering would be $ , the total underwriting discounts
and commissions would be $ and the total proceeds to TMP Worldwide Inc.
would be $ .
We and our directors and executive officers have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, we will not, during the period ending 90 days after the date of
this prospectus:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into exercisable or exchangeable for common stock or
- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of common
stock, whether any of these transactions described above is to be settled
by delivery of common stock or any other securities, in cash or otherwise
The restrictions described in the preceding list do not apply in a number of
circumstances, including:
- the exchange of shares of Class B common stock for shares of common stock
under the terms of our certificate of incorporation
- the granting of options to officers, directors, employees or consultants,
PROVIDED that these options are not generally exercisable prior to the end
of the lock-up period
- the issuance by us of shares of common stock upon the exercise of options
or warrants or the conversion of securities outstanding on the date of the
underwriting agreement or as of the closing date of this offering, of
which the underwriters have been advised in writing
- the issuance of up to 2,500,000 shares of common stock in connection with
acquisitions
- the exercise of options granted pursuant to our stock option plans or
- the sale or other transfer of any shares of common stock by the foregoing
persons to any associate, as this term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, if this person agrees to be bound by the
foregoing provisions.
In order to facilitate our offering of common stock, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the common stock. Specifically, the underwriters may over-allot in connection
with the offering, creating a short position in common stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
common stock, the underwriters may bid for, and purchase, shares of common stock
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing common stock
in the offering, if the syndicate repurchases previously distributed common
stock in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of common stock above independent market levels. The underwriters
are not required to engage in these activities, and may end any of these
activities at any time.
52
<PAGE>
Some of the underwriters engage in transactions with, and perform services
for, our company in the ordinary course of business and have engaged and may in
the future engage in commercial banking and investment banking transactions with
us, for which they receive customary compensation.
We have agreed with the underwriters to indemnify each other against some
liabilities relating to this offering, including liabilities under the
Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of common stock we are offering will be passed
upon for us by Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103. Certain legal matters in connection with this offering will be passed
upon for the underwriters by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements and schedules of TMP incorporated by
reference in this prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods indicated in
their reports incorporated in this prospectus by reference, and are incorporated
in this prospectus in reliance upon such reports given upon the authority of
that firm as experts in accounting and auditing.
The consolidated balance sheets of Morgan & Banks Limited as of
December 31, 1998 and March 31, 1998 and 1997, the consolidated statements of
operations and stockholders' equity for the year ended December 31, 1998 and
each of the three years in the period ended March 31, 1998 and the statements of
cash flows for the nine months ended December 31, 1998 and the three years in
the period ended March 31, 1998, are incorporated by reference in this
prospectus in reliance on the report of Pannell Kerr Forster, independent
auditors, given upon the authority of that firm as experts in accounting and
auditing.
The consolidated audited financial statements and schedule of LAI Worldwide,
Inc. incorporated by reference in this prospectus and elsewhere in this
registration statement, have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect thereto
and are incorporated by reference in reliance upon the authority of said firm as
experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our website at http:// www.tmpw.com or at the SEC's website at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 until this offering is finished. This prospectus is part of a
registration statement we filed with the SEC (Registration No. 333- ).
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999.
53
<PAGE>
(c) The description of the Company's common stock contained in Item 1 of
the Company's Registration Statement on Form 8-A, dated October 16, 1996.
(d) The Company's Current Report on Form 8-K, dated December 1, 1999,
which includes the supplemental consolidated condensed financial statements
and the supplemental consolidated financial statements relating to the
restatement of the Company's consolidated financial statements as of
September 30, 1999 and December 31, 1998 and 1997 and for the nine months
ended September 30, 1999 and 1998 and for each of the three years in the
period ended December 31, 1998 to reflect the mergers with Highland Search
Group L.L.C. on October 21, 1999 and TMC S.r.l. on October 27, 1999, which
are being accounted for as poolings of interests.
(e) The Company's Current Report on Form 8-K, dated October 21, 1999,
relating to the announcement of the acquisition of the Highland Search Group
L.L.C.
(f) Pages F-1 through F-22 and pages 48-53 of the Company's Registration
Statement on Form S-4, file No. 333-82531, filed July 9, 1999 relating to
the consolidated financial statements of LAI Worldwide, Inc. as of
February 28, 1999 and 1998 and for each of the three years in the period
ended February 28, 1999 and the unaudited pro forma condensed combined
financial statements relating to the merger with LAI Worldwide, Inc.
(g) The Company's Current Report on Form 8-K, dated March 5, 1999,
relating to a press release announcing the results of operations of the
Company for the year ended December 31, 1998, issued by the Company on
March 2, 1999.
(h) The Company's Current Report on Form 8-K, dated February 12, 1999,
relating to the financial statements of Morgan & Banks Limited as of
September 30, 1998 and March 31, 1998 and 1997, for the six months ended
September 30, 1998 and 1997 and for each of the three years in the period
ended March 31, 1998 and the unaudited pro forma condensed combined
financial information relating to the acquisition of Morgan & Banks Limited.
(i) The Company's Current Report on Form 8-K, dated February 1, 1999,
relating to the announcement of the Morgan & Banks Limited acquisition and
the release of the results of the Company's operations for the one month and
ten months ended October 31, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
TMP Worldwide Inc.
1633 Broadway, 33rd Floor, New York, New York 10019
Attention: Investor Relations
(Tel. No. (212) 977-4200)
The contents of our web sites are not part of this prospectus. This
prospectus contains certain of our trademarks and service marks and those of
third parties.
54
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
discounts and commissions) are estimated to be as follows:
<TABLE>
<S> <C>
SEC filing fee.............................................. $ 159,086.40
NASD filing fee............................................. 30,500.00
Nasdaq National Market Listing Fee.......................... 17,500.00
Printing expenses........................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue sky expenses and counsel fees.......................... 5,000.00
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
-------------
Total..................................................... $ *
=============
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
permits indemnification of directors, officers and employees of a corporation
under certain conditions and subject to certain limitations. Article VI of the
By-Laws of the Registrant contains provision for the indemnification of
directors, officers, and employees within the limitations permitted by
Section 145. In addition, the Company has entered into Indemnity Agreements with
its directors and officers which provide the maximum indemnification allowed by
Section 145. The Company's officers and directors are insured against losses
arising from any claim against them as such for wrongful acts or omissions,
subject to certain limitations.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality.*
10.1 Amendment No. 2 to Employment Agreement between TMP
Worldwide Inc. and James J. Treacy, effective as of
October 1, 1999.
10.2 Content License and Interactive Marketing Agreement, dated
as of December 1, 1999, between America Online, Inc. and TMP
Interactive, Inc. d/b/a Monster.com.+
23.1 (a) Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
(b) Consent of BDO Seidman, LLP.
(c) Consent of Pannell Kerr Forster.
(d) Consent of Arthur Andersen LLP.
24 Power of Attorney (on signature page).
</TABLE>
- ------------------------
* To be filed by amendment.
+ A request for confidential treatment was filed for portions of such document.
Confidential portions have been omitted and filed separately with the
Commission as required by Rule 406.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person of the
registrant in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(c) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on December 17, 1999.
<TABLE>
<S> <C> <C>
TMP WORLDWIDE INC.
By: /s/ ANDREW J. MCKELVEY
-----------------------------------------
Andrew J. McKelvey
CHAIRMAN AND CEO
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Andrew J. McKelvey and James J. Treacy, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and his name, place and stead, and in
any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments), and to file the same, and any
subsequent Registration Statement for the same offering which may be filed under
Rule 462(b), with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform such and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ANDREW J. MCKELVEY Chairman, CEO and Director
------------------------------------------- (PRINCIPAL EXECUTIVE December 17, 1999
Andrew J. McKelvey OFFICER)
Executive Vice President,
/s/ JAMES J. TREACY Chief Operating Officer
------------------------------------------- and December 17, 1999
James J. Treacy Director
/s/ BART W. CATALANE Chief Financial Officer
------------------------------------------- (PRINCIPAL FINANCIAL AND December 17, 1999
Bart W. Catalane ACCOUNTING OFFICER)
/s/ GEORGE R. EISELE
------------------------------------------- Director December 17, 1999
George R. Eisele
/s/ MICHAEL KAUFMAN
------------------------------------------- Director December 17, 1999
Michael Kaufman
/s/ JOHN SWANN
------------------------------------------- Director December 17, 1999
John Swann
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality.*
10.1 Amendment No. 2 to Employment Agreement between TMP
Worldwide Inc. and James J. Treacy, effective as of
October 1, 1999.
10.2 Content License and Interactive Marketing Agreement, dated
as of December 1, 1999, between America Online, Inc. and TMP
Interactive, Inc. d/b/a Monster.com.+
23.1 (a) Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
(b) Consent of BDO Seidman, LLP.
(c) Consent of Pannell Kerr Forster.
(d) Consent of Arthur Andersen LLP.
24 Power of Attorney (on signature page).
</TABLE>
- ------------------------
* To be filed by amendment.
+ A request for confidential treatment was filed for portions of such document.
Confidential portions have been omitted and filed separately with the
Commission as required by Rule 24b-2.
<PAGE>
Exhibit 10.1
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
TMP Worldwide Inc. ("TMPW") and James J. Treacy ("Treacy") are
parties to an Employment Agreement, dated November 18, 1996, which employment
agreement was previously amended pursuant to Amendment No. 1 to Employment
Agreement, effective as of September 14, 1998 (the employment agreement, as
heretofore amended, is referred to herein as the "Employment Agreement"), and by
virtue of this Amendment No. 2 to Employment Agreement (the "Amendment
Agreement"), are modifying certain terms of the Employment Agreement, which
amendments are effective as of October 1, 1999.
The parties hereby agree as follows:
1. The first sentence of Section 3 of the Agreement
is hereby amended to read in its entirety as follows:
"TMPW shall pay Treacy, as compensation for services
performed, an annual salary at the rate of $475,000 and, in addition, commencing
in calendar year 1999, Treacy shall be entitled to a bonus of a dollar amount
equal to a percentage of Treacy's annual salary as follows:
<TABLE>
<CAPTION>
Calendar Year Bonus
------------- -----
<S> <C>
1999 25.00%
2000 32.50%
2001 40.00%
2002 45.00%
2003 50.00%
</TABLE>
The bonus will be payable if and only if Treacy and/or the Company
attain such goals during the calendar year in question as determined by mutual
agreement of Treacy and the Chief Executive Officer. Any such bonus shall be
payable in a single lump sum not more than ninety (90) days after the end of the
calendar year with respect to which the bonus is awarded. With respect to
calendar year 2000 and calendar years thereafter during the term of employment
hereunder, the Chief Executive Officer and Treacy shall endeavor to discuss and
determine in good faith the goals on the basis of which the bonus would be
payable prior to the commencement of the year to which they relate (or as soon
as practicable after the commencement of such year). The bonus, if any, shall be
prorated for period of less than a full calendar year."
2. Section 9(b) is amended by deleting the following "; and (iii) his
minimum annual bonus for the twelve-month period following his death".
3. Section 9(c) is amended by deleting the following "his minimum
annual bonus for the twelve-month period following the effective date of
termination of his employment and (iv)".
- 1 -
<PAGE>
4. The last sentence of Section 9(c) is amended by changing the current
reference to "items (ii), (iii) and (iv)" to read "items (ii) and (iii)".
5. Section 9(d) is amended by deleting all references to (i) "and
minimum annual bonus" and (ii) "or minimum bonus".
6. New Sections 9(f), 9(g) and 9(h) are added immediately following
Section 9(e), which new Sections 9(f), 9(g) and 9(h) shall read as follows:
(f) In the event Treacy's employment is terminated by
TMPW for "other reasons", all outstanding options theretofore granted to Treacy
to purchase shares of TMPW Common Stock shall automatically and immediately
become fully vested and exercisable for the balance of the ten year term
provided by the applicable stock option agreement, subject to all other terms of
any such agreement not inconsistent with this sentence.
(g) In the event that Treacy's employment is
terminated by him pursuant to a voluntary resignation within a period of twelve
months following a Change in Control (as defined below), he shall be entitled to
receive the consideration described in Section 9(c) of this agreement, payable
in the manner described in that Section 9(c).
(h) In the event Treacy's employment is terminated by
reason of his death, all options theretofore granted to Treacy shall become
fully vested and exercisable for the shorter of (i) one year or (ii) the balance
of the ten year term provided by the applicable stock option agreement, subject
to all other terms of such agreement not inconsistent with this sentence.
7. The following language is added at the end of Section 10 of the
Employment Agreement immediately after the current last sentence thereof:
"In the event of any "Change in Control" (as defined in the Option
Agreement between Treacy and TMPW dated August 5, 1999) all outstanding options
theretofore granted to Treacy to purchase shares of TMPW Common Stock shall
automatically and immediately become fully vested and exercisable for the
balance of the ten year term provided by the applicable stock option agreement,
subject to all other terms of any such agreement not inconsistent with this
sentence, subject, however, to the provisions set forth below:
(c) Notwithstanding anything in this Section 10 or
Section 9(g) to the contrary, Treacy shall in no event be entitled to
any payment or acceleration of options that would cause any portion of
the amount received by Treacy to constitute an "excess parachute
payment" as defined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). In furtherance of the provisions of this
Section, the following provisions shall apply:
- 2 -
<PAGE>
(1) Anything in this Agreement to the
contrary notwithstanding, in the event that any payment or
acceleration of options by TMPW to or for the benefit of
Treacy (collectively, a "Payment") would be nondeductible by
TMPW for federal income tax purposes because of Section 280G
of the Code, then the aggregate present value of amounts
payable or distributable to or for the benefit of Treacy
pursuant to this Agreement shall be reduced to the Reduced
Amount (as defined below). Any such reduction shall be
accomplished first by reducing the number of options to
acquire TMPW Common Stock which otherwise would have
immediately vested in full, as determined in the reasonable
discretion of the Board of Directors of TMPW (provided that
any options so reduced shall continue to vest in accordance
with the terms of such options irrespective of Treacy's
continued employment or, if earlier, the date or dates on
which such options can vest without being deemed
nondeductible, as determined in the reasonable discretion of
the Board of Directors of TMPW); and second, if necessary, by
reducing cash payments constituting part of the payments or
other consideration to which Treacy has become entitled
(collectively, such cash payments, other consideration and the
aggregate present value of the immediate vesting of options
(calculated in accordance with Section 280G of the Code and
any regulations promulgated thereunder) are referred to as the
"Severance Amount").
(2) The "Reduced Amount" shall be the
amount, expressed in present value, which maximizes the
aggregate present value of the Severance Amount without
causing any Payment to be nondeductible by TMPW because of
Section 280G of the Code. For purposes of this clause (2),
present value shall be determined in accordance with Section
280(d)(4) of the Code.
(3) All determinations required to be made
under this Section 10 shall be made by TMPW's independent
public accountants (the "Accounting Firm") which shall provide
detailed supporting calculations to TMPW and Treacy. Any such
determination by the Accounting Firm shall be binding upon
TMPW and Treacy.
(4) It is possible that as a result of the
uncertainty in the application of Section 280G of the Code at
the time of the initial determination by the Accounting Firm,
a portion of the Severance Amount will have been made by TMPW
which should not have been made ("Overpayment") or that an
amount in addition to the Severance Payment which will not
have been made could have been made ("Underpayment"), in each
case, consistent with the calculations required to be made
hereunder.
(x) OVERPAYMENT. In the event that the
Accounting Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against
Treacy which the Accounting Firm believes has a high
probability
- 3 -
<PAGE>
of success, determines that an Overpayment has been
made, any such Overpayment paid or distributed by
TMPW to or for the benefit of Treacy shall be treated
for all purposes as a loan ab initio (from the
beginning) to Treacy which Treacy shall repay to TMPW
together with interest at the applicable federal rate
provided for in Section 1274(d) of the Code.
(y) UNDERPAYMENT. If precedent or other
substantial authority indicates that an Underpayment
has occurred, any such Underpayment shall be promptly
paid by TMPW to or for the benefit of Treacy together
with interest at the applicable federal rate provided
for in Section 1274(d) of the Code.
8. The Employment Agreement, as amended by this
Amendment Agreement, is hereby ratified and confirmed and remains in full force
and effect.
The parties hereto have executed this Amendment Agreement on
November 2, 1999.
TMP WORLDWIDE INC.
By: /s/ Andrew J. McKelvey
---------------------------------
By: Andrew J. McKelvey
Title:
/s/ James J. Treacy
-----------------------------------
James J. Treacy
- 4 -
<PAGE>
Exhibit 10.2
EXECUTION COPY
CONFIDENTIAL
CONTENT LICENSE AND INTERACTIVE MARKETING AGREEMENT
This Content License and Interactive Marketing Agreement (the
"Agreement"), dated as of December 1, 1999 (the "Effective Date"), is between
America Online, Inc. ("AOL"), a Delaware corporation, with offices at 22000 AOL
Way, Dulles, Virginia 20166, and TMP Interactive, Inc. d/b/a Monster.com
("Interactive Content Partner" or "ICP"), a Delaware corporation, with offices
at 5 Clock Tower Place, Suite 500, Maynard, Massachusetts 01754. AOL and ICP may
be referred to individually as a "Party" and collectively as the "Parties."
RECITALS
A. ICP is the leading provider of online career information, job search
tools, resume building and resume search tools, and job listing and
resume data.
B. In certain areas of the AOL Properties, AOL currently offers online
career-related content to AOL Users, including classified listings and
career related information.
C. AOL and ICP each desires that ICP be the exclusive provider of the
products and services specified in Section 3.1 hereof, and that AOL
promote and distribute several co-branded interactive sites
collectively referred to (and further defined) herein as the Affiliated
ICP Sites.
D. This relationship is further described below and is subject to the
terms and conditions set forth in this Agreement.
E. Defined terms used but not defined in the body of the Agreement will be
as defined on Exhibit B attached hereto.
AGREEMENT
1. PROMOTION, DISTRIBUTION AND MARKETING.
1.1. AOL PROMOTION OF AFFILIATED ICP SITES.
1.1.1. Subject to the terms of this Agreement, AOL will provide
ICP with the phased promotions for the Affiliated ICP
Sites described on Exhibit A attached hereto. Subject to
ICP's approval (not to be unreasonably withheld), AOL
will have the right to fulfill its promotional
commitments with respect to any of the foregoing by
providing ICP comparable promotional placements in
appropriate alternative areas of the AOL Properties. In
addition, if AOL is unable to deliver any particular
Promotion, AOL will work with ICP to provide ICP, as its
sole remedy, a comparable promotional placement. AOL
reserves the right to redesign or modify the
organization, structure, "look and feel," navigation and
other elements of the AOL Network at any time. In the
event such modifications materially and adversely affect
any specific Promotion, AOL will work with ICP to
provide ICP, as its sole remedy, a comparable
promotional placement. As used throughout this
Agreement, the phrases "comparable promotional
placements" or "comparable promotions" shall mean
placements which are of comparable overall value,
[*****], to be determined based on a variety of factors,
including without limitation size, quality, type (e.g.,
integrated or banner), location (I.E., page or screen
and the subject matter thereof) and /or demographically
targeted relevance, audience reach (taking into
CONFIDENTIAL
<PAGE>
EXECUTION COPY
account the targeted nature of the placement) and the
performance of the placement (i.e., response rate of AOL
Users).
1.1.2. In the event the Parties cannot mutually agree as to a
comparable promotional placement as addressed in Section
1.1.1, such matter shall be submitted to the Management
Committee as provided in Section 6 of this Agreement. In
the event that the Management Committee is unable to
agree as to a comparable promotional placement within
fifteen (15) days from commencement of good-faith
negotiations, the Management Committee shall jointly
select a mediator (or, if the Management Committee
cannot agree on a mediator, a mediator designated by the
American Arbitration Association). [*****]
1.2 INTEGRATION IMPRESSIONS COMMITMENT; BANNER IMPRESSIONS COMMITMENT.
1.2.1 INTEGRATION. During the Initial Term, AOL shall
integrate the integrated Promotions set forth on Exhibit
A hereto and designated as "Integrated Impressions" into
the Career Areas so as to deliver to ICP [*****]
Integrated Impressions as set forth on Exhibit A
(collectively, the "Integrated Impressions Commitment").
With respect to the Integrated Impressions targets
specified on Exhibit A, AOL will not be obligated to
provide in excess of any Integrated Impressions target
amounts in any Year. In the event of an excess in
delivery of Integrated Impressions, ICP shall have no
obligation to compensate AOL therefor and AOL shall have
no right to deduct all or any portion of such
overdelivery from the subsequent Year's Integrated
Impressions target. Any shortfall in Integrated
Impressions at the end of a Year will not be deemed a
breach of the Agreement by AOL; instead any such
shortfall greater than [*****] percent ([*****]%) of the
annual Integrated Impressions target for such Year (as
set forth on Exhibit A) will be added to the Integrated
Impressions target for the subsequent Year (as set forth
on Exhibit A). In the event there is (or will be in
AOL's reasonable judgment) a shortfall in Integrated
Impressions as of the end of the Initial Term greater
than twenty five percent of the total Integrated
Impressions Commitment for the Term as set forth on
Exhibit A (an "Integrated Impressions Final Shortfall"),
AOL will, within twelve (12) months of the end of the
Initial Term, provide ICP, as its sole remedy, with
Integrated Impressions equal in number to the Integrated
Impressions Final Shortfall, which Integrated
Impressions will point to the Principal ICP Interactive
Site.
1.2.2. BANNER IMPRESSIONS. During the Initial Term, AOL shall
deliver to ICP [*****] Banner Impressions (as
designated on Exhibit A) in the areas of the AOL
Properties set forth on Exhibit A hereto (the "Banner
Impressions Commitment"). AOL shall use commercially
reasonable efforts to deliver the Banner Impressions as
evenly as possible over the course of the Initial Term.
With respect to the Banner Impressions targets specified
on Exhibit A, AOL will not be obligated to provide in
excess of any Banner Impressions target amounts in any
Year. In the event AOL provides an excess of any annual
Banner Impressions target amounts in any Year, the
Banner Impressions target for the subsequent Year will
be reduced by the amount of such excess, up to a maximum
of [*****] percent ([*****]%) of any such Banner
Impressions Target. Any shortfall in Banner Impressions
at the end of a Year will not be deemed a breach of the
Agreement by AOL; instead the entire
CONFIDENTIAL
2
<PAGE>
EXECUTION COPY
amount of such shortfall will be added to the Banner
Impressions target for the subsequent Year. In the event
there is (or will be in AOL's reasonable judgment) a
shortfall in Banner Impressions as of the end of the
Initial Term (a "Banner Impressions Final Shortfall"),
AOL will, within twelve (12) months of the end of the
Initial Term, provide ICP, as its sole remedy, with
comparable Banner Impressions equal in number to the
Banner Impressions Final Shortfall, which Banner
Impressions will point to the Principal ICP Interactive
Site.
1.3 CONTENT OF PROMOTIONS. The Promotions will link to the
Affiliated ICP Sites and will promote only the ICP Products
described on Exhibit D; provided, however, that prior to the
launch of the Affiliated ICP Sites and during any Renewal Term,
the Promotions will link to the Principal ICP Interactive Site.
ICP agrees that it shall make no material change to the nature
of or content offerings on the Principal ICP Interactive Site
prior to the launch of the Affiliated ICP Sites. The specific
ICP Content to be contained within the Promotions described in
Exhibit A (the "Promo Content") will be determined by ICP,
subject to AOL's technical limitations, the terms of this
Agreement and AOL's then existing generally applicable policies
relating to advertising and promotions (the "Ad Policies"),
[*****]. ICP will submit in advance to AOL for its review a
quarterly online marketing plan with respect to the Affiliated
ICP Sites. The Parties will meet in person or by telephone at
least monthly to (i) review operations and performance
hereunder, including a review of the Promo Content to ensure
that it is designed to maximize performance and (ii) review the
specific format, placement, duration and nature of the
Promotions relating to Banner Impressions which AOL has
determined to use in its reasonable editorial discretion
(consistent with the editorial composition of the applicable
screens) upon consultation with ICP. In order to optimize the
Promo Content, ICP will update such Promo Content no less than
twice per month or at such other frequency as practicable, as
the Parties shall mutually determine. Except to the extent
expressly described herein, and subject to the terms of this
Agreement, including, without limitation, AOL's right to
redesign or modify the AOL Network, the specific format,
placement, duration and nature of the Promotions relating to
Integrated Impressions will be as set forth in the Programming
Plan.
1.4 ICP PROMOTION OF AFFILIATED ICP SITES AND AOL. As set forth in
fuller detail in Exhibit C, ICP will promote AOL's Interactive
Service on the Principal ICP Interactive Site and will at its
discretion promote the availability of the Affiliated ICP Sites
through the AOL Properties. ICP agrees not to promote any other
Interactive Service as its preferred Interactive Service during
the Term and will consider, in ICP's sole discretion, promoting
AOL as ICP's preferred Interactive Service when appropriate. In
the event that ICP proposes to institute with another Interactive
Service a promotion similar to the promotion set forth on Exhibit
C, ICP will grant AOL the right to participate in the same or a
similar promotion on the same terms offered to such other
Interactive Service.
2 AFFILIATED ICP SITES.
2.1 CONTENT; LOCAL CONTENT. ICP will make available through the
Affiliated ICP Sites (when constructed) the comprehensive offering
of career-related Products and related Content described on
Exhibit D to this Agreement to the same extent as provided on the
Principal ICP Interactive Site. Except as mutually agreed in
writing by the Parties, the Affiliated ICP Sites will contain only
Content that is directly related to the ICP Products listed on
Exhibit D, and the programming objectives listed in the
Programming Plan. On the Affiliated ICP Sites ICP will not
promote, sell, offer or otherwise distribute any products or
services other than those
CONFIDENTIAL
3
<PAGE>
EXECUTION COPY
related to jobs or careers or other than as set forth on
Exhibit D. ICP may in its discretion utilize any sales format
to distribute the Products on Exhibit D, [*****]. Additionally,
ICP shall not direct AOL Users accessing the Affiliated ICP
Sites to contact ICP through any non-online means (e.g.,
telephone) other than as a means of providing customer service
or technical assistance. ICP will review, delete, edit, create,
update and otherwise manage all Content available on or through
the Affiliated ICP Sites in accordance with the terms of this
Agreement. ICP will ensure that the Affiliated ICP Sites do not
in any respect promote, advertise, market or distribute (a) the
products, services or content of any other Interactive Service
or (b) AOL Premier Partner Categories (except that (i) the
foregoing restrictions shall not apply to job listings or
Project Profiles posted by any Interactive Service or by the
marketer of products or services within any AOL Premier Partner
Category which ICP includes on the Affiliated ICP Sites in the
ordinary course, and (ii) ICP shall not be responsible for
enforcing these restrictions with respect to any advertisements
on the Affiliated ICP Sites which are placed by AOL in
accordance with Section 2.10.1). ICP shall ensure, to the
extent feasible, that job listings represent opportunities
which are available at the time of listing (e.g., no general
ads for employment agencies) and any such listings shall be
removed from the Affiliated ICP Sites as promptly as possible
following notification to ICP (or knowledge of ICP) of the
filling of such positions. In the event that ICP elects to
include local Content or information on the Affiliated ICP
Sites, ICP shall feature Digital City as the sole provider of
local city information on such Site(s) and (ii) provide links
from such Site(s) to specific Digital City resources to be
mutually agreed upon by the Parties (e.g., maps, weather,
dining guides, destination guides, etc.). In the event that ICP
elects to include local content or information on the Principal
ICP Interactive Site, ICP (i) shall include Digital CIty as a
local content provider and (ii) shall not promote any other
party as a premier or preferred provider of such local content;
provided that the Digital City areas of the Principal ICP
Interactive Site shall feature co-branding in accordance with
ICP's reasonable co-branding requirements, which shall be
similar in format to the co-branded AOL/Digital City Affiliated
ICP Site.
2.2 EDITORIAL CONTENT. As further described in the Programming Plan,
ICP shall provide AOL with certain content designed to supplement
the Products specified on Exhibit D (e.g., articles, job search
advice, etc.) (collectively, "Editorial Content") that will be
accessed by AOL Users through the Career Areas. In the event that
AOL reasonably desires to offer Editorial Content in a particular
category not then offered by ICP, AOL shall notify ICP of its
desire to offer such Editorial Content, and the Parties shall work
together to jointly develop a strategy for obtaining Editorial
Content for such particular category on or through the relevant
AOL Property (to the reasonable satisfaction of AOL) within thirty
(30) days following AOL's request. The Parties anticipate that ICP
will be willing to develop and provide Editorial Content for any
particular category as reasonably requested by AOL. The Parties
acknowledge that AOL is permitted under this Agreement to procure
Editorial Content from sources other than ICP.
2.3 COMPLEMENTARY PRODUCTS AND SERVICES. Subject to Section 4.8, in
the event that ICP desires to offer any of the Complementary
Products and Services on or through any Affiliated ICP Site, ICP
shall notify AOL of such desire, and the Parties shall negotiate
in good faith (subject to the terms of any then-existing
agreements with respect to any such Complementary Products and
Services to which AOL may then be a party) in an effort to
incorporate such Complementary Products and Services into the
Affiliated ICP Site(s).
CONFIDENTIAL
4
<PAGE>
EXECUTION COPY
2.4 PRODUCTION WORK. Except as agreed to in writing by the Parties
pursuant to Section 10 of Exhibit F hereto and Section 2.10
hereof, ICP will be responsible for all production work associated
with the Affiliated ICP Sites, including all related costs and
expenses.
2.5 TECHNOLOGY. ICP will take all commercially reasonable steps
necessary to conform its promotion and offering of the ICP
Products through the Affiliated ICP Sites to the then-existing
technologies identified by AOL which are optimized for the AOL
Properties. AOL will be entitled to require reasonable changes to
the technological aspects of the Content within any linked pages
of any Affiliated ICP Site to the extent such technological
aspects of the Content will, in AOL's good faith judgment,
materially adversely affect any operational aspect of the AOL
Network, PROVIDED that the incremental investment is reasonable
relative to the AOL User traffic and is in accordance with
accepted industry standards. AOL reserves the right to review and
test the Affiliated ICP Sites from time to time to determine
whether the sites are compatible with AOL's then-available client
and host software and the AOL Network. AOL shall provide ICP
without charge reasonable technical assistance and guidance
necessary to help ICP comply with the requirements of this Section
2.5, provided, however, that ICP shall bear all its own internal
costs related to its compliance hereunder. ICP acknowledges that
ICQ may require changes to, and programming of, the ICQ-Monster
Affiliated ICP Site that differs from the other Affiliated ICP
Sites. ICP shall use commercially reasonable efforts to comply
with ICQ's requirements hereunder. In the event that ICP's
compliance with this Section 2.5 causes a material adverse effect
on ICP's ability to perform under this Agreement, ICP may submit
such matter to the Management Committee to devise an appropriate
resolution to alleviate the effects of compliance.
2.6 PRODUCTS OFFERING. Subject to the limitations on Affiliated ICP
Site Content contained in Section 2.1 above, ICP will ensure that
each of the Affiliated ICP Sites includes all of the job listings,
resume builder, resume database, and other Content (including,
without limitation, any features, offers, contests, functionality
or technology) that are then made available by or on behalf of ICP
through the Principal ICP Interactive Site; PROVIDED, HOWEVER,
that such inclusion will not be required where it is commercially
or technically impractical to either Party (i.e., inclusion would
cause either Party to incur substantial incremental costs or
contravenes the terms of any agreement); and provided, further
that to the extent AOL exercises any right it may have under this
Agreement not to permit certain Content or Products to be included
in the Affiliated ICP Sites, ICP's obligation under this Section
2.6 shall be excused. The Parties acknowledge and agree that the
Affiliated ICP Sites will require password access by an AOL User
to such AOL User's resume in the resume database and that an AOL
User shall not be permitted to access any other user's resume
through any Affiliated ICP Site.
2.7 PRICING AND TERMS. ICP will ensure that: (i) the prices (and any
other required consideration), to the extent applicable, for
Products in the Affiliated ICP Sites do not exceed the prices for
the Products or substantially similar Products offered by or on
behalf of ICP generally through the Principal ICP Interactive Site
or other distribution channels, and (ii) the terms and conditions
related to Products in the Affiliated ICP Sites are no less
favorable in any material respect to the terms and conditions for
the Products or substantially similar Products offered by or on
behalf of ICP generally through the Principal ICP Interactive Site
or other distribution channels.
2.8 EXCLUSIVE OFFERS/MEMBER BENEFITS. ICP will generally promote
through the Affiliated ICP Sites any special or promotional offers
made available by or on behalf of ICP through the Principal ICP
Interactive Site. ICP shall not be required to comply with the
foregoing if compliance therewith would cause a breach by ICP with
any of its contractual obligations existing on the date hereof. In
addition, ICP shall promote through the Affiliated ICP Sites (in
no event less then once per quarter) special offers exclusively
available to AOL Users (the "AOL Exclusive Offers"). The AOL
Exclusive Offer made available by ICP shall provide a
CONFIDENTIAL
5
<PAGE>
EXECUTION COPY
substantial member benefit to AOL Users. AOL Exclusive Offers to
be made available by ICP may from time to time consist of the AOL
Exclusive Offers listed on Exhibit D-1 attached hereto. ICP will
provide AOL with reasonable prior notice of AOL Exclusive Offers
so that AOL can market the availability of such AOL Exclusive
Offers in the manner AOL deems appropriate in its editorial
discretion.
2.9 OPERATING STANDARDS. ICP will ensure that the Affiliated ICP
Sites comply in all material respects at all times with the
standard set forth in Exhibit E. In the event ICP fails to
comply with any material terms of Exhibit E, AOL shall upon
notice to ICP have the right to suspend the Promotion
immediately and if such non-compliance continues for more than
[*****] days beyond AOL's written notice to ICP of such
non-compliance, AOL will have the right (as its sole remedy
other than in the event of termination for ICP's breach, which
remedy shall not be affected hereby) to decrease the
Impressions it provides to ICP hereunder on a proportional
basis until such time as ICP corrects its non-compliance (and
in such event, AOL will be relieved of the proportionate amount
of any Impressions Commitment made to ICP by AOL hereunder
corresponding to such decrease in promotion) and any revenue
threshold(s) set forth in Section 4 (and Exhibits K and L
hereto) will each be adjusted proportionately to correspond to
such decrease in the Impressions Commitment. Once ICP has
brought the Affiliated ICP Sites back into compliance with the
material terms of Exhibit E, AOL shall promptly resume the
Promotion. In the event that during the Initial Term the AOL
Properties (or any significant portion thereof) are
non-operational for a total of [*****] over any [*****] day
period (provided that no day shall be counted in more than one
[*****] day period), AOL shall provide ICP, as its sole remedy,
for each such [*****] day period thereafter, with a number of
Impressions equal to one forty-eighth (1/48) of the total
Impressions to be provided during the Initial Term; provided,
however, that if the AOL Properties (or any significant portion
thereof) are non-operational for more than [*****] hours (but
not including normally scheduled upgrades and maintenance
activities) in any [*****] day period, ICP shall be entitled to
terminate this Agreement for material breach.
2.10 ADVERTISING SALES.
2.10.1 AFFILIATED ICP SITES. AOL shall have the exclusive right
and obligation to license or sell promotions,
advertisements, links, pointers or similar services or
rights ("Advertisements") on or through the Affiliated
ICP Sites, in its reasonable discretion. The specific
advertising inventory within the Affiliated ICP Sites
will be as reasonably determined by AOL; PROVIDED,
HOWEVER, that AOL shall not sell or license anywhere
within the Career Areas any such Advertisements to any,
nor shall any such Advertisements promote, (i)
recruiting verticals (e.g., "journalismjobs.com"), (ii)
newspaper classifieds (but Advertisements may promote
single classified verticals (e.g., cars), so long as the
user cannot navigate to other classified areas), (iii)
ICP Competitors or (iv) other categories of advertisers
of whom ICP notifies AOL in writing; provided, however,
that (a) any new categories added pursuant to this
Section 2.10.1(iv) shall not affect then existing AOL
contractual commitments and (b) in the event that AOL
reasonably believes that the addition of new categories
has materially limited AOL's ability to meet its
obligations under this Section 2.10.1, AOL may refer the
issue to the Management Committee for resolution.
2.10.2 PRINCIPAL ICP INTERACTIVE SITE. As soon as reasonably
practical following the Effective Date, the Parties will
mutually agree upon an annual operating plan (the "Ad
Program") whereby both AOL and ICP will, in coordination
with each other, establish banner advertising inventory
space within the Principal ICP Interactive
CONFIDENTIAL
6
<PAGE>
EXECUTION COPY
Site, pricing guidelines and revenue projections for the
sale of such inventory space, and objectives for the
sale of such inventory space. The Parties acknowledge
and agree that (unless otherwise agreed by the Parties),
ICP shall be solely responsible for selling or licensing
banner Advertisements to human resources personnel or
HR-related entities, and, in its sole discretion, may
reserve up to [*****] percent ([*****]%) of all other
banner advertising inventory (to be used for ICP
cross-promotions and makegoods, but not offered for sale
by ICP to any third party). (AOL shall receive no
revenue share from any Advertisement sold, licensed or
used by ICP.) AOL shall be solely responsible for
selling or licensing the balance of the banner
advertising inventory to all other third parties. In the
event that AOL shall fail to sell at least [*****]
percent ([*****]%) of the advertising inventory in the
Principal ICP Interactive Site during any nine-month
period, the Parties shall discuss measures by which AOL
shall be able to sell more advertising inventory (the
"Advertising Enhancement Discussions"). If (i) the
Parties are unable to agree, within thirty (30) days) as
to measures by which AOL, can attempt to improve its
advertising sales on the Principal ICP Interactive Site
or (ii) AOL fails to sell at least [*****] percent
([*****]%) of the advertising inventory in the Principal
ICP Interactive Site within sixty (60) days following
such Advertising Enhancement Discussions, ICP shall
have the right to sell all of (or, to the extent
agreed upon by the Parties, a portion of) the
advertising inventory formerly sold by AOL on such
Site, AOL shall cease selling the relevant
advertising inventory agreed upon by the Parties, and
AOL shall receive a mutually agreed-upon revenue
share for the advertising inventory (if any) which
continues to be sold by AOL during the remainder of
the Term. AOL shall not sell any placement for banner
advertising extending beyond the term of this
Agreement.
2.10.3 INCLUSION OF ICP SALES FORCE IN PITCHES. Where feasible
and commercially reasonable, AOL and ICP shall work
together to include members of the ICP sales force in
advertising sales pitches to third parties.
2.10.4 ADVERTISING CONTENT. The content of the Advertisements
sold by AOL pursuant to this Section 2.10, whether on or
through the Affiliated ICP Sites or the Principal ICP
Interactive Site, shall not include any unlawful or
reasonably objectionable material (including without
limitation any pornographic, defamatory, racist, sexist
or salacious matter).
2.11 TRAFFIC FLOW; MEMBER ODD JOBS. ICP will use commercially
reasonable efforts to ensure that AOL traffic is either kept
within the Affiliated ICP Sites or channeled back into the AOL
Properties (with the exception of advertising links sold and
implemented pursuant to the Agreement and the Content implemented
pursuant to Section 2.6). The Parties will work together on
implementing mutually acceptable, prominent links from the
Affiliated ICP Sites back to (i) AOL Workplace or the main screen
of ClassifiedPlus of the appropriate AOL Property, below the
toolbar on such main screen (or, in the event of any redesign of
such area, in a comparable location) and/or (ii) the "Member Odd
Jobs" area of the AOL Service. In the event that AOL points to any
Affiliated ICP Site or any other ICP Interactive Site or otherwise
delivers traffic to such site hereunder, ICP will ensure that
navigation back to the AOL Properties from such site, whether
through a particular pointer or link, the "back" button on an
Internet browser, the closing of an active window, or any other
return mechanism, shall not be interrupted by ICP through the use
of any intermediate screen or other device not specifically
requested by the user, including without limitation through the
use of any html pop-up window or any other similar device.
CONFIDENTIAL
7
<PAGE>
EXECUTION COPY
2.12 PRODUCTION AND TECHNOLOGY. To the extent set forth in the
Programming Plan, ICP shall use commercially reasonable efforts
(i) to customize specific features for AOL Users and (ii) to
integrate ICP job listings into the main screens of
ClassifiedPlus. During the Term, the Parties shall mutually agree
to a regular editorial calendar and shall consult each other
regarding routine editorial issues.
2.13 CUSTOMIZATION OF AFFILIATED ICP SITES AND ICP RATINGS CREDIT. Each
Affiliated ICP Site shall contain "headers" and "footers" (as
further reflected in the Programming Plan) provided by AOL that
will include co-branding for, and links back to, the appropriate
AOL Property (e.g., in the event that the relevant AOL User comes
to the relevant Affiliated ICP Site from the CompuServe Service,
such Affiliated ICP Site shall contain CompuServe Service
co-branding (in form and substance satisfactory to AOL) and shall
provide navigational links back to the ClassifiedPlus area of the
CompuServe Service or the Workplace Area of the AOL Service, as
applicable). At ICP's election, each Affiliated ICP Site and
[*****] on the AOL Properties shall be located on a URL
provided by [*****] and/or the URL for the applicable AOL Property
(e.g., www.monster.aol.com, www.monster.compuserve.com,
www.aol.monster.com, www.compuserve.monster.com, etc.); provided,
however, that upon Media Metrix's public announcement of the
availability of a syndicated report, the Parties will reconsider
in good-faith the selection of such URLs. The purpose of such
reconsideration shall be to endeavor to obtain for both Parties
credit for user traffic (but in no event shall such
reconsideration result in ICP receiving less credit for traffic,
page views, unique visits or reach). [*****]
2.14 ENTERPRISE AND COMMERCE SOLUTIONS/TOOLS. AOL and ICP shall explore
in good faith the potential for AOL to supply back-end commerce
solutions to ICP through AOL's alliance with Sun Microsystems and
and/or Netscape Communications Corporation, provided that such
solutions are determined by ICP to be superior to solutions used
or contemplated to be used by ICP.
2.15 USE OF COMPONENT PRODUCTS.
2.15.1 AFFILIATED ICP SITES. In the event that ICP elects to
use or integrate any tools or functionality (other than
tools owned by ICP or existing solutions) similar to any
AOL Component Products into any Affiliated ICP Site(s),
ICP shall use or integrate into such Affiliated ICP
Site(s) the relevant AOL Component Products to the
extent that such products are comparable (in terms of
cost and performance) to similar component products
offered by any third parties and to the extent that the
transition costs (but not the cost of the AOL Component
Product) are minimal. AOL shall provide AOL Component
Products at a price no less favorable than the price
offered to its other Interactive Content Partners and
Marketing Partners.
2.15.2 PRINCIPAL ICP INTERACTIVE SITE. In the event that after
the Effective Date ICP elects to use or integrate any
such tools or functionality (other than tools owned by
ICP or existing solutions) into the Principal ICP
Interactive Site, ICP shall use or integrate the
relevant AOL Component Products to the extent that such
products are comparable (in terms of cost and
performance) to similar component products offered by
any third parties and to the extent that the transition
costs (but not the cost of the AOL Component Product)
are minimal. AOL shall provide
CONFIDENTIAL
8
<PAGE>
EXECUTION COPY
AOL Component Products at a price no less favorable than
the price offered to its other Interactive Content
Partners and Marketing Partners.
2.16 LAUNCH OF AFFILIATED ICP SITES. ICP shall launch the Affiliated
ICP Site associated with the Workplace and ClassifiedPlus areas
within the AOL Service within [*****] days of the Effective
Date and other Affiliated ICP Sites within [*****] days after
the Effective Date. AOL shall without charge provide ICP with
reasonable assistance to aid in the launch of the Affiliated ICP
Sites. To the extent that the launch of any Affiliated ICP Site
is delayed due to AOL's actions or inaction, the aforesaid launch
dates shall be extended by the period of such delay.
2.17 ClassifiedPlus; JOBS DATABASE.
2.17.1 LINKS. Any individual ICP classifieds listing on any
Results Screen may link to a more detailed description
of such listing. Any First Level Detail Screen may link
to an even more detailed description (a "Second Level
Detail Screen"). All Search Screens, Results Screens and
First Level Detail Screens shall be within the AOL
Properties, hosted and produced by AOL. Each Second
Level Detail Screen shall be within the Affiliated ICP
Site hosted and produced by ICP at ICP's expense,
subject to the terms hereof. Each First Level Detail
Screen for ICP classifieds listings may include three
active links to any page within the Affiliated ICP Site
reasonably designated by ICP and two static (i.e.,
images that are not links) graphic images (one picture,
one logo). Creative materials for such links and graphic
images shall be provided to AOL by ICP under the terms
of this Agreement.
2.17.2 MODIFICATIONS. AOL reserves the right to redesign or
modify the organization, structure, "look and feel,"
navigation and other elements of ClassifiedPlus, at any
time, and will have full and ongoing final approval in
its discretion of the design, layout, look and feel,
content (but not Content provided by ICP hereunder),
advertising inventory, commerce inventory, user
interface, functionalities and all other aspects of
ClassifiedPlus. Without limiting the foregoing, AOL in
consultation with ICP: (i) shall have the right to make
material alterations to ClassifiedPlus, (ii) may promote
other areas of the AOL Properties in ClassifiedPlus,
including via links and banners, and (iii) shall own and
control all rights to third party advertising and sales
relationships with commercial and individual listings
sources to ClassifiedPlus, subject to the restrictions
on advertising sales specified in Section 2.10.1. In the
event any modifications to the AOL Properties materially
and adversely affect any specific ICP promotion herein,
AOL will provide ICP with comparable promotional
placements as reasonably determined by the Parties.
Notwithstanding the foregoing, AOL shall (i) have no
right to influence over, or to request changes in, the
structure of ICP's databases; and (ii) have no right,
title or interest in all or any portion of ICP's
databases.
2.17.3 JOBS DATABASE. ICP shall deliver the Jobs Database in an
electronic format or formats as specified by AOL from
time to time for the sole purpose of including such Jobs
Database in ClassifiedPlus, and ICP shall update such
Jobs Database daily. AOL may display the Database and/or
individual ICP classified listings within the Database
in ClassifiedPlus in AOL's discretion, provided that AOL
shall not alter or delete specific job postings. Unless
otherwise mutually agreed by the Parties, AOL shall not
co-mingle ICP's Jobs Database with other classified
listings of other parties or AOL. ICP shall provide all
reasonable assistance to ensure that the integration of
the Jobs Database into ClassifiedPlus is error-free.
CONFIDENTIAL
9
<PAGE>
EXECUTION COPY
2.17.4 OWNERSHIP OF ClassifiedPlus. Subject to Section 2.21
hereof, AOL owns and shall own, whether now or hereafter
created or existing, all title and other rights to the
ClassifiedPlus area, including without limitation the
look and feel thereof, all search engines, user
interfaces, any technology used therein, any brand names
or other intellectual property relating thereto, any
derivative works thereto, and all documentation related
thereto created by AOL, but specifically excluding the
Jobs Database (which shall remain the exclusive property
of ICP).
2.18 CORPORATE HUMAN RESOURCES SERVICES. AOL shall have the right to
receive ICP's corporate human resources services at a discount of
at least fifty percent (50%) of ICP's standard rates for services
exclusively provided by ICP.
2.19 LICENSE. During the Term, ICP hereby grants to AOL, solely for the
purpose of, and only to the extent necessary for, AOL's
performance under this Agreement, a non-exclusive, royalty-free,
worldwide license to market, distribute, display, perform,
transmit and promote the Content provided by ICP hereunder
(collectively, the "Licensed Content") (or any portion thereof)
through the AOL Properties and the ICP Affiliated Sites. In
addition, users of the AOL Properties will have the right to
access and use the Affiliated ICP Sites.
2.20 PERFORMANCE/QUALITY CRITERIA. The Parties mutually intend to
create on the AOL Properties and the Affiliated ICP Sites a
superior career resource for AOL Users. To ensure that the quality
of the career resources provided by ICP will be maintained, ICP
commits that it will be at all times during the Initial Term in
the top [*****] of all online career search Interactive Sites
(but the Career Areas shall not constitute an online career search
Interactive Site separate and apart from ICP) as measured by a
cross-section of third party reviewers who are recognized
authorities in such industry as selected by the Management
Committee. ICP's failure to bring the Affiliated ICP Sites into
compliance with the quality standards set forth in this Section
within [*****] days shall constitute a material breach of this
Agreement; provided, however, that if ICP is unable to remedy such
breach within the cure period set forth in Section 5.4 of the
Agreement, AOL's sole remedy for such breach shall be termination
of this Agreement.
2.21 OWNERSHIP OF ICP-SUPPLIED CONTENT.
ICP exclusively owns and shall own, whether now or hereafter
created or existing, all right, title and interest in and to
Content supplied or offered hereunder by ICP (including without
limitation job listings, resumes, profiles, databases, etc.) and
all intellectual property rights therein (including without
limitation copyrights and other rights of authorship, patents,
trademarks and trade secrets) and AOL agrees that all such Content
and rights owned by ICP shall remain the sole and exclusive
property of ICP.
3. ICP EXCLUSIVE STATUS.
3.1. EXCLUSIVE STATUS. During the Initial Term, ICP shall be the
exclusive provider on the AOL Properties and the Affiliated ICP
Sites of (i) jobs listings, jobs posting, jobs databases and
jobs searching (including job agent and job alert emails), but
not of non-aggregated advertising for specific employers on
Digital City, (ii) resume builder tools, resume postings and
resume databases, (iii) executive search, selection and
outplacement, (iv) independent contractor profiles, (v) Project
Profiles, (vi) temporary employment services, and (vii) Talent
Market (collectively, the "Exclusive Services"). AOL shall not
promote on the AOL Properties services or products of any other
party which are equivalent to the Exclusive Services.
3.2. EXCEPTIONS. No provision of this Agreement will limit AOL's
ability to:
CONFIDENTIAL
10
<PAGE>
EXECUTION COPY
(i) [*****]
(ii) [*****]
(iii) [*****]
(iv) [*****]
(v) [*****]
(vi) [*****]
(vii) [*****]
(viii) [*****]
CONFIDENTIAL
11
<PAGE>
EXECUTION COPY
4. PAYMENTS.
4.1. PAYMENT. Subject to the terms of this Agreement, ICP will pay AOL
a payment of One Hundred Four Million Dollars ($100,000,000),
payable as follows:
(i) [*****]
(ii) [*****]
(iii) [*****]
4.2. SHARING OF ADVERTISING REVENUES. The Parties will share
Advertising Revenues as follows: (i) in connection with the sale
or licensing of any Advertisement on any Affiliated ICP Site, AOL
shall pay ICP [*****] percent ([*****]%) of the Advertising
Revenues generated by any such sale or licensing and (ii) in
connection with the sale or licensing of any banner Advertisement
on or through the Principal ICP Interactive Site, the selling
party shall pay the non-selling party the percentages of the
Advertising Revenues generated by any such sale or licensing set
forth on Exhibit K hereto. AOL, however, shall not be entitled to
any revenue share for advertisements sold by ICP on the Principal
ICP Interactive Site to the extent permitted under Section 2.10.2
of this Agreement. Each Party will pay the other Party all
Advertising Revenues received and owed to such other Party as
described herein on a quarterly basis within thirty (30) days
following the end of the quarter in which such amounts were
generated by such Party.
4.3. SHARING OF JOB LISTING REVENUES; BOUNTIES. AOL shall receive the
share of Job Listing Revenues set forth on Exhibit L, as well as
the Resume Acquisition Bounties, Personal Alert Profile
Acquisition Bounties and Virtual Career Fair Fees (if any)
specified in Exhibit L, all subject to the hurdles set forth (and
as defined) therein. ICP will pay AOL its share of the Job Listing
Revenues and the Bounties owed to AOL as described on Exhibit L on
a quarterly basis within thirty (30) days following the end of the
quarter in which such Job Listing Revenues and Bounties were
generated.
4.4. LATE PAYMENTS; WIRED PAYMENTS. All amounts owed hereunder not paid
when due and payable will bear interest from the date such amounts
are due and payable at the prime rate in effect at such time. All
payments required hereunder will be paid in immediately available,
non-refundable U.S. funds wired to (i) in the case of payments to
AOL, the "America Online" account, Account Number 323070752 at The
Chase Manhattan Bank, 1 Chase Manhattan Plaza, New York, NY 10081
(ABA: 021000021), or (ii) in the case of payments to ICP, the "TMP
Worldwide Inc." account, Account Number 99939084 at the Fifth
Third Bank, Cincinnati, Ohio (ABA: 042000314).
4.5. AUDITING RIGHTS. Each Party will maintain complete, clear and
accurate records of all revenues and fees in connection with the
performance of this Agreement. For the sole purpose of ensuring
compliance with this Agreement, each Party will have the right,
CONFIDENTIAL
12
<PAGE>
EXECUTION COPY
exercisable not more than once every twelve (12) months, to
appoint an independent certified public accountant to conduct a
reasonable and necessary inspection of portions of the books and
records of the other Party which are relevant to the payment of
amounts payable pursuant to this Agreement. Any such audit may be
conducted after twenty (20) business days prior written notice.
The Party initiating the audit shall bear the expense of any audit
conducted pursuant to this Section 4.5 unless such audit shows an
error in the other Party's favor amounting to a deficiency in
excess of five percent (5%) of the actual amounts paid and/or
payable hereunder, in which event the Party being audited shall
bear the reasonable expenses of the audit. The Party being audited
shall pay the other Party the amount of any deficiency discovered
by the audit within thirty (30) days after receipt of written
notice thereof.
4.6. TAXES. ICP will collect and pay and indemnify and hold AOL
harmless from any sales, use, excise or similar tax including any
penalties and interest, as well as any costs associated with the
collection or withholding thereof, including attorney's fees which
arises out of (1) the sale by ICP of tangible personal property or
any taxable service (including but not limited to advertising) to
AOL, or (2) any transaction between ICP and customers other than
AOL. AOL will collect and pay and indemnify and hold ICP harmless
from any sales, use, excise, internet access, telecommunication or
any other similar tax or fee solely to the extent arising out of
AOL's performance hereunder including any penalties and interest,
as well as any costs associated with the collection or withholding
thereof, including attorney's fees which arises in connection with
actions taken, or transactions engaged in, by AOL other than those
taxes that directly relate to (1) the sale by ICP of tangible
personal property or any taxable service to AOL, or (2) any
transaction between ICP and its customers other than AOL.
4.7. REPORTS.
4.7.1. TRANSACTION REPORTS. ICP will provide AOL in an
automated manner with a monthly report in an
AOL-designated format detailing the following activity
in such period (and any other information mutually
agreed upon by the Parties or reasonably required for
measuring revenue activity by ICP through the Affiliated
ICP Sites): summary transaction information by day
(e.g., revenues from customers and partners, number of
job listings, number of resume listings, repeat usage
percentages, etc.) (collectively, "Transaction
Reports"). AOL shall without charge provide reasonable
assistance to ICP in designing and implementing the
Transaction Reports. AOL will be entitled to use the
Transaction Reports in its business operations, subject
to the terms of this Agreement. More generally, each
payment to be made by ICP pursuant to this Section 4
will be accompanied by a report containing information
which supports the payment, including information
identifying (i) gross transaction revenues and (ii) any
applicable Advertising Revenues. AOL acknowledges that
such reports may contain ICP's Confidential Information
as defined herein.
4.7.2. USAGE REPORTS. AOL shall provide ICP on a monthly basis
with standard usage information related to the
Promotions (e.g., a schedule of the Impressions
delivered by AOL at such time, numbers of click
throughs, etc.) which is similar in substance and form
to the reports provided by AOL to other interactive
marketing partners similar to ICP. ICP acknowledges that
such information may be Confidential Information as
defined herein. Subject to the terms of this Agreement,
ICP shall be entitled to use such reports in its
internal business operations, and if ICP believes that
it has legitimate business reasons to disclose such
information to a third party, AOL will consider any
request for such third party disclosure in good faith
and its consent shall not be unreasonably withheld.
CONFIDENTIAL
13
<PAGE>
EXECUTION COPY
4.7.3. FRAUDULENT TRANSACTIONS. To the extent permitted by
applicable laws, ICP will provide AOL with a prompt
report of any fraudulent order, including the date,
screenname or email address and amount associated with
such order, promptly following ICP obtaining knowledge
that the order is, in fact, fraudulent.
4.8 ALTERNATIVE REVENUE STREAMS. In the event that ICP receives or
desires to receive (directly or indirectly) any compensation in
connection with any Affiliated ICP Sites other than with respect
to (i) the Products set forth on Exhibit D hereof or (ii)
Advertising Revenues (an "Alternative Revenue Stream"), ICP shall
promptly inform AOL in writing and request AOL's approval, which
approval shall not be unreasonably withheld, but may be
conditioned upon the negotiation of an acceptable revenue sharing
relationship (including appropriate hurdles) between the Parties.
5. TERM; RENEWAL; TERMINATION.
5.1. TERM. Unless earlier terminated as set forth herein, the initial
term of this Agreement will be four (4) years from the Effective
Date (the "Initial Term").
5.2. RENEWAL. Upon conclusion of the Initial Term, AOL will have the
right to renew the Agreement for two (2) successive one-year
renewal terms (each a "Renewal Term" and together with the Initial
Term, the "Term"). During any such Renewal Term: (i) ICP will not
be required to pay any fixed payments specified in Section 4.1 or
perform the cross-promotional obligations specified in Section 1;
(ii) AOL will not be required to undertake any fixed exclusivity
or promotional/placement obligations; and (iii) AOL shall have the
right to receive the Bounties and revenue share payments
referenced in Section 4.3 hereof, without regard to any
performance hurdles set forth therein. A Renewal Term shall
automatically commence following the expiration of the Initial
Term (or prior Renewal Term, as the case may be), provided that
AOL shall be entitled to terminate any such Renewal Term with
ninety (90) days prior written notice to ICP. Notwithstanding the
foregoing, ICP may terminate this Agreement on thirty (30) days
prior written notice to AOL in the event that AOL acquires or
forms or is acquired by an ICP Competitor during any Renewal Term.
5.3. CONTINUED LINKS; WIND-DOWN.
5.3.1. CONTINUED LINKS. Upon expiration of the Term, AOL may,
in its discretion, continue to promote one or more
"pointers" or links from the AOL Properties to the
Principal ICP Interactive Site and continue to use ICP's
trade names, trade marks and service marks in connection
therewith (collectively, a "Continued Link"). With
respect to only the first year after the expiration of
the Term, and provided that AOL maintains a Continued
Link during such period, (a) ICP shall pay AOL the share
of Job Listing Revenues required pursuant to Section 4.3
hereof (but no other payments described in Section 4.3),
without regard to any performance hurdles set forth
therein, and (b) Sections 4.5, 4.6 and 4.7 shall
continue to apply with respect to the Continued Link and
any transactions arising therefrom.
5.3.2. WIND-DOWN. Upon expiration of the Term, AOL Users shall
have the right to access any of the features of the
Affiliated ICP Site which shall be transferred to the
Principal ICP Interactive Site (including, without
limitation, any resume builder product or any other
employment-related services (e.g., auction services,
temporary employment services, etc.)), and AOL Users
shall have the right to access, update and/or remove
their resumes from relevant ICP databases.
Notwithstanding any provision of this Agreement to the
contrary, ICP shall be entitled to maintain and use on
an exclusive basis AOL Keywords: Monster and
CONFIDENTIAL
14
<PAGE>
EXECUTION COPY
Monster.com for a two (2) year period following the
expiration of the Term and such keyword shall link to
such ICP Interactive Site as ICP shall designate.
5.4. TERMINATION FOR BREACH. Except as expressly provided elsewhere in
this Agreement, either Party may terminate this Agreement
including at any time in the event of a material breach of the
Agreement by the other Party which remains uncured after thirty
(30) days written notice thereof to the other Party (or such
shorter period as may be specified elsewhere in this Agreement);
provided that the cure period with respect to any scheduled
payment will be fifteen (15) days from the date of notice of
non-payment. Notwithstanding the foregoing, in the event of a
material breach of a provision that expressly requires action to
be completed within an express period shorter than 30 days, either
Party may terminate this Agreement if the breach remains uncured
for such shorter period after written notice thereof to the other
Party. Notwithstanding the foregoing, the Parties agree that this
Agreement shall not terminate during any period during which the
Parties retain a third party mediator in accordance with Section
6.1. In the event that either Party shall terminate this Agreement
during the Initial Term pursuant to this Section 5.4, ICP shall
have no obligation to make further payments hereunder and AOL
shall pay ICP a pro rata refund of the payments theretofore made
by ICP pursuant to Section 4.1 calculated in accordance with the
Pro Rata Refund Formula; provided, however, that AOL shall have no
obligation to pay ICP a pro rata refund in the event that AOL
terminates this Agreement as a result of ICP's failure to make
payments due hereunder (an "ICP Nonpayment Termination").In the
event that AOL is awarded damages against ICP in connection with
an ICP Nonpayment Termination, ICP shall have the right to
decrease the amount of such damages by the Offset Amount;
provided, however, that ICP shall in no event be entitled to, or
have any interest in the Offset Amount, except to satisfy
(partially or in full, as the case may be) such damages awarded to
AOL. For the purposes of this Agreement, the "Offset Amount" shall
mean, upon an ICP Nonpayment Termination, the amount equal to the
difference between (a) the total amount paid by ICP to AOL
pursuant to Section 4.1 of this Agreement as of the date of such
ICP Nonpayment Termination and (b) the product of $100,000,000
multiplied by a fraction the numerator of which shall be the total
number of days elapsed in the Initial term and the denominator of
which shall be 1461.
5.5. TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may terminate
this Agreement immediately following written notice to the other
Party if the other Party (i) ceases to do business in the normal
course, (ii) becomes or is declared insolvent or bankrupt, (iii)
is the subject of any proceeding related to its liquidation or
insolvency (whether voluntary or involuntary) which is not
dismissed within ninety (90) calendar days or (iv) makes an
assignment for the benefit of creditors.
5.6. TERMINATION ON CHANGE OF CONTROL. In the event of (i) a Change of
Control of ICP resulting in control of ICP by an Interactive
Service, AOL may terminate this Agreement within thirty (30) days
after such Change of Control; (ii) a Change of Control of AOL
resulting in control of AOL by an ICP Competitor, ICP may
terminate this Agreement; or (iii) a Change of Control of AOL, AOL
or ICP may terminate this Agreement by providing forty five (45)
days prior written notice of such intent to terminate, but such
notice must be given within thirty (30) days after such Change of
Control. In the event that AOL shall terminate this Agreement
pursuant to this Section 5.6, ICP shall have no obligation to make
further payments hereunder and AOL shall pay ICP a pro rata refund
of the payments theretofore made pursuant to Section 4.1,
calculated in accordance with the Pro Rata Refund Formula.
5.7. PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to
the other Party, for its prior written approval, which will not be
unreasonably withheld or delayed, any marketing,
CONFIDENTIAL
15
<PAGE>
EXECUTION COPY
advertising, or other promotional materials, including Press
Releases, related to the Affiliated ICP Sites and/or referencing
the other Party and/or its trade names, trademarks, and service
marks (the "Promotional Materials"); provided, however, that
either Party's use of screen shots of any Affiliated ICP Site for
promotional purposes will not require the approval of the other
Party so long as America Online-Registered Trademark- is clearly
identified as the source of such screen shots; and provided
further, however, that, following the initial public announcement
of the business relationship between the Parties in accordance
with the approval and other requirements contained herein, either
Party's subsequent factual reference to the existence of a
business relationship between the Parties in Promotional
Materials, will not require the approval of the other Party. Each
Party will solicit and reasonably consider the views of the other
Party in designing and implementing such Promotional Materials.
Once approved, the Promotional Materials may be used by a Party
and its affiliates for the purpose of promoting any such
Affiliated ICP Site and the content contained therein and reused
for such purpose until such approval is withdrawn with reasonable
prior notice. In the event such approval is withdrawn, existing
inventories of Promotional Materials may be depleted. In the
event that either Party issues a press release or other
promotional material in contravention of the requirements of this
Section 5.7, at the demand of the other Party, such Party shall
issue within forty eight (48) hours of demand therefor an equally
prominent (as reasonably determined by the other Party) press
release retracting the previous press release or other
promotional material, as the case may be.
6. MANAGEMENT COMMITTEE; JURISDICTION.
6.1. MANAGEMENT COMMITTEE. The Parties will act in good faith and use
commercially reasonable efforts to promptly resolve any claim,
dispute, claim, controversy or disagreement (each a "Dispute")
between the Parties or any of their respective subsidiaries,
affiliates, successors and assigns under or related to this
Agreement or any document executed pursuant to this Agreement or
any of the transactions contemplated hereby. If the Parties cannot
resolve the Dispute within such time frame, the Dispute will be
submitted to the Management Committee for resolution. For ten (10)
days following submission of the Dispute to the Management
Committee, the Management Committee will have the exclusive right
to resolve such Dispute; provided further that the Management
Committee will have the final and exclusive right to resolve
Disputes arising from any provision of the Agreement which
expressly or implicitly provides for the Parties to reach mutual
agreement as to certain terms. If the Management Committee is
unable to amicably resolve the Dispute during the ten-day period,
then the Management Committee will consider in good faith the
possibility of retaining a third party mediator to facilitate
resolution of the Dispute (except that mediation is mandatory if
required pursuant to Section 1.1 of this Agreement). In the event
the Management Committee elects not to retain a mediator, the
dispute will be subject to resolution by litigation. "Management
Committee" will mean a committee made up of a senior executive
from each of the Parties for the purpose of resolving Disputes
under this Section 6 and generally overseeing the relationship
between the Parties contemplated by this Agreement. Neither Party
will seek, nor will be entitled to seek, binding outside
resolution of the Dispute unless and until the Parties have been
unable amicably to resolve the Dispute as set forth in this
Section 6.
6.2. CHOICE OF LAW; JURISDICTION. Any Dispute that is not finally
resolved by the Management Committee (collectively, "Claims") will
be resolved in a court of competent jurisdiction in either the
State of Delaware. Each Party irrevocably consents to the
exclusive jurisdiction of the courts of the State of Delaware and
the federal courts situated in those
CONFIDENTIAL
16
<PAGE>
EXECUTION COPY
states over any and all Claims and any and all actions to enforce
such claims or to recover damages or other relief in connection
with such Claims. Each Party will pay the fees of its own
attorneys, expenses of witnesses and all other expenses and costs
in connection with the presentation of such Party's case
(collectively, "Attorneys' Fees").
7. EFFECT ON NETCENTER SERVICES AGREEMENT. This Agreement supersedes in its
entirety that certain Netcenter Services Agreement dated as of April
29,1998 by and between Netscape Communications Corporation and ICP
(collectively, the "NSA"), and the NSA is hereby expressly terminated and
shall be of no further force and effect. ICP shall receive a prorated
credit hereunder for any amounts which have been paid but unaccrued under
the NSA, which shall be credited against the payment to be made pursuant to
Section 4.1(ii).
8. EFFECT ON ASSIGNMENT AGREEMENT. This Agreement supersedes in its entirety
that certain Assignment Agreement dated as of June 1,1998 by and between
AOL, ICP and i Village, Inc., a Delaware corporation (the "AA"), and the AA
is hereby expressly terminated and shall be of no further force and effect.
The Parties agree that no amounts shall be payable under the AA as of the
date hereof or in the future.
9. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set forth
on Exhibit F attached hereto and Standard Legal Terms & Conditions set
forth on Exhibit G attached hereto are each hereby made a part of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
CONFIDENTIAL
17
<PAGE>
EXECUTION COPY
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
AMERICA ONLINE, INC. TMP INTERACTIVE, INC.
By: /s/ David M. Colburn By: /s/ Jeff Taylor
-------------------------------- ----------------------------
Name Name:
Title: President - Business Affairs Title: President
CONFIDENTIAL
18
<PAGE>
EXECUTION COPY
EXHIBIT A
PLACEMENT/PROMOTION
I. CARRIAGE PLAN - SEE ATTACHED
II. SEARCH TERMS
A. During the Term, subject to the terms and conditions hereof, ICP
shall have the exclusive right to use the following Keyword Search Terms:
Monster.com and Monster (the "ICP Keywords"). The ICP Keywords shall point
directly to a co-branded first screen on the Affiliated ICP Site.
B. During the Term, the generic search terms job, jobs, employment,
self-employment, career, careers, help wanted, executive search, free agent,
free agents, resumes and independent professional (collectively, the Generic
Keyword Search Terms") will point to career-related areas that contain ICP
placements or Content within the AOL Properties, to be determined by AOL in its
reasonable discretion upon consultation with ICP (the "Generic Search Term
Right"), PROVIDED that the ICP placements or Content shall appear prominently on
such page, subject to the Programming Plan. In the event that any AOL Property
does not have a Career Area, the Generic Keyword Search Terms on such AOL
Property shall point to the appropriate Affiliated ICP Site or, if none, to the
Principal ICP Interactive Site.
C. Notwithstanding the foregoing, the delivery of the Generic Search
Terms and the ICP Keywords shall be subject to compliance by ICP with its
material obligations set forth in this Agreement, including, without limitation,
the obligations set forth on Exhibit C to this Agreement. In the event that any
third party reasonably claims any proprietary right in any of the Generic Search
Terms, AOL shall have the right to immediately terminate the Generic Search Term
Right.
CONFIDENTIAL
19
<PAGE>
EXECUTION COPY
CARRIAGE PLAN:
INTEGRATED IMPRESSIONS AND PERMANENT
PLACEMENTS
<TABLE>
<CAPTION>
AOL SERVICE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Teen Career Decision Guide Special 12/10/99 12/9/03
Offer Button on Overview Pages (AOL [*****] [*****] [*****] [*****] [*****]
Service only) (permanent)
Permanent Contextual Promotion in "My 12/10/99 12/9/03
AOL" Interests Tab [*****] [*****] [*****] [*****] [*****]
Careers Newsletter (1X per month) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Workplace Job Search Screen (permanent) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Workplace Job Search Results 12/10/99 12/9/03
(permanent) [*****] [*****] [*****] [*****] [*****]
TBD Content Integration (permanent) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Workplace Professions (permanent) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Workplace Job Search & Job Alerts on 12/10/99 12/9/03
Main Screen (permanent) [*****] [*****] [*****] [*****] [*****]
Workplace - Post a Resume (permanent) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
AOL.com START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Int. Branded Placements on Careers 12/10/99 12/9/03
Webcenter Main and Jobs Dept. (perm.) [*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
DCI START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jobs & Careers - City Main Page - 12/10/99 12/9/03
Monster Search, Post & Agent Promo [*****] [*****] [*****] [*****] [*****]
Jobs & Careers - Jobs Postings - Non 12/10/99 12/9/03
clickable Logo [*****] [*****] [*****] [*****] [*****]
Jobs & Careers - Jobs Listing Search 12/10/99 12/9/03
Agent - Rotating Text [*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
NETSCAPE NETCENTER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Career Center Main Page - Career 12/10/99 12/9/03
Toolkit (permanent) [*****] [*****] [*****] [*****] [*****]
Career Center Job Search Results 12/10/99 12/9/03
(permanent) [*****] [*****] [*****] [*****] [*****]
</TABLE>
CONFIDENTIAL
20
<PAGE>
EXECUTION COPY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
ICQ START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Registration Center Listing - listing 12/10/99 12/9/03
of ICQ Jobs (powered by Monster) in - - - - -
registration center
Contact List Integration - enabling 12/10/99 12/9/03
inbound/outbound functionality for ICQ - - - - -
Jobs (powered by Monster)
Plugins - extending functionalities on 12/10/99 12/9/03
ICQ specific to ICQ Jobs (powered by - - - - -
Monster)
Viral Marketing/Propagation - enabling 12/10/99 12/9/03
ICQ users to send ICQ Jobs (powered by - - - - -
Monster) to each other
Scrolling News Ticker - content 12/10/99 12/9/03
programming of multiple channels by - - - - -
Monster
Content Integration - Monster content 12/10/99 12/9/03
integrated into ICQ Portal Jobs and - - - - -
Careers Channel
====================================================================================================================================
0 0 0 0
-
</TABLE>
<TABLE>
<CAPTION>
COMPUSERVE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Premiere Aggregator Placement in the 12/10/99 12/9/03
Career Center on CS and CS.com: [*****] [*****] [*****] [*****] [*****]
Branded (permanent)
Premiere Positioning on CS and CS.com 12/10/99 12/9/03
Web Centers in the Research and [*****] [*****] [*****] [*****] [*****]
Education Center (permanent)
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AOL Canada Workplace Mainscreen
AOL.CA - Careers channel
Netscape.CA Careers area
====================================================================================================================================
0 0 0 0
-
</TABLE>
<TABLE>
<CAPTION>
CROSS BRAND PRODUCTS START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Classifieds Plus Employment Main 12/10/99 12/9/03
Screen (permanent) [*****] [*****] [*****] [*****] [*****]
Classifieds Job Search Screen 12/10/99 12/9/03
(permanent) [*****] [*****] [*****] [*****] [*****]
Classifieds Job Results Screen 12/10/99 12/9/03
(permanent) [*****] [*****] [*****] [*****] [*****]
</TABLE>
CONFIDENTIAL
21
<PAGE>
EXECUTION COPY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Classifieds Post a Resume Screen 12/10/99 12/9/03
(permanent) [*****] [*****] [*****] [*****] [*****]
Career Decision Guide Anchor Tenant on 12/10/99 12/9/03
Main and Results Pages (Across All [*****] [*****] [*****] [*****] [*****]
Brands) (permanent)
Career Decision Guide Special Offer 12/10/99 12/9/03
Button on Overview Pages (Across All [*****] [*****] [*****] [*****] [*****]
Brands) (permanent)
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
TOTALS [*****] [*****] [*****] [*****] [*****]
</TABLE>
BANNER IMPRESSIONS
<TABLE>
<CAPTION>
AOL SERVICE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Business News Feeds Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Personal Finance ROS Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
News ROS Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Teens ROS Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Email ROS 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
AOL.COM START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
My News - Run of Entertainment News 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
My News - Run of Sports 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
My News - Run of Top News 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Search 2000 - Terms TBD 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
AIM 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
DCI START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DCI ROS Banners 12/10/99 234X60
[*****] [*****] [*****] [*****] [*****]
</TABLE>
CONFIDENTIAL
22
<PAGE>
EXECUTION COPY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
DCI ROS Text DCI ROS Text
Text [*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
NETSCAPE NETCENTER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Business Main Page Text Links 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Personal Finance Main Page Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Personal Finance Main Page Text Links 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Personal Finance ROS Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Personal Finance ROS Text Links 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
NSCP Homepage 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
ICQ START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ads (banner, text promos, wingdings, 12/10/99 12/9/03
teasers, related links) in ICQ Portal [*****] [*****] [*****] [*****] [*****]
Channels
Targeted ICQ Search Results (Search 12/10/99 12/9/03
Terms TBD) [*****] [*****] [*****] [*****] [*****]
Targeted co-Browsing Ads (URLs TBD) 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Targeted Web Directory Categories 12/10/99 12/9/03
(Areas/Topics TBD) [*****] [*****] [*****] [*****] [*****]
Portal Channel "What's Related" Links 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Portal Channel Community Links 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Broad Reach 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
COMPUSERVE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Communications Mindset Package Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Business and Professional Mindset 12/10/99 12/9/03
Package Banners [*****] [*****] [*****] [*****] [*****]
Compuserve Main Menu Placements 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
TBD Mindset Package Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
Branded Positioning on CS.com Main 12/10/99 12/9/03
Menu Search Box (permanent) [*****] [*****] [*****] [*****] [*****]
What's New! Scrolling Ticker 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
</TABLE>
CONFIDENTIAL
23
<PAGE>
EXECUTION COPY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AOL Canada ROS 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
</TABLE>
<TABLE>
<CAPTION>
PARTNER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Realtor.com ROS Banners 12/10/99 12/9/03
[*****] [*****] [*****] [*****] [*****]
====================================================================================================================================
[*****] [*****] [*****] [*****] [*****]
TOTALS [*****] [*****] [*****] [*****] [*****]
Grand Total
[*****] [*****] [*****] [*****] [*****]
</TABLE>
Key:
Imps = Impressions
Y1 = Year 1
Y2 = Year 2
Y3 = Year 3
Y4 = Year 4
CONFIDENTIAL
24
<PAGE>
EXECUTION COPY
EXHIBIT B
DEFINITIONS
The following definitions will apply to this Agreement:
AA. "AA" shall have the meaning set forth in Section 8 of this Agreement.
ACTION. "Action" shall have the meaning set forth in Section 9.4 of Exhibit G
hereto.
AD PROGRAM. "Ad Program" shall have the meaning set forth in Section 2.10.2 of
this Agreement.
ADVERTISEMENTS. "Advertisements" shall have the meaning set forth in Section
2.10.1 of this Agreement.
ADVERTISING REVENUES. Aggregate amounts collected plus the fair market value of
any other compensation received (such as barter advertising) by ICP, AOL or
either Party's agents, as the case may be, arising from the license or sale of
advertisements, promotions, links or sponsorships ("Advertisements") that appear
within any pages of (i) any Affiliated ICP Site which may be exclusively
available to AOL Users and/or (ii) the Principal ICP Interactive Site. AOL
Advertising Revenues does not include amounts arising from Advertisements on any
screens or forms preceding, framing or otherwise indirectly associated with any
Affiliated ICP Site, which will be sold exclusively by AOL.
AFFILIATED ICP SITES. The specific customized and co-branded areas or web sites
residing on ICP's servers to be promoted and distributed by AOL hereunder
through which ICP can market and complete transactions regarding its Products.
ALTERNATIVE REVENUE STREAM. "Alternative Revenue Stream" shall have the meaning
set forth in Section 4.9 of this Agreement.
AOL CANADA. The standard AOL Canada brand service, which is optimized for
narrow-band distribution (but may, but need not, be accessed through a
broadband platform), specifically excluding (a) AOL.com, Netcenter or any
other AOL Interactive Site, (b) the America Online brand service and the
international versions of an America Online service (other than the Canadian
version thereof) (E.G., AOL Japan), (c) the CompuServe-Registered Trademark-
brand service and any other CompuServe products or services (d) "ICQ-TM-,"
"AOL NetFind-TM-," "AOL Instant Messenger-TM-," "Digital City,"
"NetMail-TM-," "Real Fans", "Love@AOL", "Entertainment Asylum," "AOL
Hometown," "My News" or any similar independent product, service or property
which may be offered by, through or with the U.S. version of the America
Online-Registered Trademark- brand service, (e) any programming or Content
area offered by or through the U.S. version of the America Online-Registered
Trademark- brand service over which AOL does not exercise substantially
complete operational control (including, without limitation, Content areas
controlled by other parties and member-created Content areas), (f) any yellow
pages, white pages, classifieds or other search, directory or review services
or Content offered by or through the AOL Canada brand service, (g) any
property, feature, product or service which AOL or its affiliates may acquire
subsequent to the Effective Date and (h) any other version of an America
Online service which, by virtue of its branding, distribution, functionality,
Content or services, including, without limitation, any co-branded version of
the service or any version optimized for any broadband distribution platform
or through any platform or device other than a desktop personal computer, is
materially different from the standard AOL Canada brand service, which is
optimized for narrow-band distribution (but may, but need not, be accessed
through a broadband platform).
AOL COMPONENT PRODUCTS. Chat, buddy list, and/or message board technology,
calendars, review services, voice communications or homesteading products or
services.
AOL EXCLUSIVE OFFERS. "AOL Exclusive Offers" shall have the meaning set forth in
Section 2.6 of this Agreement.
CONFIDENTIAL
25
<PAGE>
EXECUTION COPY
AOL INTERACTIVE SITE. Any Interactive Site which is managed, maintained, owned
or controlled by AOL or its agents.
AOL LOOK AND FEEL. The elements of graphics, design, organization, presentation,
layout, user interface, navigation and stylistic convention (including the
digital implementations thereof) which are generally associated with Interactive
Sites within the AOL Service or AOL.com.
AOL MEMBER. Any authorized user of the AOL Service, including any sub-accounts
using the AOL Service under an authorized master account.
AOL NETWORK. (i) The AOL Service, (ii) AOL.com, (iii) CompuServe, (iv) Digital
City, (v) Netscape Web Site, (vi) ICQ, and (vii) any other product or service
owned, operated, distributed or authorized to be distributed by or through AOL
or its affiliates worldwide (and including those properties excluded from the
definitions of the AOL Service or AOL.com). The AOL Network does not include the
Affiliated ICP Sites.
AOL PREMIER PARTNER CATEGORIES. Books (but not career related books), long
distance services, flowers, greeting cards, compact discs (but not career
related compact disks), DVDs and Videos (but not career related DVDs or Videos),
financial services (but not career related financial services) and auctions (but
not including career related auctions such as Talent Market). AOL PROMOS. "AOL
Promos" shall have the meaning set forth in Section A of Exhibit C hereto.
AOL PROPERTIES. The AOL Service, AOL.com, the CompuServe Service, the Netscape
Web Site, Digital City, ICQ and AOL Canada. Each of such properties may be
individually referred to herein as an "AOL Property." The AOL Properties do not
include the Affiliated ICP Sites.
AOL SERVICE. The standard U.S. version of the America Online-Registered
Trademark- brand service, which is optimized for narrow-band distribution
(but may, but need not, be accessed through a broadband platform), or its
successor, specifically excluding (a) AOL.com, Netcenter or any other AOL
Interactive Site, (b) the international versions of an America Online service
(other than the Canadian version thereof, i.e., AOL Canada) (E.G., AOL
Japan), (c) the CompuServe(R) brand service and any other CompuServe products
or services (d) "ICQ-TM-," "AOL NetFind-TM-," "AOL Instant Messenger-TM-,"
"Digital City," "NetMail-TM-," "Real Fans", "Love@AOL", "Entertainment
Asylum," "AOL Hometown," "My News" or any similar independent product,
service or property which may be offered by, through or with the U.S. version
of the America Online-Registered Trademark- brand service, (e) any
programming or Content area offered by or through the U.S. version of the
America Online-Registered Trademark- brand service over which AOL does not
exercise substantially complete operational control (including, without
limitation, Content areas controlled by other parties and member-created
Content areas), (f) any yellow pages, white pages, classifieds or other
search, directory or review services or Content offered by or through the
U.S. version of the America Online-Registered Trademark- brand service, (g)
any property, feature, product or service which AOL or its affiliates may
acquire subsequent to the Effective Date and (h) any other version of an
America Online service which, by virtue of its branding, distribution,
functionality, Content or services, including, without limitation, any
co-branded version of the service or any version optimized for any broadband
distribution platform or through any platform or device other than a desktop
personal computer, is materially different from the standard U.S. version of
the America Online brand service, which is optimized for narrow-band
distribution (but may, but need not, be accessed through a broadband
platform).
AOL USER. Any user of the AOL Service, AOL.com, CompuServe, Digital City,
Netcenter, the AOL Network, or the AOL Properties.
AOL.COM. AOL's primary Internet-based Interactive Site marketed under the
"AOL.COM-TM-" brand, or any successor thereto specifically excluding (a) the AOL
Service, (b) Netcenter, (c) any international versions of such site (other than
the Canadian version thereof, if any), (d) "ICQ," "AOL NetFind-TM-," "AOL
Instant
CONFIDENTIAL
26
<PAGE>
EXECUTION COPY
Messenger-TM-," "NetMail-TM-," "AOL Hometown," "My News" or any similar
independent product or service offered by or through such site or any other AOL
Interactive Site, (e) any programming or Content area offered by or through such
site over which AOL does not exercise substantial operational control
(including, without limitation, Content areas controlled by other parties and
member-created Content areas), (f) any programming or Content area offered by or
through such site which was operated, maintained or controlled by the former AOL
Studios division (e.g., Electra), (g) any yellow pages, white pages, classifieds
or other search, directory or review services or Content offered by or through
such site or any other AOL Interactive Site, (h) any property, feature, product
or service which AOL or its affiliates may acquire subsequent to the Effective
Date and (i) any other version of an America Online Interactive Site which, by
virtue of its branding, distribution, functionality, Content or services,
including, without limitation, any co-branded versions or any version
distributed through any broadband distribution platform or through any platform
or device other than a desktop personal computer, is materially different from
AOL's primary Internet-based Interactive Site marketed under the "AOL.COM-TM-"
brand.
ATTORNEYS' FEES. "Attorneys' Fees" shall have the meaning set forth in Section
6.2 of this Agreement.
BANNER IMPRESSIONS. Those Impressions so designated on Exhibit A.
BANNER IMPRESSIONS COMMITMENT. "Banner Impressions Commitment" shall have the
meaning set forth in Section 1.2.2 of this Agreement.
BANNER IMPRESSIONS FINAL SHORTFALL. "Banner Impressions Final Shortfall" shall
have the meaning set forth in Section 1.2.2 of this Agreement.
BOUNTIES. "Bounties" shall have the meaning set forth in Section 4.3 of this
Agreement.
CAREER AREAS. The WorkPlace and ClassifiedPlus areas (or any similar or
successor areas thereto) of each of the AOL Service, AOL.com, the CompuServe
Service, the Netscape Web Site, ICQ, AOL Canada and Digital City, as well as the
Affiliated ICP Sites.
CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or
consolidation or sale or other disposition of substantially all of the assets of
a party or (b) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either (i) the then outstanding
shares of common stock of such party; or (ii) the combined voting power of the
then outstanding voting securities of such party entitled to vote generally in
the election of directors.
ClassifiedPlus. The ClassifiedPlus or similar area (or any successor area)
which includes employment and other classified listings (e.g., real estate,
employment, general merchandise) on the AOL Properties.
COMPLEMENTARY PRODUCTS AND SERVICES. Any career related product or service other
than those on Exhibit D, such as payroll processing applications.
COMPUSERVE SERVICE. The standard U.S. version of the CompuServe brand service,
which is optimized for narrow-band distribution (but may, but need not, be
accessed through a broadband platform), or its successor thereto specifically
excluding (a) any international versions of such service (other than the
Canadian version thereof, if any), (b) any web-based service including
"compuserve.com", "cserve.com" and "cs.com", or any similar product or service
offered by or through the U.S. version of the CompuServe brand service, (c)
Content areas owned, maintained or controlled by CompuServe affiliates or any
similar "sub-service," (d) any programming or Content area offered by or through
the U.S. version of the CompuServe brand service over which CompuServe does not
exercise substantially complete operational
CONFIDENTIAL
27
<PAGE>
EXECUTION COPY
control (e.g., third-party Content areas), (e) any yellow pages, white pages,
classifieds or other search, directory or review services or Content and (f) any
co-branded or private label branded version of the U.S. version of the
CompuServe brand service, (g) any version of the U.S. version of the CompuServe
brand service which offers Content, distribution, services and/or functionality
materially different from the Content, distribution, services and/or
functionality associated with the standard U.S. version of the CompuServe brand
service, which is optimized for narrow-band distribution (but may, but need not,
be accessed through a broadband platform), including, without limitation, any
version of such service distributed through any platform or device other than a
desktop personal computer and (h) any property, feature, product or service
which CompuServe or its affiliates may acquire subsequent to the Effective Date.
CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the course
of the Agreement, which is or should be reasonably understood to be confidential
or proprietary to the disclosing Party, including, but not limited to, the
material terms of this Agreement, information about AOL Members, AOL Users, and
ICP customers, technical processes and formulas, source codes, product designs,
sales, cost and other unpublished financial information, product and business
plans, projections, and marketing data. "Confidential Information" will not
include information (a) lawfully known to or independently developed by the
receiving Party, (b) disclosed in published materials, (c) generally known to
the public, or (d) lawfully obtained from any third party.
CONTENT. Text, images, video, audio (including, without limitation, music used
in synchronism or timed relation with visual displays) and other data, Products,
advertisements, promotions, URLs, links, pointers and software, including any
modifications, upgrades, updates, enhancements and related documentation.
CONTEST. "Contest" shall have the meaning set forth in Section 3 of Exhibit F
hereto.
CONTINUED LINK. "Continued Link" shall have the meaning set forth in Section
5.3.1 of this Agreement.
CUSTOMERS. "Customers" shall have the meaning set forth in Section 9 of Exhibit
F hereto.
DIGITAL CITY. The standard, U.S. version of Digital City's local content
offerings marketed under the Digital City-Registered Trademark- brand name,
which is optimized for narrow-band distribution (but may, but need not, be
accessed through a broadband platform), or its successors thereto,
specifically excluding (a) the AOL Service, AOL.com, Netcenter, or any other
AOL Interactive Site, (b) any international versions of such local content
offerings (other than the Canadian version thereof, if any), (c) the
CompuServe-Registered Trademark- brand service and any other CompuServe
products or services (d) "ICQ-TM-," "AOL NetFind-TM-," "AOL Instant
Messenger-TM-," "Digital City," "NetMail-TM-," "Electra", "Thrie", "Real
Fans", "Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any
similar independent product, service or property which may be offered by,
through or with the standard narrow band version of Digital City's local
content offerings, (e) any programming or Content area offered by or through
such local content offerings over which AOL does not exercise substantial
operational control (including, without limitation, Content areas controlled
by other parties and member-created Content areas), (f) any yellow pages,
white pages, classifieds or other search, directory or review services or
Content offered by or through such local content offerings, (g) any property,
feature, product or service which AOL or its affiliates may acquire
subsequent to the Effective Date, (h) any other version of a Digital City
local content offering which is materially different from the U.S. version of
Digital City's local content offerings marketed under the Digital
City-Registered Trademark- brand name, which, by virtue of its branding,
distribution, functionality, Content or services, including, without
limitation, any co-branded version of the offerings or any version
distributed through any broadband distribution platform or through any
platform or device other than a desktop personal computer, is optimized for
narrow-band distribution (but may, but need not, be accessed through a
broadband platform), and (i) Digital City-branded offerings in any local area
where such offerings are not owned or operationally controlled by America
Online, Inc. or DCI (e.g., Chicago, Orlando, South Florida, and Hampton
Roads).
CONFIDENTIAL
28
<PAGE>
EXECUTION COPY
DISCLAIMED DAMAGES. "Disclaimed Damages" shall have the meaning set forth in
Section 9.1 of Exhibit G hereto.
DISPUTE. "Dispute" shall have the meaning set forth in Section 6.1 of this
Agreement.
EDITORIAL CONTENT. "Editorial Content" shall have the meaning set forth in
Section 2.2 of this Agreement.
EXCLUSIVE SERVICES. "Exclusive Services" shall have the meaning set forth in
Section 3.1 of this Agreement.
FIRST LEVEL DETAIL SCREEN. The screen with respect to each ICP Classifieds
Listing that is linked to from the Results Screen, resides on AOL's servers, and
provides a textual description of a specific employment opportunity.
ICP COMPETITORS. Any entity which has as a core business the provision of
products or services equivilent to any of the Exclusive Services.
ICP CREDITED PAGE. Any page within the AOL Properties created for the primary
purpose of displaying ICP Content (e.g., a ClassifiedPlus results page showing
ICP Content).
ICP INTERACTIVE SITE. Any Interactive Site (other than the Affiliated ICP Sites)
which is managed, maintained, owned or controlled by ICP or its agents.
ICP NONPAYMENT TERMINATION. "ICP Nonpayment Termination" shall have the meaning
set forth in Section 5.4 of the Agreement.
ICP TECHNICAL PROBLEM. "ICP Technical Problem" shall have the meaning set forth
in Section 5 of Exhibit E hereto.
ICQ. The standard, English-language version of the instant messaging, chat and
"buddy list" service of ICQ as made available by or through ICQ or any affiliate
of ICQ and any successor services thereto, including any Updates to such
service, but specifically excluding (a) "ICQ It!" or any other product, service,
property, programming or Content area over which ICQ or any ICQ affiliate does
not exercise substantial operational control, (b) any non-instant messaging,
non-chat or non-buddy-list services (including, without limitation, e-mail or
e-mail services), (c) ICQ Web hosting, unified messaging, search, co-browsing,
shopping or ticker areas or services (including, without limitation, any related
"push" products or services), (d) any clients unrelated to instant messaging and
buddy lists (e) any property, feature, product or service which ICQ or any ICQ
Affiliate acquires subsequent to the Effective Date, (f) any version of ICQ that
is co-branded with an unaffiliated third party, and (g) any other version of an
ICQ service which, by virtue of its features, functionality or distribution, is
materially different from the platform on which the ICQ Service operates as of
the Effective Date (e.g., an ICQ service designed primarily for distribution
over a cable TV, satellite TV or comparable broadband network, or an ICQ service
designed primarily for distribution to a hand-held, wireless personal digital
assistant (e.g., a Palm VII PDA).
IMPRESSION. A page view containing the applicable Promotion served to a user, as
such page views may be reasonably determined and measured by AOL in accordance
with its standard methodologies and protocols.
INDEMNIFIED PARTY. "Indemnified Party" shall have the meaning set forth in
Section 9.4 of Exhibit G hereto.
INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning set forth in
Section 9.4 of Exhibit G hereto.
CONFIDENTIAL
29
<PAGE>
EXECUTION COPY
INITIAL TERM. "Initial Term" shall have the meaning set forth in Section 5.1 of
this Agreement.
INTEGRATED IMPRESSIONS. "Integrated Impressions" shall have the meaning set
forth in Section 1.2.1 of this Agreement.
INTEGRATED IMPRESSIONS COMMITMENT. "Integrated Impressions Commitment" shall
have the meaning set forth in Section 1.2.1 of this Agreement.
INTEGRATED IMPRESSIONS FINAL SHORTFALL. "Integrated Impressions Final Shortfall"
shall have the meaning set forth in Section 1.2.1 of this Agreement.
INTERACTIVE SERVICE. An entity offering one or more of the following: (i) online
or Internet connectivity services (e.g., an Internet service provider); (ii) an
interactive site or service featuring a broad selection of aggregated third
party interactive content (or navigation thereto) (e.g., an online service or
search and directory service) and/or marketing a broad selection of products
and/or services across numerous interactive commerce categories (e.g., an online
mall or other leading online commerce site); (iii) a persistent desktop client;
and (iv) communications software capable of serving as the principal means
through which a user creates, sends and receives electronic mail or real time
online messages (whether by telephone, computer or other means).
INTERACTIVE SITE. Any interactive site or area, including, by way of example and
without limitation, (i) an ICP site on the World Wide Web portion of the
Internet or (ii) a channel or area delivered through a "push" product such as
the Pointcast Network or interactive environment such as Microsoft's Active
Desktop.
JOB LISTING REVENUES. Amounts owed to ICP by third parties solely in connection
with the posting of employment opportunities on or through the Affiliated ICP
Sites (but not on or through the Principal ICP Interactive Site or any other ICP
Interactive Site), as further described in Section A of Exhibit L hereto.
JOBS DATABASE. The integrated database of ICP's jobs listings to be supplied by
ICP hereunder.
KEYWORD SEARCH TERMS. (a) The Keyword-TM- online search terms made available on
the AOL Service, combining AOL's Keyword-TM- online search modifier with a term
or phrase specifically related to ICP (and determined in accordance with the
terms of this Agreement), and (b) the Go Word online search terms made available
on CompuServe, combining CompuServe's Go Word online search modifier with a term
or phrase specifically related to ICP and determined in accordance with the
terms of this Agreement).
LAUNCH DATE. "Launch Date" shall have the meaning set forth in Section 17 of
Exhibit G hereto.
LIABILITIES. "Liabilities" shall have the meaning set forth in Section 9.3 of
Exhibit G hereto.
LICENSED CONTENT. All Content offered through any Affiliated ICP Site(s)
pursuant to this Agreement or otherwise provided by ICP or its agents in
connection herewith (e.g., offline or online promotional Content, Promotions,
AOL "slideshows" , etc.), including in each case, any modifications, upgrades,
updates, enhancements, and related documentation.
MANAGEMENT COMMITTEE. "Management Committee" shall have the meaning set forth in
Section 6.1 of this Agreement.
MARKS. "Marks" shall have the meaning set forth in Section 3 of Exhibit G
hereto.
NETSCAPE WEB SITE. The collection of local language HTML documents targeted at
end users in the territory programmed and freely accessible to the public via
the Internet at the URL http://home.netscape.com (or any successor address
designated from time to time by Netscape
CONFIDENTIAL
30
<PAGE>
EXECUTION COPY
Communications Corporation, but specifically excluding (a) the AOL Service,
(b) AOL.com, (c) any international versions (other than the Canadian version
thereof, if any) of such site, (d) "ICQ," "AOL Netfind-TM-," "AOL Instant
Messenger-TM-," "NetMail-TM-," "AOL Hometown," "My News," "Digital City-TM-,"
or any similar independent product or service offered by or through such site
or any other AOL Interactive Site, (e) any programming or Content area
offered by or through such site over which AOL does not exercise
substantially complete operational control (including, without limitation,
Content areas controlled by other parties and member-created Content areas),
(f) any programming or Content area offered by or through the U.S. version of
the America Online-Registered Trademark- brand service which was operated,
maintained or controlled by the former AOL Studios division (e.g., Electra),
(g) any yellow pages, white pages, classifieds or other search, directory or
review services or Content offered by or through such site or any other AOL
Interactive Site, (h) any property, feature, product or service which AOL or
its affiliates may acquire subsequent to the Effective Date and (i) any other
version of an AOL or Netscape Communications Corporation Interactive Site
which is materially different from Netscape Communications Corporation's
primary Internet-based Interactive Site marketed under the "Netscape
Netcenter-TM-" brand, by virtue of its branding, distribution, functionality,
Content or services, including, without limitation, any co-branded versions
and any version distributed through any broadband distribution platform or
through any platform or device other than a desktop personal computer (e.g.
Custom NetCenters built specifically for third parties).
NEW FUNCTIONALITY. "New Functionality" shall have the meaning set forth in
Section 9.v of Exhibit E hereto.
OFFSET AMOUNT. "Offset Amount" shall have the meaning set forth in Section 5.4
of the Agreement.
PERSONAL ALERT PROFILE BOUNTIES. "Personal Alert Profile Bounties" shall mean
the bounty fees set forth on Exhibit L hereto per AOL User Personal Alert
Profile posted on or through any Affiliated ICP Site (but not on or through the
Principal ICP Interactive Site or any other ICP Interactive Site).
PRESS RELEASE. "Press Release" shall have the meaning set forth in Section 5.7
of this Agreement.
PRINCIPAL ICP INTERACTIVE SITE. The principal ICP Interactive Site, currently
located at the URL http://www.monster.com (or any successor Interactive Site
thereto), but not including any co-branded Interactive Site.
PRIOR BUSINESS RELATIONSHIP. "Prior Business Relationship" shall have the
meaning set forth in Section 11 of Exhibit G hereto.
PRO RATA REFUND FORMULA. [*****]
PRODUCT. Any product, good or service which ICP offers, sells, provides,
distributes or licenses to AOL Users directly or indirectly through (i) any
Affiliated ICP Site (including through any ICP Interactive Site linked thereto),
or (ii) any other electronic means directly targeted to AOL Users (e.g., e-mail
offers).
PRODUCTION PLAN. "Production Plan" shall have the meaning set forth in Section
10 of Exhibit F hereto.
CONFIDENTIAL
31
<PAGE>
EXECUTION COPY
PROGRAMMING PLAN. The plan dated December 1, 1999 mutually agreed upon by the
Parties relating to ICP's presence on the AOL Properties and the Affiliated ICP
Sites. The Programming Plan shall have been acknowledged in writing by the
Parties.
PROJECT PROFILES. A description of a project seeking specific personnel to
perform services in connection with such project.
PROMO CONTENT. "Promo Content" shall have the meaning set forth in Section 1.3
of this Agreement.
PROMOTIONAL MATERIALS. "Promotional Materials" shall have the meaning set forth
in Section 1 of Exhibit G hereto.
PROMOTIONS. The promotions described on Exhibit A, any comparable promotions
delivered by AOL in accordance with Section 1.1 of this Agreement, and any
additional promotions of any Affiliated ICP Site provided by AOL (including,
without limitation, additional Keyword Search Terms and other navigational
tools).
PROMOTIONS REPORTS. "Promotions Reports" shall have the meaning set forth in
Section 4.7.2 of this Agreement.
QUALIFIED SUBSCRIBER. Any person or entity who registers for the AOL Service or
the CompuServe Service (as the case may be) during the Term pursuant to the
partner marketing arrangement described in Section C of Exhibit C hereto (i.e.,
using ICP's special promotion identifier) and who pays the then-standard fees
required for membership to the Service for at least sixty (60) consecutive days
(following the expiration of any free service promotional period).
RENEWAL TERM. "Renewal Term" shall have the meaning set forth in Section 5.2 of
this Agreement.
RESULTS SCREEN. Any screen or page within the Classified Area displaying results
of an AOL user Search of the Database displayed within the user interface
designed by AOL pursuant to this Agreement.
RESUME ACQUISITION BOUNTIES. The bounty fees set forth on Exhibit L hereto per
AOL User resume posted on or through any Affiliated ICP Site (but not on or
through the Principal ICP Interactive Site or any other ICP Interactive Sites,
except during the period prior to the launch of the Affiliated ICP Sites as the
result of links from the AOL Properties).
SEARCH. A query made by an AOL user on any Search Screen which links to a
Results Screen, consisting of results (or a statement that no matching results
are available in the Database) when an AOL user clicks on a "search" or "go" or
similar button after partially or fully completing a search form designed to
query the Search.
SEARCH SCREEN. Any screen or page within the Classified Area where an AOL user
is prompted to manually type in a category and a location to form the basis of a
query of the Search.
TALENT MARKET. An online marketplace in which either (i) individual free agents,
individual consultants and independent professionals market their skills to
employers or (ii) employers market their job opportunities to job seekers, in an
auction-style environment (but specifically excludes contract service businesses
(e.g., accounting or legal services) and includes, but is not limited to, the
ICP Product currently known as Talent Market.
TERM. "Term" shall have the meaning set forth in Section 5.2 of this Agreement.
TERMINATION DATE. The date on which this Agreement terminates.
CONFIDENTIAL
32
<PAGE>
EXECUTION COPY
TRANSACTION REPORTS. "Transaction Reports" shall have the meaning set forth in
Section 4.7.1 of this Agreement.
USER INFORMATION. "User Information" shall have the meaning set forth in Section
13 of Exhibit G hereto.
VIRTUAL CAREER FAIR FEES. The fees collected in connection with virtual career
fairs conducted on or through any Affiliated ICP Site (but not on or through the
Principal ICP Interactive Site or any other ICP Interactive Site).
WORKPLACE. The Workplace area of the AOL Service (or any similar area on any of
the AOL Properties or successor area thereto).
YEAR. The time period between each of (i) the Effective Date and the first
anniversary thereof; (ii) the day immediately following the first anniversary of
the Effective Date and the second anniversary of the Effective Date; (iii) the
day immediately following the second anniversary of the Effective Date and the
third anniversary of the Effective Date; and (iv) the day immediately following
the third anniversary of the Effective Date and the fourth anniversary of the
Effective Date.
YEAR 1. The first Year of this Agreement.
YEAR 2. The second Year of this Agreement.
YEAR 3. The third Year of this Agreement.
YEAR 4. The fourth Year of this Agreement.
CONFIDENTIAL
33
<PAGE>
EXECUTION COPY
EXHIBIT C
ICP CROSS-PROMOTION
A. Within the Principal ICP Interactive Site (specifically not
including any co-branded sites), ICP shall include (above or below
the fold, as ICP shall determine) the following (collectively, the
"AOL Promos"): (i) a promotional banner or button (at least 90 x 30
pixels or 70 x 70 pixels in size) appearing on the first screen of
the Principal ICP Interactive Site, to promote such AOL products or
services as AOL may designate and are not competitive with ICP (for
example, the America Online-Registered Trademark- brand service, the
CompuServe-Registered Trademark-brand service, the
AOL.com-Registered Trademark- site, any of the Digital City services
or the AOL Instant Messenger-TM-service); or (ii) a "Try AOL"
feature (at least 90 x 30 pixels or 70 x 70 pixels in size) through
which users can obtain promotional information about AOL products or
services designated by AOL and are not competitive with ICP and, at
AOL's option, download or order the then-current version of client
software for such AOL products or services; OR (iii) a button or
link to enable users to download either AOL -- Instant Messenger or
ICQ (to be determined by AOL in AOL's sole discretion). AOL will
provide the creative content to be used in the AOL Promos (including
designation of links from such content to other content pages). ICP
shall post (or update, as the case may be) the creative content
supplied by AOL within the spaces for the AOL Promos within five
days of its receipt of such content from AOL. Without limiting any
other reporting obligations of the Parties contained herein, ICP
shall provide AOL with monthly written reports specifying the number
of impressions to the pages containing the AOL Promos during the
prior month. In the event that AOL elects to serve the AOL Promos to
the Principal ICP Interactive Site from an ad server controlled by
AOL or its agent, ICP shall take all reasonable operational steps
necessary to facilitate such ad serving arrangement including,
without limitation, inserting HTML code designated by AOL on the
pages of the ICP Interactive Site on which the AOL Promos will
appear. In addition, within the Principal ICP Interactive Site, ICP
shall provide prominent promotion for the keywords granted to ICP
hereunder.
B. In ICP's print, radio, television and "out of home" (e.g., buses and
billboards) advertisements and in any publications, programs, features
or other forms of media over which ICP exercises complete or
substantially complete editorial control, ICP will include specific
references to or mentions of the "keyword" term "Monster". Accordingly,
in the case of all print and out of home advertisements, ICP shall
include a reference to "America Online Keyword: Monster" in a type size
reasonably determined in ICP's discretion. In the case of all radio and
television advertisements, ICP shall include a voice (but not print)
reference to one of the following (the selection of which shall be at
ICP's discretion): "America Online Keyword: Monster," "AOL Keyword:
Monster," "Located at Keyword Monster on America Online," or "Located
at Keyword Monster on AOL"; provided, however, that to the extent
practicable ICP shall use "America Online" rather than "AOL".
C. In addition to the foregoing, ICP shall provide AOL in advance with
periodic media plans with respect to the ICP cross-promotional efforts
set forth on this Exhibit C.
D. ICP will work with AOL to carry out at AOL's cost and expense (i)
partner marketing arrangements designed to distribute AOL Service
and/or CompuServe Service CD-ROMS and (ii) other promotional offers
through its online and offline distribution channels and events. ICP
shall receive a standard bounty fee for any Qualified Subscriber
acquired through any such arrangements or promotions. In addition, AOL
and ICP shall discuss in good faith further joint marketing
opportunities.
CONFIDENTIAL
34
<PAGE>
EXECUTION COPY
<PAGE>
EXECUTION COPY
EXHIBIT D
DESCRIPTION OF PRODUCTS
To the extent permitted by (and subject to the terms and conditions of) this
Agreement:
1. The Exclusive Services (as defined in Section 3.1)
2. Editorial Content related to the Exclusive Services
CONFIDENTIAL
35
<PAGE>
EXECUTION COPY
EXHIBIT D-1
AOL EXCLUSIVE OFFERS
AOL Exclusive Offers may include the following:
1. [*****]
2. [*****]
CONFIDENTIAL
36
<PAGE>
EXECUTION COPY
EXHIBIT E
OPERATIONS
1. [Intentionally Omitted].
2. INFRASTRUCTURE OF AFFILIATED ICP SITES. ICP will be responsible for all
communications, hosting and connectivity costs and expenses associated with the
Affiliated ICP Sites. The Parties shall mutually agree as to the optimal means
for connecting the Affiliated ICP Sites to the AOL Network. ICP will provide all
hardware, software, telecommunications lines and other infrastructure necessary
to meet traffic demands on the Affiliated ICP Sites from the AOL Network. ICP
will design and implement the network between the AOL Service and Affiliated ICP
Sites such that (i) no single component failure will have a materially adverse
impact on AOL Members seeking to reach any Affiliated ICP Site from the AOL
Network and (ii) no single line under material control by ICP will run at more
than 70% average utilization for a 5-minute peak in a daily period (except that,
provided that ICP can reasonably demonstrate that its network can accommodate
anticipated traffic, ICP shall not be required to meet the threshold set forth
in this Section 2(ii), (a) on the date of the Superbowl and the two days
thereafter, or (b) on the commencement date of any major promotional activity,
not to exceed four dates per calendar year, and the two days thereafter). In
this regard, ICP will provide AOL, upon request, with a detailed network diagram
regarding the architecture and network infrastructure supporting the Affiliated
ICP Site. In the event that ICP elects to create a custom version of any
Affiliated ICP Site in order to comply with the terms of this Agreement, ICP
will bear responsibility for all aspects of the implementation, management and
cost of such customized site.
3. OPTIMIZATION; SPEED. ICP will use commercially reasonable efforts to ensure
that: (a) the functionality and features within each of the Affiliated ICP Sites
and the Principal ICP Interactive Site are optimized for the client software
then in use by AOL Members; and (b) the Affiliated ICP Sites are designed and
populated in a manner that minimizes delays when AOL Members attempt to access
such site. At a minimum, ICP will ensure that any Affiliated ICP Site's data
transfers initiate within fewer than fifteen (15) seconds on average. Prior to
commercial launch of any material promotions described herein, ICP will permit
AOL to conduct performance testing of the Affiliated ICP Sites (in person or
through remote communications), with such commercial launch not to commence
until such time as AOL is reasonably satisfied with the results of any such
testing. In the event that the Parties determine that a high-speed connection is
necessary to maintain quick and reliable transport of information to any
Affiliated ICP Site, ICP shall pay for all technology and/or production related
expenses associated with establishing and maintaining such high-speed
connection, provided, however, that (i) AOL shall lease any necessary DS-3 lines
at the best discounted rates available to AOL and charge back the cost (without
markup) to ICP, and (ii) AOL shall not charge ICP any transit or peering fees.
4. USER INTERFACE. ICP will maintain a graphical user interface within each
Affiliated ICP Site that is competitive in all material respects with interfaces
of other similar sites based on similar form technology. AOL reserves the right
to review and approve the user interface and site design prior to launch of the
Promotions and to conduct focus group testing to assess compliance with respect
to such consultation and with respect to ICP's compliance with the preceding
sentence, provided such activities are completed within ten (10) business days
of the date on which ICP makes such user interface and site design available to
AOL.
5. TECHNICAL PROBLEMS. ICP agrees to use commercially reasonable efforts to
address material technical problems (over which ICP exercises control) affecting
use by AOL Members of any Affiliated ICP Site (a "ICP Technical Problem," which
term shall include any violation by ICP of the requirements of this Exhibit E)
promptly following notice thereof. In the event that ICP is unable to resolve a
ICP Technical Problem within a commercially reasonable period following notice
thereof from AOL (including, without limitation, infrastructure deficiencies
producing user delays), AOL will have the right to regulate the promotions it
provides to ICP hereunder until such time as ICP corrects the ICP Technical
Problem at issue.
6. MONITORING. ICP will ensure that the performance and availability of the
Affiliated ICP Sites is monitored on a continuous basis. ICP will provide AOL
with contact information (including e-mail, phone, pager and fax information, as
applicable, for both during and after business hours) for ICP's principal
business and technical representatives, for use in cases when issues or problems
arise with respect to any Affiliated ICP Site.
7. TELECOMMUNICATIONS. Where applicable ICP will utilize encryption methodology
to secure data communications between the Parties' data centers. The network
between the Parties will be configured such that no single component failure
will significantly impact AOL Users.
8. SECURITY. ICP will utilize Internet standard encryption technologies (e.g.,
Secure Socket Layer - SSL) to provide a secure environment for conducting
transactions and/or transferring private member information (e.g. credit card
numbers and banking/financial information) to and from any Affiliated ICP Site.
Private member information shall not include any resume or job-related data. ICP
will facilitate periodic reviews of the Affiliated ICP Sites by AOL in order to
evaluate the security risks of such site. ICP will promptly remedy any security
risks or breaches of security as may be identified by AOL's Operations Security
team.
9. TECHNICAL PERFORMANCE.
i. ICP will design the Affiliated ICP Sites to support the AOL-client
embedded versions of the Microsoft Internet Explorer 3.XX and 4.XX
browsers (Windows and Macintosh)and the Netscape Browser 4.XX and make
commercially reasonable
CONFIDENTIAL
37
<PAGE>
EXECUTION COPY
efforts to support all other AOL browsers listed at:
"http://webmaster.info.aol.com."
ii. To the extent ICP creates customized pages on the Affiliated ICP Site
for AOL Members, ICP will develop and employ a methodology to detect
AOL Members (e.g. examine the HTTP User-Agent field in order to
identify the "AOL Member-Agents" listed at: "http://webmaster.
info.aol.com)."
iii. ICP will periodically review the technical information made available
by AOL at http://webmaster.info.aol.com.
iv. ICP will design its site to support HTTP 1.0 or later protocol as
defined in RFC 1945 and to adhere to AOL's parameters for refreshing or
preventing the caching of information in AOL's proxy system as outlined
in the document provided at the following URL:
http://webmaster.info.aol.com. ICP IS RESPONSIBLE FOR THE MANIPULATION
OF THESE PARAMETERS IN WEB-BASED OBJECTS SO AS TO ALLOW THEM TO BE
CACHED OR NOT CACHED AS OUTLINED IN RFC 1945.
V. PRIOR TO RELEASING MATERIAL, NEW FUNCTIONALITY OR FEATURES THROUGH ANY
AFFILIATED ICP SITE ("NEW FUNCTIONALITY"), ICP WILL USE COMMERCIALLY
REASONABLE EFFORTS TO (I) TEST THE NEW FUNCTIONALITY TO CONFIRM ITS
COMPATIBILITY WITH AOL SERVICE CLIENT SOFTWARE AND (II) PROVIDE AOL
WITH WRITTEN NOTICE OF THE NEW FUNCTIONALITY SO THAT AOL CAN PERFORM
TESTS OF THE NEW FUNCTIONALITY TO CONFIRM ITS COMPATIBILITY WITH THE
AOL SERVICE CLIENT SOFTWARE, PROVIDED, HOWEVER, THAT SUCH TESTS SHALL
BE COMPLETED WITHIN TEN (10) BUSINESS DAYS. SHOULD ANY NEW MATERIAL,
NEW FUNCTIONALITY OR FEATURES THROUGH THE AFFILIATED ICP SITE BE
RELEASED WITHOUT NOTIFICATION TO AOL, AOL WILL NOT BE RESPONSIBLE FOR
ANY ADVERSE MEMBER EXPERIENCE UNTIL SUCH TIME THAT COMPATIBILITY TESTS
CAN BE PERFORMED AND THE NEW MATERIAL, FUNCTIONALITY OR FEATURES
QUALIFIED FOR THE AOL SERVICE
10. AOL INTERNET SERVICES ICP SUPPORT. AOL will provide ICP with access to the
standard online resources, standards and guidelines documentation, technical
phone support, monitoring and after-hours assistance that AOL makes generally
available to similarly situated web-based partners. AOL support will not, in any
case, be involved with content creation on behalf of ICP or support for any
technologies, databases, software or other applications which are not supported
by AOL or are related to any ICP area other than the Affiliated ICP Sites.
Support to be provided by AOL is contingent on ICP providing to AOL demo account
information (where applicable), a detailed description of each Affiliated ICP
Site's software, hardware and network architecture and access to the Affiliated
ICP Sites for purposes of such performance and load testing as AOL elects to
conduct.
CONFIDENTIAL
38
<PAGE>
EXECUTION COPY
EXHIBIT F
STANDARD ONLINE COMMERCE TERMS & CONDITIONS
1. AOL NETWORK DISTRIBUTION. Except as provided in this Agreement, ICP will not
authorize or permit any third party to distribute or promote the Products or any
ICP Interactive Site through the AOL Network absent AOL's prior written
approval. Except as provided in the Agreement, this Promotions and any other
promotions or advertisements purchased from or provided by AOL will link only to
the Affiliated ICP Site, will be used by ICP solely for its own benefit and will
not be resold, traded, exchanged, bartered, brokered or otherwise offered to any
third party.
2. PROVISION OF OTHER CONTENT. In the event that AOL notifies ICP that (i) as
reasonably determined by AOL, any Content within the Affiliated ICP Site
violates AOL's then-standard Terms of Service (as set forth on the America
Online(R) brand service at Keyword term "TOS"), for the AOL Service or any other
AOL property through which the Affiliated ICP Site is promoted, the terms of
this Agreement or any other standard, written AOL policy or (ii) AOL reasonably
objects to the inclusion of any Content within any Affiliated ICP Site (other
than any specific items of Content which may be expressly identified in this
Agreement), then ICP will take commercially reasonable steps to block access by
AOL Users to such Content using ICP's then-available technology. In the event
that ICP cannot, through its commercially reasonable efforts, block access by
AOL Users to the Content in question, then ICP will provide AOL prompt written
notice of such fact. AOL may then, at its option, restrict access from the AOL
Network to the Content in question using technology available to AOL. ICP will
cooperate with AOL's reasonable requests to the extent AOL elects to implement
any such access restrictions.
3. CONTESTS. ICP will take all steps necessary to ensure that any contest,
sweepstakes or similar promotion conducted or promoted through any Affiliated
ICP Site (a "Contest") complies with all applicable federal, state and local
laws and regulations.
4. NAVIGATION. [Intentionally blank]
5. DISCLAIMERS. Upon AOL's request, ICP agrees to include within each Affiliated
ICP Site a product disclaimer (the specific form and substance to be mutually
agreed upon by the Parties) indicating that transactions are solely between ICP
and AOL Users purchasing Products from ICP.
6. AOL LOOK AND FEEL. ICP acknowledges and agrees that AOL will own all right,
title and interest in and to the elements of graphics, design, organization,
presentation, layout, user interface, navigation and stylistic convention
(including the digital implementations thereof) which are generally associated
with online areas contained within the AOL Network, subject to ICP's ownership
rights in any ICP trademarks, ICP-supplied Content or the look and feel of
ICP-supplied Content.
7. MANAGEMENT OF THE AFFILIATED ICP SITES. ICP will manage, review, delete,
edit, create, update and otherwise manage all Content available on or through
any Affiliated ICP Site, in a timely and professional manner and in accordance
with the terms of this Agreement. ICP will ensure that each of the Affiliated
ICP Sites is current, accurate and well-organized at all times. ICP warrants
that the Products and other Licensed Content : (i) will not infringe on or
violate any copyright, trademark, U.S. patent or any other third party right,
including without limitation, any music performance or other music-related
rights; (ii) will not violate AOL's generally applicable then existing Terms of
Service (which shall be deemed not to include AOL's Privacy Policy) for the AOL
Service and any other AOL Property through which any Affiliated ICP Site will be
promoted or any other standard, written AOL policy and (iii) will not violate
any applicable law or regulation, including those relating to contests,
sweepstakes or similar promotions. Additionally, ICP represents and warrants
that it owns or has a valid license to all rights to any Licensed Content used
in AOL "slideshow" or other formats embodying elements such as graphics,
animation and sound without violating the rights of any other person or entity.
ICP also warrants that a reasonable basis exists for all Product performance or
comparison claims appearing through any Affiliated ICP Site. AOL may require
that any Affiliated ICP Site be a mirrored version of any ICP Interactive Site
selling the products described on Exhibit D.
8. DUTY TO INFORM. ICP will promptly inform AOL of any information related to
any Affiliated ICP Site which could reasonably lead to a claim, demand, or
liability of or against AOL and/or its affiliates by any third party.
9. CUSTOMER SERVICE. It is the sole responsibility of ICP to provide customer
service to persons or entities purchasing Products through the AOL Network
("Customers"). ICP will bear full responsibility for all customer service,
including without limitation, order processing, billing, fulfillment, shipment,
collection and other customer service associated with any Products offered, sold
or licensed through any Affiliated ICP Site, and AOL will have no obligations
whatsoever with respect thereto. ICP will receive all emails from Customers via
a computer available to ICP's customer service staff and generally respond to
such emails within one business day of receipt. ICP will also comply with the
requirements of any federal, state or local consumer protection or disclosure
law. Payment for Products will be collected by ICP directly from customers.
ICP's order fulfillment operation will be subject to AOL's reasonable review.
ICP shall use commercially reasonable efforts to provide a level of customer
service consistent with the relevant accepted industry standards.
10. PRODUCTION WORK. Except as otherwise provided in this Agreement, in the
event that ICP requests AOL's production assistance in connection with (i)
ongoing programming and maintenance related to any Affiliated ICP Site, (ii) a
redesign of or addition to any Affiliated ICP Site (e.g., a change to an
existing screen format or construction of a new custom form), (iii) production
to modify work performed by a third party provider or (iv) any other type of
CONFIDENTIAL
39
<PAGE>
EXECUTION COPY
production work, ICP will work with AOL to develop a detailed production plan
for the requested production assistance (the "Production Plan"). Following
receipt of the final Production Plan, AOL will notify ICP of (i) AOL's
availability to perform the requested production work, (ii) the proposed fee or
fee structure for the requested production and maintenance work and (iii) the
estimated development schedule for such work. To the extent the Parties reach
agreement regarding implementation of the agreed-upon Production Plan, such
agreement will be reflected in a separate work order signed by the Parties. To
the extent ICP elects to retain a third party provider to perform any such
production work, work produced by such third party provider must generally
conform to AOL's standards & practices (as provided on the America Online brand
service at Keyword term "styleguide"). The specific production resources which
AOL allocates to any production work to be performed on behalf of ICP will be as
determined by AOL in its sole discretion. With respect to any routine
production, maintenance or related services which AOL reasonably determines are
necessary for AOL to perform in order to support the proper functioning and
integration of any Affiliated ICP Site ("Routine Services"), ICP will pay the
then-standard fees charged by AOL for such Routine Services.
11. OVERHEAD ACCOUNTS. To the extent AOL has granted ICP any overhead accounts
on the AOL Service, ICP will be responsible for the actions taken under or
through its overhead accounts, which actions are subject to AOL's applicable
Terms of Service and for any surcharges, including, without limitation, all
premium charges, transaction charges, and any applicable communication
surcharges incurred by any overhead Account issued to ICP, but ICP will not be
liable for charges incurred by any overhead account relating to AOL's standard
monthly usage fees and standard hourly charges, which charges AOL will bear.
Upon the termination of this Agreement, all overhead accounts, related screen
names and any associated usage credits or similar rights, will automatically
terminate. AOL will have no liability for loss of any data or content related to
the proper termination of any overhead account.
12. NAVIGATION TOOLS. Any Keyword Search Terms to be directed to any Affiliated
ICP Site shall be (i) subject to availability for use by ICP and (ii) limited to
the combination of the Keyword-TM- search modifier combined with a registered
trademark of ICP (e.g. "AOL keyword: XYZ Company Name"). AOL reserves the right
to revoke at any time ICP's use of any Keyword Search Terms which have been
determined by a court or other governmental authority to violate the trademarks
of a third party and, in the event that AOL receives notice from a third party
that it believes that ICP's use of any Keyword Search Terms violates such third
party's rights, AOL shall have the right to suspend ICP's use of such Keyword
Search Term unless ICP provides AOL, within five (5) business days of written
demand therefor, with (i) an indemnity for any liability resulting from ICP's
continued use of such Keyword Search Term and (ii) an opinion of counsel, in a
form reasonably acceptable to AOL, which concludes that ICP has meritorious
defenses to any trademark infringement claim. ICP acknowledges that its
utilization of a Keyword Search Term will not create in it, nor will it
represent it has, any right, title or interest in or to such Keyword Search
Term, other than the right, title and interest ICP holds in ICP's registered
trademark independent of the Keyword Search Term. Without limiting the
generality of the foregoing, ICP will not: (a) attempt to register or otherwise
obtain trademark or copyright protection in the Keyword Search Term; or (b) use
the Keyword Search Term, except for the purposes expressly required or permitted
under this Agreement. To the extent AOL allows AOL Users to "bookmark" the URL
or other locator for any such Affiliated ICP Site, such bookmarks will be
subject to AOL's and ICP's control at all times. Upon the termination of this
Agreement, except as otherwise provided for in this Agreement, ICP's rights to
any Keyword Search Terms and bookmarking will terminate.
13. MERCHANT CERTIFICATION PROGRAM. ICP may participate in any generally
applicable "Certified Merchant" program operated by AOL or its authorized agents
or contractors. Such program may require merchant participants on an ongoing
basis to meet certain reasonable, generally applicable standards relating to
provision of electronic commerce through the AOL Network (including, as a
minimum, use of 40-bit SSL encryption and if requested by AOL, 128-bit
encryption) and may also require the payment of certain reasonable certification
fees to the applicable entity operating the program. Each Certified Merchant in
good standing will be entitled to place on its affiliated Interactive Site an
AOL designed and approved button promoting the merchant's status as an AOL
Certified Merchant.
14. REWARD PROGRAMS. On each Affiliated ICP Site, ICP shall not offer, provide,
implement or otherwise make available any promotional programs or plans that are
intended to provide customers with rewards or benefits in exchange for, or on
account of, their past or continued loyalty to, or patronage or purchase of, the
products or services of ICP or any third party (e.g., a promotional program
similar to a "frequent flier" program), unless such promotional program or plan
is provided exclusively through AOL's "AOL Rewards" program, accessible on the
AOL Service at Keyword: "AOL Rewards."
15. SEARCH TERMS. To the extent this Agreement sets forth any mechanism by which
the Affiliated ICP Sites will be promoted in connection with specified search
terms Monster and Monster.com within any AOL product or service, ICP hereby
represents and warrants that ICP has all consents, authorizations, approvals,
licenses, permits or other rights necessary for ICP to use such specified search
terms. Notwithstanding the foregoing, AOL shall have the right to suspend the
use of any search term (other than Keyword Search Terms) if AOL has reason to
believe continued use may subject AOL to liability or other adverse
consequences.
CONFIDENTIAL
40
<PAGE>
EXECUTION COPY
EXHIBIT G
STANDARD LEGAL TERMS & CONDITIONS
1. [Intentionally Omitted]
2. TRADEMARK LICENSE. In designing and implementing the Materials and subject
to the other provisions contained herein, ICP will be entitled to use the
following trade names, trademarks, and service marks of AOL: the "America
Online-Registered Trademark-" brand service, "AOL-TM-" service/software and
AOL's triangle logo; and AOL and its affiliates will be entitled to use the
trade names, trademarks, and service marks of ICP for which ICP holds all
rights necessary for use in connection with this Agreement (collectively,
together with the AOL marks listed above, the "Marks"); provided that each
Party: (i) does not create a unitary composite mark involving a Mark of the
other Party without the prior written approval of such other Party; and (ii)
displays symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in accordance with
applicable trademark law and practice.
3. OWNERSHIP OF TRADEMARKS. Each Party acknowledges the ownership right of the
other Party in the Marks of the other Party and agrees that all use of the other
Party's Marks will inure to the benefit, and be on behalf, of the other Party.
Each Party acknowledges that its utilization of the other Party's Marks will not
create in it, nor will it represent it has, any right, title, or interest in or
to such Marks other than the licenses expressly granted herein. Each Party
agrees not to do anything contesting or impairing the trademark rights of the
other Party.
4. QUALITY STANDARDS. Each Party agrees that the nature and quality of its
products and services supplied in connection with the other Party's Marks will
conform to quality standards set by the other Party. Each Party agrees to supply
the other Party, upon request, with a reasonable number of samples of any
Materials publicly disseminated by such Party which utilize the other Party's
Marks. Each Party will comply with all applicable laws, regulations, and customs
and obtain any required government approvals pertaining to use of the other
Party's marks.
5. INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other
Party of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party will have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party
with its reasonable cooperation and assistance with respect to any such
infringement proceedings.
6. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to the
other Party that: (i) such Party has the full corporate right, power and
authority to enter into this Agreement and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; and (iv) such Party
acknowledges that the other Party makes no representations, warranties or
agreements related to the subject matter hereof that are not expressly provided
for in this Agreement. ICP hereby represents and warrants that it possesses all
authorizations, approvals, consents, licenses, permits, certificates or other
rights and permissions necessary to sell the Products.
7. CONFIDENTIALITY. Each Party acknowledges that Confidential Information may be
disclosed to the other Party during the course of this Agreement. Each Party
agrees that it will take reasonable steps, at least substantially equivalent to
the steps it takes to protect its own proprietary information, during the term
of this Agreement, and for a period of three years following expiration or
termination of this Agreement, to prevent the duplication or disclosure of
Confidential Information of the other Party, other than by or to its employees
or agents who must have access to such Confidential Information to perform such
Party's obligations hereunder, who will each agree to comply with this section.
Notwithstanding the foregoing, either Party may issue a press release or other
disclosure containing Confidential Information without the consent of the other
Party, to the extent such disclosure is required by law, rule, regulation or
government or court order. In such event, the disclosing Party will provide at
least five (5) business days prior written notice of such proposed disclosure to
the other Party. Further, in the event such disclosure is required of either
Party under the laws, rules or regulations of the Securities and Exchange
Commission or any other applicable governing body, such Party will (i) redact
mutually agreed-upon portions of this Agreement to the fullest extent permitted
under applicable laws, rules and regulations and (ii) submit a request to such
governing body that such portions and other provisions of this Agreement receive
confidential treatment under the laws, rules and regulations of the Securities
and Exchange Commission or otherwise be held in the strictest confidence to the
fullest extent permitted under the laws, rules or regulations of any other
applicable governing body. Notwithstanding the foregoing, nothing herein shall
preclude either Party's ability to modify or withdraw such request, if in such
Party's reasonable judgment the Securities and Exchange Commission would not be
able to timely grant confidential treatment.
8. [Intentionally Omitted]
9. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION.
9.1 LIABILITY. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY
DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
CONFIDENTIAL
41
<PAGE>
EXECUTION COPY
POSSIBILITY OF SUCH DAMAGES), ARISING FROM BREACH OF THE AGREEMENT, THE SALE
OF PRODUCTS, THE USE OR INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE,
AOL.COM OR THE AFFILIATED ICP SITES, OR ARISING FROM ANY OTHER PROVISION OF
THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED
PROFITS OR LOST BUSINESS (COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT
EACH PARTY WILL REMAIN LIABLE TO THE OTHER PARTY TO THE EXTENT ANY
DISCLAIMED DAMAGES ARE BOTH (I) CLAIMED BY A THIRD PARTY AND (II) ARE
SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 9.3. EXCEPT AS PROVIDED IN
SECTION 9.3, (I) LIABILITY ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO
DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND (II) THE MAXIMUM LIABILITY OF
ONE PARTY TO THE OTHER PARTY FOR ANY CLAIMS ARISING IN CONNECTION WITH THIS
AGREEMENT WILL NOT EXCEED THE AGGREGATE AMOUNT OF FIXED PAYMENT OBLIGATIONS
OWED BY ICP HEREUNDER IN THE YEAR IN WHICH THE EVENT GIVING RISE TO
LIABILITY OCCURS; PROVIDED THAT EACH PARTY WILL REMAIN LIABLE FOR THE
AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY PURSUANT
TO THE AGREEMENT.
9.2 NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING
THE AOL NETWORK, THE AOL SERVICE, AOL.COM OR THE AFFILIATED ICP SITES,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR
COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AOL
AND ICP SPECIFICALLY DISCLAIM ANY WARRANTY REGARDING THE PROFITABILITY OF
THE AFFILIATED ICP SITES.
9.3 INDEMNITY. Either Party will defend, indemnify, save and hold harmless
the other Party and the officers, directors, agents, affiliates,
distributors, franchisees and employees of the other Party from any and all
third party claims, demands, liabilities, costs or expenses, including
reasonable attorneys' fees ("Liabilities"), resulting from the indemnifying
Party's material breach of any duty, representation, or warranty of this
Agreement.
9.4 CLAIMS. If a Party entitled to indemnification hereunder (the
"Indemnified Party") becomes aware of any matter it believes is
indemnifiable hereunder involving any claim, action, suit, investigation,
arbitration or other proceeding against the Indemnified Party by any third
party (each an "Action"), the Indemnified Party will give the other Party
(the "Indemnifying Party") prompt written notice of such Action. Such notice
will (i) provide the basis on which indemnification is being asserted and
(ii) be accompanied by copies of all relevant pleadings, demands, and other
papers related to the Action and in the possession of the Indemnified Party.
The Indemnifying Party will have a period of ten (10) days after delivery of
such notice to respond. If the Indemnifying Party elects to defend the
Action or does not respond within the requisite ten (10) day period, the
Indemnifying Party will be obligated to defend the Action, at its own
expense, and by counsel reasonably satisfactory to the Indemnified Party.
The Indemnified Party will cooperate, at the expense of the Indemnifying
Party, with the Indemnifying Party and its counsel in the defense and the
Indemnified Party will have the right to participate fully, at its own
expense, in the defense of such Action. If the Indemnifying Party responds
within the required ten (10) day period and elects not to defend such
Action, the Indemnified Party will be free, without prejudice to any of the
Indemnified Party's rights hereunder, to compromise or defend (and control
the defense of) such Action. In such case, the Indemnifying Party will
cooperate, at its own expense, with the Indemnified Party and its counsel in
the defense against such Action and the Indemnifying Party will have the
right to participate fully, at its own expense, in the defense of such
Action. Any compromise or settlement of an Action will require the prior
written consent of both Parties hereunder, such consent not to be
unreasonably withheld or delayed.
10. ACKNOWLEDGMENT. AOL and ICP each acknowledges that the provisions of this
Agreement were negotiated to reflect an informed, voluntary allocation between
them of all risks (both known and unknown) associated with the transactions
contemplated hereunder. The limitations and disclaimers related to warranties
and liability contained in this Agreement are intended to limit the
circumstances and extent of liability. The provisions of this Section 10 will be
enforceable independent of and severable from any other enforceable or
unenforceable provision of this Agreement.
11. SOLICITATION OF AOL USERS. During the term of the Agreement and for a two
year period thereafter, ICP will not use the AOL Network (including, without
limitation, the e-mail network contained therein) to solicit AOL Users on behalf
of another Interactive Service. More generally, ICP will not send unsolicited,
commercial e-mail (i.e., "spam") or other online communications (e.g., instant
messaging) through or into AOL's products or services, absent a Prior Business
Relationship. For purposes of this Agreement, a "Prior Business Relationship"
will mean that the AOL User to whom commercial e-mail or other online
communication is being sent has voluntarily either (i) engaged in a transaction
with ICP or (ii) provided information to ICP through a contest, registration, or
other communication, which included clear notice to the AOL User that the
information provided could result in commercial e-mail or other online
communication being sent to that AOL User by ICP or its agents. Any commercial
e-mail or other online communications to AOL Users which are otherwise permitted
hereunder, will (a) include a prominent and easy means to "opt-out" of receiving
any future commercial communications from ICP, and (b) shall also be subject to
AOL's then-standard restrictions on distribution of bulk e-mail (e.g., related
to the time and manner in which such e-mail can be distributed through or into
the AOL product or service in question).
CONFIDENTIAL
42
<PAGE>
EXECUTION COPY
12. AOL USER COMMUNICATIONS. During the Term, to the extent that ICP is
permitted to communicate with AOL Users pursuant to this Agreement, in any such
communications targeted specifically to AOL Users (including, without
limitation, e-mail solicitations), ICP will not encourage AOL Users to take any
action inconsistent with the scope and purpose of this Agreement, including
without limitation, the following actions: (i) using an Interactive Site other
than the Affiliated ICP Sites for the purchase of Products, (ii) using Content
other than the Licensed Content; (iii) bookmarking of Interactive Sites; or (iv)
changing the default home page on the AOL browser. Additionally, with respect to
such AOL User communications, in the event that ICP encourages an AOL User to
purchase products through such communications, ICP shall ensure that (a) the AOL
Properties are promoted as the primary means through which the AOL User can
access the Affiliated ICP Sites and (b) any link to any Affiliated ICP Site will
link to a page which indicates to the AOL User that such user is in a site which
is affiliated with an AOL Property.
13. COLLECTION AND USE OF USER INFORMATION. ICP shall ensure that its
collection, use and disclosure of information obtained from AOL Users under this
Agreement ("User Information") complies with all applicable laws and regulations
and ICP's standard privacy policies which ICP shall prominently publish on the
site and provide adequate notice and disclosure regarding ICP's collection, use
and disclosure of user information. ICP will not disclose User Information
collected hereunder to any third party in a manner that identifies AOL Users as
end users of an AOL product or service or use Member Information collected under
this Agreement to market another Interactive Service
14. EXCUSE. Neither Party will be liable for, or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
15. INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or employee of the other
Party. Neither Party will have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement will not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
16. NOTICE. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by confirmed facsimile (ii) on the delivery date if delivered
personally to the Party to whom the same is directed (iii) one business day
after deposit with a commercial overnight carrier, with written verification of
receipt; or (iv) five business days after the mailing date, whether or not
actually received, if sent by U.S. mail, return receipt requested, postage and
charged prepaid, or any other means of rapid mail delivery for which a receipt
is available. In the case of AOL, such notice will be provided to both the
Senior Vice President for Business Affairs (fax no. 703-265-1206) and the Deputy
General Counsel (fax no. 703-265-1105), each at the address of AOL set forth in
the first paragraph of this Agreement. In the case of ICP, such notice will be
provided to both the chief executive officer and the general counsel and, except
as otherwise specified herein, the notice address will be the address for ICP
set forth in the first paragraph of this Agreement, with the other relevant
notice information, including the recipient for notice and, as applicable, such
recipient's fax number or AOL e-mail address, to be as reasonably identified by
AOL.
17. LAUNCH DATES. In the event that any terms contained herein relate to or
depend on the commercial launch date of the Affiliated ICP Sites contemplated by
this Agreement (the "Launch Date"), then it is the intention of the Parties to
record such Launch Date in a written instrument signed by both Parties promptly
following such Launch Date; provided that, in the absence of such a written
instrument, the Launch Date will be as reasonably determined by AOL based on the
information available to AOL.
18. NO WAIVER. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement will not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will be
and remain in full force and effect.
19. RETURN OF INFORMATION. Upon the expiration or termination of this Agreement,
each Party will, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
20. SURVIVAL. (a) Sections 2.21,5.3, 5.4, 5.6 and 6.2, as well as (i) the last
sentence of each of Sections 1.2.1 and 1.2.2 and (ii) the third sentence of
Section 1.3, of the body of the Agreement; (b) Sections 7 through 16, 18 through
22, and 25 through 30 of this Exhibit; and (c) any payment obligations accrued
prior to termination or expiration of this Agreement; will survive the
completion, expiration, termination or cancellation of this Agreement.
21. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
supersedes any and all prior agreements of the Parties with respect to the
transactions set forth herein. Neither Party will be bound by, and each Party
specifically objects to, any term, condition or other provision which is
different from or in addition to the provisions of this Agreement (whether or
not it would materially alter this Agreement) and which is proffered by the
other Party in any correspondence or other document, unless the Party to be
bound thereby specifically agrees to such provision in writing.
22. AMENDMENT. No change, amendment or modification of any provision of this
Agreement will be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment, and in the case of AOL, by an
executive of at least the same standing to the executive who signed the
Agreement.
CONFIDENTIAL
43
<PAGE>
EXECUTION COPY
23. FURTHER ASSURANCES. Each Party will take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
24. ASSIGNMENT. Neither Party shall assign this Agreement or any right, interest
or benefit under this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld. Subject to the
foregoing, this Agreement will be fully binding upon, inure to the benefit of
and be enforceable by the Parties hereto and their respective successors and
assigns.
25. CONSTRUCTION; SEVERABILITY. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to be construed
or if any such provision is held invalid by a court with jurisdiction over the
Parties to this Agreement, (i) such provision will be deemed to be restated to
reflect as nearly as possible the original intentions of the Parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect.
26. REMEDIES. Except where otherwise specified, the rights and remedies granted
to a Party under this Agreement are cumulative and in addition to, and not in
lieu of, any other rights or remedies which the Party may possess at law or in
equity provided that, in connection with any dispute hereunder, neither Party
will be entitled to offset any amounts that it claims to be due and payable from
the other Party against amounts otherwise payable to such other Party.
27. APPLICABLE LAW. Except as otherwise expressly provided herein, this
Agreement will be interpreted, construed and enforced in all respects in
accordance with the laws of the Commonwealth of Virginia except for its
conflicts of laws principles.
28. EXPORT CONTROLS. Both Parties will adhere to all applicable laws,
regulations and rules relating to the export of technical data and will not
export or re-export any technical data, any products received from the other
Party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.
29. HEADINGS. The captions and headings used in this Agreement are inserted for
convenience only and will not affect the meaning or interpretation of this
Agreement.
30. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
will be deemed an original and all of which together will constitute one and the
same document
CONFIDENTIAL
44
<PAGE>
EXECUTION COPY
EXHIBIT H
[INTENTIONALLY BLANK]
CONFIDENTIAL
45
<PAGE>
EXECUTION COPY
EXHIBIT I
[INTENTIONALLY BLANK]
CONFIDENTIAL
46
<PAGE>
EXECUTION COPY
EXHIBIT J
[INTENTIONALLY BLANK]
CONFIDENTIAL
47
<PAGE>
EXECUTION COPY
EXHIBIT K
ICP ADVERTISING REVENUE SHARE
<TABLE>
<CAPTION>
----------------------------------- --------------------------------------
Amount of Advertising Revenues Percentage to be Paid to the Non-
on the Principal ICP Interactive Selling Party
Site
----------------------------------- --------------------------------------
<S> <C>
Up to US$[*****] [*****]%
----------------------------------- --------------------------------------
US$[*****] - US$[*****] [*****]%
----------------------------------- --------------------------------------
Greater than US$[*****] [*****]%
----------------------------------- --------------------------------------
</TABLE>
TARGETS SHALL RESTART DURING EACH YEAR OF THE AGREEMENT.
CONFIDENTIAL
48
<PAGE>
EXECUTION COPY
EXHIBIT L
REVENUE SHARING ARRANGEMENT
A. HURDLE 1.
AOL WILL RECEIVE [*****] PERCENT ([*****]%) OF JOB LISTING REVENUES
EARNED IN A CONTRACT YEAR AFTER THE AMOUNT IN EXCESS OF THE FOLLOWING
HURDLES (EACH, A "HURDLE") ACHIEVED IN THAT YEAR:
US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 1
US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 2
US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 3
US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 4
B. HURDLE 2A.
IF HURDLE 1 IS MET, THEN MONSTER WILL MAKE THE FOLLOWING PAYMENTS AFTER
THE FOLLOWING HURDLES ARE MET:
1. RESUME ACQUISITION BOUNTIES
YEAR 1: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
YEAR 2: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
YEAR 3: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
YEAR 4: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
2. PERSONAL ALERT PROFILE ACQUISITION BOUNTIES
IN ANY YEAR: US$[*****] FOR THE FIRST [*****] UNIQUE USER PROFILES
US$[*****] FOR EACH UNIQUE USER PROFILE BETWEEN
[*****] AND [*****]
US$[*****] FOR EACH UNIQUE USER PROFILE ABOVE [*****]
3. VIRTUAL CAREER FAIR FEES
YEAR 1: [*****] PERCENT ([*****]%) OF ANY REVENUE OR FEES RECEIVED
BY ICP FROM CAREER FAIRS ("FAIR FEES") AFTER FIRST [*****]
CAREER FAIRS
YEAR 2: [*****] PERCENT ([*****]%) OF ANY FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
YEAR 3: [*****] PERCENT ([*****]%) OF ANY FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
CONFIDENTIAL
49
<PAGE>
EXECUTION COPY
YEAR 4: [*****] PERCENT ([*****]%) OF ANY FAIR FEES FROM CAREER
FAIRS AFTER FIRST [*****] CAREER FAIRS
4. TALENT MARKET.
YEAR 1: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 2: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 3: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 4: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
5. OTHER (E.G., OTHER CONSUMER SERVICES).
AOL AND ICP WILL NEGOTIATE THE TERMS FOR ANY NEW REVENUE STREAM
C. HURDLE 2B.
IF HURDLE 1 IS NOT MET, BUT THE FOLLOWING HURDLES ARE MET, ICP WILL
MAKE THE FOLLOWING PAYMENTS:
1. RESUME ACQUISITION BOUNTIES.
YEAR 1: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****]
AND [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
YEAR 2: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****]
UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME
BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****]
FOR EACH RESUME ABOVE [*****] UNIQUE USER RESUMES
YEAR 3: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
CONFIDENTIAL
50
<PAGE>
EXECUTION COPY
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES US$[*****] FOR EACH
UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE
USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
YEAR 4: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND
[*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER
RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES
US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE
USER RESUMES
2. PERSONAL ALERT PROFILE ACQUISITION BOUNTIES
IN ANY YEAR: US$[*****] FOR THE FIRST [*****] UNIQUE USER PROFILES
US$[*****] FOR EACH UNIQUE USER PROFILE BETWEEN [*****]
AND [*****]
US$[*****] FOR EACH UNIQUE USER PROFILE AFTER [*****]
3. VIRTUAL CAREER FAIR FEES
YEAR 1: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
YEAR 2: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
YEAR 3: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
YEAR 4: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST
[*****] CAREER FAIRS
4. TALENT MARKET.
YEAR 1: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 2: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 3: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
YEAR 4: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND
[*****] CANDIDATE PROFILES
US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****]
CANDIDATE PROFILES
CONFIDENTIAL
51
<PAGE>
EXECUTION COPY
5. OTHER (E.G., OTHER CONSUMER SERVICES).
AOL AND ICP WILL NEGOTIATE THE TERMS FOR ANY NEW REVENUE STREAM. AOL
WILL DISCOUNT ITS REVENUE SHARE BY [*****] PERCENT ([*****]%) IN THE
EVENT THAT HURDLE 1 IS NOT MET, BUT HURDLE 2 IS MET.
52
CONFIDENTIAL
<PAGE>
EXHIBIT 23.1(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TMP Worldwide Inc.
New York, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our reports
dated March 26, 1999, relating to the consolidated financial statements and
schedule of TMP Worldwide Inc. and Subsidiaries appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 and our
reports dated November 19, 1999, relating to the supplemental consolidated
financial statements and schedule of TWP Worldwide Inc. and Subsidiaries
appearing on the Company's Current Report on Form 8-K dated December 1, 1999.
We also consent to the reference to us under the caption "Experts" in
the Prospectus.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
New York, New York
December 15, 1999
<PAGE>
Exhibit 23.1(c)
The Board of Directors
Morgan & Banks Limited
Level 11, Grosvenor Place
225 George Street
SYDNEY NSW 2000
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We hereby consent to the use of our reports:
a) dated 16 June 1998, except for Note 2 of Notes to and forming part of the
Consolidated Financial Statements for which the date is 21 September 1998,
relating to the consolidated balance sheets of Morgan & Banks Limited as at
31 March 1998 and 1997, and the consolidated profit statements and cash flow
statements for each of the years in the three year period ended 31 March 1998
appearing in the Company's Current Report on Form 8-K dated 12 February 1999;
and
b) dated 15 April 1999, relating to the consolidated balance sheets of Morgan
& Banks Limited as at 31 December 1998 and 31 March 1998, and the profit
statements for the years ended 31 December 1998, 31 March 1998 and 31 March
1997, and the cash flow statements for the nine month period ended 31
December 1998 and the years ended 31 March 1998 and 31 March 1997 appearing
in the Company's Current Report on Form 8-K dated December 1, 1999;
which reports are incorporated by reference in the Prospectus constituting a
part of this Registration Statement on Form S-3 of TMP Worldwide Inc.
We also consent to the reference to us under the caption "Experts" in the
Prospectus constituting a part of this Registration Statement.
Sydney, Australia
December 15, 1999
Pannell Kerr Foster
/s/ PANNELL KERR FOSTER
<PAGE>
Exhibit 23.1(d)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
April 7, 1999, included in TMP Worldwide Inc.'s Registration Statement File No.
333-82531 and included in TMP Worldwide Inc.'s Form 8-K dated December 1, 1999,
and to all references to our firm included in this registration statement.
Arthur Andersen LLP
Tampa, Florida
December 15, 1999
