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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEADHUNTER.NET, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
GEORGIA 7310 58-2403177
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification Number)
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WARREN L. BARE
CHIEF EXECUTIVE OFFICER
HEADHUNTER.NET, INC.
6410 ATLANTIC BOULEVARD
SUITE 160
NORCROSS, GEORGIA 30071
TELEPHONE: (770) 300-9272
FACSIMILE: (770) 300-9298
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and agent for service)
COPIES TO:
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JOEL J. HUGHEY, ESQ. GLENN W. STURM, ESQ.
ALSTON & BIRD LLP NELSON MULLINS RILEY
ONE ATLANTIC CENTER & SCARBOROUGH, L.L.P.
1201 WEST PEACHTREE STREET FIRST UNION PLAZA
ATLANTA, GEORGIA 30309-3424 999 PEACHTREE STREET, N.E.
FACSIMILE: (404) 881-7777 SUITE 1400
ATLANTA, GEORGIA 30309
FACSIMILE: (404) 817-6050
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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, check the following box. [ ]
If this Form is filed to register additional securities for any offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
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Common Stock, $0.01 par value................... $37,375,000 $11,026
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(1) Includes shares of Common Stock which the Underwriters have an option to
purchase from the Company to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. In accordance with Rule 457(o) under the Securities
Act of 1933, as amended, the number of shares being registered and the
proposed maximum offering price per share are not included in this table.
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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.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 17, 1998
PROSPECTUS
SHARES
HEADHUNTER.NET, INC.
COMMON STOCK
All of the shares of Common Stock offered hereby (the "Offering")
are being offered by HeadHunter.NET, Inc. (the "Company" or "HeadHunter.NET").
Prior to the Offering there has been no public market for the Common Stock.
It is currently anticipated that the initial public offering price for the
Common Stock will be between $ and $ per share. See "Underwriting"
for information relating to the determination of the initial public offering
price. The Company has applied for listing of the Common Stock on the Nasdaq
National Market under the symbol "HNET."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share......................... $ $ $
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Total(3).......................... $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated Offering expenses of $ payable by the
Company.
(3) The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ and the total Proceeds to Company will
be $ . See "Underwriting."
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The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the Underwriters' right to
reject orders in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about , 1998.
WHEAT FIRST UNION
J.C. BRADFORD&CO.
INTERSTATE/JOHNSON LANE
CORPORATION
, 1998.
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[PICTURES OF HEADHUNTER.NET WEB PAGES APPEAR HERE]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE
COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements, the
notes thereto and the other financial and operating data contained elsewhere in
this Prospectus. Unless otherwise indicated, the information contained in this
Prospectus assumes (i) no exercise of the Underwriters' over-allotment option
and (ii) conversion of all of the Company's Class A Preferred Stock into Common
Stock. Unless otherwise indicated expressly or by context, references herein to
the "Company" or "HeadHunter.NET" refer to HeadHunter.NET, Inc. and its
subsidiaries, HeadHunters, L.L.C. ("LLC") and HNET, Inc. ("HNI").
THE COMPANY
HeadHunter.NET is an Internet-based interactive technology company that
provides a leading employment Web site at www.HeadHunter.NET. The Company's Web
site enables employers and recruiters ("job listers") to list job opportunities
and search for resumes, and enables job seekers to post resumes and search for
job opportunities using a wide array of search criteria, including keyword,
industry, job type, education, geographic location and salary range. Based on
Relevant Knowledge statistics for the second quarter of 1998, HeadHunter.NET
rated first in terms of return traffic, page views per user and time spent per
user on the site compared to the leading employment Web sites. The Company has
significantly increased traffic on its Web site from 170,000 average daily page
views during January 1998 to 375,000 average daily page views during June 1998.
HeadHunter.NET believes that this increase in traffic is due to the quality and
quantity of its content, the ease of use, search capabilities and overall
functionality of its Web site, and increased market awareness resulting from
enhanced marketing activities. The Company recently entered into strategic
relationships with Yahoo! Inc. ("Yahoo!"), WorkLife Solutions, Inc.
("WorkLife"), in conjunction with the AltaVista search engine ("AltaVista"),
GeoCities, Inc. ("GeoCities") and DoubleClick Inc. ("DoubleClick"), each of
which the Company believes will further increase traffic and market awareness of
its Web site.
HeadHunter.NET offers an effective Internet-based solution to meet the
hiring and job search needs of job listers and job seekers. All of the job
opportunities and resumes listed on the Company's Web site are original content
submitted by job listers and job seekers, and are not recycled from print or
other media. At June 30, 1998, approximately 165,000 job opportunities and
31,000 resumes were listed on the Company's Web site. HeadHunter.NET ensures the
quality of its content by enabling job listers and job seekers to continually
update their job opportunities and resumes and by removing outdated listings
from its Web site. The Company offers enhanced listing services to job listers
which are primarily intended to increase visibility of their job opportunities.
These enhanced listing services include: (i) preferential search result
ordering; (ii) automatic cross-posting of listings to Yahoo! Classifieds and
AltaVista's Career and Employer Zone (the "Careers Zone"); (iii) a link to a job
lister's Web site which allows job seekers to easily access additional
information about the job lister and its employment opportunities; and (iv)
access to an automated job posting system which allows job listers to bulk post
a large number of employment opportunities to the Company's Web site.
Jupiter Communications estimates that the total number of individual online
users in the United States will grow from approximately 49 million in 1997 to
116 million in 2002. The Company believes that this rapid increase has made and
will continue to make the Internet an attractive medium for online recruiting.
According to an industry report, the traditional place and search segment of the
staffing industry is expected to generate approximately $13 billion in revenues
in 1998, an increase of 19% from 1997. Total spending on online recruiting is
expected to grow from approximately $48 million in 1997 to $460 million in 2002,
according to Forrester Research. The Company believes that online recruiting has
a number of advantages over traditional means of hiring and job searching
because it is: (i) interactive, allowing immediate links to additional
information; (ii) more easily tailored to satisfy the users' needs; (iii) more
cost-effective; and (iv) more easily accessible.
The Company also believes that a significant opportunity exists to
capitalize on the growing use of the Internet as an advertising medium by
leveraging the traffic on its Web site to attract advertisers. According to
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Jupiter Communications, total spending for online advertising is expected to
grow from approximately $940 million in 1997 to $7.7 billion in 2002. The
Company believes that job seekers using its Web site present an attractive
target audience for advertising by existing job listers and companies such as
career consultants, resume consultants, benefits providers, recruiters, human
resource management companies, moving companies, insurance companies and others
whose services may be of interest to job seekers.
The Company derives its revenues from enhanced listing services fees and
the sale of advertising banners on its site. Job listers may choose to purchase
enhanced listing services to improve the placement and visibility of their job
opportunities. Advertisers may purchase banner advertisements that are displayed
randomly or based upon targeted search criteria. During June 1998, the Company
delivered, on average, over 375,000 advertising impressions per day from over 65
advertisers, including Fidelity Investments, HotMail Corporation, Powertel,
Inc., Ford Motor Company and InterCall, Inc.
The Company's objective is to provide the leading employment Web site by
offering an effective solution to meet the employment needs of job listers and
job seekers. The Company's strategy to accomplish this objective includes the
following key elements: (i) continue to facilitate successful employment
searches; (ii) increase market awareness and brand recognition of
HeadHunter.NET; (iii) establish additional strategic relationships; (iv)
implement an innovative pricing model; (v) continue to enhance site
functionality and features; and (vi) pursue strategic acquisitions of
complementary businesses and technologies.
Information contained on the Company's Web site is not a part of this
Prospectus and must not be relied upon in evaluating an investment in the Common
Stock offered hereby. This Prospectus contains trade names, service marks and
trademarks of the Company and others, all of which are the property of their
respective owners.
THE OFFERING
Common Stock offered by the
Company..................... shares
Common Stock to be outstanding
after the Offering............ shares(1)
Use of Proceeds............... Marketing and selling costs, including the
development of strategic relationships;
repayment of debt to a wholly-owned subsidiary
of one of the Company's principal shareholders;
and working capital and general corporate
purposes. See "Use of Proceeds" and "Certain
Transactions."
Proposed Nasdaq National
Market symbol................. HNET
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(1) Excludes (i) 500,000 shares of Common Stock reserved for issuance under the
HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan (the "Incentive Plan"),
(ii) 382,250 shares of Common Stock issuable upon the exercise of options
granted under the HeadHunters, L.L.C. Employee Common Unit Option Plan (the
"LLC Plan") as of the date of this Prospectus, none of which are currently
exercisable and (iii) shares of Common Stock (assuming an initial
public offering price of $ per share) issuable upon the exercise of a
warrant granted by the Company to ITC Service Company, a wholly-owned
subsidiary of one of the Company's principal shareholders, in connection
with the Company's $2.5 million credit facility. See
"Management -- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan,"
"-- HeadHunters, L.L.C. Employee Common Unit Option Plan" and "Certain
Transactions."
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SUMMARY FINANCIAL AND OPERATING DATA
The summary financial and operating data set forth below should be read in
conjunction with "Company Organization," "Use of Proceeds," "Selected Financial
and Operating Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company's financial statements and
notes thereto, and the other financial and operating data included elsewhere in
this Prospectus. The financial and operating data for the periods after October
31, 1997 (the date the Company was organized) are not comparable to the
financial and operating data for prior periods as a result of the amortization
of acquired software rights. The financial data for the "Predecessor Company"
represent the financial results of HNI prior to October 31, 1997. The financial
and operating data for the "Successor Company" represent the financial results
and operating data of HeadHunter.NET, Inc. through June 30, 1998. See Notes 1
and 2 of notes to the Company's financial statements.
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SUCCESSOR PREDECESSOR SUCCESSOR
PREDECESSOR COMPANY COMPANY COMPANY COMPANY
----------------------------------------------- ------------ ----------- ------------
FROM INCEPTION YEAR TEN MONTHS TWO MONTHS SIX MONTHS SIX MONTHS
(OCTOBER 10, 1995) ENDED ENDED ENDED ENDED ENDED
TO DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1997 1997 1997 1998
------------------ ------------ ----------- ------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
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STATEMENTS OF OPERATIONS DATA:
Revenues.......................... $ 50,754 $ 190,146 $ 124,437 $ 29,591 $ 103,885 $ 278,051
Operating expenses................ 5,589 61,687 158,757 212,209 96,222 1,344,976
-------- --------- --------- --------- --------- ------------
Operating income (loss)........... 45,165 128,459 (34,320) (182,618) 7,663 (1,066,925)
Net income (loss)................. $ 45,165 $ 128,623 $ (35,163) $(176,392) $ 7,062 $ (1,059,381)
======== ========= ========= ========= ========= ============
LOSS PER SHARE:(1)
Basic............................. $ (0.08) $ (0.48)
Diluted........................... $ (0.08) $ (0.46)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic............................. 2,200,000 2,200,000
Diluted........................... 2,318,250 2,318,250
OPERATING DATA:
Jobs posted (at end of period).... 90,000 165,000
Resumes posted (at end of
period)......................... 20,000 31,000
Monthly page impressions(2)....... 2,500,000 11,400,000
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SUCCESSOR COMPANY
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AS OF JUNE 30, 1998
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ACTUAL AS ADJUSTED(3)
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(UNAUDITED) (UNAUDITED)
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BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 196,366
Working capital............................................. (273,131)
Total assets................................................ 1,524,696
Total debt, including current maturities.................... 400,000
Total shareholders' equity.................................. 771,136
</TABLE>
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(1) Pursuant to Staff Accounting Bulletin ("SAB") No. 98, for all periods
presented, basic net loss per share is computed using the weighted average
number of shares of Common Stock outstanding during the period. Diluted net
loss per share is computed using the weighted average number of shares of
Common Stock outstanding during the period and nominal issuances of Common
Stock and Common Stock equivalents, regardless of whether they are
anti-dilutive. The Predecessor Company's per share data are not shown as
they are not comparable with the Successor Company's.
(2) Page impressions represent the number of Web pages delivered from the
Company's server to users. Monthly page impressions consist solely of
impressions delivered for the last month of the period.
(3) Adjusted to reflect the sale of shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$ per share and the application of the estimated net proceeds therefrom.
See "Use of Proceeds."
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RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Common Stock offered hereby. This Prospectus contains statements which
constitute "forward-looking statements" appearing throughout this Prospectus and
include all statements that are not historical statements of fact relating to,
without limitation, future economic performance, plans and objectives of
management for future operations and projections of revenues and other financial
items that are based on the beliefs of the Company's management, as well as
assumptions made by, and information currently available to, the Company's
management. The words "may," "would," "could," "expect," "estimate,"
"anticipate," "believe," "plan," "intend" and similar expressions and variations
thereof are intended to identify forward-looking statements. The cautionary
statements set forth in this "Risk Factors" section and elsewhere in this
Prospectus identify important factors with respect to such forward-looking
statements, including certain risks and uncertainties, many of which are beyond
the Company's ability to control, that could cause actual results to differ
materially from those in such forward-looking statements.
EXTREMELY LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT AND ANTICIPATION OF
CONTINUED LOSSES
The Company launched its Web site in October 1996. Accordingly, the Company
has an extremely limited operating history upon which an evaluation of the
Company and its current business can be based. The Company's business must be
considered in light of the risks, expenses and problems frequently encountered
by companies in their early stage of development, particularly companies in new
and rapidly evolving markets such as Internet services and Internet-based
advertising markets. Specifically, such risks include, without limitation, the
inability to achieve or, if achieved, to maintain, high volumes of traffic on
its Web site, the failure to anticipate and adapt to a developing market, the
rejection of the Company's services by job listers, job seekers, or advertisers,
current or additional competition, the failure of the marketplace to adopt the
Internet as an advertising medium, reductions in market prices for
Internet-based advertising as a result of competition or other factors, the
inability of the Company to establish additional or maintain existing strategic
relationships, the inability of the Company to identify, attract, retain and
motivate qualified personnel, and the inability of the Company to effectively
integrate the technology and operations of any subsequently acquired businesses
or technologies with its operations. There can be no assurance that the Company
will be successful in addressing such risks.
The Company has achieved only limited revenues to date, has incurred
significant operating and net losses since inception, and as of June 30, 1998,
had an accumulated deficit of approximately $1.2 million. The Company may
continue to experience significant increases in operating and net losses on an
annual and quarterly basis in the future. There can be no assurance that any
revenue growth the Company experiences will be indicative of future operating
results. In addition, the Company plans to significantly increase its operating
expenses in order to expand its sales and marketing efforts, and increase its
general and administrative costs to support an enlarged organization. To the
extent that revenues do not grow at anticipated rates or that increases in such
operating expenses precede or are not subsequently followed by commensurate
increases in revenues, or that the Company is unable to adjust operating expense
levels accordingly, the Company's business, results of operations and financial
condition will be materially and adversely affected. Given the level of planned
expenditures, the Company anticipates that it will continue to incur losses and
negative cash flow through at least the second quarter of 2000. The extent of
these losses and negative cash flow will be contingent on the amount of growth
in the Company's advertising and listing enhancement revenues which in turn
depends on the factors noted above. Although the Company does not anticipate
that its operating loss will continue to increase indefinitely, there can be no
assurance that operating losses will not increase in the future or that the
Company will ever achieve or maintain profitability.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS; UNPREDICTABILITY OF FUTURE REVENUES
As a result of the Company's extremely limited operating history and the
emerging nature of the Internet, the Company has no meaningful historical
financial data upon which to base planned operating expenses. Accordingly, the
Company's expense levels are based in part on its expectations as to future
revenues. There
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can be no assurance that the Company will be able to accurately predict the
levels of future revenues, particularly in light of the intense competition for
the sale of Internet-based advertisements and the uncertainty as to the
viability of the Internet as an advertising or recruiting medium, and the
failure to do so could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, the Company derives
its revenues from the sale of advertising on its Web site pursuant to short-
term contracts and fees charged for enhanced listing services. As a result,
quarterly sales and operating results are and will continue to be entirely
dependent on such revenues received within the quarter, which are difficult to
forecast, and are also dependent on the Company's ability to adjust spending in
a timely manner to compensate for any unexpected revenue shortfall. The
cancellation or deferral of a small number of existing advertising contracts or
enhanced listing orders or the failure to obtain new advertising contracts and
enhanced listing orders in any quarter could have a material adverse effect on
the Company's business, results of operations and financial condition for such
quarter. Furthermore, the Company derives advertising revenue based on the
amount of traffic, or page views, on its Web site. Accordingly, any significant
shortfall of traffic on the Company's Web site in relation to the Company's
expectations, or the expectations of existing or potential advertisers, would
have an immediate material adverse effect on the Company's business, results of
operations and financial condition.
The Company expects operating results to vary significantly on a quarterly
basis. Such fluctuations may in the future be caused by numerous factors, many
of which are outside the Company's control, including, without limitation, (i)
specific economic conditions relating to the Internet, (ii) usage of the
Internet, (iii) demand for advertising on the Company's Web site as well as
demand for Internet-based advertising in general, (iv) changes in advertising
rates as a result of competition or other factors, (v) seasonal trends in
advertising sales, (vi) the advertising budgeting cycles of advertisers, (vii)
the hiring cycles of employers, (viii) demand for enhanced listing services on
the Company's Web site, (ix) incurrence of charges in connection with the
Company's distribution relationships with Internet service providers ("ISPs")
and online service providers ("OSPs") or other third parties, (x) demand for the
Company's services, (xi) incurrence of costs relating to acquisitions of
businesses or technologies, (xii) incurrence of charges in connection with the
establishment of strategic relationships, (xiii) introduction or enhancement of
services by the Company and its competitors, (xiv) market acceptance of new
services, (xv) delays in the introduction of services or enhancements by the
Company or its competitors, (xvi) changes in the Company's pricing policies or
those of its competitors, (xvii) capacity constraints and dependencies on
computer infrastructure and (xviii) general economic conditions. In order to
promote and maintain awareness of the Company's Web site, the Company may in the
future significantly increase its advertising and/or promotion budgets for a
particular quarter, which could have a material adverse effect on the Company's
business, results of operations and financial condition for such period. As a
strategic response to a changing competitive environment, the Company may elect
from time to time to make certain other pricing, service or marketing decisions
or acquisitions that could have a material adverse effect on the Company's
business, results of operations and financial condition. As a result, the
Company believes that period-to-period comparisons of its results of operations
will not necessarily be meaningful and should not be relied upon as an
indication of future performance. Due to all of the foregoing factors, it is
likely that in some future quarter or quarters the Company's operating results
will be below the expectations of management or public market analysts and
investors. In such event, the price of the Company's capital stock could drop
significantly.
UNCERTAIN ACCEPTANCE OF THE INTERNET AS AN EFFECTIVE ADVERTISING MEDIUM OR
SEARCH TOOL FOR CAREER AND EMPLOYMENT NEEDS
The Company's current business model is based on deriving its revenues from
selling advertising space on its Web site and charging fees for enhanced listing
services. Because the market for the Company's services has recently begun to
develop and is rapidly evolving, there is a lack of proven business models for
companies like the Company which rely on such sources of revenue. In particular,
the Internet is an unproven medium for advertising and for the fulfillment of
job listers' and job seekers' needs as compared to traditional advertising media
and job search and placement services. No standards have been widely accepted
for the measurement of the effectiveness of Internet-based advertising, and
there can be no assurance that such standards will ever develop sufficiently to
support the Internet as an effective advertising medium. In addition, there is
intense
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competition in the sale of advertising on the Internet, resulting in a wide
range of rates quoted and a variety of pricing models offered by different
vendors for a variety of advertising services which makes it difficult to
project future levels of advertising revenues and rates. It is also difficult to
predict which pricing models will be adopted by the industry or advertisers. For
example, advertising rates based on the number of "click throughs" from the
Company's Web site to the advertiser's pages, instead of rates based solely on
the number of impressions or other factors, could have a material adverse effect
on the Company's advertising revenues. Moreover, "filter" software programs that
limit or remove advertising from an Internet user's desktop are publicly
available. Widespread adoption of such software by users could have a material
adverse effect upon the viability of advertising on the Internet. Moreover,
critical issues concerning the commercial use of the Internet (including
security, reliability, cost, ease of use, access, quality of service and
acceptance of advertising) remain unresolved and may impact the growth of the
Internet. The Company's future operating results depend upon the increased use
of the Internet for information, publication, distribution and commerce, and on
the emergence of the Internet as an effective advertising medium and a useful
tool for job listers and job seekers. If widespread commercial use of the
Internet does not develop, or if the Internet does not develop as an effective
advertising medium or search tool for job listers and job seekers, such factors
could have a material adverse effect on the Company's business, results of
operations and financial condition.
A majority of the Company's current and targeted advertising customers have
only limited experience with the Internet as an advertising medium and may not
find such advertising to be effective for promoting their products or services
relative to traditional methods of advertising. As a result, many current and
targeted advertisers have not yet devoted a significant portion of their
advertising expenditures to Internet-based advertising, and purchase
advertisements only on a short-term basis. There can be no assurance that such
advertisers will perceive that the value obtained by advertising on the
Company's Web site outweighs the value obtained from traditional advertising or
by advertising on other Web sites, or that such advertisers will continue or
increase the level of, or that potential new advertisers will purchase,
advertisements on the Company's Web site. The Company's ability to generate
significant advertising revenues will also depend on, among other factors, the
development of a large base of users of the Company's services possessing
demographic characteristics attractive to advertisers, and the ability of the
Company to develop and update effective advertising delivery and measurement
systems. The Company believes that establishing and maintaining brand
recognition of HeadHunter.NET is a critical aspect of developing a large user
base and that the importance of brand recognition will increase as competition
increases. The inability of the Company to develop an attractive audience for
advertisers or to satisfactorily deliver such advertising could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Similarly, a majority of the Company's current job listers that elect
optional enhancements to their employment listings have limited experience with
the Internet as a tool for fulfilling their employment needs and may find that
listing on the Internet is not as effective in fulfilling employment needs as
traditional recruiting methods and media. The Company's ability to generate
significant listing enhancement revenues is dependent on, among other factors,
the satisfaction and success of job listers and job seekers utilizing the
Company's services, brand recognition of the Company's services, the perceived
value to job listers of listing enhancements, the successful implementation of
the Company's proprietary variable pricing program, and the incentive created by
the Company for job listers to enhance listings. The inability of the Company to
achieve user satisfaction and brand recognition, or to deliver valuable enhanced
services at rates desirable to job listers relative to traditional recruiting
methods, could have a material adverse effect on the Company's business, results
of operations and financial condition.
The Company has recently implemented a beta version of its proprietary
variable pricing program, AVILUS (Associated Value Internet Listing Upgrade
System), which will change its current flat-fee structure charged for
preferential search result ordering. The Company believes that a live version of
AVILUS will be operational in the third quarter of 1998. While the Company
believes that the implementation of AVILUS will increase listing enhancement
revenues, such a model has not been previously utilized on the Internet. There
can be no assurance that under AVILUS the Company will derive equal or higher
revenues from the sale of enhanced listing services than it previously did with
the flat-fee structure or that the Company will ever derive substantial revenues
from listing enhancements. For the six months ended June 30, 1998, fees
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from enhanced listing services accounted for approximately 27.3% of the
Company's revenues. The inability of the Company to significantly increase the
number of job listers electing to enhance their listings and the revenues
generated from such enhancements could have a material adverse effect on the
Company's business, results of operations and financial condition.
INTENSE COMPETITION
The market for advertising and employment listing services on the Internet
is highly fragmented and intensely competitive. The Company believes that the
principal competitive factors in these markets are user traffic, establishment
of strategic relationships, name recognition, pricing, user satisfaction,
performance, ease of use and functionality. The Company competes against other
online recruiting Web sites such as The Monster Board, Career Path, Career
Mosaic and Online Career Center. In addition, the Company also competes with
ISPs, OSPs, owners of Web browsers and other Internet content providers for the
sale of advertisements and for traffic searching for employment listings. The
Company believes that the number of companies relying on fees from
Internet-based advertising has increased substantially during the past year.
Accordingly, the Company may face increased pricing pressure for the sale of
advertisements on its Web site, which could have a material adverse effect on
the Company's business, results of operations and financial condition. In
addition, in order to make their sites more attractive to advertisers, many Web
site operators have been entering into distribution arrangements, co-branding
arrangements, content arrangements and other strategic relationships with ISPs,
OSPs, owners of Web browsers, operators of high traffic Web sites and other
businesses in an attempt to increase traffic and page views. If direct
competitors or other Web site operators are able to enter into strategic
relationships and increase their traffic and page views, their Web sites could
appear more attractive to advertisers, which would have a material adverse
effect on the amount of advertisements and enhanced listing services sold on the
Company's Web site and on the Company's business, results of operations and
financial condition.
Certain of the Company's existing competitors, as well as a number of
potential new competitors, have longer operating histories in the online
recruiting market, greater name recognition, larger user bases and databases,
and significantly greater financial, technical and marketing resources than the
Company. Such competitors may be able to undertake more extensive marketing
efforts, adopt more aggressive pricing policies and make more attractive offers
to potential employees, distribution partners, advertisers and content
providers. Further, there can be no assurance that the Company's competitors
will not develop online employment listing services that achieve greater market
acceptance than the Company's services in the area of name recognition,
performance, ease of use and functionality. There can also be no assurance that
ISPs, OSPs, owners of Web browsers and other Internet content providers will not
be perceived by advertisers as having more desirable Web sites for placement of
advertisements. In addition, certain of the Company's current and targeted
advertising customers and strategic partners may have established collaborative
relationships with certain of the Company's competitors, and a number of the
Company's competitors have established collaborative relationships with ISPs,
OSPs and other Internet content providers. Accordingly, there can be no
assurance that the Company will be able to retain advertisers and job listers,
maintain or increase traffic on its Web site, or that competitors will not
experience greater growth in traffic than the Company as a result of such
relationships, or that strategic partners will not sever or will elect not to
renew their agreements with the Company.
The Internet, in general, and the Company, specifically, also must compete
with traditional advertising media such as print, radio and television for a
share of advertisers' total advertising budgets. To the extent that the Internet
is not perceived as an effective advertising medium, advertisers may be
reluctant to devote a significant portion of their advertising budget to the
Internet. See "-- Uncertain Acceptance of the Internet as an Advertising Medium
or Search Tool for Career and Employment Needs."
LOW BARRIERS TO ENTRY
The market for Internet content and services is relatively new, intensely
competitive and rapidly evolving. There are minimal barriers to entry, and
current and new competitors can launch new Internet sites and add substantial
content available on such sites at a relatively low cost within a relatively
short time period. In
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addition, the Company competes for the time and attention of Internet users with
numerous not-for-profit Internet sites operated by individuals and government
and educational institutions. Existing and potential competitors also include
magazine and newspaper publishers, cable television companies and start-up
ventures attracted to the Internet market. Accordingly, the Company expects
competition to persist and intensify and the number of competitors to increase
significantly in the future. Should the Company attempt in the future to expand
the scope of its Web site, it will compete with a greater number of Web sites
and other media companies. Because the operations and strategic plans of
existing and future competitors are undergoing rapid change, it is extremely
difficult for the Company to anticipate which companies are likely to offer
competitive content and services in the future. See "-- Intense Competition."
DEPENDENCE ON STRATEGIC AND OTHER RELATIONSHIPS
The Company has entered into and continually evaluates strategic
relationships. The Company depends on its strategic relationships to increase
(i) traffic and content on its Web site, (ii) visibility of job listers'
employment opportunities, (iii) brand recognition, and (iv) advertising
revenues. The Company has only recently entered into strategic relationships
with Yahoo!, WorkLife (in conjunction with AltaVista), GeoCities and
DoubleClick. Each of these relationships is short-term and generally
non-exclusive. There can be no assurance that any such relationships will
continue in the future or generate substantial benefits or revenues for the
Company. The inability of the Company to maintain existing and enter into
additional strategic relationships, or the failure to complete any projects
related to any strategic relationship could have a material adverse effect on
the Company's business, results of operations and financial condition. In
addition, the Company depends on advertising agreements with Internet companies
such as America Online, Inc. ("AOL") and Yahoo! to increase content and traffic
on its Web site and to increase users' awareness of the Company's Web site.
There can be no assurance that such agreements will be renewed on terms
acceptable to the Company. Such companies may also enter into arrangements with
the Company's competitors which may substantially reduce the effectiveness of
the Company's advertising or eliminate the Company's ability to advertise on
such companies' Web sites. See "Business -- Marketing and Promotion -- Strategic
Relationships."
The Company is also generally dependent on other Web site operators that
provide links to the Company's Web site. Most of these arrangements are not
exclusive and are short-term or may be terminated at the convenience of the
other party. Moreover, many Web site operators provide links to the Company's
Web site on an informal basis, and such Web site operators may terminate such
links at any time without notice to the Company. In addition, there can be no
assurance that such third parties will not develop their own competitive
services, either during their relationship with the Company or after their
relationship with the Company expires. Further, there can be no assurance that
the services of those Web site operators that provide access or links to the
Company's Web site will achieve market acceptance or commercial success.
Accordingly, there can be no assurance that the Company's existing relationships
will result in sustained business partnerships, successful service offerings, or
the generation of significant traffic and content on the Company's Web site or
significant revenues for the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the performance of
Warren L. Bare and other executive officers and key employees. Given the
Company's early stage of development, the Company is dependent on its ability to
attract, retain and motivate high quality personnel, especially its management
and development teams. The Company has obtained a "key person" life insurance
policy on Mr. Bare in the amount of $2.0 million and the Company has made
application to increase the amount of this policy to $4.0 million. The loss of
the services of Mr. Bare or any of its other executive officers or key employees
could have a material adverse effect on the business, results of operations or
financial condition of the Company. The Company's future success also depends on
its continuing ability to identify, hire, train and retain other highly
qualified technical and managerial personnel. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to
identify, attract, assimilate or retain other highly qualified technical and
managerial personnel in the future and the failure to do so could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Management."
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FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company currently believes that cash on hand and the net proceeds from
the Offering will be sufficient to fund its working capital, anticipated
operating cash flow deficit and capital expenditure requirements for the 12
months following completion of the Offering. Thereafter, the Company may need to
raise additional funds. The Company's ability to grow will depend in part on the
Company's ability to expand and improve its Internet operations, expand its
advertising and marketing efforts, expand and improve its Internet user support
capabilities and increase content on its Web site. In connection therewith, the
Company may need to raise additional capital in the foreseeable future from
public or private equity or debt sources in order to finance such possible
growth. In addition, the Company may need to raise additional funds in order to
take advantage of unanticipated opportunities (such as acquisitions of
complementary businesses or the development of new products or services), to
react to unforeseen difficulties (such as the loss of key personnel or the
rejection by Internet users or potential advertisers of the Company's Internet
content) or to otherwise respond to unanticipated competitive pressures. If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of the Company's then existing shareholders
will be reduced, shareholders may experience additional dilution and such
securities may have rights, preferences or privileges senior to those of the
Company's Common Stock. There can be no assurance that additional financing will
be available on terms favorable to the Company or at all. If adequate funds are
not available on acceptable terms, the Company may not be able to fund its
expansion, take advantage of unanticipated acquisition opportunities, develop or
enhance service offerings or respond to competitive pressures. Such inability
could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
CONFUSINGLY SIMILAR DOMAIN NAMES
The Company has registered with Network Solutions, Inc. the Internet domain
names Headhunter.net and Headhunters.net, and has recently completed
negotiations to acquire the domain name "Headhunter.com." However, there are
other substantially similar domain names (including Headhunters.com,
Headhunter.org and Headhunters.org), which are registered by companies which
compete with the Company. In addition, new top level domains may be added in the
future, allowing such combinations as Headhunter.firm, Headhunter.shop and other
similar domains, which may not be controlled by the Company. There can be no
assurance that potential users and advertisers will not confuse the Company's
domain name with other similar domain names. In situations in which such
confusion occurs, the Company may lose business to a competitor, advertising
rates and enhanced listing service fees may be driven down due to lower traffic,
and some users of the Company's services may have negative experiences with the
other companies on their Web sites that such users erroneously associate with
the Company. See "Business -- Intellectual Property."
BROAD DISCRETION OF MANAGEMENT OVER USE OF PROCEEDS
The primary purpose of the Offering is to raise funds to be used to expand
the Company's marketing efforts and to position the Company to develop
additional strategic relationships. Assuming an initial public offering price of
$ per share, approximately % of the net proceeds of the Offering have
been allocated to expand the Company's marketing and advertising efforts,
including the development of additional strategic relationships. The remainder
of the net proceeds of the Offering have been allocated for repayment of debt to
the Company's majority shareholder and for working capital and other general
corporate purposes, which may include capital expenditures, expansion of
facilities, personnel, general and administrative expenses, and acquisitions.
The proposed allocation of the net proceeds of the Offering represents the
Company's best estimate based on the expected utilization of funds necessary to
finance the Company's activities in accordance with management's current
objectives and market conditions. The amounts actually expended by the Company
for each purpose may vary significantly depending on a number of factors, such
as the amount of cash used or generated by the Company's operations and
management's assessment of the Company's specific needs. Accordingly, management
of the Company has significant flexibility in applying the net proceeds of the
Offering. See "Use of Proceeds" and "Certain Transactions."
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MANAGEMENT OF GROWTH; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The Company's planned growth is expected to place a significant strain on
its managerial, operational and financial resources. The Company expects that
the number of its employees will significantly increase over the next 12 months.
Since October 1997, the Company has hired substantially all of its employees.
The Company's financial and managerial controls, reporting systems and
procedures are also very limited. The Company plans to continue to improve its
financial and management controls, reporting systems and procedures and expand,
train and manage its work force. The Company also is required to manage multiple
relationships with various customers, strategic partners and other third
parties. There can be no assurance that the Company's systems, procedures or
controls will be adequate to support the Company's operations or that Company
management will be able to achieve the rapid execution necessary to successfully
offer its services and implement its business plan. The Company's future
operating results will also depend on its ability to expand its sales and
marketing organization and expand its support organization commensurate with the
growth of its business and the Internet. The inability of the Company to manage
growth effectively could have a material adverse effect on the Company's
business, results of operations and financial condition.
In addition, the Company may, in the future, acquire businesses,
technologies, services, product lines, content databases, or access to content
databases that are complementary to the Company's business. Future acquisitions
by the Company, if any, may involve a number of risks. For example, the
assimilation of a target company's and the Company's operations may require,
among other things, the integration of service offerings, coordination of
departmental efforts of the two companies, the assumption by the Company of
substantial liabilities, the addition of numerous personnel and the diversion of
management's attention from the day-to-day operations of the Company. There can
also be no assurance that a given acquisition, if consummated, would not have a
material adverse effect on the Company's business, results of operations and
financial condition.
RISK OF CAPACITY CONSTRAINTS; DEPENDENCE ON COMPUTER INFRASTRUCTURE; DEPENDENCE
ON INTERNET
INFRASTRUCTURE; TECHNOLOGICAL RISKS
The Company depends on its ability to generate a high volume of traffic to
and content on its Web site. Accordingly, the Company depends upon ISPs, OSPs
and other Web site operators, which have experienced significant outages in the
past, for access to its Web site, and users may experience difficulties due to
system failures unrelated to the Company's services. The Company currently uses
ITC'DeltaCom, Inc. ("ITC'DeltaCom") as its ISP. Any system failure that causes
an interruption in service or a decrease in responsiveness of the Company's Web
site could result in less traffic, and if sustained or repeated, could impair
the reputation and perception of the Company's Web site. Any failure by
ITC'DeltaCom to handle current or increased volumes of traffic would have a
material adverse effect on the Company's business, results of operations and
financial condition.
In addition, the Company may have to make substantial investments in
equipment and other technology in order to improve performance of its Web site,
including the establishment of new co-location facilities. The success of the
Company depends in large part upon the development of the Internet's
infrastructure as a reliable network backbone with the necessary speed, data
capacity and security, or timely development of complementary products, such as
high-speed modems, for providing reliable Internet access and services. Because
global commerce and online exchange of information on the Internet and other
similar open wide-area networks are new and evolving, it is difficult to predict
with any assurance whether the Internet will prove to be a viable commercial
marketplace. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by such growth or that the performance
or reliability of the Internet will not be adversely affected by this continued
growth. In addition, the Internet could lose its viability due to delays in the
development or adoption of new standards and protocols to handle increased
levels of activity or due to increased governmental regulation. There can be no
assurance that the infrastructure or complementary products or services
necessary to make the Internet a viable commercial marketplace will be
developed. If the necessary infrastructure standards or protocols or
complementary products, services or facilities are not developed, the Company's
business, results of operations
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and financial condition will be materially adversely affected. The market in
which the Company competes is characterized by rapidly changing technology,
evolving industry standards, frequent new service and product announcements,
introductions and enhancements, and changing customer demands. These market
characteristics are exacerbated by the emerging nature of the Internet.
Accordingly, the Company's future success will depend on its ability to adapt to
rapidly changing technologies and to adapt its services to evolving industry
standards. The failure of the Company to adapt to such changes could have a
material adverse effect on the Company's business, results of operations and
financial condition.
RISKS OF BUSINESS INTERRUPTION; NEW FACILITY
The Company's operations are dependent upon its ability to protect its
computer and telecommunications equipment and software systems against damage
from fire, power loss, telecommunications interruption or failure, natural
disaster and other similar events. In the fourth quarter of 1998, the Company
expects to move its corporate offices into a new facility. In the event the
Company experiences a temporary or permanent interruption of its business,
through casualty or operating malfunction, as a result of the move or otherwise,
the Company's business, results of operations or financial condition could be
materially adversely affected. The Company's property and business interruption
insurance may not adequately compensate the Company for all losses that it may
incur.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. However, due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing,
characteristics and quality of products and services. Such laws and regulations
could dampen the growth in use of the Internet generally and decrease the
acceptance of the Internet as a communications and commercial medium, and could
thereby have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, several telecommunications
carriers are seeking to have telecommunications over the Internet regulated by
the Federal Communications Commission (the "FCC") in the same manner as other
telecommunications services. Because the growing popularity and use of the
Internet has burdened the existing telecommunications infrastructure and many
areas with high Internet use have begun to experience interruptions in phone
service, local telephone carriers, such as Pacific Bell, have petitioned the FCC
to regulate ISPs and OSPs in a manner similar to long distance telephone
carriers and to impose higher access fees on the ISPs and OSPs. The costs of
communicating on the Internet could increase substantially as a result of any
such regulation, potentially slowing the growth in use of the Internet.
INTELLECTUAL PROPERTY
The Company's success and ability to compete are dependent to a significant
degree upon its internally developed proprietary technology and on its brand and
marks. The Company relies on trademark, patent and other intellectual property
laws, and on confidentiality and non-disclosure agreements with its employees
and third parties to establish and protect its proprietary rights. The Company
has obtained a federally registered mark ("HeadHunters(R)"), has a pending
federal trademark application for "HeadHunter.NET," and is in the process of
applying for patents on various proprietary systems that it has developed,
including AVILUS. There can be no assurance that the steps taken by the Company
to protect its proprietary rights will be adequate or that the Company will be
able to defend its marks or obtain patents for any of the Company's internally
developed systems. The inability of the Company to secure or protect the
Company's marks and systems could have a material adverse effect on the Company.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries are
uncertain and still evolving, and there can be no assurance as to the future
viability or value of any proprietary rights of the Company or other companies
within the industry. There also can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate or
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that third parties will not infringe or misappropriate the Company's proprietary
rights. Any such infringement or misappropriation could have a material adverse
effect on the Company's business, results of operations and financial condition.
Furthermore, there can be no assurance that the Company's business activities
will not infringe upon the proprietary rights of others, or that other parties
will not assert infringement claims against the Company. From time to time the
Company has been, and expects to continue to be, subject to claims in the
ordinary course of its business, including claims of alleged infringement of the
trademarks and other intellectual property rights of third parties by the
Company. Although such claims have not had a material adverse effect on the
Company's business, results of operations or financial condition, such claims
could subject the Company to significant liability for damages and could result
in invalidation of the Company's proprietary rights, could be time-consuming and
expensive to defend, and could result in a diversion of management's time and
attention, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition.
CONTROL BY CERTAIN SHAREHOLDERS
Upon completion of the Offering and conversion of all outstanding shares of
Class A Preferred Stock, ITC Holding Company, Inc. ("ITC") and Mr. Bare will
beneficially own % and % (assuming an initial public offering price of
$ per share), respectively, of the outstanding Common Stock of the Company.
As a result, these shareholders, voting together, will possess the ability,
among other things, to elect all of the members of the Company's Board of
Directors and to approve significant corporate transactions. Such control or
share ownership may also have the effect of delaying or preventing a change in
control of the Company, impede a merger, consolidation, takeover or other
business combination involving the Company or discourage a potential acquiror
from making a tender offer or otherwise attempting to obtain control of the
Company. See "Principal Shareholders" and "Description of Capital Stock."
ANTITAKEOVER EFFECTS OF ARTICLES OF INCORPORATION, BYLAWS AND GEORGIA LAW
Upon completion of the Offering, the Company's Board of Directors will have
the authority to issue up to 5,000,000 shares of Class B Serial Preferred Stock
without any further vote of the Company's shareholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of Class B Serial Preferred Stock that may be issued
in the future. Under the Company's Articles of Incorporation, the terms of the
Class B Serial Preferred Stock may provide for liquidation and dividend rights
senior to those of the Common Stock. The issuance of any shares of Class B
Serial Preferred Stock could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no current intention or plan to issue any of such
shares of Class B Serial Preferred Stock in the immediate future. Further,
certain provisions of Georgia law could delay, prevent or make more difficult a
merger, tender offer or proxy contest involving the Company. In addition, the
Company has adopted the fair price requirements and the business combination
provisions of the Georgia Business Corporation Code. See "Description of Capital
Stock."
NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for any of the
Company's capital stock, and there can be no assurance that an active trading
market will develop or be sustained for the Company's Common Stock. The initial
public offering price for the Common Stock has been determined through
negotiations between the Company and the Underwriters. Among the factors
considered in determining the initial public offering price were prevailing
market and economic conditions, revenues, the market valuations of other
companies engaged in activities similar to those of the Company, estimates of
the business potential and prospects of the Company, the present state of the
Company's business operations, the Company's management and other factors deemed
relevant. These factors may not be indicative of the market price of the Common
Stock after the Offering. In addition, the stock markets in general, and the
market prices for Internet-related companies in particular, have historically
experienced extreme volatility that at times have been unrelated to the
operating performance of such companies. The trading price of the Common Stock
could also be subject to significant fluctuations in response to variations in
quarterly results of operations,
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announcements of acquisitions by the Company or its competitors, governmental
regulatory actions, other developments or disputes with respect to proprietary
rights, general trends in the industry and overall market conditions and other
factors. These broad market and industry fluctuations may adversely affect the
market price of the Common Stock regardless of the Company's operating
performance. See "Underwriting."
DILUTION
Purchasers in the Offering will suffer an immediate and substantial
dilution in the net tangible book value of the Common Stock from the initial
public offering price. Purchasers of shares of Common Stock in the Offering will
experience an immediate dilution in the net tangible book value of $ per
share, representing an immediate dilution of approximately % from the
initial public offering price per share. See "Dilution."
DIVIDEND POLICY
Except for a distribution of $100,000 made by LLC to Mr. Bare, the Company
has not declared or paid any dividends on its capital stock and does not expect
to declare or pay dividends for the foreseeable future. The Company currently
intends to retain future earnings, if any, to finance the development and
operation of its business. Any future declarations and payments of dividends
shall be at the sole discretion of the Company's Board of Directors. Payment of
dividends on the Common Stock would be subject to the prior payment of all
accrued and unpaid dividends on any shares of Class B Serial Preferred Stock the
Company may issue in the future at its sole discretion and may be subject to
certain restrictions in any future credit facilities. See "Dividend Policy,"
"Certain Transactions" and "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming no exercise of any
portion of the Underwriters' over-allotment option. Of these shares, the
shares to be sold in the Offering will be freely tradable without
restriction or further registration under the Securities Act, except that any
shares purchased by "affiliates" of the Company, as that term is defined in Rule
144 under the Securities Act, may generally only be sold in compliance with the
limitations of Rule 144. The remaining outstanding shares of
Common Stock held by ITC and Mr. Bare are "restricted securities" as that term
is defined in Rule 144 ("Restricted Shares"). Restricted Shares may be sold in
the public market only if registered or if they qualify for an exemption from
registration. Restricted Shares will not be eligible for immediate sale until
they have been held for at least one year and the other requirements of Rule 144
are met. In addition, the Company, ITC, ITC Service Company and Mr. Bare have
agreed not to, directly or indirectly, without the prior written consent of the
Underwriters, offer, sell or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or any securities
exercisable for or convertible into shares of Common Stock owned by them for a
period of 180 days following completion of the Offering.
As of the date of this Prospectus, options to purchase an aggregate of
382,250 shares of Common Stock had been granted, none of which will become
exercisable within 180 days following the date of this Prospectus. An additional
500,000 shares of Common Stock are available for future grants under the
Incentive Plan. The Company intends to file one or more registration statements
on Form S-8 under the Securities Act to register all shares of Common Stock
subject to outstanding stock options and Common Stock issuable under the
Incentive Plan. The Company expects to file these registration statements within
a reasonable time after the date of this Prospectus, and such registration
statements are expected to become effective upon filing. Shares covered by these
registration statements will thereupon be eligible for sale in the public
markets, subject to the lock-up agreements, to the extent applicable. See
"Shares Eligible for Future Sale."
In connection with the extension of the credit facility, the Company
granted ITC Service Company a warrant to purchase shares of
Common Stock (assuming an initial public offering price of $ per share) at
an exercise price per share equal to the price per share to public in the
Offering. Neither the warrant nor the underlying shares have been
registered by the Company. The shares of Common Stock issuable upon exercise of
this warrant would be deemed restricted shares under Rule 144 and the resale
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thereof would either have to be registered or comply with the requirements of an
exemption from registration. See "Principal Shareholders," "Certain
Transactions" and "Underwriting."
YEAR 2000 COMPLIANCE
The Year 2000 issue refers to the potential failures that computer systems
may incur as a result of the date change from 1999 to 2000, such as the
inability of such computer systems to properly recognize date-sensitive data
resulting in the creation of erroneous information or system failure. The
Company has assessed the extent to which the Year 2000 issue affects its
internal systems and has implemented a remediation program to correct any
problems. The Company does not anticipate that it will incur any material costs
in connection with its remediation program. The Company is currently unable to
predict the extent to which the Year 2000 issue will affect the systems of
companies upon which the Company relies or with which the Company has strategic
relationships. Any failure by such companies to resolve any Year 2000 issues on
a timely basis, or in a manner that is compatible with the Company's systems,
could have a material adverse effect on the Company. Although the Company may
incur costs in correcting these Year 2000 issues, such costs cannot currently be
estimated.
Virtually every computer operation will be affected in some way by the Year
2000 issue. The impact that the Year 2000 issue will have on the Internet and
the Web over the next few years is a material uncertainty. The inability of
users of the Company's Web site to fully utilize its services could have a
material adverse effect on the Company's business, results of operations and
financial condition.
16
<PAGE> 18
COMPANY ORGANIZATION
The Company was founded in October 1995 as Software Technology Corporation,
now known as HNET, Inc. ("HNI"). From its inception until late 1996, all of the
Company's revenues were derived from Web site development consulting services.
As a result of the experience gained during this period, the Company identified
online recruiting as an emerging industry and launched www.HeadHunter.NET in
October 1996. From October 1996 until October 1997, the Company shifted its
focus from providing consulting services to attracting content and traffic to
its Web site. In October 1997, HNI contributed all of its assets and liabilities
related to the Web site to the LLC in exchange for a 45% equity interest in the
LLC and ITC contributed $1,100,000 in cash in exchange for a 55% equity interest
in the LLC, pursuant to an Investment Agreement dated October 30, 1997 between
HNI, ITC and Mr. Bare. In July 1998 pursuant to the Contribution Agreement
between LLC, ITC and Mr. Bare, Mr. Bare contributed all of the outstanding
capital stock of HNI to the Company in exchange for 2,200,000 shares of Common
Stock and 50,000 shares of the Company's Class A Preferred Stock, and ITC
contributed its 55% equity interest in LLC to the Company in exchange for
2,750,000 shares of the Company's Class A Preferred Stock. The shares of Class A
Preferred Stock will convert into an equal number of shares of Common Stock upon
consummation of the Offering. See "Description of Capital Stock - Preferred
Stock."
The address of the Company's principal executive offices is 6410 Atlantic
Boulevard, Suite 160, Norcross, Georgia 30071 and the telephone number is (770)
300-9272.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the
shares of Common Stock in this Offering are estimated to be
approximately $ million (approximately $ million if the
Underwriters' over-allotment option is exercised in full), after deducting the
underwriting discount and other estimated Offering expenses payable by the
Company.
The Company intends to use the net proceeds of this Offering as follows:
(i) approximately $ million to expand the Company's marketing and
selling efforts, including the development of additional strategic
relationships; (ii) approximately $ million to repay the outstanding
principal balance on the Company's amended and restated credit facility with ITC
Service Company; and (iii) the balance of the net proceeds for working capital
and general corporate purposes, which may include capital expenditures,
expansion of facilities, general and administrative expenses, and acquisitions
of complementary businesses, products and technologies. Pending application of
the net proceeds as described above, the Company intends to invest the net
proceeds in short-term, interest-bearing, investment grade securities.
The amended and restated credit facility with ITC Service Company provides
for advances to the Company of up to $2.5 million and is payable in full on the
earlier of (i) December 31, 1998 or (ii) the closing of this Offering. Amounts
outstanding under the credit facility accrue interest at an annual rate equal to
ITC Service Company's cost of debt capital as reasonably determined, from time
to time, by ITC Service Company (currently 8.6%) on the first $1.0 million and
at a fixed rate of 14% per annum on the remaining $1.5 million. Proceeds from
the credit facility were used for working capital and other general corporate
purposes.
DIVIDEND POLICY
In November 1997, LLC made a distribution to Mr. Bare in the amount of
$100,000. See "Certain Transactions." The Company does not anticipate paying any
cash dividends on its Common Stock in the foreseeable future because it intends
to retain its earnings, if any, to finance the expansion of its business and for
general corporate purposes. Any payment of future dividends will be at the
discretion of the Board of Directors and will depend upon, among other things,
the Company's earnings, financial condition, capital requirements, level of
indebtedness, contractual restrictions with respect to the payment of dividends
and other factors that the Company's Board of Directors deems relevant. The
terms of the credit facility with ITC Service Company, which will be repaid with
a portion of the proceeds of the Offering, currently restrict the Company's
payment of dividends.
17
<PAGE> 19
DILUTION
The net tangible book value of the Company at June 30, 1998 was
approximately $(77,000) or $(0.04) per share. The net tangible book value per
share represents the amount by which the Company's net tangible assets exceed
all liabilities, divided by the number of outstanding shares of Common Stock.
After giving effect to the conversion of all outstanding shares of Class A
Preferred Stock and the sale of the shares of Common Stock
offered hereby at an assumed initial public offering price of $ per share
and the application of the net proceeds as set forth under "Use of Proceeds,"
the Company's net tangible book value as of June 30, 1998 would have been
approximately $ million, or $ per share, representing an immediate
increase of $ in net tangible book value per share to existing
shareholders and an immediate dilution of $ in net tangible book value
per share to investors in the Offering. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price............. $
Net tangible book value at June 30, 1998.......... $ 0.04
Increase attributable to the sale of shares
offered hereby..................................
----------
Pro forma net tangible book value after the
Offering........................................
----------
Dilution per share to new investors(1)............ $
==========
</TABLE>
- ---------------
(1) If the Underwriters' over-allotment option is exercised in full, pro forma
net tangible book value of the Company would be $ per share,
representing an increase in pro forma net tangible book value of $ per
share and dilution to new investors of $ per share.
The following table sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid by the Company's existing shareholders and to be paid by new
investors in the Offering.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders......................... 5,000,000 $2,000,000 $0.40
New investors.................................
Total............................... 100% 100%
========= === ========== ===
</TABLE>
The foregoing tables assume no exercise of outstanding stock options or
warrants and no exercise of the Underwriters' over-allotment option. As of the
date of this Prospectus, there were outstanding options to purchase 382,250
shares of Common Stock at a weighted average exercise price of $0.63 per share
and an outstanding warrant to purchase shares of Common Stock (assuming an
initial public offering price of $ per share) at an exercise price per share
equal to the initial public offering price.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth the Company's capitalization at June 30,
1998: (i) on a historical basis and (ii) as adjusted to give effect to the sale
by the Company of shares of Common Stock offered hereby (assuming an
initial public offering price of $ per share) and the application of the net
proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with the Company's financial statements and the notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the other financial and operating data appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Short term borrowings....................................... $ 400,000 $
=========== ========
Shareholders' equity:
Class A Preferred Stock, $0.01 par value, 2,800,000 shares
authorized, issued and outstanding (actual),
outstanding (as adjusted).............................. 28,000
Class B Serial Preferred Stock, $0.01 par value, 5,000,000
shares authorized, none issued and outstanding......... --
Common Stock $0.01 par value, 50,200,000 shares
authorized, 2,200,000 shares issued and outstanding
(actual), shares issued and outstanding (as
adjusted)(1)........................................... 22,000
Paid-in capital........................................... 1,956,909
Retained earnings (accumulated deficit)................... (1,235,773)
----------- --------
Total shareholders' equity........................ 771,136
----------- --------
Total capitalization.............................. $ 771,136 $
=========== ========
</TABLE>
- ---------------
(1) Excludes 382,250 shares of Common Stock that were subject to outstanding
options and warrants at June 30, 1998 at a weighted average exercise price
of $0.63 per share. See "Management -- HeadHunters, L.L.C. Employee Common
Unit Option Plan" and "Shares Eligible for Future Sale."
19
<PAGE> 21
SELECTED FINANCIAL AND OPERATING DATA
The following table sets forth selected financial and operating data for
the Company as of and for the Inception Period, the year ended December 31,
1996, the ten months ended October 31, 1997, and as of and for the two months
ended December 31, 1997 which have been derived from the audited financial
statements of the Predecessor Company and the Successor Company. The selected
financial and operating data as of and for the six months ended June 30, 1997
and 1998 have been derived from the unaudited financial statements of the
Company and, in the opinion of management, include all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of such
information. Operating results for the six months ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the entire year.
The selected financial and operating data set forth below should be read in
conjunction with "Company Organization," "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Company's financial statements and the notes thereto and the other financial and
operating data included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR SUCCESSOR
PREDECESSOR COMPANY COMPANY COMPANY COMPANY
----------------------------------------------- ------------ ----------- ------------
FROM INCEPTION YEAR TEN MONTHS TWO MONTHS SIX MONTHS SIX MONTHS
(OCTOBER 10, 1995) ENDED ENDED ENDED ENDED ENDED
TO DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1997 1997 1997 1998
------------------ ------------ ----------- ------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues.......................... $ 50,754 $ 190,146 $ 124,437 $ 29,591 $ 103,885 $ 278,051
Operating expenses................ 5,589 61,687 158,757 212,209 96,222 1,344,976
-------- --------- --------- --------- --------- ------------
Operating income (loss)........... 45,165 128,459 (34,320) (182,618) 7,663 (1,066,925)
Net income (loss)................. $ 45,165 $ 128,623 $ (35,163) $(176,392) $ 7,062 $ (1,059,381)
======== ========= ========= ========= ========= ============
LOSS PER SHARE:(1)
Basic............................. $ (0.08) $ (0.48)
Diluted........................... $ (0.08) $ (0.46)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic............................. 2,200,000 2,200,000
Diluted........................... 2,318,250 2,318,250
OPERATING DATA:
Jobs posted (at end of period).... 90,000 165,000
Resumes posted (at end of
period)......................... 20,000 31,000
Monthly page impressions(2)....... 2,500,000 11,400,000
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR SUCCESSOR
PREDECESSOR COMPANY COMPANY COMPANY COMPANY
--------------------------- ------------ ----------- ------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1997 1997 1998
------------ ------------ ------------ ----------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 14,326 $ 25,973 $ 853,989 $ 13,981 $ 196,366
Working capital....................... 31,214 33,706 788,976 20,638 (273,131)
Total assets.......................... 43,030 58,550 1,922,915 52,853 1,524,696
Total debt, including current
maturities.......................... -- -- -- -- 400,000
Total shareholders' equity............ 42,865 55,500 1,830,517 44,376 771,136
</TABLE>
- ---------------
(1) Pursuant to SAB No. 98, for all periods presented, basic net loss per share
is computed using the weighted average number of shares of Common Stock
outstanding during the period. Diluted net loss per share is computed using
the weighted average number of shares of Common Stock outstanding during the
period and nominal issuances of Common Stock and Common Stock equivalents,
regardless of whether they are anti-dilutive. The Predecessor Company's per
share data are not shown, as they are not comparable with the Successor
Company's.
(2) Page impressions represent the number of Web pages delivered from the
Company's server to users. Monthly page impressions consist solely of
impressions delivered for the last month of the period.
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Prospectus contains "forward-looking statements" relating to, without
limitation, the Company's future economic performance, plans and objectives of
management for future operations, projections of revenue mix and other financial
items that are based on the beliefs of, as well as assumptions made by and
information currently known to, the Company's management. The words "may,"
"could," "would," "will," "expect," "estimate," "anticipate," "believe,"
"intends," "plans" and similar expressions and variations thereof are intended
to identify forward-looking statements. The cautionary statements set forth in
this section, in "Risk Factors" and elsewhere in this Prospectus identify
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to differ
materially from those in such forward-looking statements. The following
discussion should be read in conjunction with the Company's financial statements
and the notes thereto and other financial information appearing elsewhere in
this Prospectus. The dollar amounts and percentages provided below have been
rounded to simplify presentations.
OVERVIEW
HeadHunter.NET is an Internet-based interactive technology company that
provides a leading employment Web site at www.HeadHunter.NET. The Company's Web
site enables job listers to list employment opportunities and search for resumes
and enables job seekers to post resumes and search for employment using a wide
array of search criteria, including keyword, industry, job type, education,
geographic location and salary range. At June 30, 1998, the Company had
approximately 165,000 job opportunities and 31,000 resumes listed on its Web
site, an increase of 83.3% and 106.7%, respectively, from approximately 90,000
job opportunities and 15,000 resumes listed as of December 31, 1997. Traffic on
the Company's Web site grew 660% from approximately 2.5 million Web page
impressions viewed during the month of December 1997 to 11.4 million impressions
viewed during the month of June 1998.
The Company was founded in October 1995 and from its inception until late
1996, all of its revenues were derived from Web site development consulting
services. As a result of the experience gained during this period, the Company
identified online recruiting as an emerging industry. The Company launched
www.HeadHunter.NET in October 1996. From October 1996 until October 1997, the
Company shifted its focus from providing consulting services to attracting
content and traffic to its Web site. In October 1997, the Company entered into
an investment agreement with ITC Holding Company, Inc. ("ITC") to form
HeadHunters, L.L.C. ("LLC"), and to fund continued growth of the Company and its
Web site. Since late 1997, the Company has hired substantially all of its
employees and has continued to focus on building site content, traffic and its
revenues. In July 1998 pursuant to a Contribution Agreement between LLC, ITC and
Mr. Bare, Mr. Bare contributed all of the outstanding capital stock of HNI to
the Company in exchange for 2,200,000 shares of Common Stock and 50,000 shares
of the Company's Class A Preferred Stock, and ITC contributed its 55% equity
interest in LLC to the Company in exchange for 2,750,000 shares of the Company's
Class A Preferred Stock. The shares of Class A Preferred Stock will convert into
an equal number of shares of Common Stock upon consummation of the Offering.
The Company derives all of its revenues from the sale of enhanced listing
services and advertising banners on its Web site. To date, a majority of the
Company's revenues have been derived from the sale of advertisements.
Advertising sales constituted 72.7% of revenues for the six months ended June
30, 1998, and 53.9% of revenues for the two months ended December 31, 1997.
Advertising rates vary depending upon whether the impressions delivered are
targeted to a specific audience based on keyword or other targeting criteria, or
placed in general rotation for display throughout the Company's Web site.
Although the Company does not charge job listers for the basic listing
services provided on its Web site, the Company does charge fees for its enhanced
listing services. Historically, the Company has charged a flat fee for the
package of available enhanced listing services. Effective in August 1998,
however, the Company intends to unbundle its enhanced listing services and allow
job listers to purchase such services individually on a daily fee basis. See
"Business -- Pricing Strategy and Service Offerings." Enhanced listing revenue
21
<PAGE> 23
constituted 27.3% of revenues for the six months ended June 30, 1998, and 46.1%
of revenues for the two months ended December 31, 1997. Enhanced listing
services include: (i) preferential search result ordering; (ii) automatic
cross-posting of listings to Yahoo! Classifieds and AltaVista's Careers Zone;
(iii) a link to a job lister's Web site to allow job seekers to easily access
additional information about the job lister and its employment opportunities;
and (iv) access to an automated job posting system which allows job listers to
bulk post a large number of employment opportunities to the Company's Web site.
The Company believes its enhanced listing services will represent an increasing
percentage of revenues in the future.
Advertising and enhanced listing revenues are recognized ratably in the
period in which the advertisement is displayed or the enhanced listing service
is delivered. The Company is generally obligated to provide its advertisers with
a guaranteed minimum number of "impressions," or times that an advertisement
appears in pages viewed by users of the Company's Web site. Payments received
prior to the display of an advertisement or the delivery of an enhanced listing
service are recorded as deferred revenues and are recognized as revenue ratably
when the advertisements are displayed or the enhanced listing services are
delivered. At June 30, 1998, the Company had deferred revenues of approximately
$109,000.
The Company's principal costs and operating expenses consist of costs of
revenues, marketing and selling expenses, general and administrative expenses,
and depreciation and amortization. Costs of revenues consist primarily of
Internet connection charges and co-location costs. Marketing and selling
expenses consist primarily of salaries of sales and marketing personnel,
commissions, advertising and other marketing related expenses, including
development of strategic relationships. General and administrative expenses
consist primarily of salaries and related costs for general corporate functions,
including finance, accounting, facilities, and fees for professional services.
Depreciation and amortization includes depreciation of the Company's computer
hardware and related equipment and amortization of acquired software rights.
The Company launched its Web site in October 1996 and accordingly has an
extremely limited operating history upon which to base an evaluation of the
Company. Thus, the Company believes that period-to-period comparisons of its
operating results are not meaningful and that the results for any period should
not be relied upon as an indication of future performance. In addition, the
Company has incurred significant losses since its inception and, as of June 30,
1998, had an accumulated deficit of approximately $1.2 million. To foster its
growth, the Company expects to continue to significantly increase its operating
expenses in the areas of marketing, sales and technology. The Company faces
additional uncertainties, such as the lack of a proven business model similar to
the Company's and intense competition for the sale of enhanced listing services,
advertising and for the attention of job listers and job seekers. As a result of
these factors, the Company expects to incur losses and negative cash flow in the
near term and there can be no assurance that the Company will be profitable on a
quarterly and annual basis for the foreseeable future, if at all. See "Risk
Factors."
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997
Revenues. The Company's revenues increased $174,000, or 167.3%, from
$104,000 for the six months ended June 30, 1997 to $278,000 for the six months
ended June 30, 1998. The Company generated advertising revenues of $202,000 and
enhanced listing fees of $76,000 for the six months ended June 30, 1998, as
compared to $69,000 in advertising revenues and $35,000 in enhanced listing fees
for the six months ended June 30, 1997. The increase in advertising revenues and
enhanced listing fees resulted primarily from the addition of 10 sales personnel
in the first six months of 1998.
Costs of Revenues. The Company's costs of revenues increased $22,000, or
137.5%, from $16,000 for the six months ended June 30, 1997 to $38,000 for the
six months ended June 30, 1998. The increase in costs of revenues was primarily
due to co-location and Internet connectivity fees related to the growth in
content and traffic on the Company's Web site. The Company anticipates that
these expenses will continue to grow ratably with the Company's Web site traffic
for the foreseeable future.
22
<PAGE> 24
Marketing and Selling Expenses. Marketing and selling expenses increased
$499,000, from $9,000 for the six months ended June 30, 1997 to $508,000 for the
six months ended June 30, 1998. The increase in marketing and selling expenses
was primarily due to an increase in advertising and public relations expenses
and the addition of 10 sales personnel in the first six months of 1998. The
Company expects that marketing and selling expenses will grow significantly in
the foreseeable future as it pursues a more aggressive advertising and branding
strategy and hires additional sales and marketing personnel.
General and Administrative Expenses. General and administrative expenses
increased $615,000, from $66,000 for the six months ended June 30, 1997 to
$681,000 for the six months ended June 30, 1998. The increase in general and
administrative expenses was primarily due to the hiring of additional personnel
as well as professional fees incurred in connection with the Company's
reorganization. The Company expects that general and administrative expenses
will continue to grow as it hires additional personnel and incurs additional
expenses related to the growth of its operations, including additional expenses
related to its status as a public company.
Depreciation and Amortization. Depreciation and amortization increased
$113,000, from $5,000 for the six months ended June 30, 1997 to $118,000 for the
six months ended June 30, 1998. The increase was primarily a result of
amortization related to the acquisition of software rights of approximately $1.0
million from HNI.
RESULTS FOR THE TWO MONTHS ENDED DECEMBER 31, 1997, TEN MONTHS ENDED OCTOBER 31,
1997,
YEAR ENDED DECEMBER 31, 1996, AND THE INCEPTION PERIOD ENDED DECEMBER 31, 1995
Revenues. The Company generated revenues of $30,000 for the two months
ended December 31, 1997, $124,000 for the ten months ended October 31, 1997,
$190,000 for the year ended December 31, 1996, and $51,000 for the Inception
Period ended December 31, 1995. The Company generated advertising revenues of
$16,000, $9,000, $0, and $0, enhanced listing fees of $14,000, $42,000, $0, and
$0, and consulting revenues of $0, $52,000, $184,000, and $51,000, respectively
for such periods. HNI's revenues were primarily generated from consulting
services, and comparison of those operating results to current operations is not
meaningful.
Operating Expenses. The Company's operating expenses for the two months
ended December 31, 1997 were $212,000, for the ten months ended October 31, 1997
were $159,000, for the year ended December 31, 1996 were $62,000, and for the
Inception Period ended December 31, 1995 were $6,000. Costs of revenues were
$3,000, $29,000, $0, and $0; marketing and selling expenses were $41,000,
$23,000, $3,000, and $0; general and administrative expenses were $126,000,
$96,000, $52,000, and $5,000; and depreciation and amortization expenses were
$42,000, $10,000, $7,000, and $500, respectively for such periods.
LIQUIDITY AND CAPITAL RESOURCES
From its inception until November 1997, the Company financed its operations
primarily through revenue generated from providing Web site development
consulting services. Since November 1997, the Company has financed its
operations primarily through an equity investment by ITC and borrowings from ITC
Service Company.
Net cash used in operating activities was $957,000 and $72,000 for the six
months ended June 30, 1998 and for the two months ended December 31, 1997,
respectively. Net cash used in operating activities for the six months ended
June 30, 1998 and the two months ended December 31, 1997 primarily consisted of
the net loss for such periods.
Capital expenditures were approximately $101,000 for the six months ended
June 30, 1998, and $74,000 for the two months ended December 31, 1997. The
Company has no material commitments for capital expenditures other than $105,000
relating to the purchase of furniture as the result of the addition of
personnel. In order to accommodate its growth, the Company has recently entered
into a lease for its new principal offices for a term of 10 years commencing
November 1, 1998, with annual rents ranging from approximately $297,000 to
$424,000.
23
<PAGE> 25
On July 16, 1998, the Company, ITC Service Company and ITC entered into an
amended and restated credit facility under which ITC Service Company made
available to the Company a revolving line of credit of up to $2.5 million.
Amounts outstanding under the credit facility accrue interest at an annual rate
equal to ITC Service Company's cost of debt capital as reasonably determined,
from time to time, by ITC Service Company (currently 8.6%) on the first $1.0
million and a fixed rate of 14% per annum on the remaining $1.5 million. This
credit facility replaced a prior credit facility between the Company and ITC
under which, at June 30, 1998, the Company had borrowed $400,000. The Company
intends to utilize a portion of the net proceeds of the Offering to repay the
outstanding balance under this credit facility, which will then terminate. See
"Use of Proceeds" and "Certain Transactions."
The Company believes that cash on hand and the net proceeds from the
Offering will be sufficient to fund its working capital, anticipated operating
cash flow deficit and capital expenditure requirements for the 12 months
following completion of the Offering. Thereafter, the Company may need to raise
additional funds. The Company's ability to grow will depend in part on its
ability to expand and improve its Internet operations, its advertising and
marketing efforts, Internet user support capabilities and increase content on
its Web site. In connection therewith, the Company may need to raise additional
capital in the foreseeable future from public or private equity or debt sources
in order to finance such possible growth. In addition, the Company may need to
raise additional funds in order to take advantage of unanticipated opportunities
(such as acquisitions of complementary businesses or the development of new
products or services), to react to unforeseen difficulties (such as the loss of
key personnel or the rejection by Internet users or potential advertisers of the
Company's Internet content) or to otherwise respond to unanticipated competitive
pressures. If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of the Company's then
existing shareholders will be reduced, shareholders may experience additional
dilution and such securities may have rights, preferences or privileges senior
to those of the Company's Common Stock. There can be no assurance that
additional financing will be available on terms favorable to the Company or at
all. If adequate funds are not available on acceptable terms, the Company may
not be able to fund its expansion, take advantage of unanticipated acquisition
opportunities, develop or enhance service offerings or respond to competitive
pressures. Such inability could have a material adverse effect on the Company's
business, financial condition and operating results. See "Risk Factors -- Future
Capital Needs; Uncertainty of Additional Financing."
YEAR 2000 COMPLIANCE
The Company has assessed the extent to which the Year 2000 issue will
affect its internal systems and has implemented a remediation program to correct
any problems. The Company does not anticipate that it will incur any material
costs in connection with its remediation program. Notwithstanding the above, the
Company is currently unable to predict the extent to which the Year 2000 issue
will affect the systems of companies upon which the Company relies or with which
the Company has strategic relationships. Any failure by such companies to
resolve any Year 2000 issues on a timely basis, or in a manner that is
compatible with the Company's systems, could have a material adverse effect on
the Company. Although the Company may incur costs in correcting Year 2000
issues, such costs cannot currently be estimated. Any costs related to Year 2000
compliance will be expensed as incurred, which will have a negative effect on
current operating results.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," which
establishes new guidelines for the calculation and presentation of earnings per
share. In February 1998, the Commission issued SAB No. 98, on computations of
earnings per share in an initial public offering. SAB No. 98 revised prior
Commission guidance including earnings per share computations in periods prior
to an initial public offering, to reflect the requirements of SFAS No. 128. The
Company has calculated earnings per share for periods prior to its initial
public offering under SAB No. 98.
24
<PAGE> 26
BUSINESS
GENERAL
HeadHunter.NET is an Internet-based interactive technology company that
provides a leading employment Web site at www.HeadHunter.NET. The Company's Web
site enables job listers to list job opportunities and search for resumes, and
enables job seekers to post resumes and search for job opportunities using a
wide array of search criteria, including keyword, industry, job type, education,
geographic location and salary range. Based on Relevant Knowledge statistics for
the second quarter of 1998, HeadHunter.NET rated first in terms of return
traffic, page views per user and time spent per user on the site, compared to
the leading employment Web sites. The Company has significantly increased
traffic on its Web site from 170,000 average daily page views during January
1998 to 375,000 average daily page views during June 1998. HeadHunter.NET
believes that this increase in traffic is due to the quality and quantity of its
content, the ease of use, search capabilities and overall functionality of its
Web site, and increased market awareness resulting from enhanced marketing
activities. The Company recently entered into strategic relationships with
Yahoo!, WorkLife (in conjunction with AltaVista), GeoCities and DoubleClick,
each of which the Company believes will further increase traffic and market
awareness of its Web site.
HeadHunter.NET offers an effective Internet-based solution to meet the
hiring and job search needs of job listers and job seekers. All of the job
opportunities and resumes listed on the Company's Web site are original content
submitted by job listers and job seekers, and are not recycled from print or
other media. At June 30, 1998, approximately 165,000 job opportunities and
31,000 resumes were listed on the Company's Web site. HeadHunter.NET ensures the
quality of its content by enabling job listers and job seekers to continually
update their job opportunities and resumes and by removing outdated listings
from its Web site. The Company offers enhanced listing services to job listers
which are primarily intended to increase visibility of their job opportunities.
These enhanced listing services include: (i) preferential search result
ordering; (ii) automatic cross-posting of listings to Yahoo! Classifieds and
AltaVista's Careers Zone; (iii) a link to a job lister's Web site which allows
job seekers to easily access additional information about the job lister and its
employment opportunities; and (iv) access to an automated job posting system
which allows job listers to bulk post a large number of employment opportunities
to the Company's Web site.
The Company derives its revenues from enhanced listing services fees and
the sale of advertising banners on its Web site. Job listers may choose to
purchase enhanced listing services to improve the placement and visibility of
their job opportunities. Advertisers may purchase banner advertisements that are
displayed randomly or based upon targeted search criteria. During June 1998, the
Company delivered, on average, over 375,000 advertising impressions per day from
over 65 advertisers, including Fidelity Investments, HotMail Corporation,
Powertel, Inc., Ford Motor Company and InterCall, Inc.
THE INTERNET INDUSTRY
Growth of the Internet
The Internet has emerged as a mass communications medium enabling millions
of people worldwide to share information, communicate and conduct business
electronically. Jupiter Communications estimates that the number of
Internet-connected households in the United States will grow from approximately
22 million in 1997 to 57 million in 2002 and that the total number of individual
users online in the United States will grow from approximately 49 million in
1997 to 116 million in 2002. The increasing functionality, accessibility and
overall usage of the Internet has been driven by a number of factors, including
the large and growing 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
individuals.
Online Recruiting
The Company believes that the rapid increase in online users has made the
Internet an attractive medium for online recruiting. According to an industry
report, the traditional place and search segment of the staffing
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industry is expected to generate approximately $13 billion in revenues in 1998,
an increase of 19% from 1997. The total dollars spent on online recruiting is
expected to grow from approximately $48 million in 1997 to $460 million in 2002,
according to Forrester Research. The Company believes that online recruiting has
a number of advantages over traditional means of hiring and job searching
because it is: (i) interactive, allowing immediate links to additional
information; (ii) more easily tailored to satisfy the user's needs; (iii) more
cost effective; and (iv) more easily accessible.
Online Advertising
The Internet is emerging as an attractive new medium for advertisers due to
the growth in the number of Internet users, the amount of time such users spend
on the Internet, the increase in electronic commerce, the interactive nature of
the Internet, the Internet's global reach, the ability to reach highly targeted
audiences and a variety of other factors. Jupiter Communications estimates that
total spending on online advertising will grow from approximately $940 million
in 1997 to $7.7 billion in 2002. Many of the largest advertisers in traditional
media, including consumer products companies, automobile manufacturers and
others, have expanded their use of Internet advertising, and the Company
believes that Internet advertising will become an increasing component of their
total advertising budgets. The Company believes that the leading Internet
content providers will benefit from the increasing number of Internet users
since advertisers will more likely advertise on Web sites that demonstrate a
high volume of traffic and provide advertising programs allowing them to target
specific demographic groups.
THE HEADHUNTER.NET SOLUTION
Many of the leading online recruiting Web sites are owned and operated by
traditional recruiting and recruitment advertising companies. The Company
believes that such companies offer their Web sites as a complement to their
pre-existing businesses and in response to the emergence of the Internet. The
Company also believes that, as a result, these competitors have extended their
pre-existing pricing models to their Web sites by charging significant up-front
fees for each job listed.
HeadHunter.NET established its Web site solely to capitalize on the
potential of the online recruiting market instead of as an extension of a
pre-existing business. As a result, the Company has concentrated its efforts on
developing a Web site predicated on facilitating successful employment searches
by its users. The Company believes that the quality and quantity of content on
its Web site, coupled with its ease of use, search capabilities and overall
functionality, are critical to users' success. In order to attract quality
content to its Web site, the Company offers its basic listing service at no
charge to users, as opposed to the predominant competitive practice of charging
up-front fees for each job listed. The Company believes that by providing free
basic services it is able to more effectively attract job listers and job
seekers, including small to midsize job listers, who may be less willing to pay
up-front fees.
The Company believes that its rapid growth to date has resulted from and
its future growth will depend upon its ability to leverage its base of content
and traffic, which will generate increased revenues from enhanced listing
services and advertising. The Company believes that its approach has allowed it
to differentiate itself from its competitors and to quickly establish a leading
position among online recruiting Web sites without significant marketing
expenditures. Accordingly, the Company believes it is uniquely positioned to
capitalize on the continued growth of the Internet as a medium for commerce.
STRATEGY
The Company's objective is to provide the leading employment Web site by
offering an effective solution to meet the employment needs of job listers and
job seekers. The Company's strategy to accomplish this objective includes the
following key elements:
Continue to Facilitate Successful Employment Searches. HeadHunter.NET
believes that users of its Web site have been and will continue to be successful
in their employment searches. The Company also believes that these successful
searches have led and will continue to lead to increased traffic on its Web
site, which in turn will encourage current and potential users to post a greater
number of job opportunities and
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resumes. The Company intends to continue to facilitate successful employment
searches and further enhance this growth cycle by maintaining the content
quality, search capabilities and functionality of its Web site.
Increase Market Awareness and Brand Recognition of HeadHunter.NET. By
increasing awareness of the Company's brand through referrals from satisfied
users and strategic marketing campaigns aimed at potential job listers and
advertisers, the Company believes that the content and traffic on its Web site
will increase and thereby result in greater revenues. The Company plans to
continue to increase and reinforce market awareness of the HeadHunter.NET brand
name through a more aggressive marketing campaign using a combination of online
and traditional advertising and direct marketing.
Establish Additional Strategic Relationships. The Company has formed a
number of strategic relationships, including agreements with Yahoo!, WorkLife
(in conjunction with AltaVista), GeoCities and DoubleClick, as a means to
increase traffic and content on its Web site, enhance visibility of its job
listers employment opportunities, increase awareness of the HeadHunter.NET brand
and provide marketing and cross-promotional opportunities. The Company intends
to seek additional strategic relationships, including with Internet-based
companies, that will increase traffic, content and brand recognition. See
"-- Marketing and Promotion -- Strategic Relationships."
Implement an Innovative Pricing Model. The Company believes that it will
attract a greater number of job listings and gain a competitive advantage over
other recruiting Web sites by offering unbundled services on a daily fee basis
and variable pricing of preferential search result ordering. The Company is
currently beta testing and plans to fully implement in August 1998 an innovative
pricing model. This model will provide users maximum flexibility to choose only
those enhanced listing services which they desire to purchase and to control
search result placement of their employment listings through the Company's
proprietary variable pricing program, AVILUS (Associated Value Internet Listing
Upgrade System). This model differs from the industry standard of a uniform flat
monthly fee for services which do not include preferential search result
ordering. The Company expects that unbundled and variable pricing of services
will attract job listers because of their need for greater flexibility in how
they target their recruiting spending.
Continue to Enhance Site Functionality and Features. The Company believes
that the current functionality and features of its Web site have been essential
to building and maintaining its leadership among online recruiting companies.
The Company intends to continue to make its user interface more friendly and
intuitive and add technology-driven enhancements that increase the functionality
of the Web site. In addition, the Company may also include certain additional
features to the Web site, such as salary surveys, relocation information,
electronic magazines (e-zines), virtual job fairs, employer profiles, and other
services of interest to job listers, job seekers and advertisers, as a means to
increase interest in and traffic to the Web site.
Pursue Strategic Acquisitions of Complementary Businesses and
Technologies. From time to time, the Company evaluates possible acquisitions
of, or investments in, businesses, products and technologies that complement
those of the Company. The Company will explore those acquisition opportunities
which may accelerate its growth, add new content and advertisers, develop new
technologies or penetrate new markets. The Company presently has no commitments
or understandings for such acquisitions and is not presently engaged in any
negotiations for any such acquisitions.
MARKETING AND PROMOTION
The Company's marketing and promotion strategy is designed to establish
www.HeadHunter.NET as the leading employment Web site. The Company utilizes
multiple channels to market and promote its Web site, including strategic
relationships, online and traditional advertising and direct marketing.
Strategic Relationships
The Company has entered into and continuously evaluates strategic
relationships as a means to increase traffic to and content on its Web site,
enhance visibility of its users' listings, increase awareness of the
HeadHunter.NET brand, and provide marketing and cross-promotional opportunities.
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GeoCities. GeoCities has developed and operates an Internet community
which consists of its home page and themed "neighborhoods." These neighborhoods
provide content, chat rooms, message boards, and are populated by Internet users
with their own Web sites and e-mail addresses called "homesteaders." According
to Relevant Knowledge, the GeoCities community was the sixth most frequently
visited Web site during the first quarter of 1998. The Company and GeoCities
recently entered into a co-marketing agreement under which the Company will
sponsor a career center within the GeoCities community called the "GeoCities
Career Center sponsored by HeadHunter.NET" (the "Career Center"). The Company
expects the Career Center to be operational in the third quarter of 1998. The
Career Center will enable users to list job opportunities and resumes, and a
networking center will include chat rooms, message boards and forum events.
HeadHunter.NET will have a link on all pages in the Career Center directly to
its Web site. HeadHunter.NET is guaranteed a minimum number of advertising
impressions per month under this agreement. The term of this agreement expires
on June 30, 1999, although HeadHunter.NET has the right to renew the agreement
for an additional one-year term.
DoubleClick. Based on information reported by DoubleClick, DoubleClick is
a global Internet advertising network with approximately 230 high-traffic Web
sites on which it currently delivers an estimated 1.5 billion advertisements
each month to approximately 35 million people. DoubleClick's proprietary
technology enables advertisers to target their audience based on precise
profiling criteria. For April 1998, Media Metrix rated the DoubleClick network
as having the third largest audience reach on the Internet behind AOL and
Yahoo!. The Company recently entered into an advertising agreement with
DoubleClick under which the Company will purchase over 400 million advertising
impressions over two years. This agreement allows the Company, through the
DoubleClick network, to target Internet users conducting employment related
keyword searches on AltaVista and to target other users and Web sites within the
DoubleClick network. This agreement also makes the Company a sponsor of
AltaVista's Careers Zone and the Fast Company Career Center. Each sponsored Web
site will display the Company's name with a link to its Web site.
Yahoo! In April 1998, the Company entered into a non-exclusive agreement
with Yahoo! under which the Company has the right to post job opportunities and
resumes from the Company's Web site on the Yahoo! Classifieds Web site. Relevant
Knowledge rated Yahoo! as having the largest audience reach on the Internet
during June 1998. All HeadHunter.NET job opportunities and resumes posted on the
Yahoo! Classifieds Web site contain a link to the Company's Web site for further
information. This arrangement provides additional traffic because many Internet
users who link to the Company's Web site from the Yahoo! Classifieds choose to
stay and search additional listings on the Company's Web site. The initial term
of this agreement expires on April 13, 1999, and is automatically renewed
annually, unless either party provides notice of termination.
Worklife. Worklife, in conjunction with AltaVista, will install, manage
and market the Careers Zone to store, classify and categorize career and
employment related content from the Internet. Relevant Knowledge rated Alta
Vista as having the tenth largest audience reach on the Internet during June
1998. The Careers Zone is currently in beta test. Alta Vista will provide its
customers with continuous access to the Careers Zone. HeadHunter.NET and
Worklife recently entered into a non-exclusive agreement under which the Company
has the right to post job and resume listings on the Careers Zone. When an
AltaVista user's search identifies jobs cross-posted from HeadHunter.NET, the
user may only learn details of the job listing by linking directly to the
Company's Web site. The Company expects that this agreement will provide
additional traffic because many users who link to the Company's Web site from
the Careers Zone will choose to stay and search additional listings on the
Company's Web site. The term of this agreement is for four years, although it
may be terminated by either party on 30 days notice after the first year.
Online and Traditional Advertising
The Company promotes its Web site through an aggressive marketing campaign
using a combination of online and traditional advertising. The Company
advertises on Web sites of major Internet content and service providers,
including Yahoo!, AOL, GeoCities and Lycos, Inc. The Company generally purchases
banner advertisements on Web sites that enable it to target potential users of
its Web site and allow them to click through to www.HeadHunter.NET.
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HeadHunter.NET also believes that traditional advertising is important to
building brand recognition and promoting the benefits of online recruiting.
Traditional advertising can be an effective means of promoting brand awareness
and attracting job listers and job seekers who use traditional means to satisfy
their employment needs. HeadHunter.NET's traditional advertising efforts have
included: (i) advertising in the employment classifieds of national and local
newspapers; (ii) advertising in recruitment magazines and information technology
consumer magazines; and (iii) out of home advertisements such as on billboards
and truck and bus exteriors. The Company also plans to advertise on television
and radio in select markets. From time to time, HeadHunter.NET also plans to
design contests and promotions to build brand awareness for its Web site.
Direct Marketing
The Company also attends human resource trade shows and job seminars and
plans to attend college career fairs to reach job listers and inform them of the
benefits of the Company's Web site. In the future, the Company's marketing
efforts will also include direct mail, fax and e-mail campaigns aimed at human
resources executives, recruiters, outsourcing companies and college career
placement offices.
PRICING STRATEGY AND SERVICE OFFERINGS
On the Company's Web site, job listers may list employment opportunities
and search for resumes, and job seekers may post resumes and search for
employment opportunities free of charge. Due to the large number of employment
opportunities listed on the Company's Web site, job listers may choose to
purchase enhanced listing services to improve the placement and visibility of
their employment opportunities. The Company has historically offered all of its
enhanced listing services at a single flat rate. The Company is currently beta
testing, and plans to fully implement in August 1998 an innovative pricing
model. This model will provide users maximum flexibility to choose only those
enhanced listing services which they desire to purchase and to control search
result placement of their employment listings through its proprietary pricing
program, AVILUS. Once this pricing model is fully implemented, job listers will
generally pay a separate daily fee for each enhanced listing service.
Enhanced listing services offered by the Company include:
Preferential Search Result Ordering. The Company enables job listers to
have their job opportunities positioned above non-enhanced listings in a search
result. Once the unbundled pricing model is fully implemented, job listers will
compete for preferential search result ordering. Each job lister will pay a
daily fee (or bid) for each employment opportunity it posts on the Company's Web
site. Amounts that job listers have paid for placement can be viewed on a search
result page. Job listers may bid based on where they want their job opportunity
to be placed in a specified search and may change such bid at any time in
response to competitive bids.
Cross-Posting. Job listers can have their job opportunities automatically
cross-posted to Yahoo! Classifieds and AltaVista's Careers Zone. Users who
search these sites are linked to HeadHunter.NET when their search identifies a
job or resume submitted by the Company. The Company plans to increase the cross-
posting opportunities to include cross-posting to university employment related
Web sites and other targeted locations.
Links to Job Lister's Web Site. Job listers can also have a link to their
Web site added to their job listings on the Company's Web site. This link allows
job seekers to easily access additional information about the job lister and its
employment opportunities.
Automated Job Posting System. The Company also makes available an
automated job posting system which allows job listers to post large databases of
jobs at once, expediting the listing process.
SALES
The Company currently employs a direct sales staff of eight full-time and
two part-time employees who are dedicated to establishing relationships with
potential job listers and advertisers and maintaining existing
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relationships with current purchasers of enhanced listing services and
advertisers. The Company intends to significantly increase its sales staff with
a portion of the net proceeds from the Offering. See "Use of Proceeds."
Advertising Sales. HeadHunter.NET believes that job seekers using its Web
site present an attractive target audience for existing job listers and
companies such as career consultants, resume consultants, benefits providers,
recruiters, human resource management companies, moving companies, insurance
companies and others whose services or products may be of interest to job
seekers. The Company's sales staff focuses specifically on such companies as
potential advertisers on its Web site. The Company also intends to pursue
relationships with more non-employment related advertisers as well as with
advertising agencies. In addition, the Company sells banner advertisements to
its job listers which increase their visibility on its Web site by enabling job
seekers to link to the job lister's entire job bank on its Web site. In order to
maintain existing advertising relationships, the Company's sales staff consults
regularly with its advertisers on advertisement design, provides advertisers
with advertising measurement analysis and focuses on providing a high level of
customer service and satisfaction.
Currently, advertisers enter into short term contracts with the Company
under which they may elect random banner display advertising or keyword and
other targeted advertising. From time to time, the Company may offer discounts
to first time advertisers or for high volume, long-term advertising contracts.
During June 1998, the Company delivered, on average, over 375,000 advertisement
impressions each day on its Web site for over 65 advertisers including, Fidelity
Investments, HotMail Corporation, Powertel, Inc., Ford Motor Company and
InterCall, Inc.
Listing Enhancement Sales. The Company's sales staff currently consults
with existing job listers to advise them on improving the visibility of their
listings based on an evaluation of their online recruiting needs. The Company
plans to hire additional listing enhancement sales personnel to proactively call
on Fortune 1000 companies.
SUPPORT SERVICES
HeadHunter.NET believes that support services are important to its ability
to attract and retain traffic on its Web site and to make each user's experience
easy and productive. The Company posts answers to frequently asked questions
under the "Answers" icon on its Web site. The Company also solicits questions
and feedback from users on its Web site, and the Company's support staff
responds by e-mail to inquiries concerning technical aspects of the Company's
Web site, advertising on the Web site and enhanced listing services available
from the Company. The Company also provides direct telephone support to job
listers purchasing enhanced listing services. The Company does not charge for
its support services.
TECHNOLOGY
The software system developed by the Company is specifically designed to
support a high volume of Web site traffic and searches, as well as immediate
additions, modifications and deletions of job listings and resumes. In addition,
the system has been designed to allow scalability as the traffic to its Web site
increases.
Job and Resume Distribution. The Company has developed a proprietary
distribution system to replicate job listings and resumes from a single update
server to multiple query servers. This distribution system can be configured to
support any number of query servers in one or more locations. If any query
server is unable to receive a replicated job listing or resume, the distribution
system is able to queue that job listing or resume until the affected server can
be contacted. The distribution system is being enhanced to reduce the time it
takes for a job listing or resume to be distributed and made available for
viewing from a few minutes to a few seconds. The Company expects to have this
enhancement in place during the third quarter of 1998.
Fault Tolerance and Scalability. The Company's online systems support
operations of the Company's Web site on a 24-hour-a-day, seven-day-a-week basis.
Using Pentium-based hardware, the system's scalable design has redundant and
fault tolerant features that allow system maintenance and upgrades without
impacting the Web site's performance. The Company maintains a DS-3 connection
with redundant lines to
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the Internet. In the third quarter of 1998, the Company will establish two
co-location facilities to house its servers and will expand to a third
co-location facility in the fourth quarter of 1998. The co-location facilities
are being established through an agreement with Frontier GlobalCenter, Inc.,
which supports some of the largest Web sites on the Internet. The Company
expects that the capacity provided by these multiple co-location facilities will
support the significant growth in content and traffic on its Web site for the
next 12 months. Included in this design is load balancing architecture and
sufficient redundancy to permit any single co-location facility to lose its
connection to the Internet without impacting the Web site's performance.
Commercially available software is used to monitor and manage the Company's
systems with minimal operator participation.
Content Searching. The Company has developed advanced proprietary meta
tags for its content. These meta tags provide classification information that
allows a user to perform very specific searches that surpass traditional keyword
searches. In particular, one meta tag contains a geographic location identifier
that allows proximity searching across a spatially indexed continuum rather than
treating geographic locations as simply another keyword. The identifier not only
applies to locations in the U.S., but to more than 240,000 cities and towns
throughout the world. The Company's Web site is effectively "pre-wired" for
global use as Internet usage increases internationally.
INTELLECTUAL PROPERTY
The Company's success and ability to compete depends significantly on its
internally developed proprietary technology and on its brand and marks. The
Company relies upon trademark, patent and other intellectual property laws, and
on confidentiality and non-disclosure agreements with its employees and third
parties, to establish and protect its proprietary rights. The Company has
obtained a federal registered mark ("HeadHunters(R)"), has a pending federal
trademark application for "HeadHunter.NET," and is in the process of applying
for patents on various proprietary systems that it has developed, including
AVILUS. There can be no assurance that any of the Company's trademark
registrations or patent applications will be approved or granted or, if granted,
that they will not be successfully challenged by others or invalidated through
administrative process or litigation. Further, if the Company's registration of
HeadHunter.NET is not approved or granted due to the prior issuance of
trademarks to third parties or for other reasons, there can be no assurance that
the Company would be able to enter into arrangements with such third parties on
commercially reasonable terms to allow the Company to continue to use such
trademark. In addition, the Company seeks to protect its proprietary rights
through the use of confidentiality agreements with employees, consultants,
advisors and others. There can be no assurance that such agreements will provide
adequate protection for the Company's proprietary rights in the event of any
unauthorized use or disclosure, that employees of the Company, consultants,
advisors or others will maintain the confidentiality of such proprietary
information, or that such proprietary information will not otherwise become
known, or be independently developed, by competitors. In addition, the Company
has licensed in the past, and expects that it may license in the future,
elements of its trademarks and other proprietary rights to third parties. While
the Company attempts to ensure that the quality of its brand is maintained by
such third parties, there can be no assurance that such parties will not take
actions that could materially and adversely affect the value of the Company's
proprietary rights or the reputation of its brand.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries are
uncertain and still evolving, and there can be no assurance as to the future
viability or value of any proprietary rights of the Company or other companies
within the industry. There also can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate or that third parties
will not infringe or misappropriate the Company's proprietary rights. Any such
infringement or misappropriation, should it occur, could have a material adverse
effect on the Company's business, results of operations and financial condition.
Furthermore, there can be no assurance that the Company's business activities
will not infringe upon the proprietary rights of others, or that other parties
will not assert infringement claims against the Company. From time to time the
Company has been, and expects to continue to be, subject to claims in the
ordinary course of its business, as well as claims of alleged infringement of
the trademarks and other intellectual property rights of third parties by the
Company. Although such claims have
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not had a material adverse effect on the Company's business, results of
operations or financial condition, such claims could subject the Company to
significant liability for damages and could result in invalidation of the
Company's proprietary rights and, even if not meritorious, could be
time-consuming and expensive to defend, and could result in a diversion of
management's time and attention, any of which could have a material adverse
effect on the Company's business, results of operations and financial condition.
COMPETITION
The Company competes with other Internet sites for the time and attention
of users and for advertising and other revenues. Competition among Internet
sites is intense and is expected to increase significantly in the future. The
Company's Web site competes against a variety of companies that provide similar
content through one or more media, such as print, radio, television and the
Internet. To compete successfully, the Company must deliver informative and
useful content to attract more job listers and job seekers, generate fees from
enhanced listing services and sell advertising. In addition to such general
media competition, the Company competes against other online recruiting Web
sites such as The Monster Board, Career Path, Career Mosaic and Online Career
Center. Such competitor's services may be sufficiently attractive to users to
dissuade them from accessing and using the Company's Web site. If the Company is
unable to attract a significant number of users to its Web site, the Company's
business, financial condition and results of operations be materially adversely
affected and the Company may cease to be a commercially viable enterprise.
The market for Internet content and services, including career and
employment services, is relatively new, intensely competitive and rapidly
evolving. There are minimal barriers to entry, and current and new competitors
can launch new Internet sites and add content at relatively low costs within
relatively short time periods. In addition, the Company competes for the time
and attention of Internet users with not-for-profit Web sites operated by, among
others, individuals, governments and educational institutions. Accordingly, the
Company expects competition to persist and intensify and the number of
competitors to increase significantly in the future. There can be no assurance
that the Company's Web site will compete successfully.
The Company believes that the competitive factors attracting Internet users
include the quality of presentation and the relevance, timeliness, depth and
breadth of employment information and services offered by the Company. With
respect to attracting advertisers, the Company believes that the competitive
factors include, among others, the volume of traffic on the Company's Web site,
the demographics of such user base, the Company's ability to deliver focused
advertising and interactivity through its Web site and the overall value to the
advertiser of advertising offered by the Company. With respect to attracting
listing enhancements, the Company believes that the competitive factors include,
among others, the fees charged for fees for enhanced listing services and the
cost and accessibility of similar services through the Internet or competing
media. Given the intense competition among other Internet employment sites and
other media, there can be no assurance that the Company will be able to compete
successfully with respect to any of these factors.
Many of the Company's current and potential competitors have significantly
greater financial, technical and marketing resources, longer operating
histories, greater name recognition and greater experience than the Company, and
also have established relationships with advertisers, employers, recruiters and
other listers. Many of such competitors may be able to undertake more extensive
marketing efforts and adopt more aggressive advertising and listing enhancement
pricing policies. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that the
competitive pressures faced by the Company will not have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, in response to competitive pressures, the Company may make certain
pricing, content and/or marketing decisions or enter into acquisitions or new
ventures that could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors -- Intense
Competition" and "-- Low Barriers to Entry."
EMPLOYEES
As of June 30, 1998, the Company had a total of 24 full-time and three
part-time employees, all of whom are based at the Company's executive offices in
Norcross, Georgia. Of the 27 employees, 13 are in sales and
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marketing, seven are in technology and seven are performing general and
administrative functions. None of the Company's employees are represented by a
labor union and the Company considers its employee relations to be good. In
addition to its full-time employees, the Company also utilizes an independent
marketing and publicity consultant, and periodically provides internships for
talented students interested in commerce on the Internet.
FACILITIES
The Company's current executive offices are located in Norcross, Georgia at
6410 Atlantic Boulevard. In order to accommodate its growth, the Company has
recently entered into a lease for its executive offices comprised of
approximately 26,775 square feet located at 2469 Satellite Boulevard,
Lawrenceville, Georgia for a term which expires in 2008. The Company anticipates
that it will relocate to these offices in the fourth quarter of 1998. The
Company believes that its new office space will be adequate for its needs for
the present and the immediate future.
LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
From time to time, the Company may be subject to legal proceedings and claims in
the ordinary course of business, as well as claims of alleged infringement of
trademarks and other intellectual property of third parties by the Company. Such
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources.
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MANAGEMENT
The executive officers, key employees and directors of the Company and
their ages and positions as of the date of this Prospectus are as follows:
<TABLE>
<CAPTION>
NAME AGE CLASS(1) POSITION
- ---- --- -------- --------
<S> <C> <C> <C>
William H. Scott, III. 51 III Chairman of the Board and Director
Warren L. Bare........ 32 III President, Chief Executive Officer and Director
Kenneth E. Dopher..... 38 -- Chief Financial Officer and Secretary
Judith G. Hackett..... 38 -- Senior Vice President -- Marketing
Todd A. Lundberg...... 34 -- Vice President -- Sales
C. Eric Presley....... 31 -- Director of Technology
Mark W. Fouraker...... 36 -- Director of Operations
Robert M. Montgomery.. 40 I Director
Burton B. Goldstein, Jr 50 I Director
Donald W. Weber....... 61 II Director
J. Douglas Cox........ 47 II Director
</TABLE>
- ---------------
(1) Class I term expires at the annual meeting of shareholders in 1999, Class II
term expires at the annual meeting of shareholders in 2000, and Class III
term expires at the annual meeting of shareholders in 2001.
William H. Scott, III has served as a director of the Company since October
1997 and became Chairman of the Board of Directors in July 1998. Since December
1991, Mr. Scott has served as President of ITC, a diversified telecommunications
and technology holding company and principal shareholder of the Company, and has
served on the Board of Directors of ITC since May 1989. From 1989 to 1991, Mr.
Scott served as Executive Vice President of ITC. Between 1984 and 1988, Mr.
Scott held several offices with SouthernNet, Inc., a regional long distance
company, including Chief Operating Officer, Chief Financial Officer and Vice
President -- Administration. From 1984 to 1987, he served as a director of
SouthernNet, Inc. Currently, Mr. Scott serves as a director of Powertel, Inc., a
wireless telecommunications services company, AvData Systems, Inc., a data
network management services company, KNOLOGY Holdings, Inc., a broadband
telecommunications services company, Mindspring Enterprises, Inc., an Internet
service provider, ITC'DeltaCom, Inc., a regional telecommunications services
provider, and Innotrac Corporation, a provider of customized marketing and
support services.
Warren L. Bare founded the Company in October 1995 and has been its
President, Chief Executive Officer and a member of its Board of Directors since
its inception. From October 1995 to October 1996, Mr. Bare provided Web site
development consulting services with the Company. From 1992 to October 1995, Mr.
Bare served as the Director of Technology at United Systems, Inc., an
Atlanta-based software development and consulting company. Prior to 1992, Mr.
Bare held management and technical positions at Progress Software Corporation
and Computer Advisory Services. Mr. Bare received finance and economics degrees
from the University of South Florida.
Kenneth E. Dopher joined the Company in January 1998 as its Chief Financial
Officer and also became its Secretary in July 1998. From 1994 to 1998, Mr.
Dopher served as a Director of Finance and Operations with Walt Disney Feature
Animation, a division of The Walt Disney Company ("Disney"). From 1990 to 1994,
Mr. Dopher held several positions in the Creative Content division of Disney,
including Senior Manager of Finance for Feature Animation, Manager of Capital
Planning, and Senior Business Planner. From 1985 to 1988, Mr. Dopher worked as a
controller for House Corporation, a holding company of real estate and computer
services companies. Mr. Dopher is a CPA and received a M.B.A. in finance from
Indiana University.
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<PAGE> 36
Judith G. Hackett joined the Company in May 1998 as its Senior Vice
President -- Marketing. From 1995 to 1998, Ms. Hackett was the Senior Vice
President -- Advertising and Marketing with TBS Superstation, Inc., a national
cable network. From 1994 to 1995, Ms. Hackett was General Marketing Manager and
Creative Director of a CBS affiliate television station, WOIO in Cleveland, and
from 1988 to 1994 she served as its Creative Services Director while it was part
of the FOX broadcasting network. Ms. Hackett received a degree in journalism
from Kent State University.
Todd A. Lundberg joined the Company in January 1998 as its Vice
President -- Sales. From 1987 to 1997, Mr. Lundberg held various positions with
CAD ONE, Inc., a computer graphics company, including Account Executive,
Southeast Regional Manager, Regional Sales Director and Director of Sales. Mr.
Lundberg received degrees in marketing and management from Valdosta State
University.
C. Eric Presley joined the Company in December 1997 as the Manager of
Technology and has been the Director of Technology since April 1998. From 1993
to 1997, Mr. Presley held several positions at Advanced Technology Corporation
("ATC"), a technology solutions provider, including Senior Consultant and System
Architect. From 1988 to 1993, Mr. Presley was Lead Developer at Northern Telecom
Limited, a global communications network solutions provider. Mr. Presley
received a degree in information and computer science from the Georgia Institute
of Technology and a Masters in computer engineering from North Carolina State
University.
Mark W. Fouraker joined the Company in April 1998 as the Director of
Operations. In 1989, Mr. Fouraker co-founded ATC and, from that time until April
1998, he held several positions with ATC including Director of Systems
Architecture, Vice President of Operations and Director of Information
Technology. From 1988 to 1989, Mr. Fouraker served as Manager of Technical
Services for Canada Dry/ Sunkist, a diversified soft drink company. From 1985 to
1988, Mr. Fouraker was an Information Systems Coordinator with the Georgia
Institute of Technology.
Robert M. Montgomery has served as a director of the Company since January
1998. Since 1992, Mr. Montgomery has served as a Vice President of ITC. In 1991,
Mr. Montgomery founded InterCall, Inc. ("InterCall"), a teleconferencing company
and a wholly-owned subsidiary of ITC, and since then has been its President and
Chief Executive Officer. Since 1993, Mr. Montgomery has served as Chairman of
the Board and a director of InterCall's United Kingdom division. From 1986 to
1991, Mr. Montgomery served in various capacities with Telecom USA (which was
purchased by MCI Communications Corp.), including President of the Conference
Calling Division.
Burton B. Goldstein, Jr. has served as a director of the Company since July
1998. Mr. Goldstein is currently a private investor. Mr. Goldstein co-founded
Information America, Inc., an online information services company in 1982, and
served as its President from November 1982 to June 1998. From 1996 until June
1998, Mr. Goldstein served on the executive committee of West Group, a division
of The Thomson Corporation, an information and publishing company.
Donald W. Weber has served as a director of the Company since July 1998.
Since 1997, Mr. Weber has been a consultant and private investor. Since 1995,
Mr. Weber has served as a director of ITC. From 1993 to 1997, Mr. Weber served
as President and Chief Executive Officer of ViewStar Entertainment Services,
Inc. ("ViewStar"), a DBS satellite services company. From 1987 to 1991, Mr.
Weber held various executive positions, including President and Chief Executive
Offices, at and served as a director of Contel Corporation, a telecommunications
company. Currently, Mr. Weber serves as a director of Powertel, ViewStar,
Pegasus Communications Corporation, a media and communications company, and
Healthdyne Information Enterprise, Inc., a clinical information solutions
company.
J. Douglas Cox has served as a director of the Company since October 1997.
Since September 1997, Mr. Cox has served as Senior Vice President (Corporate
Development) of ITC, and he has also served as Chief Financial Officer and Vice
President (Finance) of ITC (or its predecessor companies) and several other
subsidiaries of ITC beginning in March 1987. From 1980 to 1987, Mr. Cox was a
partner in the accounting firm of Cox & Rumsey, Certified Public Accountants.
From 1972 to 1979, Mr. Cox was employed by Arthur Andersen & Co., specializing
in regulated industries.
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<PAGE> 37
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has established a Compensation Committee and an Audit
Committee. The Compensation Committee is currently comprised of Messrs.
Goldstein, Scott and Montgomery and is responsible for reviewing and approving
all compensation arrangements with executive officers of the Company and will
also be responsible for administering the Company's incentive and stock option
plans. See "-- HeadHunters, L.L.C. Common Unit Option Plan" and
"-- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan."
The Audit Committee is currently comprised of Messrs. Goldstein, Cox and
Weber and is responsible for recommending to the Board of Directors the
engagement of the independent auditors of the Company and reviewing with the
independent auditors the scope and results of the audits, the internal
accounting controls of the Company, audit practices and the professional
services furnished by the independent auditors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee until July 15, 1998.
Prior to such date, the Company's Board of Directors or Board of Managers, as
the case may be, determined executive compensation. Except for Mr. Scott, no
executive officer of the Company serves as a member of the Compensation
Committee or as a director of any entity of which any of the Company's directors
serve as an executive officer. Mr. Scott is a director of ITC for which Messrs.
Cox and Montgomery are executive officers.
DIRECTOR COMPENSATION
The Company's Bylaws allow the Company's Board of Directors to determine
from time to time the compensation that directors may receive for their services
as directors. However, since inception, the Company's directors have served
without compensation except for reimbursement of out-of-pocket expenses for each
meeting attended. Concurrently with their respective elections to the Board of
Directors, Messrs. Scott, Montgomery, Cox, Weber and Goldstein were granted
options to purchase 10,000 shares of Common Stock at exercise prices of $0.40,
$0.40, $0.40, $1.40 and $1.40, respectively. The Company has adopted the
HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan pursuant to which
non-employee directors are eligible to receive options and awards to purchase
shares of Common Stock. See "HeadHunters, L.L.C. Employee Common Unit Option
Plan" and "-- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan."
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by the Company to its
Chief Executive Officer for the year ended December 31, 1997. No other executive
officer's salary and bonus exceeded $100,000 during the year ended December 31,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- --------------------------- ---- --------- --------
<S> <C> <C> <C>
Warren L. Bare.............................................. 1997 $57,205 $ --
President and Chief
Executive Officer
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into letter agreements with Messrs. Bare, Dopher,
Fouraker, Lundberg, Presley and Ms. Hackett providing for (i) annual base
salaries of $75,600, $90,000, $70,000, $85,000, $75,000 and $125,000,
respectively, and (ii) eligibility for annual performance based bonuses of up to
$22,680, $13,500, $5,000, $15,000, $10,000 and $20,000, respectively. In
addition, these letter agreements provide for the grant of options for the
purchase of common units of LLC to each of Messrs. Dopher, Fouraker, Lundberg,
Presley and Ms. Hackett for 100,000, 7,500, 50,000, 50,000 and 50,000 common
units, respectively,
36
<PAGE> 38
which converted into options to purchase equal numbers of shares of Common
Stock. The exercise price per share for each of the above options, after
conversion is $0.40, $1.40, $0.40, $0.40 and $1.40, respectively. Pursuant to
the terms of the option agreements, each of the above options vests 40% on the
second anniversary of the grant date and 20% on each of the next three
anniversary dates thereafter.
HEADHUNTERS, L.L.C. EMPLOYEE COMMON UNIT OPTION PLAN
The Company has assumed certain options ("LLC Options") that had been
granted by LLC to purchase common units of LLC under the HeadHunters, L.L.C.
Employee Common Unit Option Plan (the "HH LLC Plan"). Such LLC Options have been
converted into options (the "Converted Options") to purchase an equal number of
shares of Common Stock of the Company. The Converted Options will be
administered by the Company's Board of Directors or the Compensation Committee
substantially in accordance with the terms of the assumed HH LLC Plan. As of the
date of this Prospectus, 29 persons hold outstanding Converted Options to
purchase a total of 382,250 shares of the Company's Common Stock. Mr. Dopher
holds a Converted Option to purchase 100,000 shares of Common Stock at an
exercise price of $0.40 per share, Ms. Hackett holds a Converted Option to
purchase 50,000 shares of Common Stock at an exercise price of $1.40 per share,
and Messrs. Scott, Montgomery, Goldstein, Weber and Cox each hold a Converted
Option to purchase 10,000 shares of Common Stock at exercise prices of $0.40,
$0.40, $0.40, $1.40 and $1.40, respectively. See "-- Employment Agreements" and
"-- Director Compensation." The Company does not intend to grant any additional
options pursuant to the HH LLC Plan after consummation of the Offering.
HEADHUNTER.NET, INC. 1998 LONG-TERM INCENTIVE PLAN
On July 15, 1998, the Company's Board of Directors adopted the
HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan (the "Incentive Plan") and on
, 1998, the Company's shareholders approved the Incentive Plan. The
Company has reserved 500,000 shares of its Common Stock for issuance in
connection with options and awards granted under the Incentive Plan. The Company
may grant options and awards to officers and employees of the Company, a parent
or a subsidiary, and to non-employee directors and consultants to the Company.
As of the date hereof, there are 29 persons eligible to participate in the
Incentive Plan. The Incentive Plan authorizes the granting of awards to eligible
participants in the form of (i) options to purchase shares of the Company's
Common Stock, which may be incentive stock options or non-qualified stock
options, (ii) stock appreciation rights, (iii) performance shares, (iv)
restricted stock awards, (v) dividend equivalents or (vi) other stock-based
awards. The Incentive Plan is administered by the Company's Board of Directors
or the Compensation Committee in accordance with its terms. As of the date of
this Prospectus, the Company has not granted any awards or options pursuant to
the Incentive Plan.
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<PAGE> 39
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the date of this Prospectus and as
adjusted to reflect the sale of the Common Stock offered hereby with respect to:
(i) each of the Company's directors and its Chief Executive Officer; (ii) all
executive officers and directors of the Company as a group; and (iii) each
person known by the Company to own beneficially more than 5% of the Common
Stock. The table assumes full conversion of the Class A Preferred Stock prior to
and after the Offering.
<TABLE>
<CAPTION>
SHARES OF COMMON PERCENTAGE BENEFICIALLY OWNED
STOCK BENEFICIALLY --------------------------------
NAME OWNED BEFORE OFFERING AFTER OFFERING
- ---- ------------------ --------------- --------------
<S> <C> <C> <C>
ITC Holding Company, Inc.(1).......................
Warren L. Bare(2)..................................
William H. Scott, III(3)...........................
J. Douglas Cox(3)..................................
Robert M. Montgomery(3)............................
Burton B. Goldstein, Jr............................
Donald W. Weber(3).................................
All directors and executive officers as a group
(8 persons)......................................
</TABLE>
- ---------------
* Less than 1%
(1) ITC's address is 1239 O.G. Skinner Drive, West Point, Georgia 31833.
Includes shares of Common Stock (assuming an initial public
offering price of $ per share) subject to a warrant held by ITC Service
Company, a wholly-owned subsidiary of ITC, exercisable within 60 days of the
date of this Prospectus.
(2) Mr. Bare's address is 6410 Atlantic Boulevard, Suite 160, Norcross, Georgia
30071.
(3) Consists of shares beneficially owned by ITC, with respect to
which Messrs. Scott, Cox, Montgomery and Weber as officers and/or directors
of ITC, may be deemed to be the beneficial owner. Messrs. Scott, Cox,
Montgomery and Weber disclaim beneficial ownership of all such shares. The
address for Messrs. Scott, Cox, Montgomery and Weber is 1239 O.G. Skinner
Drive, West Point, Georgia 31833.
CERTAIN TRANSACTIONS
In October 1997, HNI contributed all of its assets and liabilities related
to the Web site to the LLC in exchange for a 45% equity interest in the LLC and
ITC contributed $1,100,000 in cash in exchange for a 55% equity interest in the
LLC, pursuant to an Investment Agreement dated October 30, 1997 between HNI, ITC
and Mr. Bare.
In January 1998, the Company entered into an agreement with ITC'DeltaCom,
Inc. pursuant to which ITC'DeltaCom, Inc. serves as the Company's ISP.
ITC'DeltaCom, Inc. is related to ITC through both common ownership and board
membership.
On November 1, 1997, the LLC paid a dividend of $100,000 to Warren L. Bare,
which was included in the initial equity contribution under the terms of the
Investment Agreement.
On July 16, 1998, the Company, ITC and ITC Service Company, an affiliate of
ITC, entered into an amended and restated credit facility pursuant to which ITC
Service Company made available to the Company a revolving line of credit of up
to $2.5 million. Principal amounts outstanding under the credit facility bear
interest at an annual rate equal to ITC Service Company's cost of debt capital
as reasonably determined, from time to time, by ITC Service Company (currently
8.6%) on the first $1.0 million and at a fixed rate of 14% per annum on the
remaining $1.5 million. In connection with this credit facility, the Company
issued a warrant to ITC Service Company to purchase $375,000 of Common Stock at
a price per share equal to the initial public offering price. This warrant
vested upon issuance and is exercisable for a term of 10 years.
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<PAGE> 40
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 50,200,000 shares
of Common Stock, $0.01 par value per share, 2,800,000 shares of Class A
Preferred Stock, $0.01 par value per share, and 5,000,000 shares of Class B
Serial Preferred Stock, $0.01 par value per share. The following description of
the terms and provisions of the shares of stock of the Company and certain other
matters does not purport to be complete and is subject to and qualified in its
entirety by reference to the applicable provisions of the Georgia Business
Corporation Code, as amended (the "Georgia Code"), and the Company's Articles of
Incorporation and Bylaws.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share owned of record
on all matters upon which such holders are entitled to vote. Subject to any
preferential rights of holders of Class B Serial Preferred Stock that may
adversely affect the rights, preferences and privileges of holders of Common
Stock, the holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Company's Board of Directors, in its sole
discretion, out of funds legally available therefor, and are further entitled to
share ratably in any distribution of the Company's assets, after payment of all
debts and other liabilities of the Company, upon liquidation, dissolution or
winding up of the Company. The holders of Common Stock have no preemptive
rights, rights to cumulative voting, rights to redeem such shares or to convert
such shares into other securities of the Company. All outstanding shares of the
Common Stock are, and the shares of Common Stock to be sold by the Company in
this Offering will be, upon issuance and delivery, validly issued, fully paid
and nonassessable.
PREFERRED STOCK
Class A Preferred Stock. Upon consummation of the Offering and pursuant to
the Company's Articles of Incorporation, each share of Class A Preferred Stock
shall automatically convert into one share of Common Stock. Immediately prior to
the Offering, there were shares of Class A Preferred Stock outstanding
held by two holders of record, ITC and Mr. Bare. Prior to the Offering, holders
of Class A Preferred Stock are entitled to one vote per share owned of record on
all matters upon which such holders are entitled to vote.
Class B Serial Preferred Stock. The Company's Board of Directors has the
authority, without further shareholder approval, to issue up to 5,000,000 shares
of Class B Serial Preferred Stock in one or more series and to fix the relative
rights, preferences, privileges, qualifications, limitations and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series. The
issuance of Class B Serial Preferred Stock could have the effect of delaying,
deferring or preventing a change in control of the Company, may discourage bids
for the Company's Common Stock at a premium over the market price of the Common
Stock and may adversely affect the market price and the voting and other rights
of holders of the Common Stock. The Company has no present plans to issue any
shares of Class B Serial Preferred Stock.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION, BYLAWS AND GEORGIA LAW
Shareholders' rights and related matters are governed by the Georgia Code
and the Company's Articles of Incorporation and Bylaws. Certain provisions of
the Articles of Incorporation and Bylaws summarized below could have the effect
of preventing, hindering, or delaying a change in control of the Company or a
change in management.
Classified Board of Directors; Removal of Directors
The Company's Bylaws provide that the Board of Directors shall consist of
not less than three nor more than 11 members. The Company's Board of Directors
is divided into three classes serving staggered three-year
39
<PAGE> 41
terms. The Company's Articles of Incorporation provide that each class shall be
comprised of substantially equal numbers of directors. In addition, members of
the Board of Directors may only be removed for cause and then only at a special
meeting of shareholders called for such purpose by the affirmative vote of at
least two-thirds of the then outstanding shares of capital stock entitled to
vote. The classification of directors, together with other provisions in the
Articles of Incorporation and Bylaws that limit the removal of directors and
permit the remaining directors to fill any vacancies on the Board of Directors,
has the effect of making it more difficult for shareholders to change the
composition of the Board of Directors. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not such change in the Board of Directors would be
beneficial to the Company and its shareholders and whether or not a majority of
the Company's shareholders believes that such a change would be desirable. The
Company believes, however, that the longer time required to elect a majority of
a classified Board of Directors will help to ensure the continuity and stability
of the Company's management and policies. Currently, the terms of Class I
directors expire in 1999, the terms of Class II directors expire in 2000 and the
terms of Class III directors expire in 2001.
Advance Notice of New Business and Director Nominations
The Company's Bylaws provide that any shareholder proposals or director
nominations must be provided to the Company in writing at least 120 days before
the date of an annual meeting of shareholders or, in the case of a special
meeting of shareholders, within 10 days after notice of such special
shareholders' meeting was sent by the Company to the shareholders. Such
provision may preclude shareholders from bringing matters before the
shareholders at an annual meeting or from making nominations for directors at an
annual meeting.
Issuance of Blank Check Preferred Stock
The Board of Directors has the power to issue 5,000,000 shares of Class B
Serial Preferred Stock, in one or more classes or series and with such rights
and preferences as determined by the Board of Directors, all without shareholder
approval. Because the Board of Directors has the power to establish the
preferences and rights of each class or series of Class B Serial Preferred
Stock, it may afford the holders in any series of Class B Serial Preferred Stock
preferences, powers and rights, voting or otherwise, senior to the rights of
holders of Common Stock. The Board of Directors has no present plans to issue
any shares of Class B Serial Preferred Stock.
Anti-Takeover Provisions and Georgia Law
The Georgia Code generally restricts a company from entering into certain
business combinations with an interested shareholder (which is defined as any
person or entity that is the beneficial owner of at least 10% of a company's
voting stock) or its affiliates for a period of five years after the date on
which such shareholder became an interested shareholder, unless (i) the
transaction is approved by the board of directors of the company prior to the
date such person became an interested shareholder, (ii) the interested
shareholder acquires 90% of the company's voting stock in the same transaction
in which it exceeds 10%, or (iii) subsequent to becoming an interested
shareholder, such shareholder acquires 90% of the company's voting stock and the
business combination is approved by the holders of a majority of the voting
stock entitled to vote thereon (the "Business Combination Statute"). The Georgia
Code provides that the Business Combination Statute does not apply unless the
bylaws of the corporation specifically provide that the Business Combination
Statute is applicable to the corporation. The Company has elected to be covered
by the Business Combination Statute.
The Georgia Code also contains provisions that impose certain fair price
and other procedural requirements applicable to certain business combinations
(the "Fair Price Statute") with any person who owns 10% or more of the common
stock (an "interested shareholder"). These statutory requirements restrict
business combinations with, and accumulations of shares of voting stock of,
certain Georgia corporations. The Fair Price Statute applies to a company only
if the company elects to be covered by the restrictions imposed by these
statutes. The Company has elected to be covered by the Fair Price Statute.
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<PAGE> 42
Ability to Consider Other Constituencies
The Articles of Incorporation permit the Board of Directors, in determining
what is believed to be in the best interest of the Company, to consider the
interests of the employees, customers, suppliers and creditors of the Company,
the communities in which offices or other establishments of the Company are
located and all other factors the directors consider pertinent, in addition to
considering the effects of any actions on the Company and its shareholders.
Pursuant to this provision, the Board of Directors may consider numerous
judgmental or subjective factors affecting a proposal, including certain
non-financial matters, and on the basis of these considerations may oppose a
business combination or other transaction which, viewed exclusively from a
financial perspective, might be attractive to some, or even a majority, of the
Company's shareholders.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Articles of Incorporation eliminate, subject to certain exceptions, the
personal liability of a director to the Company or its shareholders for monetary
damage for breaches of such director's duty of care or other duties as a
director. The Articles do not provide for the elimination of or any limitation
on the personal liability of a director for (i) any appropriation, in violation
of the director's duties, of any business opportunity of the Company, (ii) acts
or omissions that involve intentional misconduct or a knowing violation of law,
(iii) unlawful corporate distributions as set forth in Section 14-2-832 of the
Georgia Code, or (iv) any transactions from which the director derived an
improper personal benefit. The Articles of Incorporation of the Company further
provide that if the Georgia Code is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
fullest extent permitted by the Georgia Code, as amended, without further action
by the shareholders. These provisions of the Articles of Incorporation will
limit the remedies available to a shareholder in the event of breaches of any
director's duties to such shareholder or the Company.
The Company's Bylaws require the Company to indemnify and hold harmless any
director or officer who was or is a party or is threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative (including any action or suit
by or in the right of the Company) because such person is or was a director or
officer of the Company, against liability incurred in such proceeding except for
any liability incurred in a proceeding in which the director or officer is
adjudged liable to the Company or is subjected to injunctive relief in favor of
the Company for (i) any appropriation, in violation of such director's or
officer's duties, of any business opportunity of the Company, (ii) acts or
omissions which involve intentional misconduct or a knowing violation of law,
(iii) types of liability set forth in Section 14-2-832 of the Georgia Code, or
(iv) any transaction from which such officer or director received an improper
personal benefit. In addition, the Bylaws provide that the Company (i) must
advance funds to pay or reimburse the reasonable expenses incurred by a director
or officer who is a party to a proceeding because such person is a director or
officer if such director or officer satisfies certain conditions, and (ii) may
indemnify and advance expenses to an employee or agent of the Company who is not
a director or officer to the same extent and subject to the same conditions that
the Company could without shareholder approval under the Georgia Code indemnify
and advance expenses to a director.
The Company has entered into separate indemnity agreements with each of its
directors and executive officers, whereby the Company agreed, among other
things, to provide for indemnification and advancement of expenses in a manner
and subject to terms and conditions similar to those set forth in the Articles
and Bylaws. There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being sought, nor is the Company aware of any pending or threatened litigation
that may result in claims for indemnification by any director, officer, employee
or other agent.
REGISTRATION RIGHTS
Pursuant to that Contribution Agreement dated July 15, 1998, ITC and Mr.
Bare have certain registration rights regarding their shares of Common Stock in
the Company. If the Company undertakes any registered public offering of the
Company's Common Stock, other than the Offering or an offering registered on
Form S-8 or S-4, the Company must provide written notice to ITC and Mr. Bare not
less than 30 days prior
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<PAGE> 43
to the proposed filing date of such registration statement. At the written
request of ITC or Mr. Bare, the Company shall include in such registered
offering, all shares of Common Stock as are set forth in the written request
provided by ITC or Mr. Bare within 15 days after receipt of the written notice
from the Company; provided, however, that if the managing underwriters advise
the Company in writing that, in their opinion, the number of shares of Common
Stock requested to be included in such registered offering exceeds the number
which can be sold in such offering without adversely affecting the marketability
of such offering, the Company shall include in such registered offering (i)
first, the primary shares of Common Stock that the Company proposes to sell, and
(ii) second, the shares of Common Stock requested to be included in such
offering, pro rata between ITC and Mr. Bare on the basis of the number of shares
of Common Stock requested to be included by each. ITC and Mr. Bare have waived
any and all registration rights each may have in connection with the Offering.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is .
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have shares of
Common Stock outstanding, assuming no exercise of the Underwriters'
over-allotment option. The shares sold in the Offering ( shares if
the Underwriters over-allotment option is exercised in full) will be freely
tradable by persons other than affiliates of the Company, without restriction.
The remaining shares of Common Stock outstanding will be "restricted"
securities within the meaning of Rule 144 under the Securities Act and may not
be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including the safe harbor provisions
set forth in Rule 144. The Company, ITC, ITC Service Company and Mr. Bare,
however, have agreed not to sell or otherwise dispose of any shares of Common
Stock for a period of 180 days after the date of this Prospectus without the
prior written consent of Wheat First Securities, Inc., except that the Company
may issue shares of Common Stock in connection with acquisitions. See
"Underwriting."
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares of
Common Stock for at least one year (including the prior holding period of any
prior owner other than an affiliate) is entitled to sell within any three-month
period that number of shares which does not exceed the greater of 1% of the
outstanding shares of Common Stock and the average weekly trading volume during
the four calendar weeks preceding each such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed an "affiliate" of the
Company for at least three months and who has beneficially owned shares for at
least two years (including the holding period of any prior owner other than an
affiliate) would be entitled to sell such shares under Rule 144 without regard
to the limitations described above. Rule 144 defines "affiliate" of a company as
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such company.
Affiliates of a company generally include its directors, officers and principal
shareholders and, as of the date of this Prospectus, specifically include ITC
and Mr. Bare. As of the date of this Prospectus, all of the restricted shares
are held by affiliates of the Company and 90 days after the Offering, all
5,000,000 shares would become eligible for resale pursuant to Rule 144, subject
to the volume limitations and other restrictions of Rule 144 and the 180 day
lock-up agreements.
The Company has outstanding options to purchase up to an aggregate of
382,250 shares of Common Stock held by certain employees of the Company. The
Company intends to file registration statements on Form S-8 to register the
shares issuable upon exercise of such options and options and awards granted in
the future under its stock plans. Upon such registration, such shares will be
eligible for resale in the public market without restrictions by persons who are
not affiliates of the Company, and to the extent they are held by affiliates,
pursuant to Rule 144 without observance of the holding period requirements.
42
<PAGE> 44
ITC and Mr. Bare have certain registration rights regarding the 2,750,000
and 2,250,000 shares of Common Stock held by each, respectively. See
"Description of Capital Stock -- Registration Rights."
In connection with the $2.5 million credit facility provided by ITC Service
Company to the Company, on July 16, 1998 the Company granted ITC Service Company
a warrant to purchase shares of Common Stock (assuming an initial public
offering price of $ per share) at an exercise price per share equal to the
initial public offering price. The warrant vested upon issuance and is
exercisable for a term of 10 years. Neither the warrant nor the underlying
shares have been registered by the Company. The shares of Common Stock issuable
upon exercise of this warrant would be deemed restricted shares under Rule 144
and the resale thereof would either have to be registered or comply with the
requirements of an exemption from registration.
Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.
43
<PAGE> 45
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Company and Wheat First Union, a division of Wheat First Securities, Inc., J.C.
Bradford & Co. and Interstate/Johnson Lane Corporation, as representatives of
the Underwriters (the "Representatives"), the Underwriters have severally agreed
to purchase from the Company, and the Company has agreed to sell to each of the
Underwriters, the respective number of shares of Common Stock set forth opposite
their names below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
Wheat First Securities, Inc.................................
J.C. Bradford & Co..........................................
Interstate/Johnson Lane Corporation.........................
--------
Total.............................................
========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase and pay for all the
above shares of Common Stock if any are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the public offering price set forth on the cover page of this
Prospectus and to selected dealers at such price less a concession not in excess
of $ per share of Common Stock. The Underwriters may allow, and such
selected dealers may reallow, a concession not in excess of $ per share of
Common Stock to certain brokers and dealers. After the initial offering to the
public, the price to public, concessions and reallowances to dealers may be
changed by the Representatives.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to an
additional shares of Common Stock to cover over-allotments, if any, at
the public offering price, less the underwriting discount, as set forth on the
cover page of this Prospectus. To the extent that the Underwriters exercise this
option, each of the Underwriters will be committed, subject to certain
conditions, to purchase such additional shares in approximately the same
proportion as set forth in the above table. The Underwriters may purchase such
shares only to cover over-allotments made in connection with the Offering.
ITC, Mr. Bare, ITC Service Company and the Company have agreed not to
offer, sell or contract to sell or otherwise dispose of, directly or indirectly,
or announce an offering of, any Common Stock of the Company, with certain
exceptions, for a period of 180 days after the date hereof without the written
consent of Wheat First Securities, Inc.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the Underwriters may be required to make in respect
thereof.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price was determined through
negotiations between the Company and the Representatives. Among the factors that
were considered in making such determination were prevailing market conditions,
the Company's financial and operating history and condition, its prospects and
prospects for the industry in general, the management of the Company and the
market prices of securities for companies in business similar to that of the
Company.
In connection with the Offering, certain Underwriters and selling group
members (if any) and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with
44
<PAGE> 46
Rule 104 of Regulation M of the Securities and Exchange Commission (the
"Commission"), pursuant to which such persons may bid for or purchase Common
Stock for the purpose of stabilizing its market price. The Underwriters also may
create a short position for the account of the Underwriters by selling more
Common Stock in connection with the Offering than they are committed to purchase
from the Company and in such case may purchase Common Stock in the open market
following completion of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to shares of Common Stock, by exercising the Underwriters
over-allotment option. In addition, Wheat First Securities, Inc., on behalf of
the Underwriters, may impose penalty bids under contractual arrangements with
the Underwriters whereby it may reclaim from an Underwriter (or dealer
participating in the Offering), for the account of the other Underwriters, the
selling concession with respect to the Common Stock that is distributed in the
Offering but subsequently purchased for the account of the Underwriters in the
open market. Any of the transactions described in this paragraph may result in
the maintenance of the price of the Common Stock at a level above that which
might otherwise prevail in the open market. None of the transactions described
in this paragraph is required, and if any is undertaken, it may be discontinued
at any time.
LEGAL MATTERS
The validity of shares of Common Stock offered hereby is being passed upon
for the Company by Alston & Bird LLP, Atlanta, Georgia. Certain legal matters
related to this Offering will be passed upon for the Underwriters by Nelson
Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.
EXPERTS
The consolidated financial statements of HeadHunter.Net.Inc. and
subsidiaries (Successor Company) and HNET, Inc., (Predecessor Company) for the
years ended December 31, 1995 and 1996, the ten months ended October 31, 1997
and the two months ended December 31, 1997 included elsewhere in this Prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving such reports.
AVAILABLE INFORMATION
The Company has filed with the Commission through the Electronic Data
Gathering and Retrieval ("EDGAR") system a registration statement on Form S-1
(together with all amendments, exhibits and schedules thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. For further
information, reference is made to the Registration Statement, including the
exhibits thereto, which may be inspected without charge at the Commission's
principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
and at the following Regional Offices of the Commission, except that copies of
the exhibits may not be available at certain of the Regional Offices: Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of all or any part of such material may be obtained from the
Commission at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, upon
payment of certain fees prescribed by the Commission. The Commission maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports,
proxy, information statements, and registration statements and other information
filed with the Commission through the EDGAR system.
45
<PAGE> 47
The Company is not presently a reporting company and does not file reports
or other information with the Commission. On the effective date of the
Registration Statement, however, the Company will become a reporting company
under the Exchange Act. Accordingly, the Company will become subject to the
informational and periodic reporting requirements of the Exchange Act and in
accordance therewith will file reports, proxy statements and other information
with the Commission. In addition, after completion of the Offering, the Company
intends to furnish its shareholders with annual reports containing audited
financial statements and with quarterly reports containing unaudited summary
financial information for each of the first three quarters of each fiscal year.
46
<PAGE> 48
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HEADHUNTER.NET, INC. AND SUBSIDIARIES (SUCCESSOR COMPANY)
AND HNET, INC. (PREDECESSOR COMPANY)
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets -- December 31, 1996 and 1997
and June 30, 1998 (unaudited)............................. F-3
Consolidated Statements of Operations for the Period From
Inception (October 10, 1995) to December 31, 1995, the
Year Ended December 31, 1996, the Ten Months Ended October
31, 1997, the Two Months Ended December 31, 1997, and the
Six Months Ended June 30, 1997 and 1998 (unaudited)....... F-4
Consolidated Statements of Shareholders' Equity for the
Period From Inception (October 10, 1995) to December 31,
1995, the Year Ended December 31, 1996, the Ten Months
Ended October 31, 1997, the Two Months Ended December 31,
1997, and the Six Months Ended June 30, 1998
(unaudited)............................................... F-5
Consolidated Statements of Cash Flows for the Period From
Inception (October 10, 1995) to December 31, 1995, the
Year Ended December 31, 1996, the Ten Months Ended October
31, 1997, and the Two Months Ended December 31, 1997, and
the Six Months Ended June 30, 1997 and 1998 (unaudited)... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 49
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HeadHunter.NET, Inc.:
We have audited the accompanying consolidated balance sheets of
HEADHUNTER.NET, INC. AND SUBSIDIARIES (Successor Company) and HNET, INC.
(Predecessor Company) as of December 31, 1996 and 1997 and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the period from inception (October 10, 1995) to December 31, 1995, the year
ended December 31, 1996, the ten months ended October 31, 1997, and the two
months ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of HeadHunter.NET, Inc. and
subsidiaries (Successor Company) and HNET, Inc. (Predecessor Company) as of
December 31, 1996 and 1997 and the results of their operations and their cash
flows for the period from inception (October 10, 1995) to December 31, 1995, the
year ended December 31, 1996, the ten months ended October 31, 1997, and the two
months ended December 31, 1997 in conformity with generally accepted accounting
principles. As discussed in Note 1 to the financial statements, effective
October 31, 1997, ITC Holding Company, Inc. acquired a majority ownership
interest in HeadHunter.NET, Inc. in a business combination accounted for as a
purchase. As a result of this acquisition, the financial information for the
periods after the acquisition is presented on a different cost basis than for
periods before the acquisition and, therefore, is not comparable.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
July 16, 1998
F-2
<PAGE> 50
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY SUCCESSOR COMPANY
------------ --------------------------
DECEMBER 31, DECEMBER 31, JUNE 30,
1996 1997 1998
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $25,973 $ 853,989 $ 196,366
Accounts receivable:
Trade, net of allowance for doubtful accounts of $0 at
December 31, 1996 and 1997 and $32,249 at June 30,
1998.................................................. 10,783 8,865 123,116
Affiliates (Note 3)..................................... -- 5,100 --
Prepaid expenses.......................................... -- 13,420 160,947
------- ---------- -----------
Total current assets................................ 36,756 881,374 480,429
------- ---------- -----------
PROPERTY AND EQUIPMENT:
Furniture and fixtures.................................... 800 28,664 64,717
Leasehold improvements.................................... 10,809 -- --
Hardware and related equipment............................ 17,543 66,082 130,638
------- ---------- -----------
29,152 94,746 195,355
Accumulated depreciation and amortization................. (7,358) (3,778) (23,965)
------- ---------- -----------
Total property and equipment, net................... 21,794 90,968 171,390
------- ---------- -----------
ACQUIRED SOFTWARE RIGHTS, net of accumulated amortization of
$32,633 and $130,529 at December 31, 1997 and June 30,
1998, respectively........................................ -- 946,343 848,447
------- ---------- -----------
OTHER ASSETS................................................ -- 4,230 24,430
------- ---------- -----------
Total assets........................................ $58,550 $1,922,915 $ 1,524,696
======= ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable:
Trade................................................... $ 3,050 $ 20,326 $ 172,575
Affiliates (Note 3)..................................... -- 23,843 --
Employees............................................... -- 36,454 --
Short-term borrowings -- affiliates (Note 3).............. -- -- 400,000
Accrued compensation...................................... -- -- 13,583
Other accrued expenses.................................... -- -- 58,387
Deferred revenue.......................................... -- 11,775 109,015
------- ---------- -----------
Total current liabilities........................... 3,050 92,398 753,560
------- ---------- -----------
COMMITMENTS AND CONTINGENCIES (Note 4)
SHAREHOLDERS' EQUITY:
Class A Preferred Stock, $0.01 par value; 2,800,000 shares
authorized, issued and outstanding at December 31, 1997
and June 30, 1998....................................... -- 28,000 28,000
Class B Serial Preferred Stock, $0.01 par value; 5,000,000
shares authorized, none issued and outstanding at
December 31, 1997 and June 30, 1998..................... -- -- --
Common stock, $0.01 par value; 50,200,000 shares
authorized, 2,200,000 shares issued and outstanding at
December 31, 1997 and June 30, 1998..................... -- 22,000 22,000
Capital stock............................................. 260 -- --
Paid-in capital........................................... 5,040 1,956,909 1,956,909
Retained earnings (accumulated deficit)................... 50,200 (176,392) (1,235,773)
------- ---------- -----------
Total shareholders' equity.......................... 55,500 1,830,517 771,136
------- ---------- -----------
Total liabilities and shareholders' equity.......... $58,550 $1,922,915 $ 1,524,696
======= ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 51
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR SUCCESSOR
PREDECESSOR COMPANY COMPANY COMPANY COMPANY
----------------------------------------- ------------ ----------- -----------
FROM
INCEPTION TEN
(OCTOBER 10, MONTHS TWO MONTHS SIX MONTHS SIX MONTHS
1995) TO YEAR ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1997 1997 1997 1998
------------ ------------ ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES.................................. $50,754 $190,146 $124,437 $ 29,591 $103,885 $ 278,051
------- -------- -------- ---------- -------- -----------
OPERATING EXPENSES:
Costs of revenues....................... -- -- 29,390 2,906 15,540 37,539
Marketing and selling................... -- 2,740 23,301 41,123 8,920 508,380
General and administrative.............. 5,073 52,105 95,967 126,268 66,281 680,974
Depreciation and amortization........... 516 6,842 10,099 41,912 5,481 118,083
------- -------- -------- ---------- -------- -----------
Total operating expenses......... 5,589 61,687 158,757 212,209 96,222 1,344,976
------- -------- -------- ---------- -------- -----------
OPERATING INCOME (LOSS)................... 45,165 128,459 (34,320) (182,618) 7,663 (1,066,925)
OTHER INCOME (EXPENSE).................... -- 164 (843) 6,226 (601) 7,544
------- -------- -------- ---------- -------- -----------
NET INCOME (LOSS)......................... $45,165 $128,623 $(35,163) $ (176,392) $ 7,062 $(1,059,381)
======= ======== ======== ========== ======== ===========
LOSS PER SHARE:
Basic................................... $ (0.08) $ (0.48)
Diluted................................. $ (0.08) $ (0.46)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic................................... 2,200,000 2,200,000
Diluted................................. 2,318,250 2,318,250
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 52
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS A RETAINED
PREFERRED STOCK COMMON STOCK EARNINGS
------------------- ------------------- PAID-IN (ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT) TOTAL
--------- ------- --------- ------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR COMPANY:
Inception, October 10,
1995..................... -- $ -- -- $ -- $ -- $ -- $ --
Issuance of capital
stock.................. -- -- 260 260 5,040 -- 5,300
Dividends................ -- -- -- -- -- (7,600) (7,600)
Net income............... -- -- -- -- -- 45,165 45,165
--------- ------- --------- ------- ---------- ----------- -----------
Balance, December 31,
1995..................... -- -- 260 260 5,040 37,565 42,865
Dividends................ -- -- -- -- -- (115,988) (115,988)
Net income............... -- -- -- -- -- 128,623 128,623
--------- ------- --------- ------- ---------- ----------- -----------
Balance, December 31,
1996..................... -- -- 260 260 5,040 50,200 55,500
Capital contribution..... -- -- -- -- 30,000 -- 30,000
Dividends................ -- -- -- -- -- (121,941) (121,941)
Net loss................. -- -- -- -- -- (35,163) (35,163)
--------- ------- --------- ------- ---------- ----------- -----------
Balance, October 31,
1997..................... -- $ -- 260 $ 260 $ 35,040 $ (106,904) $ (71,604)
========= ======= ========= ======= ========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------
SUCCESSOR COMPANY:
Initial capitalization of
HeadHunters, L.L.C....... -- $ -- -- $ -- $2,000,000 $ -- $ 2,000,000
Acquisition of
Predecessor Company.... -- -- (260) (260) (35,040) 106,904 71,604
Reorganization (Note
5)..................... 2,800,000 28,000 2,200,000 22,000 (43,091) -- 6,909
Net loss................. -- -- -- -- -- (176,392) (176,392)
--------- ------- --------- ------- ---------- ----------- -----------
Balance, December 31,
1997..................... 2,800,000 28,000 2,200,000 22,000 1,956,909 (176,392) 1,830,517
Net loss................. -- -- -- -- -- (1,059,381) (1,059,381)
--------- ------- --------- ------- ---------- ----------- -----------
Balance, June 30, 1998
(unaudited).............. 2,800,000 $28,000 2,200,000 $22,000 $1,956,909 $(1,235,773) $ 771,136
========= ======= ========= ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 53
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR SUCCESSOR
PREDECESSOR COMPANY COMPANY COMPANY COMPANY
----------------------------------------------- ------------ ----------- -----------
FROM INCEPTION TEN MONTHS TWO MONTHS SIX MONTHS SIX MONTHS
(OCTOBER 10, 1995) YEAR ENDED ENDED ENDED ENDED ENDED
TO DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1997 1997 1997 1998
------------------ ------------ ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)............... $ 45,165 $ 128,623 $(35,163) $ (176,392) $ 7,062 $(1,059,381)
-------- --------- -------- ---------- -------- -----------
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization................ 516 6,842 10,099 41,912 5,481 118,083
Changes in current operating
assets and liabilities:
Accounts receivable......... (17,053) 6,270 10,783 (3,182) (4,351) (109,151)
Prepaid expenses............ -- -- -- (13,420) -- (15,260)
Other assets................ -- -- -- (4,230) -- (152,467)
Accounts payable............ 165 2,885 741 71,248 5,427 91,952
Accrued expenses............ -- -- 2,548 0 -- 71,970
Deferred revenue............ -- -- -- 11,775 -- 97,240
-------- --------- -------- ---------- -------- -----------
Total adjustments......... (16,372) 15,997 24,171 104,103 6,557 102,367
-------- --------- -------- ---------- -------- -----------
Net cash provided by (used
in) operating
activities.............. 28,793 144,620 (10,992) (72,289) 13,619 (957,014)
-------- --------- -------- ---------- -------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment..................... (6,867) (16,985) (14,830) (73,722) (7,425) (100,609)
-------- --------- -------- ---------- -------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Equity contribution............. -- -- 30,000 1,100,000 -- --
Proceeds from short-term
borrowings.................... -- -- -- -- -- 400,000
Dividends paid (Note 3)......... (7,600) (115,988) (21,941) (100,000) (18,186) --
-------- --------- -------- ---------- -------- -----------
Net cash (used in)
provided by financing
activities.............. (7,600) (115,988) 8,059 1,000,000 (18,186) 400,000
-------- --------- -------- ---------- -------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS............ 14,326 11,647 (17,763) 853,989 (11,992) (657,623)
CASH AND CASH EQUIVALENTS,
beginning of period............. -- 14,326 25,973 -- 25,973 853,989
-------- --------- -------- ---------- -------- -----------
CASH AND CASH EQUIVALENTS, end of
period.......................... $ 14,326 $ 25,973 $ 8,210 $ 853,989 $ 13,981 $ 196,366
======== ========= ======== ========== ======== ===========
SUPPLEMENTAL CASH FLOW
INFORMATION:
Initial noncash equity
contributions (Note 1)........ $ 5,300 $ -- $ -- $ 900,000 $ -- $ --
======== ========= ======== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 54
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
ORGANIZATION
On October 10, 1995, HNET, Inc. ("HNI" or the "Predecessor Company"), a
Georgia S corporation, was established as a web site development consulting
firm. In October 1996, the HeadHunter.NET web site was launched.
On October 31, 1997, HeadHunters, L.L.C. ("LLC") was organized. Effective
November 1, 1997, in a transaction accounted for as a purchase, ITC Holding
Company, Inc. ("ITC"), contributed $1,100,000 in cash in exchange for a 55%
equity interest in LLC. HNI contributed all of its assets and liabilities,
including the right to use the name "HeadHunter.NET," in exchange for the
remaining 45% equity interest. The total fair market value of HNI's equity
contribution to LLC was $900,000.
On July 15, 1998, HNI's sole shareholder and ITC formed HeadHunter.NET,
Inc. (the "Company" or the "Successor Company"), a Georgia corporation, and
reorganized LLC and HNI as follows (the "Reorganization") for the purpose of
completing the initial public offering (the "Offering") of the Company's common
stock, as more fully described in Note 5.
a. ITC contributed its 55% ownership interest in LLC to the Company.
b. HNI's sole shareholder contributed 100% of HNI to the Company.
As a result of the Reorganization, LLC and HNI are now wholly owned
subsidiaries of the Company.
NATURE OF BUSINESS
HeadHunter.NET is an Internet-based interactive technology company that
provides a leading employment web site at www.HeadHunter.NET. The Company's web
site enables job listers to list job opportunities and search for resumes, and
enables job seekers to post their resumes and search for job opportunities using
a wide array of search criteria, including keyword, industry, job type,
education, geographic location, and salary range. The Company also offers banner
advertising on its web page for companies who wish to target users of its
services.
The Company has experienced operating losses and negative cash flows from
operations as a result of efforts to build out its network infrastructure,
increase internal staffing, and develop its systems. The Company expects to
continue to focus on increasing its customer base and expanding its operations.
Accordingly, the Company expects that its cost of revenues, marketing and
selling expenses, general and administrative expenses and capital expenditures
will continue to increase significantly, all of which will have a negative
impact on short-term operating results. The Company has entered into an
agreement for a $2,500,000 line of credit which expires the earlier of (i)
December 31, 1998 or (ii) the closing of the Offering (Notes 3 and 5). The
Company also plans to complete an Offering of its common stock in the third
quarter of 1998 (Note 5) to provide additional funds for its expansion plans. In
the event this proposed equity offering is unsuccessful in the opinion of
management, the Company's current cash position and available line of credit
will be sufficient to meet the capital and operating needs of the Company
through at least 1998. However, there can be no assurance that growth in the
Company's revenues or customer base will continue or that the Company will be
able to achieve or sustain profitability and/or positive cash flow.
F-7
<PAGE> 55
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION
The accompanying consolidated financial statements have been prepared on
the accrual basis of accounting. The consolidated financial statements reflect
the Reorganization in a manner similar to a pooling of interests and include the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
As a result of ITC's acquisition of a majority interest in the Company as
discussed in Note 1, the capital structure of and the basis of accounting for
the Company differs from that of the Predecessor Company prior to ITC's
acquisition and the Reorganization. Financial data of the Company with respect
to all reporting periods subsequent to November 1, 1997 (the "Successor Period")
reflect ITC's acquisition under the purchase method. Therefore, financial data
with respect to HNI prior to the acquisition (the "Predecessor Period")
generally will not be comparable to that of the Company with respect to the
items described below.
As a result of ITC's acquisition of a majority interest in LLC, the
statements of operations for the Successor Period include amortization of the
software rights acquired. Also as a result of purchase accounting, the fair
values of the property and equipment at the date of their acquisition became
their new "cost" bases with respect to the Company. Accordingly, the
depreciation of property and equipment for the Successor Period is based on the
newly established cost bases of these assets. Other effects of purchase
accounting in the Successor Period are not significant.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company earns enhanced listing revenues by providing enhanced listing
services for the users of the Company's recruiting web site and recognizes these
revenues when the services are provided. The Company also earns advertising
revenues by providing web advertisers access to users of the Company's web site
and recognizes these revenues when earned.
CASH AND CASH EQUIVALENTS
The Company considers all short-term, highly liquid investments with an
original maturity date of three months or less to be a cash equivalent. Cash and
cash equivalents are stated at cost, which approximates fair value.
F-8
<PAGE> 56
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the respective assets
for financial reporting purposes. Major additions and improvements are charged
to the property accounts while maintenance and repairs which do not improve or
extend the lives of the respective assets are expensed in the current period.
Estimated useful lives for the Company's assets are as follows:
<TABLE>
<S> <C>
Furniture and fixtures................................. Three to five years
Hardware and equipment................................. Three years
</TABLE>
Leasehold improvements are amortized using the straight-line method over
the shorter of the service lives of the improvements or the remaining term of
the lease.
ACQUIRED SOFTWARE RIGHTS
Acquired software rights were recorded at their fair market value and are
being amortized on a straight-line basis over a period of five years.
LONG-LIVED ASSETS
The Company periodically reviews the values assigned to long-lived assets,
such as property and equipment and other long-term assets, to determine whether
any impairments are other than temporary. Management believes that the
long-lived assets in the accompanying consolidated balance sheets are
appropriately valued.
INCOME TAXES
The sole shareholder of HNI elected for the Predecessor Company to be taxed
under S corporation status of the Internal Revenue Code (the "Code") as amended.
The Code and certain applicable state statutes provide that the income and
expenses of an S corporation are not taxable separately to the corporation but
rather accrue directly to the shareholders. Accordingly, no provision for income
taxes has been reflected in the accompanying financial statements of the
Predecessor Company.
Prior to the Reorganization (Note 1), LLC, as a limited liability company,
was treated as a partnership for tax purposes. Therefore, the income tax
benefits generated by LLC were recorded by its members.
Following the Reorganization (Note 1), the Successor Company will utilize
the liability method of accounting for income taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. At the date of the Reorganization (Note 1), there were no
material effects on the Company's financial statements related to tax
consequences of the Reorganization.
ADVERTISING COSTS
The Company expenses the cost of advertising as incurred. Advertising
expenses included in marketing and selling expenses were $0 for the period from
inception (October 10, 1995) to December 31, 1995 and the
F-9
<PAGE> 57
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
year ended December 31, 1996, $2,632 for the ten months ended October 31, 1997,
and $28,240 for the two months ended December 31, 1997.
Advertising expenses included in marketing and selling expenses were $0 and
$462,608 for the six months ended June 30, 1997 and 1998, respectively
(unaudited).
SOURCES OF SUPPLIES
The Company relies on local telephone companies and other companies to
provide data communications capacity. Although management feels alternative
telecommunications facilities could be found in a timely manner, disruption of
these services for more than a brief period would have an adverse effect on
operating results.
Although the Company attempts to maintain multiple vendors for each
required product, its property and equipment, which are important components of
its operations, are each currently acquired from only a few sources. In
addition, some of the Company's suppliers have limited resources and production
capacity. If the suppliers are unable to meet the Company's needs as it builds
out its network infrastructure and sell services, then delays and increased
costs in the expansion of the Company's network infrastructure or losses of
potential customers could result, which would adversely affect operating
results.
NET LOSS PER SHARE
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 98, for periods prior to the Company's initial public offering (Note 5),
basic net loss per share is computed using the weighted average number of shares
of common stock outstanding during the period. Diluted net loss per share is
computed using the weighted average number of shares of common stock outstanding
during the period and, nominal issuances of common stock and common stock
equivalents, regardless of whether they are antidilutive. Net loss per share is
not shown for the Predecessor Company, as it is not comparable.
3. RELATED-PARTY TRANSACTIONS
On October 31, 1997, the Company entered into a revolving credit agreement
(the "Credit Agreement") which has been amended and restated (Note 5) with ITC
and ITC Service Company, an affiliate of ITC, which allows the Company to draw
up to $1,000,000 at an interest rate approximating ITC's cost of debt capital.
ITC shall have the right to convert any outstanding balance at the end of the
term into a fully paid and nonassessable equity interest in the Company equal to
1% for each $40,000 of the unpaid balance, including interest and penalties.
Short-term borrowings under the Credit Agreement were $0 during the two months
ended December 31, 1997 and $400,000 for the six months ended June 30, 1998
(unaudited).
On November 1, 1997, the Company paid $100,000 in satisfaction of a
dividend payable to the sole shareholder of HNI, which was included in the
initial equity contribution under the organization of the LLC.
As of December 31, 1997, approximately 40% of the Company's deferred
revenue was related to subscription sales to affiliates of ITC. Outstanding
receivables and payables for services provided to and rendered from ITC and its
affiliates were $5,100 and $20,000, respectively, at December 31, 1997.
Beginning in January 1998, the Company entered into an agreement with
ITC'DeltaCom, Inc. ("ITC'DeltaCom") to serve as the Company's Internet service
provider and host of the Company's web site. ITC'DeltaCom is related to ITC
through both common ownership and board membership.
F-10
<PAGE> 58
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Lease expense relates to the lease of office space. At December 31, 1997,
future minimum lease payments under this noncancelable operating lease, which
expires August 31, 1998, totaled $24,000. Rental expense under the operating
lease amounted to $3,000 for the two months ended December 31, 1997.
Rental expense under the operating lease amounted to $18,000 for the six
months ended June 30, 1998 (unaudited).
PURCHASE COMMITMENTS
The Company has entered into an agreement with an Internet company to
purchase a minimum of $60,000 in banner advertising on the advertiser's web page
by April 1998.
The Company has entered into various agreements with Internet companies to
purchase a minimum of $432,000 and $206,000 in banner advertisements in 1998 and
1999, respectively (unaudited).
LEGAL PROCEEDINGS
The Company is not currently a party to any material legal proceedings.
From time to time, the Company may be subject to legal proceedings and claims in
the ordinary course of business, as well as claims of alleged infringement of
trademarks and other intellectual property of third parties by the Company. Such
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources.
DEPENDENCE ON STRATEGIC AND OTHER RELATIONSHIPS
The Company has entered into and continually evaluates strategic
relationships. The Company depends on its strategic relationships to increase
(i) traffic and content on its web site, (ii) visibility of job listers'
employment opportunities, (iii) brand recognition, and (iv) advertising
revenues. The Company has only recently entered into strategic relationships
with Yahoo!, WorkLife (in conjunction with AltaVista), GeoCities and
DoubleClick. Each of these relationships is short-term and generally
non-exclusive. There can be no assurance that any such relationships will
continue in the future or generate substantial benefits or revenues for the
Company. The inability of the Company to maintain existing and enter into
additional strategic relationships, or the failure to complete any projects
related to any strategic relationship could have a material adverse effect on
the Company's business, results of operations and financial condition. In
addition, the Company depends on advertising agreements with Internet companies
such as America Online, Inc. and Yahoo! to increase content and traffic on its
web site and to increase users' awareness of the Company's web site. There can
be no assurance that such agreements will be renewed on terms acceptable to the
Company. Such companies may also enter into arrangements with the Company's
competitors which may substantially reduce the effectiveness of the Company's
advertising or eliminate the Company's ability to advertise on such companies'
web sites.
The Company is also generally dependent on other web site operators that
provide links to the Company's web site. Most of these arrangements are not
exclusive and are short-term or may be terminated at the convenience of the
other party. Moreover, many web site operators provide links to the Company's
web site on an informal basis, and such web site operators may terminate such
links at any time without notice to the Company. In addition, there can be no
assurance that such third parties will not develop their own competitive
services, either during their relationship with the Company or after their
relationship with the Company
F-11
<PAGE> 59
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expires. Further, there can be no assurance that the services of those web site
operators that provide access or links to the Company's web site will achieve
market acceptance or commercial success. Accordingly, there can be no assurance
that the Company's existing relationships will result in sustained business
partnerships, successful service offerings, or the generation of significant
traffic and content on the Company's web site or significant revenues for the
Company.
RISK OF CAPACITY CONSTRAINTS; DEPENDENCE ON COMPUTER INFRASTRUCTURE; DEPENDENCE
ON INTERNET INFRASTRUCTURE; TECHNOLOGICAL RISKS
The Company depends on its ability to generate a high volume of traffic to
and content on its Web site. Accordingly, the Company depends upon ISPs, OSPs
and other Web site operators, which have experienced significant outages in the
past, for access to its Web site, and users may experience difficulties due to
system failures unrelated to the Company's services. The Company currently uses
ITC'DeltaCom, Inc. ("ITC'DeltaCom") as its ISP. Any system failure that causes
an interruption in service or a decrease in responsiveness of the Company's Web
site could result in less traffic, and if sustained or repeated, could impair
the reputation and perception of the Company's Web site. Any failure by
ITC'DeltaCom to handle current or increased volumes of traffic would have a
material adverse effect on the Company's business, results of operations and
financial condition.
In addition, the Company may have to make substantial investments in
equipment and other technology in order to improve performance of its Web site,
including the establishment of new co-location facilities. The success of the
Company depends in large part upon the development of the Internet's
infrastructure as a reliable network backbone with the necessary speed, data
capacity and security, or timely development of complementary products, such as
high-speed modems, for providing reliable Internet access and services. Because
global commerce and online exchange of information on the Internet and other
similar open wide-area networks are new and evolving, it is difficult to predict
with any assurance whether the Internet will prove to be a viable commercial
marketplace. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and amount of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by such growth or that the performance
or reliability of the Internet will not be adversely affected by this continued
growth. In addition, the Internet could lose its viability due to delays in the
development or adoption of new standards and protocols to handle increased
levels of activity or due to increased governmental regulation. There can be no
assurance that the infrastructure or complementary products or services
necessary to make the Internet a viable commercial marketplace will be
developed. If the necessary infrastructure standards or protocols or
complementary products, services or facilities are not developed, the Company's
business, results of operations and financial condition will be materially
adversely affected. The market in which the Company competes is characterized by
rapidly changing technology, evolving industry standards, frequent new service
and product announcements, introductions and enhancements, and changing customer
demands. These market characteristics are exacerbated by the emerging nature of
the Internet. Accordingly, the Company's future success will depend on its
ability to adapt to rapidly changing technologies and to adapt its services to
evolving industry standards. The failure of the Company to adapt to such changes
could have a material adverse effect on the Company's business, results of
operations and financial condition.
F-12
<PAGE> 60
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. SUBSEQUENT EVENTS
COMMON UNIT OPTION PLAN
In January 1998, LLC's board of managers approved the formation of an
incentive unit option plan and allocated 500,000 shares of common units to the
plan. Through June 30, 1998, the board of managers has granted 382,250 of these
options to various employees of the Company. All options were granted with an
exercise price between $0.40 and $1.40 per share, which represents the estimated
fair value of 264,000 of the common units granted as determined by the board of
managers at the dates of grant. The remaining 118,250 common units granted had
an estimated fair value in excess of the grant price due to an increase in value
related to the contemplated initial public offering (Note 5). The Company
recorded approximately $14,000 in compensation expense during the six months
ended June 30, 1998. The options vest over a five-year period as follows: 40% at
the second anniversary of the dates of grant and an additional 20% at each of
the next three anniversary dates. The options expire ten years from the date of
grant.
OPERATING LEASE
In April 1998, the Company entered into a ten-year operating lease
agreement for office space to begin November 1, 1998. Future minimum lease
payments as of June 30, 1998 are as follows (unaudited):
<TABLE>
<S> <C>
1998........................................................ $ 46,374
1999........................................................ 310,129
2000........................................................ 357,723
2001........................................................ 364,875
2002........................................................ 372,171
Thereafter.................................................. 2,642,015
----------
$4,093,287
==========
</TABLE>
FORMATION OF THE COMPANY AND COMPLETION OF THE REORGANIZATION
On July 15, 1998, the Company was incorporated under the laws of the State
of Georgia. The Company has authorized 50,200,000 shares of common stock, par
value $0.01, and 2,800,000 shares of Class A Preferred Stock, par value $0.01,
and 5,000,000 shares of Class B Serial Preferred Stock. Upon consummation of the
proposed initial public offering discussed later, each share of Class A
Preferred Stock will automatically convert into one share of common stock. The
Company's board of directors has the authority to issue up to 5,000,000 shares
of Class B Serial Preferred Stock in one or more series. There are no shares of
Class B Serial Preferred Stock currently outstanding.
As discussed in Note 1, the purpose of incorporating the Company was to
enable ITC and STC's sole shareholder to complete a reorganization of LLC and
HNI. In return for the contribution of its 55% interest in LLC to the Company,
ITC received 2,750,000 shares of the Company's Class A Preferred Stock. The sole
shareholder of HNI received 2,200,000 shares of the Company's common stock,
$0.01 par value and 50,000 shares of the Company's Class A Preferred Stock in
return for the contribution of 100% of HNI.
In connection with the Reorganization, the Company also assumed LLC's
Common Unit Option Plan and has issued replacement options with identical terms.
F-13
<PAGE> 61
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AMENDMENT TO CREDIT FACILITY
On July 16, 1998, the Company, ITC and ITC Service Company, an affiliate of
ITC, entered into an amended and restated the Credit Agreement (Note 3),
pursuant to which ITC Service Company made available to the Company a revolving
line of credit of up to $2.5 million and is payable in full the earlier of (i)
December 31, 1998 or (ii) the closing of this Offering. Principal amounts
outstanding under the credit facility bear interest at annual rate equal to ITC
Service Company's cost of debt capital as reasonably determined, from time to
time by ITC Service Company (currently 8.6%) on the first $1 million and at a
fixed rate of 14% per annum on the remaining $1.5 million. In connection with
the amendments to the Credit Agreement, the Company issued to ITC Service
Company a warrant to purchase $375,000 of common stock at a price per share
equal to the initial public offering price per share. This warrant vested upon
issuance and is exercisable for a term of ten years.
1998 LONG-TERM INCENTIVE PLAN
On July 15, 1998, the Company's board of directors adopted the Company's
1998 Long-Term Incentive Plan (the "Incentive Plan"). The Company has reserved
500,000 shares of its common stock for issuance in connection with options and
awards granted under the Incentive Plan. The Company may grant options and
awards to officers and employees of the Company, a parent or a subsidiary, and
to nonemployee directors and consultants to the Company. The Incentive Plan
authorizes the granting of awards to eligible participants in the form of (i)
options to purchase shares of the Company's common stock, which may be incentive
stock options or nonqualified stock options, (ii) stock appreciation rights,
(iii) performance shares, (iv) restricted stock awards, (v) dividend equivalents
or (vi) other stock-based awards. The Incentive Plan is administered by the
Company's board of directors or the Compensation Committee in accordance with
its term. No awards or options pursuant to the Incentive Plan have been granted.
PROPOSED INITIAL PUBLIC OFFERING
The Company is in the process of registering with the Securities and
Exchange Commission shares of its common stock. There can be no assurance that
this Offering will be completed.
F-14
<PAGE> 62
------------------------------------------------------
------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Company Organization.................. 17
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 18
Capitalization........................ 19
Selected Financial and Operating
Data................................ 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 25
Management............................ 34
Principal Shareholders................ 38
Certain Transactions.................. 38
Description of Capital Stock.......... 39
Shares Eligible for Future Sale....... 42
Underwriting.......................... 44
Legal Matters......................... 45
Experts............................... 45
Available Information................. 45
Index to Financial Statements......... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
SHARES
HEADHUNTER.NET, INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
WHEAT FIRST UNION
J.C. BRADFORD&CO.
INTERSTATE/JOHNSON LANE
CORPORATION
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 63
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the Offering described in the Registration Statement:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $11,026.00
NASD Fees................................................... 4,238.00
Nasdaq Fees................................................. **
Blue Sky Fees and Expenses.................................. **
Printing and Engraving...................................... **
Legal Fees and Expenses..................................... **
Accounting Fees and Expenses................................ **
Transfer Agent Fees......................................... **
Miscellaneous Expenses...................................... **
----------
Total............................................. $ *
==========
</TABLE>
- ---------------
* All amounts other than the SEC Registration Fee and NASD Fees reflect Company
estimates.
** To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation eliminate, subject to certain
limited exceptions, the personal liability of a director to the Company or its
shareholders for monetary damage for any breach of duty as a director. There is
no elimination of liability for (i) a breach of duty involving appropriation of
a business opportunity of the Company; (ii) an act or omission which involves
intentional misconduct or a knowing violation of law; (iii) any transaction from
which the director derives an improper personal benefit; or (iv) as to any
payments of a dividend or any other type of distribution that is illegal under
Section 14-2-832 of the Georgia Business Corporation Code (the "GBCC"). In
addition, if at any time the GBCC is amended to authorize further elimination or
limitation of the personal liability of a director, then the liability of each
director of the Company shall be eliminated or limited to the fullest extent
permitted by such provisions, as so amended, without further action by the
shareholders, unless the provisions of the GBCC require such action. The
provision does not limit the right of the Company or its shareholders to seek
injunctive or other equitable relief not involving payments in the nature of
monetary damages.
The indemnification provisions in the Company's Bylaws require the Company
to indemnify and hold harmless any director or officer who was or is a party or
is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding whether civil, criminal, administrative or
investigative (including any action or suit by or in the right of the Company)
because such person is or was a director or officer of the Company, against
liability incurred in such proceeding except for any liability incurred in a
proceeding in which the director or officer is adjudged liable to the Company or
is subjected to injunctive relief in favor of the Company for (i) any
appropriation, in violation of such director's or officer's duties, of any
business opportunity of the Company, (ii) acts or omissions which involve
intentional misconduct or a knowing violation of law, (iii) types of liability
set forth in Section 14-2-832 of the GBCC or (iv) any transaction from which
such officer or director received an improper personal benefit. The Board of
Directors of the Company also has the authority to extend to employees and
agents the same indemnification rights held by directors, subject to all the
accompanying conditions and obligations. Indemnified persons would also be
entitled to have the Company advance expenses prior to the final disposition of
the proceeding. If it is ultimately determined that they are not entitled to
indemnification, however, such amounts would be repaid. Insofar as
indemnification for liability arising under the Securities Act may be permitted
to officers and directors of the Company pursuant to the foregoing provisions,
the Company has been informed 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.
II-1
<PAGE> 64
The Company has entered into separate indemnification agreements with each
of its directors and executive officers, whereby the Company agreed, among other
things, to provide for indemnification and advancement of expenses in a manner
and subject to terms and conditions similar to those set forth in the Articles
of Incorporation and Bylaws. There is no pending litigation or proceeding
involving a director, officer, employee or other agent of the Company as to
which indemnification is being sought, nor is the Company aware of any pending
or threatened litigation that may result in claims for indemnification by any
director, officer, employee or other agent.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
No securities which were not registered under the Securities Act have been
sold by HeadHunter.NET, Inc. within the past three years except for (i) the
sales made by the Company to Mr. Bare and ITC pursuant to that certain
Contribution Agreement dated July 15, 1998 and (ii) the issuance to ITC Service
Company of a warrant to purchase shares of Common Stock (assuming an
Offering price of $ per share) in connection with the Company's $2.5
million credit facility with ITC Service Company. Pursuant to Contribution
Agreement, Mr. Bare received 2,200,000 shares of Common Stock and 50,000 shares
of Class A Preferred Stock and ITC received 2,750,000 shares of Class A
Preferred Stock in exchange for all of the outstanding capital stock of HNI held
by Mr. Bare and ITC's 55% equity interest in LLC.
The issuances of securities described above were made in reliance on one or
more of the exemptions from registration under the Securities Act, including
those provided for by Section 4(2) and Regulation D thereunder. The recipients
of the securities in the above transactions represented their intention to
acquire the securities for investment purposes only and not with a view to or
for the sale in connection with any distribution thereof, and appropriate
legends were affixed to the share certificates issued in such transactions. The
recipients of these securities had adequate access, through their relationship
with the Company, to information about the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation of the Company
3.2 -- Bylaws of the Company
4.1 -- Specimen Common Stock Certificate*
4.2 -- Article II of the Company's Articles of Incorporation (filed
as part of Exhibit 3.1)
5.1 -- Opinion of Alston & Bird LLP*
10.1 -- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan
10.2 -- HeadHunters, L.L.C. Employee Common Unit Option Plan dated
January 14, 1998
10.3 -- Amended and Restated Loan and Security Agreement dated July
16, 1998 among ITC Holding Company, Inc., ITC Service
Company and the Company**
10.4 -- Form of Indemnity Agreement between directors/executive
officers and the Company
10.5 -- Contribution Agreement dated July 15, 1998 by and among ITC
Holding Company, Inc., Warren L. Bare and the Company
10.6 -- GeoCities and HeadHunter.NET Co-Marketing Agreement dated
July 2, 1998 between GeoCities, Inc. and the Company*+
10.7 -- WorkLife's Internet Content Partners Agreement by and
between WorkLife Solutions, Inc. and the Company
10.8 -- Yahoo! Inc. Content License Agreement dated as of April 15,
1998 between Yahoo! Inc. and the Company
10.9 -- Letter Agreement dated October 29, 1997 between Warren L.
Bare and ITC Holding Company, Inc.
</TABLE>
II-2
<PAGE> 65
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.10 -- Letter Agreement dated November 13, 1997 between Kenneth E.
Dopher and the Company
10.11 -- Letter Agreement dated May 18, 1998 between Judith G.
Hackett and the Company
10.12 -- Lease dated June 4, 1998 between Michael G. Perkins and the
Company, as amended by that First Amendment to Lease dated
June 4, 1998
10.13 -- Yahoo! Advertising Insertion Order dated March 24, 1998*+
10.14 -- AOL Insertion Order dated March 5, 1998 between America
Online, Inc. and the Company*+
10.15 -- Classifieds2000 Advertising Agreement dated April 2, 1998
between Classifieds2000 and the Company*+
10.16 -- Agreement dated July 16, 1998 between DoubleClick Inc. and
the Company*+
10.17 -- Stock Purchase Warrant dated July 16, 1998 in favor of ITC
Service Company
10.18 -- Investment Agreement dated October 30, 1997 by and among ITC
Holding Company, Inc., Software Technology Corporation and
Warren L. Bare*
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Alston & Bird LLP (filed as part of Exhibit 5.1)*
24.1 -- Power of Attorney (set forth on page II-5)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment
** The Company agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the Securities and Exchange Commission upon request, as
provided in Item 601(b)(2) of Regulation S-K.
+ Confidential treatment will be sought with respect to certain portions of
this agreement. Such portions will be omitted from this filing and will be
filed separately with the Securities and Exchange Commission.
(b) Financial Schedules
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, 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 Act and will be governed by the final adjudication of
such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, 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 Company 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.
II-3
<PAGE> 66
(2) For the purpose of determining any liability under the Securities
Act of 1933, 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-4
<PAGE> 67
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON JULY 17, 1998.
HEADHUNTER.NET, INC.
By: /s/ WARREN L. BARE
------------------------------------
Warren L. Bare
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers and
directors of HeadHunter.NET, Inc., a Georgia corporation, for himself and not
for one another, does hereby constitute and appoint Warren L. Bare and Kenneth
E. Dopher, and each of them, a true and lawful attorney in his name, place and
stead, in any and all capacities, to sign his name to any and all amendments,
including post-effective amendments, to this Registration Statement, and to sign
a Registration Statement pursuant to Section 462(b) of the Securities Act of
1933, and to cause the same (together with all Exhibits thereto) to be filed
with the Securities and Exchange Commission, granting unto said attorneys and
each of them full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES LISTED AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WARREN L. BARE Chief Executive Officer, July 17, 1998
- ----------------------------------------------------- President and Director
Warren L. Bare (Principal Executive Officer)
/s/ KENNETH E. DOPHER Chief Financial Officer and July 17, 1998
- ----------------------------------------------------- Secretary (Principal Financial
Kenneth E. Dopher and Accounting Officer)
/s/ WILLIAM H. SCOTT, III Chairman of the Board and July 17, 1998
- ----------------------------------------------------- Director
William H. Scott, III
/s/ ROBERT M. MONTGOMERY Director July 17, 1998
- -----------------------------------------------------
Robert M. Montgomery
/s/ BURTON B. GOLDSTEIN, JR. Director July 17, 1998
- -----------------------------------------------------
Burton B. Goldstein, Jr.
</TABLE>
II-5
<PAGE> 68
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DONALD W. WEBER Director July 17, 1998
- -----------------------------------------------------
Donald W. Weber
/s/ J. DOUGLAS COX Director July 17, 1998
- -----------------------------------------------------
J. Douglas Cox
</TABLE>
II-6
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation of the Company
3.2 -- Bylaws of the Company
4.1 -- Specimen Common Stock Certificate*
4.2 -- Article II of the Company's Articles of Incorporation (filed
as part of Exhibit 3.1)
5.1 -- Opinion of Alston & Bird LLP*
10.1 -- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan
10.2 -- HeadHunters, L.L.C. Employee Common Unit Option Plan dated
January 14, 1998
10.3 -- Amended and Restated Loan and Security Agreement dated July
16, 1998 among ITC Holding Company, Inc., ITC Service
Company and the Company**
10.4 -- Form of Indemnity Agreement between directors/executive
officers and the Company
10.5 -- Contribution Agreement dated July 15, 1998 by and among ITC
Holding Company, Inc., Warren L. Bare and the Company
10.6 -- GeoCities and HeadHunter.NET Co-Marketing Agreement dated
July 2, 1998 between GeoCities Inc. and the Company*+
10.7 -- WorkLife's Internet Content Partners Agreement by and
between WorkLife Solutions, Inc. and the Company
10.8 -- Yahoo! Inc. Content License Agreement dated as of April 15,
1998 between Yahoo! Inc. and the Company
10.9 -- Letter Agreement dated October 29, 1997 between Warren L.
Bare and ITC Holding Company, Inc.
10.10 -- Letter Agreement dated November 13, 1997 between Kenneth E.
Dopher and the Company
10.11 -- Letter Agreement dated May 18, 1998 between Judith G.
Hackett and the Company
10.12 -- Lease dated June 4, 1998 between Michael G. Perkins and the
Company, as amended by that First Amendment to Lease dated
June 4, 1998
10.13 -- Yahoo! Advertising Insertion Order dated March 24, 1998*+
10.14 -- AOL Insertion Order dated March 5, 1998 between America
Online, Inc. and the Company*+
10.15 -- Classifieds2000 Advertising Agreement dated April 2, 1998
between Classifieds2000 and the Company*+
10.16 -- Agreement dated July 16, 1998 between DoubleClick Inc. and
the Company*+
10.17 -- Stock Purchase Warrant dated July 16, 1998 in favor of ITC
Service Company
10.18 -- Investment Agreement dated October 30, 1997 by and among ITC
Holding Company, Inc., Software Technology Corporation and
Warren L. Bare*
21.1 -- Subsidiaries
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Alston & Bird LLP (filed as part of Exhibit 5.1)*
24.1 -- Power of Attorney (set forth on page II-5)
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment
** The Company agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the Securities and Exchange Commission upon request, as
provided in Item 601(b)(2) of Regulation S-K.
+ Confidential treatment will be sought with respect to certain portions of
this agreement. Such portions will be omitted from this filing and will be
filed separately with the Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
HEADHUNTER.NET, INC.
ARTICLE ONE
NAME
The name of the corporation is HeadHunter.NET, Inc. (the
"CORPORATION").
ARTICLE TWO
CAPITALIZATION
2.1 AUTHORIZED SHARES. The Corporation shall have authority, to be
exercised by the board of directors, to issue no more than 58,000,000 shares of
capital stock, of which (i) 50,200,000 shares shall be shares of common stock,
par value $.01 per share ("COMMON STOCK"), (ii) 2,800,000 shares shall be of
Class A Preferred Stock, par value $.01 per share and (iii) 5,000,000 shares
shall be shares of Class B Serial Preferred Stock, par value $.01 per share.
Except as expressly set forth herein, the rights of the holders of Common Stock
and Class A Preferred Stock shall be in all respects identical.
2.2 VOTING RIGHTS. At each annual meeting or special meeting of
shareholders, in the case of any written consent of shareholders in lieu of a
meeting and for all other purposes, each holder of record of shares of Common
Stock and Class A Preferred Stock on the relevant record date shall be entitled
to one (1) vote for each share of such stock standing in such holder's name on
the stock transfer records of the Corporation. Except as otherwise required by
law and subject to the rights of holders of Class B Serial Preferred Stock of
the Corporation that may be issued from time to time in accordance herewith, the
holders of shares of Common Stock and Class A Preferred Stock shall vote as a
single class on all matters with respect to which a vote of the shareholders of
the Corporation is required under applicable law, these Articles of
Incorporation of the Corporation, as amended from time to time (the "ARTICLES"),
the Bylaws of the Corporation, as amended from time to time (the "BYLAWS"), or
on which a vote of shareholders is otherwise duly called for by the Corporation
2.3 DIVIDENDS AND OTHER DISTRIBUTIONS. Subject to the rights and
preferences of the holders of shares of Class B Serial Preferred Stock, and
subject to any other provision of the Articles, if a dividend or other
distribution in cash, stock or other property is paid on shares of either Common
Stock or Class A Preferred Stock, then such dividend or distribution, or a like
<PAGE> 2
dividend or other distribution of equal value, shall be paid on all outstanding
shares of Common Stock and Class A Preferred Stock.
2.4 CHANGES IN CAPITALIZATION. In the case of any split, subdivision,
combination or reclassification of shares of Common Stock or Class A Preferred
Stock, the outstanding shares of Common Stock and Class A Preferred Stock shall
all be split, subdivided, combined or reclassified so that the number of shares
of each such class of stock outstanding immediately following such split,
subdivision, combination or reclassification bears the same relationship to the
other classes of stock as such class of stock did immediately prior to such
split, subdivision, combination or reclassification.
2.5 LIQUIDATION PREFERENCE. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, after
payment of the Corporation's creditors and of any prior liquidation preference
to the holders of Class B Serial Preferred Stock, if any, the holders of shares
of Class A Preferred Stock, if any, shall be entitled to a liquidation
preference payment in an amount equal to $.40 per share (the "LIQUIDATION
PREFERENCE PAYMENT") of Class A Preferred Stock held of record by such holder
upon the date of such liquidation, dissolution or winding up. In the event that
the number of outstanding shares of Class A Preferred Stock increases or
decreases due to a split, dividend, subdivision, combination or other
reclassification, the board of directors shall adjust the Liquidation Preference
Payment accordingly.
2.6 OTHER PAYMENTS ON LIQUIDATION. After the Liquidation Preference
Payment has been made in full and after the holders of shares of any other class
or series of stock having preference over the Common Stock in the event of
liquidation, dissolution or winding up of the Corporation have received the full
preferential amounts to which they are entitled, the holders of shares of Common
Stock shall be entitled to receive out of assets of the corporation legally
available for distribution to the shareholders, cash in an amount per share
equal to the amount of the Liquidation Preference Payment (the "SECONDARY
PREFERENCE PAYMENT"). After the Secondary Preference Payment has been made in
full, the holders of the Class A Preferred Stock shall be entitled to share
ratably with the holders of the shares of Common Stock and any other class or
series of stock entitled to participate in the liquidation, dissolution or
winding up of the Corporation, in the distribution of any and all assets
remaining to be paid or distributed such that the distributions made in respect
of each outstanding share of Class A Preferred Stock shall be in an amount equal
to the distributions made in respect of each outstanding share of Common Stock.
2.7 MERGERS AND OTHER TRANSACTIONS. In the event of any merger,
consolidation, or purchase or acquisition of all or substantially all of the
Corporation's property or stock, or other reorganization in which any
consideration is to be received by the holders of shares of Common Stock or
Class A Preferred Stock, the holders of Common Stock and Class A Preferred Stock
shall receive the same consideration on a per share basis.
2.8 CONVERSION OF CLASS A PREFERRED STOCK. Upon the earlier of (i) the
date of the first public sale of shares of Common Stock pursuant to a
registration statement filed on Form S-1 or other similar form with the
Securities and Exchange Commission in connection with an
- 2 -
<PAGE> 3
initial public offering of shares of the Corporation's Common Stock (the
"INITIAL PUBLIC OFFERING DATE") with an aggregate public offering price of at
least $20,000,000 or (ii) the tenth anniversary of the date of the first
issuance of shares of Class A Preferred Stock, each share of Class A Preferred
Stock shall automatically convert into one share of Common Stock without any
action by any holder thereof or the Corporation, and shall have all powers,
preferences, rights, qualifications, limitations and restrictions as a share of
Common Stock. The Corporation hereby reserves, and shall at all times, reserve
and keep available, out of its authorized and unissued shares of Common Stock,
for the purpose of effecting conversions, such number of duly authorized shares
of Common Stock as shall be sufficient to effect the conversion of all
outstanding shares of Class A Preferred Stock.
2.9 CLASS B SERIAL PREFERRED STOCK. The Corporation's board of
directors is expressly authorized to provide (by resolution) for the issuance
from time to time of all or any shares of Class B Serial Preferred Stock in one
or more series, and to fix for each such series such designation, powers,
preferences and other rights, and qualifications, limitations or restrictions
thereon, as shall be set forth in the resolution or resolutions adopted by the
board of directors of the Corporation providing for the issuance of such series,
including, without limitation, (i) the dividend rate on the shares of that
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of that series, (ii) whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights, (iii) whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the board of directors shall
determine, (iv) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption rates, (v) the rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series, and (vi) any other relative powers, preferences, rights,
qualifications, limitations or restrictions of that series.
ARTICLE THREE
REGISTERED OFFICE AND AGENT
The initial registered office of the Corporation is located at the
street address of:
100 Peachtree Street
Atlanta, Georgia 30303
The name of the initial registered agent of the Corporation at its
registered office named above is:
- 3 -
<PAGE> 4
Corporation Service Company
ARTICLE FOUR
INCORPORATOR
The name and address of the incorporator are:
Joel J. Hughey
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
ARTICLE FIVE
PRINCIPAL OFFICE
The mailing address of the initial principal office of the Corporation
is:
6410 Atlantic Boulevard, Suite 160
Norcross, Georgia 30071
ARTICLE SIX
BOARD OF DIRECTORS
6.1 INITIAL BOARD OF DIRECTORS. The initial board of directors shall
consist of six (6) members. The name and address of each of the initial members
are:
Warren L. Bare
c/o HeadHunter.NET, Inc.
6410 Atlantic Boulevard, Suite 160
Norcross, Georgia 30071
J. Douglas Cox
c/o ITC Holding Company, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
- 4 -
<PAGE> 5
Robert M. Montgomery
c/o InterCall, Inc.
8420 West Bryn Manor
Chicago, Illinois 60631
William H. Scott, III
c/o ITC Holding Company, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
Burton B. Goldstein, Jr.
c/o HeadHunter.NET, Inc.
6410 Atlantic Boulevard, Suite 160
Norcross, Georgia 30071
Donald W. Weber
c/o ITC Holding Company, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
6.2 CLASSIFIED BOARD OF DIRECTORS. The number of directors of the
Corporation shall be as fixed from time to time by or pursuant to the
Corporation's Bylaws. The directors shall be divided into three classes, Class
I, Class II and Class III, each of which shall be as nearly equal in number as
possible, and shall be adjusted from time to time in the manner set forth in the
Corporation's Bylaws to maintain such equality. Initially, Burton B. Goldstein,
Jr. and Robert M. Montgomery shall constitute all of the members of Class I,
Donald W. Weber and J. Douglas Cox shall constitute the all of the members of
Class II, and Warren L. Bare and William H. Scott, III shall constitute all of
the members of Class III. Each initial director in Class I shall serve for a
term expiring at the 1999 annual meeting of shareholders, each initial director
in Class II shall serve for a term expiring at the 2000 annual meeting of
shareholders, and each initial director in Class III shall serve for a term
expiring at the 2001 annual meeting of shareholders. Each initial director shall
serve until the annual meeting set forth above and until their successor has
been duly elected or until such director's earlier death, resignation or
removal. At each annual meeting of shareholders, the successors to the class of
directors whose term expires at that meeting shall be elected to hold office for
a term expiring at the annual meeting of shareholders held in the third year
following the year of their election and until their successors have been duly
elected and qualified or until any such director's death, resignation or
removal.
6.3 REMOVAL. Directors may only be removed from the Board of Directors
for cause and only at a special meeting of shareholders called for such a
purpose by the affirmative vote of at least two-thirds (2/3) of the total number
of votes of the then outstanding shares of the Corporation's capital stock
entitled to vote in the election of directors and only if notice of such
proposal was contained in the notice of such meeting. Any vacancy in the Board
of Directors resulting from such removal shall be filled in accordance with
Section 6.4 hereof. For purposes of this Section, "cause" shall mean only (a)
conviction of a felony, (b) declaration of unsound
- 5 -
<PAGE> 6
mind or order of a court, (c) gross dereliction of duty, (d) commission of an
action involving moral turpitude, or (e) commission of an action which
constitutes intentional misconduct or a knowing violation of law if such action
in either event results both in an improper substantial personal benefit and a
material injury to the Corporation.
6.4 VACANCIES AND CHANGES OF AUTHORIZED NUMBER. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
fewer than a quorum, or by a sole remaining director. Each director chosen in
accordance with this Section shall hold office until the next election of the
class for which such director shall have been chosen, and until such director's
successor is elected and qualified, or until the director's earlier death,
resignation or removal.
6.5 AMENDING OR REPEALING ARTICLE SIX. Notwithstanding any provision
hereof, or of the Bylaws or any law which might otherwise permit a lesser vote,
the affirmative vote of the holder's of at least two-thirds (2/3) of all classes
of stock entitled to vote in the election of directors shall be required to
alter, amend or repeal this Article Six.
ARTICLE SEVEN
SHAREHOLDER ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT
7.1 ACTION BY WRITTEN CONSENT. Any action required or permitted by
O.C.G.A. SS.SS. 14-2-101 through 14-2-1703, as amended (hereinafter "THE GEORGIA
BUSINESS CORPORATION CODE"), to be taken at a shareholders' meeting may be taken
without a meeting if the action is taken by persons who hold of record at least
two-thirds (2/3) of all of the then outstanding shares of the Corporation's
capital stock entitled to vote upon such action. The action must be evidenced by
one or more written consents bearing the date of signature and describing the
action taken, signed by shareholders holding of record the requisite number of
votes and entitled to take action without a meeting and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records.
7.2 INFORMATION DISCLOSURE REQUIREMENT. No written consent signed under
O.C.G.A. SS. 14-2-704 shall be valid unless:
(i) The consenting shareholder has been furnished the same
material that, under the Georgia Business Corporation Code, would have
been required to be sent to shareholders in a notice of a meeting at
which the proposed action would have been submitted to the shareholders
for action, including notice of any applicable dissenters' rights as
provided in O.C.G.A. 14-2-1320; or
(ii) The written consent contains an express waiver of the right
to receive the material otherwise required to be furnished.
- 6 -
<PAGE> 7
7.3 TIMING OF CONSENT. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty (60) days of the
earliest date appearing on a consent delivered to the Corporation in the manner
required by O.C.G.A. SS. 14-2-704, evidence of written consents signed by
shareholders sufficient to act by written consent are received by the
Corporation.
7.4 NOTICE TO OTHER VOTING SHAREHOLDERS. If action is taken under
O.C.G.A. SS. 14-2-704 by less than all of the shareholders entitled to vote on
the action, all voting shareholders on the record date who did not participate
in taking the action shall be given written notice of the action, together with
the material described in paragraph 7.2 (i) above, not more than ten (10) days
after the taking of action without a meeting.
7.5 NOTICE TO NONVOTING SHAREHOLDERS. If the Georgia Business
Corporation Code requires that notice of action by shareholders be given to
nonvoting shareholders and the action is taken by voting shareholders without a
meeting, the Corporation must give its nonvoting shareholders written notice of
the action not more than ten (10) days after the taking of action without a
meeting. The notice must contain or be accompanied by the same material that,
under the Georgia Business Corporation Code, would have been required to be sent
to nonvoting shareholders in a notice of meeting at which the proposed action
would have been submitted to the shareholders for action.
ARTICLE EIGHT
CONSTITUENCY CONSIDERATIONS
In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the Corporation, the
Board of Directors, committees of the Board of Directors, and individual
directors, in addition to considering the effects of any action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers, and creditors of the Corporation, the communities in which
offices or other establishments of the Corporation are located, and all other
factors such directors consider pertinent; provided, however, that this Article
shall be deemed solely to grant discretionary authority to the directors and
shall not be deemed to provide to any constituency and right to be considered.
ARTICLE NINE
AMENDMENT OF BYLAWS
The Bylaws may be altered, amended or repealed, and new Bylaws may be
adopted, by (a) the affirmative vote of the holders of two-thirds (2/3) of the
shares of capital stock then outstanding and entitled to vote in the election of
directors, or (b) the Board of Directors of the Corporation, but any Bylaw
adopted by the Board of Directors may be altered, amended, or repleased, or new
Bylaws may be adopted, by the affirmative vote of the holders of two-thirds
- 7 -
<PAGE> 8
(2/3) of the shares of capital stock entitled to vote in the election of
directors. The shareholders may prescribe, by so expressing in the action they
take in amending or adopting any Bylaw or Bylaws, that the Bylaw or Bylaws so
amended or adopted by them shall not be altered, amended or repealed by the
Board of Directors.
ARTICLE TEN
LIMITATION OF DIRECTOR LIABILITY
10.1 LIMITATION OF LIABILITY. A director of the Corporation shall not
be liable to the Corporation or its shareholders for monetary damages for any
action taken, or any failure to take any action, as a director, except
liability:
(i) for any appropriation, in violation of his or her duties, of
any business opportunity of the Corporation;
(ii) for acts or omissions which involve intentional misconduct
or a knowing violation of law;
(iii) for the types of liability set forth in O.C.G.A. SS.
14-2-832; or
(iv) for any transaction from which the director received an
improper personal benefit.
10.2 REPEAL OR MODIFICATION OF THIS ARTICLE. Any repeal or modification
of the provisions of this Article by the shareholders of the Corporation shall
be prospective only and shall not adversely affect any limitation on the
liability of a director of the corporation with respect to any act or omission
occurring prior to the effective date of such repeal or modification.
10.3 ADDITIONAL PROVISIONS. If the Georgia Business Corporation Code is
amended, after this Article becomes effective, to authorize corporate action
further eliminating or limiting the liability of directors, then, without
further corporate action, the liability of a director of the Corporation, in
addition to the limitation on liability provided herein, shall be limited to the
fullest extent permitted by the Georgia Business Corporation Code, as so
amended.
10.4 SEVERABILITY. In the event that any of the provisions of this
Article (including any provision within a single sentence) is held by a court of
competent jurisdiction to be invalid, void, or otherwise unenforceable, the
remaining provisions are severable and shall remain enforceable to the fullest
extent permitted by law.
* * *
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IN WITNESS WHEREOF, the undersigned has executed these Articles this
13th day of July, 1998.
/s/ Joel J. Hughey
------------------------------------
Joel J. Hughey
Incorporator
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EXHIBIT 3.2
HEADHUNTER.NET, INC.
BYLAWS
Adopted as of July 15, 1998
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TABLE OF CONTENTS
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Article I. OFFICES AND AGENT....................................................................1
Section 1.01 Registered Office and Agent..........................................1
Section 1.02 Other Offices........................................................1
Article II. MEETINGS OF SHAREHOLDERS............................................................1
Section 2.01 Annual Meetings......................................................1
Section 2.02 Special Meetings.....................................................1
Section 2.03 Place of Meetings....................................................1
Section 2.04 Notice of Meetings...................................................2
Section 2.05 Shareholder Nominations and Proposals................................2
Section 2.06 Voting Group.........................................................3
Section 2.07 Quorum for Voting Groups.............................................3
Section 2.08 Vote Required for Action.............................................4
Section 2.09 Voting for Directors.................................................4
Section 2.10 Voting of Shares.....................................................4
Section 2.11 Proxies..............................................................4
Section 2.12 Chairman of the Board................................................5
Section 2.13 Inspectors...........................................................5
Section 2.14 Adjournments.........................................................5
Section 2.15 Action by Shareholders Without a Meeting.............................6
Article III. THE BOARD OF DIRECTORS.............................................................6
Section 3.01 General Powers.......................................................6
Section 3.02 Number, Election and Term of Office..................................6
Section 3.03 Removal..............................................................7
Section 3.04 Vacancies............................................................7
Section 3.05 Compensation.........................................................8
Section 3.06 Committees...........................................................8
Article IV. MEETINGS OF THE BOARD OF DIRECTORS..................................................8
Section 4.01 Regular Meetings.....................................................8
Section 4.02 Special Meetings.....................................................8
Section 4.03 Place of Meetings....................................................8
Section 4.04 Notice of Meetings...................................................8
Section 4.05 Quorum...............................................................8
Section 4.06 Vote Required for Action.............................................9
Section 4.07 Participation by Conference Telephone................................9
Section 4.08 Adjournments.........................................................9
Section 4.09 Action by Directors Without a Meeting...............................10
Article V. MANNER OF NOTICE TO AND WAIVER OF NOTICE............................................10
Section 5.01 Manner of Notice....................................................10
Section 5.02 Waiver of Notice....................................................11
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Article VI. OFFICERS...........................................................................12
Section 6.01 Number and Duties...................................................12
Section 6.02 Appointment and Term................................................12
Section 6.03 Compensation........................................................12
Section 6.04 Chairman of the Board...............................................12
Section 6.05 President...........................................................12
Section 6.06 Vice Presidents.....................................................12
Section 6.07 Secretary...........................................................13
Section 6.08 Treasurer...........................................................13
Section 6.09 Bonds...............................................................13
Article VII. SHARES............................................................................13
Section 7.01 Authorization and Issuance of Shares................................13
Section 7.02 Share Certificates..................................................13
Section 7.03 Registered Owner....................................................14
Section 7.04 Transfers of Shares.................................................14
Section 7.05 Duty of Corporation to Register Transfer............................14
Section 7.06 Lost, Stolen, or Destroyed Certificates.............................15
Section 7.07 Record Date with Regard to Shareholder Action.......................15
Article VIII. DISTRIBUTIONS....................................................................15
Section 8.01 Authorization or Declaration........................................15
Section 8.02 Record Date With Regard to Distributions............................15
Article IX. INDEMNIFICATION....................................................................16
Section 9.01 Definitions.........................................................16
Section 9.02 Basic Indemnification Arrangement...................................17
Section 9.03 Advances for Expenses...............................................17
Section 9.04 Court-Ordered Indemnification and Advances
for Expenses........................................................18
Section 9.05 Determination of Reasonableness of Expenses.........................18
Section 9.06 Indemnification of Employees and Agents.............................19
Section 9.07 Liability Insurance.................................................19
Section 9.08 Witness Fees........................................................20
Section 9.09 Report to Shareholders..............................................20
Section 9.10 Security for Indemnification Obligations............................20
Section 9.11 No Duplication of Payments..........................................20
Section 9.12 Subrogation.........................................................20
Section 9.13 Contract Rights.....................................................20
Section 9.14 Specific Performance................................................20
Section 9.15 Non-exclusivity, Etc................................................21
Section 9.16 Amendments..........................................................21
Section 9.17 Severability........................................................21
Article X. MISCELLANEOUS.......................................................................21
Section 10.01 Inspection of Records...............................................21
Section 10.02 Fiscal Year.........................................................22
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Section 10.03 Corporate Seal......................................................22
Section 10.04 Financial Statements................................................22
Section 10.05 Conflict with Articles of Incorporation.............................22
Article XI. AMENDMENTS.........................................................................22
Section 11.01 Power to Amend Bylaws...............................................22
Article XII. CERTAIN PROVISIONS OF GEORGIA LAW.................................................22
Section 12.01 Fair Price Requirements.............................................22
Section 12.02 Business Combinations...............................................22
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ARTICLE I. OFFICES AND AGENT
SECTION 1.01 REGISTERED OFFICE AND AGENT
The corporation shall continuously maintain in the state of Georgia a registered
office that may be the same as any of the corporation's places of business. In
addition, the corporation shall continuously maintain a registered agent whose
business office is identical with the registered office. The registered agent
may be an individual who resides in the state of Georgia, a domestic corporation
or nonprofit domestic corporation, or a foreign corporation or nonprofit foreign
corporation authorized to transact business in the state of Georgia.
SECTION 1.02 OTHER OFFICES
In addition to having a registered office, the corporation may have other
offices, located in or out of the state of Georgia, as the corporation's board
of directors ("Board of Directors") may designate from time to time.
ARTICLE II. MEETINGS OF SHAREHOLDERS
SECTION 2.01 ANNUAL MEETINGS
The corporation shall hold a meeting of shareholders annually at a time
designated by the Board of Directors for the purpose of electing directors and
transacting any other business that may properly come before the shareholders.
If the corporation does not hold an annual meeting as provided in this Section,
any business, including the election of directors, that might properly have been
acted upon at an annual meeting may be acted upon by the shareholders at a
special meeting held in accordance with these bylaws or in accordance with a
court order.
SECTION 2.02 SPECIAL MEETINGS
Special meetings of shareholders may be called at any time by (i) the Board of
Directors, (ii) the Chairman of the Board of Directors, (iii) the President of
the corporation or (iv) the holders of two-thirds (2/3) of the votes entitled to
be cast on any issue proposed to be considered at such special meeting following
delivery by such holders to the Secretary of the corporation of a signed and
dated written request setting forth the purposes of such meeting.
SECTION 2.03 PLACE OF MEETINGS
The corporation may hold shareholders' meetings, both annual and special, at any
place in or out of the state of Georgia except that the corporation shall hold
any meeting at the place set forth in the notice of the meeting or, if the
meeting is held in accordance with a waiver of notice of the meeting, at the
place set forth in the waiver of notice. If no place is specified in the notice
or the waiver of notice, the corporation shall hold the meeting at the
corporation's principal office.
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SECTION 2.04 NOTICE OF MEETINGS
The corporation shall notify shareholders of the date, time, and place of each
annual and special shareholders' meeting no fewer than ten (10) nor more than
sixty (60) days before the meeting date. Unless the Georgia Business Corporation
Code, as amended (the "Code"), or the articles of incorporation require
otherwise, the corporation shall notify only those shareholders entitled to vote
at the meeting who have not waived, in accordance with Section 5.02, the right
to receive notice. In the case of an annual meeting, the notice need not state
the purposes of the meeting unless the articles of incorporation or the Code
provide otherwise. Notice of a special meeting shall include a description of
the purpose or purposes for which the meeting is called. If not otherwise fixed
under Code Section 14-2-703 or 14-2-707, the record date for determining
shareholders entitled to notice of and entitled to vote at an annual or special
shareholders' meeting is the close of business on the day before the first
notice is delivered to shareholders.
SECTION 2.05 SHAREHOLDER NOMINATIONS AND PROPOSALS
(a) No proposal for a shareholder vote shall be submitted by a
shareholder (a "Shareholder Proposal") to the corporation's shareholders unless
the shareholder submitting such proposal (the "Proponent") shall have filed a
written notice setting forth with particularity (i) the names and business
addresses of the Proponent and all natural persons, corporations, partnerships,
trusts or any other type of legal entity or recognized ownership vehicle
(collectively, "Persons") acting in concert with the Proponent; (ii) the name
and address of the Proponent and the Persons identified in clause (i), as they
appear on the corporation's books (if they so appear); (iii) the class and
number of shares of the corporation beneficially owned by the Proponent and the
Persons identified in clause (i); (iv) a description of the Shareholder Proposal
containing all material information relating thereto; and (v) such other
information as the Board of Directors reasonably determines is necessary or
appropriate to enable the Board of Directors and shareholders of the corporation
to consider the Shareholder Proposal. The presiding officer at any shareholders'
meeting may determine that any Shareholder Proposal was not made in accordance
with the procedures prescribed in these bylaws or is otherwise not in accordance
with law, and if it is so determined, such officer shall so declare at the
meeting and the Shareholder Proposal shall be disregarded.
(b) Only persons who are selected and recommended by the Board of
Directors or the committee of the Board of Directors designated to make
nominations, or who are nominated by shareholders in accordance with the
procedures set forth in this Section 2.05, shall be eligible for election, or
qualified to serve, as directors. Nominations of individuals for election to the
Board of Directors of the corporation at any annual meeting or any special
meeting of shareholders at which directors are to be elected may be made by any
shareholder of the corporation entitled to vote for the election of directors at
that meeting by compliance with the procedures set forth in this Section 2.05.
Nominations by shareholders shall be made by written notice (a "Nomination
Notice"), which shall set forth (i) as to each individual nominated, (A) the
name, date of birth, business address and residence address of such individual;
(B) the
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business experience during the past five years of such nominee, including his or
her principal occupations and employment during such period, the name and
principal business of any corporation or other organization in which such
occupations and employment were carried on, and such other information as to the
nature of his or her responsibilities and level of professional competence as
may be sufficient to permit assessment of his or her prior business experience;
(C) whether the nominee is or has ever been at any time a director, officer or
owner of 5% or more of any class of capital stock, partnership interests or
other equity interest of any corporation, partnership or other entity; (D) any
directorships held by such nominee in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended; and (E) whether such nominee has ever been convicted in a
criminal proceeding or has ever been subject to a judgment, order, finding or
decree of any federal, state or other governmental entity, concerning any
violation of federal, state or other law, or any proceeding in bankruptcy, which
conviction, order, finding, decree or proceeding may be material to an
evaluation of the ability or integrity of the nominee; and (ii) as to the Person
submitting the Nomination Notice and any Person acting in concert with such
Person, (X) the name and business address of such Person, (Y) the name and
address of such Person as they appear on the corporation's books (if they so
appear), and (Z) the class and number of shares of the corporation that are
beneficially owned by such Person. A written consent to being named in a proxy
statement as a nominee, and to serve as a director if elected, signed by the
nominee, shall be filed with any Nomination Notice. If the presiding officer at
any shareholders' meeting determines that a nomination was not made in
accordance with the procedures prescribed by these bylaws, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(c) Nomination Notices and Shareholder Proposals shall be
delivered to the Secretary of the corporation at the principal executive office
of the corporation (i) within 120 days prior to an annual meeting of
shareholders or (ii) within 10 days after the date that notice of a special
meeting is sent to shareholders.
SECTION 2.06 VOTING GROUP
The term "voting group" means all shares of one or more classes or series that
under the Code or the articles of incorporation are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the Code or the articles of incorporation to vote generally
on the matter are for that purpose a single voting group.
SECTION 2.07 QUORUM FOR VOTING GROUPS
Shares entitled to vote as a separate voting group may take action on a matter
at a meeting of shareholders only if a quorum of those shares exists with
respect to that matter. Unless the Code or the articles of incorporation provide
otherwise, a majority of the votes (as represented by person or by proxy)
entitled to be cast on the matter by the voting group constitutes a quorum of
that voting group for action on that matter. Once a
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share is represented for any purpose at a meeting, other than solely to object
to holding the meeting or to transacting business at the meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting as provided in Section 7.7.
SECTION 2.08 VOTE REQUIRED FOR ACTION
If a quorum exists, action on a matter (other than the election of directors) by
a voting group is approved if the votes cast within the voting group favoring
the action exceed the votes cast opposing the action, unless the Code, the
articles of incorporation, or the bylaws require a greater number of affirmative
votes. If the Code or the articles of incorporation provide for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by that voting group as provided in this Section and in Sections 2.06 and 2.07.
If the Code or the articles of incorporation provide for voting by two or more
voting groups on a matter, action on that matter is taken only when voted upon
by each of those voting groups counted separately as provided in this section
and in Sections 2.06 and 2.07. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
SECTION 2.09 VOTING FOR DIRECTORS
Unless otherwise provided in the articles of incorporation or the Code,
directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present. Shareholders do
not have a right to cumulate their votes for directors unless the articles of
incorporation so provide.
SECTION 2.10 VOTING OF SHARES
Unless the Code or the articles of incorporation provide otherwise, each
outstanding share having voting rights is entitled to one vote on each matter
voted on at a meeting of shareholders. Shareholders voting their shares shall
vote their shares by voice vote or by show of hands unless (i) a qualified
voting shareholder, prior to any voting on a matter, demands a vote by ballot or
(ii) the presiding officer determines in his or her sole discretion to vote by
ballot. If a demand occurs or the presiding officer determines to do so,
shareholders shall vote by ballot. Each ballot shall state the name of the
shareholder voting and the number of shares voted by the shareholder. If a
ballot is cast by proxy, the ballot must also state the name of the proxy.
SECTION 2.11 PROXIES
(a) A shareholder may vote his or her shares in person or by
proxy. For a shareholder to vote shares by proxy, a shareholder or his or her
agent or attorney in fact shall appoint a proxy by executing a writing that
authorizes another person or persons to vote or otherwise act for the
shareholder by signing and dating an appointment form. An appointment of proxy
is effective when the corporate agent authorized to tabulate votes receives an
original or facsimile transmission of a signed appointment form. The appointment
of proxy is valid for only one meeting and any adjournments, and the
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appointment form must specify that meeting. In any event, the appointment is not
valid for longer than eleven (11) months unless the appointment form expressly
provides for a longer period. The corporate secretary shall file any appointment
of proxy with the records of the meeting to which the appointment relates.
(b) An appointment of proxy is revocable or irrevocable as
provided in the Code.
(c) If any person questions the validity of an appointment of
proxy, that person shall submit the appointment form for examination to the
secretary of the shareholders' meeting or to a proxy officer or committee
appointed by the person presiding at the meeting. The secretary, proxy officer,
or committee, as the case may be, will determine the appointment form's
validity. The secretary's reference in the meeting's minutes to the regularity
of the appointment of proxy will be prima facie evidence of the facts stated in
the minutes for establishing a quorum at the meeting and for all other purposes.
SECTION 2.12 CHAIRMAN OF THE BOARD
The Chairman of the Board shall preside over every shareholders' meeting unless
the shareholders elect another person to preside at a meeting. The Chairman of
the Board may appoint any persons he or she deems necessary to assist with the
meeting.
SECTION 2.13 INSPECTORS
The corporation may appoint one or more inspectors to act at a shareholders'
meeting and to make a written report of the inspectors' determinations. Each
inspector shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of the inspector's
ability. The inspector shall: ascertain the number of shares outstanding and the
voting power of each; determine the shares represented at a meeting; determine
the validity of proxies and ballots; count all votes; and determine the result.
An inspector may be an officer or employee of the corporation.
SECTION 2.14 ADJOURNMENTS
Whether or not a quorum is present to organize a meeting, any meeting of
shareholders (including an adjourned meeting) may be adjourned by the holders of
a majority of the voting shares represented at the meeting to reconvene at a
specific time and place, but no later than 120 days after the date fixed for the
original meeting unless the requirements of the Code concerning the selection of
a new record date have been met. At any reconvened meeting within that time
period, any business may be transacted that could have been transacted at the
meeting that was adjourned. If notice of the adjourned meeting was properly
given, it shall not be necessary to give any notice of the reconvened meeting or
of the business to be transacted, if the date, time and place of the reconvened
meeting are announced at the meeting that was adjourned and before adjournment;
provided, however, that if a new record date is or must be fixed, notice of the
reconvened meeting must be given to persons who are shareholders as of the new
record date.
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SECTION 2.15 ACTION BY SHAREHOLDERS WITHOUT A MEETING
Action required or permitted by the Code to be taken at a shareholders' meeting
may be taken without a meeting if the action is taken by at least two-thirds
(2/3) of all shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents bearing the date of signature and
describing the action taken, signed by at least two-thirds (2/3) of all
shareholders entitled to take action without a meeting, and delivered to the
corporation for inclusion in the minutes or filing with the corporate records.
ARTICLE III. THE BOARD OF DIRECTORS
SECTION 3.01 GENERAL POWERS
All corporate powers shall be exercised by or under the authority of, and the
business and affairs of the corporation shall be managed under the direction of,
the Board of Directors, subject to any limitation set forth in the articles of
incorporation, bylaws approved by the shareholders, or agreements among the
shareholders that are otherwise lawful. No limitation upon the authority of a
director, whether contained in the articles of incorporation, bylaws, or an
agreement among shareholders, shall be effective against persons, other than
shareholders and directors, who do not have actual knowledge of the limitation.
SECTION 3.02 NUMBER, ELECTION AND TERM OF OFFICE
The number of directors of the corporation shall not be less than three nor more
than eleven, the precise number to be fixed by resolution of the shareholders or
of the Board of Directors from time to time. The directors shall be divided into
three classes, Class I, Class II and Class III, each consisting, as nearly equal
in number as possible, of one-third of the total number of directors
constituting the entire Board of Directors. At the annual shareholders meeting
of 1999, the terms of the initial Class I directors shall expire and a new Class
I shall be elected for a term expiring at the third annual meeting of
shareholders following their election and upon the election and qualification of
their respective successors; at the annual shareholders meeting of 2000, the
terms of the initial Class II directors shall expire and a new Class II shall be
elected for a term expiring at the third annual meeting of shareholders
following their election and upon the election and qualification of their
respective successor; and at the annual shareholders meeting of 2001, the terms
of the initial Class III directors shall expire and a new Class III shall be
elected for a term expiring at the third annual meeting of shareholders
following their election and upon the election and qualification of their
respective successor. At each succeeding annual meeting of shareholders,
successors to the class of directors whose term expires at the annual meeting of
shareholders shall be elected for a three-year term. Except as provided in
Section 3.04, a director shall be elected by the affirmative vote of the holders
of a plurality of the shares represented at the meeting of shareholders at which
the director stands for election and entitled to elect such director.
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The number of directors may be increased or decreased from time to
time as provided herein or by amendment to these bylaws and the articles of
incorporation of the corporation; provided, however, that the total number of
directors at any time shall not be less than three provided, however, that no
decrease in the number of directors shall have the effect of shortening the term
of an incumbent director. In the event of any increase or decrease in the
authorized number of directors, each director then serving shall continue as a
director of the class of which he is a member until the expiration of his
current term, or his earlier resignation, retirement, disqualification, removal
from office or death, and the newly created or eliminated directorships
resulting from such increase or decrease shall be apportioned by the Board of
Directors among the three classes of directors so as to maintain such classes as
nearly equal as possible; provided, however, that any such additional directors
elected by the Board shall serve only for a term expiring at the next meeting of
the shareholders called for the purpose of electing directors. Each director
shall serve until his successor is elected and qualified or until his earlier
resignation, retirement, disqualification, removal from office, or death.
SECTION 3.03 REMOVAL
The shareholders may remove one or more directors only for cause and only by the
affirmative vote of the holders of at least two-thirds (2/3) of all votes
entitled to be case in the election or such directors. If the director was
elected by a voting group of shareholders, only the shareholders of that voting
group may participate in the vote to remove the director. The shareholders may
remove a director only at a special meeting called for the purpose of removing
the director, and the meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the director. For purposes of this
Section, "cause" shall mean only (i) conviction of a felony, (ii) declaration of
unsound mind by an order of a court, (iii) gross dereliction of duty, (iv)
commission of an action involving moral turpitude or (v) commission of an action
which constitutes intentional misconduct or a knowing violation of law if such
action results in an improper substantial personal benefit and a material injury
to the corporation.
SECTION 3.04 VACANCIES
If a vacancy occurs on the Board of Directors, the first to act of the
shareholders or the Board of Directors may fill the vacancy for the unexpired
term. But if the vacancy results from an increase in the number of directors in
the Board of Directors or the removal of a director by the corporation's
shareholders, and the Board of Directors acts first to fill this vacancy, the
director elected will serve a term continuing only until the next election of
directors by the shareholders and until the election and qualification of a
successor. Even if the directors remaining in office constitute fewer than a
quorum of the Board of Directors, the directors may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office. If the
vacant office was held by a director elected by a voting group of shareholders,
only the holders of shares of that voting group or the remaining directors
elected by that voting group are entitled to vote to fill the vacancy.
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SECTION 3.05 COMPENSATION
Unless the articles of incorporation provide otherwise, the Board of Directors
may determine from time to time the compensation, if any, that directors may
receive for their services as directors. A director may also serve the
corporation in a capacity other than that of director and receive compensation
determined by the Board of Directors for services rendered in such other
capacity.
SECTION 3.06 COMMITTEES
The Board of Directors by resolution may create one or more committees and
appoint members of the Board of Directors to serve on such committees at the
discretion of the Board of Directors. Except as limited by the Code, each
committee will have the authority set forth in the resolution establishing such
committee.
ARTICLE IV. MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4.01 REGULAR MEETINGS
The Board of Directors shall hold a regular meeting immediately after an annual
shareholders' meeting or a special shareholders' meeting held in lieu of an
annual meeting. In addition, the Board of Directors may schedule and hold other
meetings at regular intervals throughout the year.
SECTION 4.02 SPECIAL MEETINGS
The Board of Directors shall hold a special meeting upon the call of the
Chairman of the Board, the President or any two directors.
SECTION 4.03 PLACE OF MEETINGS
The Board of Directors may hold meetings, both regular and special, at any place
in or out of the state of Georgia. Regular meetings shall be held at the place
established from time to time for regular meetings. Special meetings shall be
held at the place set forth in the notice of the meeting or, if the special
meeting is held in accordance with a waiver of notice of the meeting, at the
place set forth in the waiver of notice.
SECTION 4.04 NOTICE OF MEETINGS
Unless the articles of incorporation provide otherwise, the corporation is not
required to give notice of the date, time, place, or purpose of a regular
meeting of the Board of Directors. The corporation shall, give at least one (1)
day's prior notice of the date, time, and place of a special meeting of the
Board of Directors. Notices of special meetings shall comply with Section 5.01
and may be waived in accordance with Section 5.02.
SECTION 4.05 QUORUM
Unless the Code, the articles of incorporation, or these bylaws require a
greater number, a quorum of the Board of Directors consists of a majority of the
total number of directors that has been initially fixed in the articles of
incorporation or that has been later
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prescribed by resolution of the shareholders or of the Board of Directors in
accordance with Section 3.02.
SECTION 4.06 VOTE REQUIRED FOR ACTION
(a) If a quorum is present when a vote is taken, the affirmative
vote of a majority of directors present is the act of the Board of Directors
unless the Code, the articles of incorporation, or these bylaws require the vote
of a greater number of directors.
(b) A director who is present at a meeting of the Board of
Directors or a committee of the Board of Directors when corporate action is
taken is deemed to have assented to the action taken unless:
(i) he or she objects at the beginning of the meeting (or
promptly upon his or her arrival) to holding it or transacting business
at the meeting;
(ii) his or her dissent or abstention from the action taken
is entered in the minutes of the meeting; or
(iii) he or she delivers written notice of his or her dissent
or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting.
The right to dissent or abstain is not available to a director who votes in
favor of the action taken.
SECTION 4.07 PARTICIPATION BY CONFERENCE TELEPHONE
Any or all directors may participate in a meeting of the Board of Directors or
of a committee of the Board of Directors through the use of any means of
communication by which all directors participating may simultaneously hear each
other during the meeting. A director participating in a meeting by this means
shall be deemed to be present in person at the meeting.
SECTION 4.08 ADJOURNMENTS
A majority of the directors present at a meeting may adjourn the meeting from
time to time. This right to adjourn exists whether or not a quorum is present at
the meeting and applies to regular as well as special meetings, including any
meetings that are adjourned and reconvened. If a meeting of the Board of
Directors is adjourned to a different date, time, or place, the corporation is
not required to give notice of the new date, time, or place or of the business
to be transacted, if the new date, time, or place is announced at the meeting
before adjournment. At the meeting reconvened after adjournment, the Board of
Directors may transact any business that could have been transacted at the
meeting that was adjourned.
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SECTION 4.09 ACTION BY DIRECTORS WITHOUT A MEETING
Any action required or permitted by the Code to be taken at any meeting of the
Board of Directors (or a committee of the Board of Directors) may be taken
without a meeting if the action is taken by all of the members of the Board of
Directors (or the committee, as the case may be). The action must be evidenced
by one or more written consents describing the action taken, signed by each of
the directors (or each of the directors serving on the committee, as the case
may be), and delivered to the corporation for inclusion in the minutes or filing
with the corporate records.
ARTICLE V. MANNER OF NOTICE TO AND WAIVER OF NOTICE
BY SHAREHOLDERS AND DIRECTORS
SECTION 5.01 MANNER OF NOTICE
(a) Whenever these bylaws require notice to be given to any
shareholder or director, the notice must comply with this Section 5.01 in
addition to any other section of these bylaws concerning notice and any
provision in the articles of incorporation.
(b) Notice to shareholders shall be in writing. Notice to a
director may be written or oral.
(c) Notice may be communicated in person; by telephone, telegraph,
teletype, facsimile, or other form of wire or wireless communication; or by mail
or private carrier. If these forms of personal notice are impracticable, notice
may be communicated by a newspaper of general circulation in the area where
published, or by radio, television, or other form of public broadcast
communication. Unless otherwise provided in the Code, the articles of
incorporation, or these bylaws, notice by facsimile transmission, telegraph, or
teletype shall be deemed to be notice in writing.
(d) Written notice to shareholders, if the notice is in a
comprehensible form, is effective when mailed, if mailed with first-class
postage prepaid and correctly addressed to the shareholder's address shown in
the corporation's current record of shareholders.
(e) Except as provided in subsection 5.01(d), written notice, if
in a comprehensible form, is effective at the earliest of the following:
(i) when received, or when delivered, properly addressed, to
the addressee's last known principal place of business or residence;
(ii) five (5) days after its deposit in the mail, as
evidenced by the postmark, or such longer period as provided in the
articles of incorporation or these bylaws, if mailed with first-class
postage prepaid and correctly addressed; or
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(iii) on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and the receipt
is signed by or on behalf of the addressee.
(f) Oral notice is effective when communicated if communicated in
a comprehensible manner.
(g) In calculating time periods for notice, when a period of time
measured in days, weeks, months, years, or other measurement of time is
prescribed for the exercise of any privilege or the discharge of any duty, the
first day shall not be counted but the last day shall be counted.
SECTION 5.02 WAIVER OF NOTICE
(a) A shareholder may waive any notice before or after the date
and time stated in the notice. Except as provided in subsection 5.02(b), the
waiver must be in writing, be signed by the shareholder entitled to the notice,
and be delivered to the corporation for inclusion in the minutes or filing with
the corporate records.
(b) A shareholder's attendance at a meeting:
(i) waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting;
and
(ii) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the shareholder objects to considering the
matter when it is presented.
(c) A shareholder's waiver of notice is not required to specify
the business transacted or the purpose of the meeting unless required by the
Code or these bylaws.
(d) A director may waive any notice before or after the date and
time stated in the notice. Except as provided in paragraph (e) of this Section
5.02, the waiver must be in writing, signed by the director entitled to the
notice, and delivered to the corporation for inclusion in the minutes or filing
with the corporate records.
(e) A director's attendance at or participation in a meeting
waives any required notice to him or her of the meeting unless the director at
the beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
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ARTICLE VI. OFFICERS
SECTION 6.01 NUMBER AND DUTIES
The officers of the corporation shall consist of a Chairman of the Board,
President and a Secretary, and may include a Treasurer and one or more Vice
Presidents and Assistant Secretaries and any other officers as may be appointed
by the Board of Directors, as it determines, in its sole discretion, to be
necessary or desirable. The officers will have the authority and will perform
the duties as set forth in these bylaws. The other officers that are appointed
will have the authority and will perform the duties as established by the Board
of Directors from time to time.
SECTION 6.02 APPOINTMENT AND TERM
The Board of Directors appoints the individuals who will serve as officers of
the corporation. An individual may simultaneously hold more than one office. All
officers serve at the pleasure of the Board of Directors. The Board of Directors
may remove with or without cause any officer.
SECTION 6.03 COMPENSATION
The Board of Directors or a committee thereof will fix the compensation, if any,
of all corporate officers.
SECTION 6.04 CHAIRMAN OF THE BOARD
The Chairman of the Board shall preside at all meetings of shareholders and the
Board of Directors. The Chairman of the Board shall have such other powers and
duties as may be delegated to him or her from time to time by the Board of
Directors.
SECTION 6.05 PRESIDENT
The President will be the chief executive officer of the corporation and will
have general supervision of the business of the corporation. The President will
see that all orders and resolutions of the Board of Directors are carried into
effect. Unless the articles of incorporation, these bylaws, or a resolution of
the Board of Directors provides otherwise, the President may execute and deliver
on behalf of the corporation any contract, conveyance, or similar document not
requiring approval by the Board of Directors or shareholders as provided in the
Code. The President will have any other authority and will perform any other
duties that the Board of Directors may delegate to him or her from time to time.
SECTION 6.06 VICE PRESIDENTS
In the case of absence or disability of the President, or at the direction of
the President, the Vice President, if any, will have the authority and perform
the duties of the President. A Vice President will have any other authority and
will perform any other duties that the Board of Directors may delegate to him or
her from time to time.
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SECTION 6.07 SECRETARY
The Secretary will have responsibility for preparing minutes of the acts and
proceedings of all meetings of the shareholders, of the Board of Directors, and
of any committees of the Board of Directors. The Secretary will have authority
to give all notices required by the Code, other applicable law, or these bylaws.
The Secretary will have responsibility for the custody of the corporate books,
records, contracts, and other corporate documents. The Secretary will have
authority to affix the corporate seal to any lawfully executed document and will
sign any instruments that require his or her signature. The Secretary will
authenticate records of the corporation. The Secretary will have any other
authority and will perform any other duties that the Board of Directors may
delegate to him or her from time to time. In the case of absence or disability
of the Secretary, or at the direction of the President, any assistant secretary
has the authority and may perform the duties of the Secretary.
SECTION 6.08 TREASURER
The Treasurer, if any, will have responsibility for the custody of all funds and
securities belonging to the corporation and for the receipt, deposit, or
disbursement of funds and securities under the direction of the Board of
Directors. The Treasurer will cause to be maintained true accounts of all
receipts and disbursements and will make reports of these to the Board of
Directors, upon its request, and to the President, upon his or her request. The
Treasurer will have any other authority and will perform any other duties that
the Board of Directors may delegate to him or her from time to time.
SECTION 6.09 BONDS
The Board of Directors by resolution may require any or all of the officers,
agents, or employees of the corporation to give bonds to the corporation, with
sufficient surety or sureties, conditioned on the faithful performance of the
duties of their respective offices or positions, and to comply with any other
conditions that from time to time may be required by the Board of Directors.
ARTICLE VII. SHARES
SECTION 7.01 AUTHORIZATION AND ISSUANCE OF SHARES
The Board of Directors may authorize shares of any class or series provided for
in the articles of incorporation to be issued for consideration deemed valid
under the provisions of the Code. In addition, before the corporation issues the
shares authorized by the Board of Directors, the Board of Directors must
determine that the consideration received or to be received for shares to be
issued is adequate. To the extent provided in the articles of incorporation, the
Board of Directors will determine the preferences, limitations, and relative
rights of such shares before their issuance.
SECTION 7.02 SHARE CERTIFICATES
The interest of each shareholder shall be represented by a certificate or
certificates representing shares of the corporation which shall be in such form
as Board of Directors
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may from time to time adopt. Share certificates shall be numbered consecutively,
shall be in registered form shall indicate the date of issuance, the name of the
corporation and that it is organized under the laws of the State of Georgia, the
name of the shareholder, and the number and class of shares and the designation
of the series, if any, represented by the certificate. Each certificate shall be
signed by any one of the Chairman of the Board, the President, a Vice President,
the Secretary or the Treasurer. The corporate seal need not be affixed.
SECTION 7.03 REGISTERED OWNER
The corporation may treat the registered owner of any share of stock of the
corporation as the person exclusively entitled to vote that share and to receive
any dividend or other distribution with respect to that share and as the
exclusive owner of that share for all other purposes. Accordingly, the
corporation is not required to recognize any other person's equitable, or other,
claim to or interest in that share, whether or not the corporation has express
or other notice of the claim or interest, except as provided otherwise by law.
SECTION 7.04 TRANSFERS OF SHARES
The Board of Directors will designate a transfer agent to transfer shares on the
transfer books of the corporation when the agent is properly directed to do so.
The transfer agent will keep these books at his or her office. Only the person
named on a certificate, or his or her attorney-in-fact lawfully constituted by a
writing, may direct the transfer agent to transfer the share represented by that
certificate. Before the corporation issues a new certificate to the new owner of
the share, the old certificate must be surrendered to the corporation for
cancellation. In the case of a certificate claimed to have been lost, stolen, or
destroyed, the person making the claim must comply with Section 7.06.
SECTION 7.05 DUTY OF CORPORATION TO REGISTER TRANSFER
Notwithstanding any provision in Section 7.04, the corporation is not under a
duty to register the transfer of a share unless:
(a) the certificate representing that share is endorsed by the
appropriate person or persons;
(b) reasonable assurance is given that the endorsement or
affidavit (in the case of a lost, stolen, or destroyed certificate) is genuine
and effective;
(c) the corporation either has no duty to inquire into adverse
claims or has discharged that duty;
(d) the requirements of any applicable law relating to the
collection of taxes for the proposed transfer have been met; and
(e) the transfer is in fact rightful or is to a bona fide
purchaser.
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SECTION 7.06 LOST, STOLEN, OR DESTROYED CERTIFICATES
Any person claiming a share certificate has been lost, stolen, or destroyed must
make an affidavit or affirmation of that fact in the manner prescribed by the
Board of Directors. In addition, if the Board of Directors requires, the person
must give the corporation a bond of indemnity in a form and amount, and with one
or more sureties, satisfactory to the Board of Directors. Once the person has
satisfactorily completed these steps, the corporation will issue an appropriate
new certificate to replace the certificate alleged to have been lost, stolen, or
destroyed.
SECTION 7.07 RECORD DATE WITH REGARD TO SHAREHOLDER ACTION
The Board of Directors may fix a future date as the record date in order to
determine the shareholders entitled to notice of a shareholders' meeting, to
demand a special meeting, to vote, or to take any other action (except an action
provided for in Section 8.02). Any future date fixed as a record date may not be
more than seventy (70) days before the date on which the meeting is to be held
or the action requiring a determination of shareholders is to be taken. A
determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting. If the Board of Directors does not fix a future date as a record date,
the corporation will determine the record date in accordance with the Code.
ARTICLE VIII. DISTRIBUTIONS
SECTION 8.01 AUTHORIZATION OR DECLARATION
Subject to any restriction in the articles of incorporation, the Board of
Directors from time to time in its discretion may authorize or declare and the
corporation may make distributions to the shareholders in accordance with the
Code.
SECTION 8.02 RECORD DATE WITH REGARD TO DISTRIBUTIONS
The Board of Directors may fix a future date as the record date in order to
determine shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other reacquisition of the corporation's shares). If
the Board of Directors does not fix a future date as the record date, the
corporation will determine the record date in accordance with the Code.
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ARTICLE IX. INDEMNIFICATION
SECTION 9.01 DEFINITIONS
As used in this Article, the term:
(a) "corporation" includes any domestic or foreign predecessor
entity of the corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(b) "director" or "officer" means an individual who is or was a
director or board-elected officer, respectively, of the corporation or who,
while a director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee, or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity. A director or officer is
considered to be serving an employee benefit plan at the corporation's request
if his or her duties to the corporation also impose duties on, or otherwise
involve services by, the director or officer to the plan or to participants in
or beneficiaries of the plan. "Director" or "officer" includes, unless the
context otherwise requires, the estate or personal representative of a director
or officer.
(c) "disinterested director" or "disinterested officer" means a
director or officer, respectively who at the time of an evaluation referred to
in subsection 9.05(b) is not:
(i) A party to the proceeding; or
(ii) An individual having a familial, financial, professional,
or employment relationship with the person whose advance for expenses is the
subject of the decision being made with respect to the proceeding, which
relationship would, in the circumstances, reasonably be expected to exert an
influence on the director's or officer's judgment when voting on the decision
being made.
(d) "expenses" includes counsel fees.
(e) "liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses incurred with respect to a
proceeding.
(f) "party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
(g) "proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative or investigative and whether formal or informal.
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(h) "reviewing party" shall mean the person or persons making the
determination as to reasonableness of expenses pursuant to Section 9.05 of this
Article, and shall not include a court making any determination under this
Article or otherwise.
SECTION 9.02 BASIC INDEMNIFICATION ARRANGEMENT
(a) The corporation shall indemnify an individual who is a party
to a proceeding because he or she is or was a director or officer against
liability incurred in the proceeding; provided, however that the corporation
shall not indemnify a director or officer under this Article for any liability
incurred in a proceeding in which the director or officer is adjudged liable to
the corporation or is subjected to injunctive relief in favor of the
corporation:
(i) For any appropriation, in violation of his or her
duties, of any business opportunity of the corporation;
(ii) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
(iii) For the types of liability set forth in Section 14-2-832
of the Code; or
(iv) For any transaction from which he or she received an
improper personal benefit.
(b) If any person is entitled under any provision of this Article
to indemnification by the corporation for some portion of liability incurred by
him or her, but not the total amount thereof, the corporation shall indemnify
such person for the portion of such liability to which he or she is entitled.
SECTION 9.03 ADVANCES FOR EXPENSES
(a) The corporation shall, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable expenses
incurred by a director or officer who is a party to a proceeding because he or
she is a director or officer if he or she delivers to the corporation:
(i) A written affirmation of his or her good faith belief
that his or her conduct does not constitute behavior of the kind described in
subsection 9.02(a) above; and
(ii) His or her written undertaking (meeting the
qualifications set forth below in subsection 9.03(b)) to repay any funds
advanced if it is ultimately determined that he or she is not entitled to
indemnification under this Article or the Code.
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(b) The undertaking required by subsection 9.03(a)(2) above must
be an unlimited general obligation of the proposed indemnitee but need not be
secured and shall be accepted without reference to the financial ability of the
proposed indemnitee to make repayment. If a director or officer seeks to enforce
his or her rights to indemnification in a court pursuant to Section 9.04 below,
such undertaking to repay shall not be applicable or enforceable unless and
until there is a final court determination that he or she is not entitled to
indemnification, as to which all rights of appeal have been exhausted or have
expired.
SECTION 9.04 COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES
(a) A director or officer who is a party to a proceeding because
he or she is a director or officer may apply for indemnification or advance for
expenses to the court conducting the proceeding or to another court of competent
jurisdiction. For purposes of this Article, the corporation hereby consents to
personal jurisdiction and venue in any court in which is pending a proceeding to
which a director or officer is a party. Regardless of any determination by the
Reviewing Party as to the reasonableness of expenses, and regardless of any
failure by the Reviewing Party to make a determination as to the reasonableness
of expenses, such court's review shall be a de novo review. After receipt of an
application and after giving any notice it considers necessary, the court shall:
(i) Order indemnification or advance for expenses if it
determines that the director or officer is entitled to indemnification or
advance for expenses; or
(ii) Order indemnification or advance for expenses if it
determines, in view of all the relevant circumstances, that it is fair and
reasonable to indemnify the director or officer, or to advance expenses to the
director or officer, even if the director or officer failed to comply with the
requirements for advance of expenses, or was adjudged liable in a proceeding
referred to in subsection 9.02(a)(4) above.
(b) If the court determines that the director or officer is
entitled to indemnification or advance for expenses, the corporation shall pay
the director's or officer's reasonable expenses to obtain court-ordered
indemnification or advance for expenses.
SECTION 9.05 DETERMINATION OF REASONABLENESS OF EXPENSES
(a) The corporation acknowledges that indemnification of a
director or officer under Section 9.02 has been pre-authorized by the
corporation as permitted by Section 14-2-859(a) of the Code, and that pursuant
authority exercised under Section 14-2-856 of the Code, no determination need be
made for a specific proceeding that indemnification of the director or officer
is permissible in the circumstances because he or she has met a particular
standard of conduct. Nevertheless, except as set forth in
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subsection 9.05(b) below, evaluation as to reasonableness of expenses of a
director or officer for a specific proceeding shall be made as follows:
(i) If there are two or more disinterested directors, by the
board of directors of the corporation by a majority vote of all disinterested
directors (a majority of whom shall for such purpose constitute a quorum) or by
a majority of the members of a committee of two or more disinterested directors
appointed by such a vote; or
(ii) If there are fewer than two disinterested directors, by
the board of directors (in which determination directors who do not qualify as
disinterested directors may participate); or
(iii) By the shareholders, but shares owned by or voted under
the control of a director or officer who at the time does not qualify as a
disinterested director or disinterested officer may not be voted on the
determination.
(b) Notwithstanding the requirement under subsection 9.05(a) that
the Reviewing Party evaluate the reasonableness of expenses claimed by the
proposed indemnitee, any expenses claimed by the proposed indemnitee shall be
deemed reasonable if the Reviewing Party fails to make the evaluation required
by subsection 9.05(a) within sixty (60) days following the proposed indemnitee's
written request for indemnification or advance for expenses.
SECTION 9.06 INDEMNIFICATION OF EMPLOYEES AND AGENTS
The corporation may indemnify and advance expenses under this Article to an
employee or agent of the corporation who is not a director or officer to the
same extent and subject to the same conditions that a Georgia corporation could,
without shareholder approval under Section 14-2-856 of the Code, indemnify and
advance expenses to a director, or to any lesser extent (or greater extent if
permitted by law) determined by the board of directors, in each case consistent
with public policy.
SECTION 9.07 LIABILITY INSURANCE
The corporation may purchase and maintain insurance on behalf of an individual
who is a director, officer, employee or agent of the corporation or who, while a
director, officer, employee or agent of the corporation, serves at the
corporation's request as a director, officer, partner, trustee, employee or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity against liability asserted against
or incurred by him or her in that capacity or arising from his or her status as
a director, officer, employee, or agent, whether or not the corporation would
have power to indemnify or advance expenses to him or her against the same
liability under this Article or the Code.
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SECTION 9.08 WITNESS FEES
Nothing in this Article shall limit the corporation's power to pay or reimburse
expenses incurred by a person in connection with his or her appearance as a
witness in a proceeding at a time when he or she is not a party.
SECTION 9.09 REPORT TO SHAREHOLDERS
To the extent and in the manner required by the Code from time to time, if the
corporation indemnifies or advances expenses to a director or officer in
connection with a proceeding by or in the right of the corporation, the
corporation shall report the indemnification or advance to the shareholders.
SECTION 9.10 SECURITY FOR INDEMNIFICATION OBLIGATIONS
The corporation may at any time and in any manner, at the discretion of the
board of directors, secure the corporation's obligations to indemnify or advance
expenses to a person pursuant to this Article.
SECTION 9.11 NO DUPLICATION OF PAYMENTS
The corporation shall not be liable under this Article to make any payment to a
person hereunder to the extent such person has otherwise actually received
payment (under any insurance policy, agreement or otherwise) of the amounts
otherwise payable hereunder.
SECTION 9.12 SUBROGATION
In the event of payment under this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the
indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the corporation effectively to bring suit to
enforce such rights.
SECTION 9.13 CONTRACT RIGHTS.
The right to indemnification and advancement of expenses conferred hereunder to
directors and officers shall be a contract right and shall not be affected
adversely to any director or officer by any amendment of these bylaws with
respect to any action or inaction occurring prior to such amendment; provided,
however, that this provision shall not confer upon any indemnitee or potential
indemnitee (in his or her capacity as such) the right to consent or object to
any subsequent amendment of these bylaws.
SECTION 9.14 SPECIFIC PERFORMANCE
In any proceeding brought by or on behalf of an officer or director to
specifically enforce the provisions of this Article, the corporation hereby
waives the claim or defense therein that the plaintiff or claimant has an
adequate remedy at law, and the corporation shall not urge in any such
proceeding the claim or defense that such remedy at law exists. The provisions
of this Section 9.15, however, shall not prevent the officer or director from
seeking a remedy at law in connection with any breach of the provisions of this
Article.
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SECTION 9.15 NON-EXCLUSIVITY, ETC.
The rights of a director or officer hereunder shall be in addition to any other
rights with respect to indemnification, advancement of expenses or otherwise
that he or she may have under contract or the Georgia Business Corporation Code
or otherwise.
SECTION 9.16 AMENDMENTS
It is the intent of the corporation to indemnify and advance expenses to its
directors and officers to the full extent permitted by the Georgia Business
Corporation Code, as amended from time to time. To the extent that the Georgia
Business Corporation Code is hereafter amended to permit a Georgia business
corporation to provide to its directors greater rights to indemnification or
advancement of expenses than those specifically set forth hereinabove, this
Article shall be deemed amended to require such greater indemnification or more
liberal advancement of expenses to the corporation's directors and officers, in
each case consistent with the Georgia Business Corporation Code as so amended
from time to time. No amendment, modification or rescission of this Article, or
any provision hereof, the effect of which would diminish the rights to
indemnification or advancement of expenses as set forth herein shall be
effective as to any person with respect to any action taken or omitted by such
person prior to such amendment, modification or rescission.
SECTION 9.17 SEVERABILITY
To the extent that the provisions of this Article are held to be inconsistent
with the provisions of Part 5 of Article 8 of the Georgia Business Corporation
Code, such provisions of such Code shall govern. In the event that any of the
provisions of this Article (including any provision within a single section,
subsection, division or sentence) is held by a court of competent jurisdiction
to be invalid, void or otherwise unenforceable, the remaining provisions of this
Article shall remain enforceable to the fullest extent permitted by law.
ARTICLE X. MISCELLANEOUS
SECTION 10.01 INSPECTION OF RECORDS
The Board of Directors may determine what corporate records, other than those
specifically required by the Code to be made open to inspection, will be made
open to the right of inspection by the shareholders. In addition, the Board of
Directors may fix reasonable rules not in conflict with the Code regarding the
inspection of corporate records that are required by the Code or are permitted
by determination of the Board of Directors to be made open to inspection. The
right of inspection granted in Code Section 14-2-1602(c) is not available to any
shareholder owning two percent (2%) or less of the shares outstanding, unless
the Board of Directors in its discretion grants prior approval for the
inspection to the shareholder.
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SECTION 10.02 FISCAL YEAR
The Board of Directors may determine the fiscal year of the corporation and may
change the fiscal year from time to time as the Board of Directors deems
appropriate.
SECTION 10.03 CORPORATE SEAL
If the Board of Directors determines that the corporation should have a
corporate seal for the corporation, the corporate seal will be in the form the
Board of Directors from time to time determines.
SECTION 10.04 FINANCIAL STATEMENTS
In accordance with the Code, the corporation shall prepare and provide to the
shareholders such financial statements as may be required by the Code.
SECTION 10.05 CONFLICT WITH ARTICLES OF INCORPORATION
In the event that any provision of these bylaws conflicts with any provision of
the articles of incorporation, the provision in the articles of incorporation
will govern.
ARTICLE XI. AMENDMENTS
SECTION 11.01 POWER TO AMEND BYLAWS.
The Board of Directors may amend or repeal the bylaws or adopt new bylaws, but
any bylaws adopted by the Board of Directors may be altered, amended or
repealed, and new bylaws adopted, by the shareholders. The shareholders may
prescribe, by expressing in the action they take in adopting or amending any
bylaw or bylaws, that the bylaw or bylaws so adopted or amended shall not be
altered, amended or repealed by the Board of Directors.
ARTICLE XII. CERTAIN PROVISIONS OF GEORGIA LAW
SECTION 12.01 FAIR PRICE REQUIREMENTS.
All of the requirements of Article 11, Part 2, of the Code, included in Sections
14-2-1110 through 1113 (and any successor provisions thereto), shall be
applicable to the corporation with any business combination, as defined therein,
with any interested shareholder, as defined therein.
SECTION 12.02 BUSINESS COMBINATIONS.
All of the requirements of Article 11, Part 3, of the Code, included in Sections
14-2-1131 through 1133 (and any successor provisions thereto), shall be
applicable to the corporation in connection with any business combination, as
defined therein, with any interested shareholder, as defined therein.
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EXHIBIT 10.1
HEADHUNTER.NET, INC.
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the HeadHunter.NET, Inc. 1998 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
HeadHunter.NET, Inc. (the "Corporation"), by linking the personal interests of
its employees, officers and directors to those of Corporation shareholders and
by providing such persons with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of persons upon whose judgment,
interest, and special effort the successful conduct of the Company's operation
is largely dependent. Accordingly, the Plan permits the grant of incentive
awards from time to time to selected employees and officers. From and after the
date, if any, upon which the Company's common stock shall be traded on a
national securities exchange or on the Nasdaq National Market, non-employee
directors and consultants of the Company will also be eligible to receive Awards
under the Plan.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon which
it shall be approved by the Board. However, the Plan shall be submitted to the
shareholders of the Company for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the shareholders and if the
shareholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the shareholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, Dividend Equivalent Award, or Other
Stock-Based
<PAGE> 2
Award, or any other right or interest relating to Stock or cash, granted to
a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 25% or more of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition by a
Person who is on the Effective Date the beneficial owner of 25% or
more of the Outstanding Company Voting Securities, (ii) any
acquisition directly from the Company, including without limitation
a public offering of securities, (iii) any acquisition by the
Company, (iv) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (v) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(3) Consummation of a reorganization, merger or consolidation to
which the Company is a party or a sale or other disposition of all
or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
combined voting power of the then
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<PAGE> 3
outstanding voting securities entitled to vote generally in the
election of directors of the Company resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, and (ii) no Person (excluding
any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of the combined voting
power of the then outstanding voting securities of the Company
resulting from such Business Combination except to the extent that
such ownership existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of directors of the
Company resulting from such Business Combination were members of the
Incumbent Board (including persons deemed to be members of the
Incumbent Board by reason of the proviso to subsection (2) of this
definition at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Corporation" means HeadHunter.NET, Inc., a Georgia corporation.
(h) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3), provided that no employee shall be a Covered Employee
until the deduction limitations of Section 162(m) are applicable to the
Company and any reliance period under Section 162(m) has expired, as
described in Section 16.15.
(i) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Company, or any medically
determinable illness or other physical or mental condition resulting from a
bodily injury, disease or mental disorder which, in the judgment of the
Committee, is permanent and continuous in nature. The Committee may require
such medical or other evidence as it deems necessary to judge the nature
and permanency of the Participant's condition.
(j) "Dividend Equivalent" means a right granted to a Participant
under Article 11.
(k) "Effective Date" has the meaning assigned such term in Section
2.1.
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<PAGE> 4
(l) "Fair Market Value," on any date, means (i) if the Stock is not
listed on a securities exchange or traded over the Nasdaq National Market
or otherwise publicly quoted or traded, Fair Market Value will be
determined by such method as the Committee determines in good faith to be
reasonable; (ii) if the Stock is listed on a securities exchange or is
traded over the Nasdaq National Market, the closing sales price on such
exchange or the last reported sale price over such system on such date or,
in the absence of reported sales on such date, the closing sales price or
last sale price, as applicable on the immediately preceding date on which
sales were reported; or (iii) if the Stock is not listed on a securities
exchange or traded over the Nasdaq National Market, the mean between the
bid and offered prices as quoted by Nasdaq or, if not quoted on Nasdaq,
other recognized quotations service selected by the Committee in good faith
for such date, provided that if it is determined that the fair market value
is not properly reflected by such Nasdaq quotations, Fair Market Value will
be determined by such other method as the Committee determines in good
faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.
(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a
Participant under Article 12, that relates to or is valued by reference to
Stock or other Awards relating to Stock.
(q) "Parent" means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the Company.
For Incentive Stock Options, the term shall have the same meaning as set
forth in Code Section 424(e).
(r) "Participant" means an eligible person who has been granted an
Award under the Plan.
(s) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(t) "Plan" means the HeadHunter.NET, Inc. 1998 Long-Term Incentive
Plan, as amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
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<PAGE> 5
(v) "Retirement" means a Participant's termination of employment
with the Company, Parent or Subsidiary after attaining any normal or early
retirement age specified in any pension, profit sharing or other retirement
program sponsored by the Company, or, in the event of the inapplicability
thereof with respect to the person in question, as determined by the
Committee in its judgment.
(w) "Stock" means the $.01 par value Common Stock of the Company
and such other securities of the Company as may be substituted for Stock
pursuant to Article 14.
(x) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(y) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Company. For Incentive Stock Options, the term shall have the meaning set
forth in Code Section 424(f).
(z) "1933 Act" means the Securities Act of 1933, as amended from
time to time.
(aa) "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by a committee (the
"Committee") appointed by the Board (which Committee shall consist of two or
more directors) or, at the discretion of the Board from time to time, the Plan
may be administered by the Board. It is intended that the directors appointed to
serve on the Committee shall be "non-employee directors" (within the meaning of
Rule 16b-3 promulgated under the 1934 Act) and "outside directors" (within the
meaning of Code Section 162(m) and the regulations thereunder) to the extent
that Rule 16b-3 and, if necessary for relief from the limitation under Code
Section 162(m) and such relief is sought by the Company, Code Section 162(m),
respectively, are applicable. However, the mere fact that a Committee member
shall fail to qualify under either of the foregoing requirements shall not
invalidate any Award made by the Committee which Award is otherwise validly made
under the Plan. The members of the Committee shall be appointed by, and may be
changed at any time and from time to time in the discretion of, the Board.
During any time that the Board is acting as administrator of the Plan, it shall
have all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board.
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<PAGE> 6
4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Parent or Subsidiary, the Company's independent certified public accountants, or
any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid
in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
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<PAGE> 7
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan, and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 500,000, of which not more than 10% may be granted as Restricted
Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, the maximum number of shares of Stock
with respect to one or more Options and/or SARs that may be granted during any
one calendar year under the Plan to any one Covered Employee shall be 100,000.
The maximum fair market value of any Awards (other than Options and SARs) that
may be received by a Covered Employee (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$1,000,000.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are employees
or officers of the Company or a Parent or Subsidiary; provided, however, that
from and after the date, if any, upon which the Stock shall be traded on a
national securities exchange or on the Nasdaq National Market, non-employee
directors and consultants of the Company will also be eligible to receive Awards
under the Plan.
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<PAGE> 8
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock under an
Option shall be determined by the Committee.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon such factors as the Committee may determine in
its sole discretion so that the Option becomes exerciseable at an earlier
date.
(c) PAYMENT. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants; provided,
however, that if shares of Stock are used to pay the exercise price of an
Option, such shares must have been held by the Participant for at least six
months.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions, not inconsistent with the Plan, as
may be specified by the Committee.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3), (4) and (5) above,
it will automatically become a Non-Qualified Stock Option:
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<PAGE> 9
(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.
(3) If the Participant terminates employment for any reason
other than as provided in paragraph (4) or (5) below, the Incentive
Stock Option shall lapse, unless it is previously exercised, three
months after the Participant's termination of employment; provided,
however, that if the Participant's employment is terminated by the
Company for cause or by the Participant without the consent of the
Company, the Incentive Stock Option shall (to the extent not
previously exercised) lapse immediately.
(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination
of employment.
(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's
death. Upon the Participant's death, any exercisable Incentive Stock
Options may be exercised by the Participant's beneficiary,
determined in accordance with Section 13.6.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an Option
after termination of employment, the Option may be exercised only with
respect to the shares that were otherwise vested on the Participant's
termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of stock
of the Company or any Subsidiary unless the exercise price per share of
such Option is at least 110% of the Fair Market Value per share of Stock at
the date of grant and the Option expires no later than five years after the
date of grant.
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<PAGE> 10
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.
(h) DIRECTORS. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Company or Parent or
Subsidiary but only in that individual's position as an employee and not as
a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the Fair
Market Value of one share of Stock on the date of grant in the case
of any SAR related to an Incentive Stock Option.
(b) OTHER TERMS. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.
ARTICLE 9
PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.
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<PAGE> 11
9.2. RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Shares in its discretion which, depending on the extent to which
they are met, will determine the number and value of Performance Shares that
will be paid to the Participant.
9.3. OTHER TERMS. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards
of Restricted Stock to Participants in such amounts and subject to such terms
and conditions as may be selected by the Committee. All Awards of Restricted
Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
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<PAGE> 12
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Stock, or
otherwise reinvested.
ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
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<PAGE> 13
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Parent or Subsidiary on the grant or exercise of an Award may be
made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
13.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Parent or Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Parent or Subsidiary. No unexercised
or restricted Award shall be assignable or transferable by a Participant other
than by will or the laws of descent and distribution or, except in the case of
an Incentive Stock Option, pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award
under the Plan; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not result in accelerated taxation, (ii) does not cause any Option intended to
be an incentive stock option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any factors
deemed relevant, including without limitation, state or federal tax or
securities laws applicable to transferable Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
13.8 ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability during his employment or service as a
director or consultant, all outstanding Options, Stock Appreciation Rights, and
other Awards in the nature of rights that
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<PAGE> 14
may be exercised shall become fully exercisable and all restrictions on
outstanding Awards shall lapse. Any Option or Stock Appreciation Rights Awards
shall thereafter continue or lapse in accordance with the other provisions of
the Plan and the Award Agreement. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section
7.2(d), the excess Options shall be deemed to be Non-Qualified Stock Options.
13.9. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.11. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an event
has occurred as described in Section 13.9 or 13.10 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.11.
13.12. EFFECT OF ACCELERATION. If an Award is accelerated under Section
13.9 or 13.10, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's
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<PAGE> 15
determination need not be uniform and may be different for different
Participants whether or not such Participants are similarly situated.
13.13. PERFORMANCE GOALS. The Committee may (but need not) determine that
any Award granted pursuant to this Plan to a Participant (including, but not
limited to, Participants who are Covered Employees) shall be determined solely
on the basis of (a) the achievement by the Company or a Parent or Subsidiary of
a specified target return, or target growth in return, on equity or assets, (b)
the Company's, Parent's or Subsidiary's stock price, (c) the achievement by a
business unit of the Company, Parent or Subsidiary of a specified target, or
target growth in, net income or earnings per share, or (d) any combination of
the goals set forth in (a) through (c) above. If an Award is made on such basis,
the Committee has the right for any reason to reduce (but not increase) the
Award, notwithstanding the achievement of a specified goal. If an Award is made
on such basis, the Committee shall establish goals prior to the beginning of the
period for which such performance goal relates (or such later date as may be
permitted under Code Section 162(m) or the regulations thereunder). Any payment
of an Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.
13.14. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Company to one of its Parents or Subsidiaries, transfers from a Parent
or Subsidiary to the Company, or transfers from one Parent or Subsidiary to
another Parent or Subsidiary.
13.15. REPURCHASE. The provisions of this Section 13.15 shall apply only
until such time, if any, as the Company's common stock shall be traded on a
national securities exchange or on the Nasdaq National Market. At any time
subsequent to the termination of a Participant's employment by the Company
(without regard to whether such termination is voluntary or involuntary, or for
cause or otherwise), the Company may repurchase, and the Participant (and any
transferee of Stock acquired pursuant to the Plan or any Awards granted
hereunder) shall be obligated to sell, all shares of Stock acquired pursuant to
the Plan or through exercise of any Award hereunder for a price equal to the
Fair Market Value of such Stock on the date of such repurchase. To exercise its
right to repurchase Stock hereunder, the Company shall give written notice to
the Participant of (i) its election to repurchase the Stock, (ii) the Fair
Market Value of the Stock to be repurchased, and (iii) the closing date for the
repurchase, which shall be not later than 60 days after the date of the notice
required hereunder. In the case of any repurchase by the Company of Stock under
this Section 13.15, at the option of the Company, the Company may pay the
purchase price to the Participant (or transferee of the Stock) in four or fewer
equal annual installments. Interest shall be credited on the installments at the
applicable federal rate (as determined for purposes of Section 1274 of the Code)
in effect on the date on which the purchase is made. The Company shall pay at
least one-fourth of the total purchase price each year, plus interest on the
unpaid balance, with the first installment being made on the closing date of the
purchase.
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<PAGE> 16
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the Stock,
the number of shares of Stock subject to grant pursuant to this Plan shall be
increased proportionately and the number of shares of Stock then subject to each
Award shall be increased proportionately without any change in the aggregate
purchase price therefor. In the event the Stock shall be changed into or
exchanged for a different number or class of shares of stock or securities of
the Company or of another corporation, whether through reorganization,
recapitalization, reclassification, stock split-up, combination of shares,
merger or consolidation, there shall be substituted for each such share of Stock
then subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award. In the event
the Stock shall be changed into or exchanged for cash or other property not
consisting of shares of stock or securities of the Company or of another
corporation, whether through reorganization, recapitalization, merger or
consolidation, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time to the extent not then
exercised, (ii) that the Award will be settled in cash rather than Stock, (iii)
that the Award will be assumed by another party to the transaction or otherwise
be equitably converted in connection with such transaction, or (iv) any
combination of the foregoing. The Committee's determination need not be uniform
and may be different for different Participants whether or not such Participants
are similarly situated.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without shareholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of shareholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that such amendment, modification or
termination shall not, without the Participant's consent, reduce or diminish the
value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination.
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<PAGE> 17
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or any eligible participant shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants or eligible participants
uniformly.
16.2. NO SHAREHOLDER RIGHTS. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Parent or Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of the Plan. With respect
to withholding required upon any taxable event under the Plan, the Committee
may, at the time the Award is granted or thereafter, require that any such
withholding requirement be satisfied, in whole or in part, by withholding shares
of Stock having a Fair Market Value on the date of withholding equal to the
amount to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Parent or Subsidiary to terminate any Participant's employment or status as
an officer, director or consultant at any time, nor confer upon any Participant
any right to continue as an employee, officer, director or consultant of the
Company or any Parent or Subsidiary.
16.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Parent or Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee shall be indemnified and held harmless by the Company
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.
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<PAGE> 18
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Parent or Subsidiary unless provided otherwise in such other plan.
16.8. EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
1933 Act, or any state securities act, any of the shares of Stock paid under the
Plan. The shares paid under the Plan may in certain circumstances be exempt from
registration under the 1933 Act, and the Company may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Georgia.
16.14. ADDITIONAL PROVISIONS. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.
16.15. CODE SECTION 162(m). The deduction limits of Code Section 162(m) and
the regulation thereunder do not apply to the Company until such time, if any,
as any class of the Company's common equity securities is registered under
Section 12 of the 1934 Act or the Company otherwise meets the definition of a
"publicly held corporation" under Treasury Regulation 1.162-27(c) or any
successor provision. Upon becoming a publicly held corporation, the deduction
limits of Code Section 162(m) and the regulations thereunder shall not apply to
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<PAGE> 19
compensation payable under this Plan until the expiration of the reliance period
described in Treasury Regulation 1.162-27(f) or any successor regulation.
The foregoing is hereby acknowledged as being the HeadHunter.NET, Inc. 1998
Long-Term Incentive Plan as adopted by the Board of Directors of the Company on
July 15, 1998.
HEADHUNTER.NET, INC.
By: /s/ Warren L. Bare
-------------------------------------
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<PAGE> 1
Exhibit 10.2
HEADHUNTERS, L.L.C.
EMPLOYEE COMMON UNIT OPTION PLAN
DATED AS OF JANUARY 14, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PURPOSE.............................................................................................1
2. DEFINITIONS.........................................................................................1
3. ADMINISTRATION......................................................................................3
3.1 Board of Managers..........................................................................3
3.2 Action by Board of Managers................................................................3
3.3 No Liability...............................................................................3
4. UNITS...............................................................................................3
5. ELIGIBILITY.........................................................................................4
5.1 Designated Recipients......................................................................4
5.2 Successive Grants..........................................................................4
6. EFFECTIVE DATE AND TERM OF THE PLAN.................................................................4
6.1 Effective Date.............................................................................4
6.2 Term.......................................................................................4
7. GRANT OF UNIT OPTIONS...............................................................................4
8. UNIT OPTION AGREEMENTS..............................................................................4
9. UNIT OPTION PRICE...................................................................................5
10. Term AND EXERCISE...................................................................................5
10.1 Unit Option Period and Limitations on Exercise.........................................5
10.2 Limitations on Exercise of Unit Option.................................................5
10.3 Method of Exercise and Payment.........................................................5
10.4 Effective Date of Exercise.............................................................6
11. REPURCHASE..........................................................................................6
12. CANCELLATION OF UNITS...............................................................................6
12.1 Termination of Employment..............................................................6
12.2 Rights in the Event of Death...........................................................7
12.3 Rights In the Event of Disability......................................................7
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
13. NONTRANSFERABILITY..................................................................................8
13.1 General Prohibition on Transfers.......................................................8
13.2 Family Transfers.......................................................................8
14. REQUIREMENTS OF LAW.................................................................................8
15. AMENDMENT AND TERMINATION OF THE PLAN...............................................................9
16. EFFECT OF CHANGE IN CONTROL AND CHANGES IN
CAPITALIZATION......................................................................................9
16.1 Changes in Ownership Interests.........................................................9
16.2 Reorganization in Which the Company Is the Surviving Entity............................9
16.3 Reorganization in Which the Company Is Not the Surviving Entity
or Sale of Assets or Units............................................................10
16.4 Adjustments...........................................................................10
16.5 No Limitations on Company.............................................................10
17. DISCLAIMER OF RIGHTS...............................................................................11
18. NONEXCLUSIVITY OF THE PLAN.........................................................................11
19. CAPTIONS...........................................................................................11
20. WITHHOLDING TAXES..................................................................................11
21. OTHER PROVISIONS...................................................................................12
22. NUMBER AND GENDER..................................................................................12
23. SEVERABILITY.......................................................................................12
24. GOVERNING LAW......................................................................................12
</TABLE>
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<PAGE> 4
HEADHUNTERS, L.L.C.
EMPLOYMENT COMMON UNIT OPTION PLAN
HeadHunters, L.L.C. sets forth the terms of an Employee Common Unit
Option Plan (the "PLAN") as follows:
1.PURPOSE
This Plan is intended to advance the interests of the Company by
providing eligible individuals (as designated pursuant to SECTION 5 hereof) an
opportunity to acquire or increase a proprietary interest in the Company, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of the Company and its subsidiaries and will encourage such eligible
individuals to continue to service the Company. To this end, this Plan provides
for the grant of options to purchase Common Units of HeadHunters, L.L.C., all as
set out herein.
2.DEFINITIONS
For purposes of interpreting this Plan and related documents
(including Unit Option Agreements), the definitions in this SECTION 2 shall
apply. Sections refer to sections of this Plan.
1933 Act: The Securities Act of 1933, as now in effect or as hereafter
amended.
Affiliate: Any company or other trade or business that is controlled by or
under common control with the Company (determined in accordance with the
principles of Section 414(b) and 414(c) of the Code and the regulations
thereunder) or is an affiliate of the Company within the meaning of Rule 405 of
Regulation C under the 1933 Act.
Board of Managers: The Board of Managers of the Company.
Cause: Unless otherwise defined in a Unit Option Agreement, (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between a Holder and the Company or any of its Affiliates..
Code: Internal Revenue Code of 1986, as now in effect or as hereafter
amended, and, unless the context otherwise requires, applicable Regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
revenue laws.
Company: HeadHunters, L.L.C. and any successor entity.
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<PAGE> 5
Effective Date: The date of adoption of this Plan by the Board of Managers.
Exchange Act: The Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
Expiration Date: The tenth anniversary of the Grant Date.
Fair Market Value: The value of a Unit determined in accordance with
industry-standard valuation procedures for such economic interests, taking into
account, among other relevant criteria, capitalized earnings of the Company, the
value of comparable companies and any discount applicable to such Units due to
the illiquidity of an ownership interest in the Company.
Grant Date: The later of (i) the date as of which the Board of Managers
approves the grant and (ii) the date as of which the Holder and the Company
enter into the relationship resulting in the Holder being eligible for grants.
Holder: A person who holds Unit Options under this Plan.
Immediate Family Members: The spouse, children and grandchildren of the
Holder.
Percentage Interest: An ownership interest in the Company expressed as a
percentage of all ownership interests then outstanding.
Plan: The HeadHunters, L.L.C. Employee Common Unit Option Plan as provided
for herein.
Unit: A "Common Unit" as that term is defined in the Limited Liability
Company Agreement of HeadHunters, L.L.C.
Unit Option: A right to purchase one or more Units pursuant to this Plan.
Unit Option Agreement: The written agreement evidencing the grant of a Unit
Option hereunder.
Unit Option Period: The period during which Unit Options may be exercised
as defined in SECTION Error! Reference source not found .
Unit Option Price: The purchase price for each Unit subject to a Unit
Option.
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<PAGE> 6
3.ADMINISTRATION
3.1.BOARD OF MANAGERS
This Plan shall be administered by the Board of Managers or by a
committee designated by the Board of Managers for such purpose. If a committee
is so designated, all references in this Plan to the Board of Managers and its
members shall be deemed to include references to such committee and its members.
3.2.ACTION BY BOARD OF MANAGERS
The Board of Managers shall have such powers and authorities related
to the administration of this Plan as are consistent with the Limited Liability
Company Agreement of HeadHunters, L.L.C., as it may be amended from time to
time, and applicable law. The Board of Managers shall have the full power and
authority to take all actions and to make all determinations required or
provided for under this Plan, any Unit Option granted hereunder, or any Unit
Option Agreement entered into hereunder, and shall have the full power and
authority to take all such other actions and determinations not inconsistent
with the specific terms and provisions of this Plan that the Board of Managers
deems to be necessary or appropriate to the administration of this Plan, any
Unit Option granted hereunder, or any Unit Option Agreement entered into
hereunder. All such actions and determinations shall be in accordance with the
Limited Liability Company Agreement of HeadHunters, L.L.C. and with applicable
law. The interpretation and construction by the Board of Managers of any
provision of this Plan, any Unit Option granted hereunder, or any Unit Option
Agreement entered into hereunder shall be final and conclusive.
3.3.NO LIABILITY
No member of the Board of Managers shall be liable for any action or
determination made in good faith with respect to this Plan or any Unit Option
granted or Unit Option Agreement entered into hereunder.
4.UNITS
The number of Units with respect to which Unit Options may be
granted under this Plan shall not exceed 500,000 Units. If any Unit Options
expire, terminate, or are terminated or canceled for any reason prior to
exercise or vesting in full, the Units that were subject to the unexercised,
forfeited, or terminated Unit Options shall be available for future grants of
Unit Options under this Plan, such awards, if any, to be at the sole discretion
of the Board of Managers.
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<PAGE> 7
5.ELIGIBILITY
5.1.DESIGNATED RECIPIENTS
Unit Options may be granted under this Plan to (i) any employee who
is employed by the Company on a full-time basis as the Board of Managers shall
determine and designate from time to time or (ii) any other individual whose
participation in this Plan is determined by the Board of Managers to be in the
best interests of the Company and is so designated by the Board of Managers.
5.2.SUCCESSIVE GRANTS
An individual may hold more than one Unit Option, subject to such
restrictions as are provided herein.
6.EFFECTIVE DATE AND TERM OF THE PLAN
6.1.EFFECTIVE DATE
This Plan shall be effective as of the date of adoption by the Board
of Managers.
6.2.TERM
This Plan shall terminate on the tenth anniversary of the Effective
Date.
7.GRANT OF UNIT OPTIONS
Subject to the terms and conditions of this Plan, the Board of
Managers shall make grants of Unit Options to such eligible individuals as the
Board of Managers may determine, on such terms and conditions as the Board of
Managers may determine. Such authority specifically includes the authority, in
order to effectuate the purposes of this Plan but without amending this Plan, to
modify grants to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize differences
in local law, tax policy, or custom.
8.UNIT OPTION AGREEMENTS.
All Unit Options granted pursuant to this Plan shall be evidenced by
Unit Option Agreements, to be executed by the Company and by the Holder, in such
form or forms as the Board of Managers shall from time to time determine. Unit
Option Agreements covering Unit Options granted from time to time or at the same
time need not contain similar provisions; provided, however, that all such Unit
Option Agreements shall comply with all terms of this Plan.
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<PAGE> 8
9.UNIT OPTION PRICE.
The Unit Option Price shall be fixed by the Board of Managers and
stated in each Unit Option Agreement. The Unit Option Price for a Unit shall not
be less than the Fair Market Value of the Units on the Grant Date of the Unit
Option. Fair Market Value shall be determined by the Board of Managers in good
faith.
10.TERM AND EXERCISE.
Each Unit Option granted under this Plan shall terminate and all
rights to purchase Units thereunder shall cease upon the expiration of ten years
after the Grant Date of such Unit Option, or on such date prior thereto as may
be fixed by the Board of Managers and stated in the Option Agreement relating to
such Unit Option.
10.1.UNIT OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Unit Option granted under this Plan shall be exercisable, in
whole or in part, at any time and from time to time over a period commencing on
or after the Grant Date and ending upon the expiration or termination of the
Unit Option, as the Board of Managers shall determine and set forth in the Unit
Option Agreement relating to such Unit Option. Without limiting the foregoing,
the Board of Managers, subject to the terms and conditions of this Plan, may in
its sole discretion provide that a Unit Option may not be exercised in whole or
in part for a stated period or periods of time during which such Unit Option is
outstanding. Any limitation on the exercise of a Unit Option may be rescinded,
modified or waived by the Board of Managers, in its sole discretion, at any time
and from time to time after the Grant Date of such Unit Option, so as to
accelerate the time at which the Unit Option may be exercised.
10.2.LIMITATIONS ON EXERCISE OF UNIT OPTION
Notwithstanding the foregoing Sections, in no event may the Unit
Option be exercised: (i) in whole or in part, after ten years following the
Grant Date of the Unit Option, or (ii) following termination of employment.
10.3.METHOD OF EXERCISE AND PAYMENT
Unit Options that are or become exercisable hereunder may be
exercised by the Holder's delivery to the Company of written notice of the
exercise and the number of Units for which the Unit Option are being exercised.
Such delivery shall occur on any business day, at the Company's principal
office, addressed to the attention of the Board of Managers. An attempt to
exercise any Unit Option granted hereunder other than as set forth above shall
be invalid and of no force and effect. Promptly after the exercise of Unit
Options, the individual exercising the Unit Options shall pay to the Company in
cash an amount equal to the Unit Option Price of the Units as to which Unit
Options are being exercised.
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<PAGE> 9
10.4.EFFECTIVE DATE OF EXERCISE.
Unless otherwise stated in the applicable Unit Option Agreement, (i)
any exercise of a Unit Option shall be effective as of the first day of the
Company's next fiscal quarter (for financial reporting purposes) beginning after
the date of delivery to the Company of the exercise notice and the Unit Option
Price, and (ii) an individual holding or exercising Unit Options shall have none
of the rights of an owner of a Common Unit (e.g., the right to receive cash
distributions attributable to the subject Common Units) until the effective date
of such exercise hereunder.
11.REPURCHASE
At any time subsequent to the termination of the Optionee's employment by
the Company (without regard to whether such termination is voluntary or
involuntary, or for cause or otherwise), the Company may repurchase, and the
Optionee (and any transferee of Option Units) shall be obligated to sell, all
Option Units acquired through exercise of the Option for a price equal to the
Fair Market Value of such Option Units. Fair Market Value for this purpose shall
be the Fair Market Value of Option Units determined by the Board of Managers for
purposes of granting Option Units as of the most recent date preceding the date
on which notice is given of the Company's exercise of this repurchase right.
Upon payment of the applicable amount to the Optionee (or transferee of the
Option Units), all rights of the Optionee (or transferee of the Option Units)
with respect to the Option Units shall terminate, and if as a result of such
repurchase the Optionee (or transferee) no longer holds any Units of the
Company, the Optionee (or transferee) shall cease to be a member of the Company.
To exercise its right to repurchase Option Units hereunder, the Company shall
give written notice to the Optionee of (i) its election to repurchase the Option
Units, (ii) the Fair Market Value of the Option Units to be repurchased, and
(iii) the closing date for the repurchase, which shall be not later than 60 days
after the date of the notice required hereunder. In the case of any repurchase
by the Company of Option Units under this SECTION 11 at the option of the
Company, the Company may pay the purchase price to the Optionee (or transferee
of the Option Units) in four or fewer equal annual installments. Interest shall
be credited on the installments at the applicable federal rate (as determined
for purposes of Section 1274 of the Code) in effect on the date on which the
purchase is made. the Company shall pay at least one-fourth of the total
purchase price each year, plus interest on the unpaid balance, with the first
installment being made on the closing date of the purchase.
12.CANCELLATION OF UNITS
12.1.TERMINATION OF EMPLOYMENT
Upon the termination of the employment of a Holder with the Company
or an Affiliate, other than by reason the death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code), any Unit
Option granted to the Holder pursuant
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<PAGE> 10
to this Plan shall terminate, and such Holder shall have no further right to
purchase Units pursuant to such Unit Option; provided, that the Board of
Managers may provide, by inclusion of appropriate language in any Unit Option
Agreement, that a Holder may (subject to the general limitations on exercise set
forth in SECTION 10.1), in the event of termination of employment of the Holder
with the Company or an Affiliate, exercise a Unit Option, in whole or in part,
at any time subsequent to such termination of employment and prior to
termination of the Unit Option pursuant to SECTION 10.1, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
SECTION 10.1, as the Board of Managers, in its sole and absolute discretion,
shall determine and set forth in the Unit Option Agreement. Whether a leave of
absence or leave on military or government service shall constitute a
termination of employment for purposes of this Plan, shall be determined by the
Board of Managers, which determination shall be final and conclusive. For
purposes of this Plan, a termination of employment with the Company or an
Affiliate shall not be deemed to occur if the Holder is immediately thereafter
employed with the Company or any other Affiliate.
12.2.RIGHTS IN THE EVENT OF DEATH
If a Holder dies while employed by the Company or an Affiliate, the
executors or administrators or legatees or distributees of such Holder's estate
shall have the right (subject to the general limitations on exercise set forth
in SECTION 10.2), at any time within one year after the date of such Holder's
death and prior to termination of the Option pursuant to SECTION 10, to exercise
any Unit Option held by such Holder at the date of such Holder's death, whether
or not such Unit Option was exercisable immediately prior to such Holder's
death; provided however, that the Board of Managers may provide by inclusion of
appropriate language in any Unit Option Agreement that, in the event of the
death of a Holder, the executors of administrators or legatees or distributees
of such Holder's estate may exercise a Unit Option (subject to the general
limitations on exercise set forth in SECTION 10.1), in whole or in part, at any
time subsequent to such Holder's death and prior to termination of the Unit
Option pursuant to SECTION 10, either subject to or without regard to any
installment limitation on exercise imposed pursuant to SECTION 10.1, as the
Board of Managers, in its sole and absolute discretion, shall determine and set
forth in the Unit Option Agreement.
12.3.RIGHTS IN THE EVENT OF DISABILITY.
If a Holder terminates employment with the Company or an Affiliate
by reason of the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Holder, then such Holder shall have the right
(subject to the general limitations on exercise set forth in SECTION 10.1), at
any time within one year after such termination of employment and prior to
termination of the Unit Option held by such Holder at the date of such
termination of employment, whether or not such Unit Option was exercisable
immediately prior to such termination of employment; provided; however, that the
Board of Managers may provide, by inclusion of appropriate language in any Unit
Option Agreement, that a Holder may (subject to the general limitations on
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<PAGE> 11
exercise set forth in SECTION 10.1), in the event of the termination of
employment of the Holder with the Company or an Affiliate by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Holder, exercise a Unit Option, in whole or in part, at any time
subsequent to such termination of employment and prior to termination of the
Unit Option pursuant to SECTION 10, either subject to or without regard to any
installment limitation on exercise imposed pursuant to SECTION 10.1, as the
Board of Managers, in its sole and absolute discretion, shall determine and set
forth in the Unit Option Agreement. Whether a termination of employment is to be
considered by reason of "permanent and total disability" for purposes of this
Plan shall be determined by the Board of Managers, which determination shall be
final and conclusive.
13.NONTRANSFERABILITY
13.1.GENERAL PROHIBITION ON TRANSFERS
Except as provided in SECTION 13.2, during the lifetime of a Holder,
only such Holder (or, in the event of legal incapacity or incompetency, the
guardian or legal representative of the Holder) may exercise Unit Options.
13.2.FAMILY TRANSFERS
Subject to the terms of the applicable Unit Option Agreement, a
Holder may transfer all or part of a Unit Option to (i) any Immediate Family
Member, (ii) a trust or trusts for the exclusive benefit of any Immediate Family
Member, or (iii) a partnership or limited liability company in which Immediate
Family Members and trusts described in the foregoing clause (ii) are the only
members or partners, provided that (x) there may be no consideration for any
such transfer, and (y) subsequent transfers of transferred Unit Options are
prohibited except those in accordance with this SECTION 13.2 or by will or the
laws of descent and distribution. Following transfer, any such Unit Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this SECTION 13.2
hereof the term "Holder" shall be deemed to refer the transferee. The provisions
of SECTION 11 shall continue to be applied to the transferred Unit Option with
reference to the original Holder, and the transferred Unit Option shall be
exercisable by the transferee only to the extent, and for the periods specified
in SECTION 11.
14.REQUIREMENTS OF LAW
The Company shall not be required to sell or issue any securities
under any Unit Option Agreement if the sale or issuance of such securities would
constitute a violation by the Holder, the individual exercising Unit Options, or
the Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any securities upon any securities
exchange or under any governmental regulatory body is
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<PAGE> 12
necessary or desirable as a condition of, or in connection with, the issuance or
purchase of securities hereunder, Unit Options may not be exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Company, and any delay caused thereby shall in no way affect the date of
termination of Unit Options. Any determination in this connection by the Board
of Managers shall be final, binding, and conclusive. The Company may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the 1933 Act. The Company shall not be obligated to take any affirmative action
in order to cause the exercise of Unit Options or the issuance of securities
pursuant thereto to comply with any law or regulation of any governmental
authority.
15.AMENDMENT AND TERMINATION OF THE PLAN
The Board of Managers may, at any time and from time to time, amend,
suspend, or terminate this Plan as to any Units as to which Unit Options have
not been granted. The Company may retain the right in a Unit Option Agreement to
cause a forfeiture of the rights of a Holder on account of the Holder taking
actions in "competition with the Company," as defined in the applicable Unit
Option Agreement. Except as permitted under this SECTION 16, no amendment,
suspension, or termination of this Plan shall, without the consent of the
Holder, alter or impair rights or obligations under any Unit Options theretofore
granted under this Plan.
16.EFFECT OF CHANGE IN CONTROL AND CHANGES IN CAPITALIZATION
16.1.CHANGES IN OWNERSHIP INTERESTS
If the outstanding Units in the Company are increased or decreased
or the Units are changed into or exchanged for a different number or kind of
interests or other securities of the Company on account of any recapitalization,
reclassification, split-up, reverse split, combination of interests, exchange of
interests, dividend or other distribution payable in Units, or other increase or
decrease in such Units effected without receipt of consideration by the Company,
occurring after the Effective Date of this Plan, the number and kinds of Units
as to which Unit Options may be granted under this Plan shall be adjusted
proportionately and accordingly by the Board of Managers. In addition, the
number and kind of Units as to which Unit Options are outstanding shall be
adjusted proportionately and accordingly so that the proportionate interest of
the Holder immediately following such event shall, to the extent practicable, be
equivalent as immediately before such event. Any such adjustment in outstanding
Unit Options shall not change the aggregate Unit Option Price with respect to
Units that are subject to the unexercised portion of Unit Options outstanding
but shall include a corresponding proportionate adjustment in the Unit Option
Price per Unit.
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<PAGE> 13
16.2.REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY
Subject to SECTION 16.3, if the Company shall be the surviving
entity in any reorganization, merger, or consolidation of the Company with one
or more other entities, any Unit Option theretofore granted pursuant to this
Plan shall pertain to and apply to the securities to which a holder of the
number of Units subject to such Unit Option would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Unit Option Price per Unit so that the aggregate
Unit Option Price thereafter shall be the same as the aggregate Unit Option
Price of the Units remaining subject to the Unit Option immediately prior to
such reorganization, merger, or consolidation.
16.3.REORGANIZATION IN WHICH THE COMPANY IS NOT THE SURVIVING ENTITY OR
SALE OF ASSETS OR UNITS
Upon the dissolution or liquidation of the Company, or upon a
merger, consolidation, or reorganization of the Company with one or more other
entities in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board of Managers that
results in any person or entity (or person or entities acting as a group or
otherwise in concert) owning 80 percent or more of the combined voting power of
all classes of securities of the Company, this Plan and all Unit Options
outstanding hereunder shall terminate, except to the extent provision is made in
writing in connection with such transaction for the continuation of this Plan or
the assumption of such Unit Options theretofore granted, or for the substitution
for such Unit Options of new options covering the stock, limited liability
company interests or units, or partnership interests or units of a successor
Company, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kinds of shares or units and exercise prices, in which event this
Plan and Unit Options theretofore granted shall continue in the manner and under
the terms so provided. In the event of any such termination of this Plan, each
individual holding a Unit Option shall have the right (subject to the general
limitations on exercise set forth in SECTION 10.1), immediately before the
occurrence of such termination and during such period occurring before such
termination as the Board of Managers in its sole discretion shall determine and
designate, to exercise such Unit Option in whole or in part, whether or not such
Unit Option was otherwise exercisable at the time such termination occurs. The
Board of Managers shall send written notice of an event that will result in such
a termination to all individuals who hold Unit Options not later than the time
at which the Company gives notice thereof to its members.
16.4.ADJUSTMENTS
Adjustments under this SECTION 16 related to Units or securities of
the Company shall be made by the Board of Managers, whose determination in that
respect shall be final, binding, and conclusive.
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<PAGE> 14
16.5.NO LIMITATIONS ON COMPANY
The grant of Unit Options pursuant to this Plan shall not affect or
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.
17.DISCLAIMER OF RIGHTS
No provision in this Plan or in any Unit Options granted or Unit
Option Agreement entered into pursuant to this Plan shall be construed to confer
upon any individual the right to remain in the employ or service of the Company
or any affiliate, or to interfere in any way with any contractual or other right
or authority of the Company or any affiliate either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment between any individual and the Company or an affiliate. In
addition, notwithstanding anything contained in this Plan to the contrary,
unless otherwise stated in the applicable Unit Option Agreement, no Unit Options
granted under this Plan shall be affected by any change of duties or position of
the Holder (including a transfer to or from the Company or an affiliate), so
long as such Holder continues to be an employee of the Company or an affiliate.
The obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described
herein, in the manner and under the conditions prescribed herein. This Plan
shall in no way be interpreted to require the Company to transfer any amounts to
a third party trustee or otherwise hold any amounts in trust or escrow for
payment to any participant or beneficiary under the terms of this Plan.
18.NONEXCLUSIVITY OF THE PLAN
The adoption of this Plan shall not be construed as creating any
limitations upon the right and authority of the Board of Managers to adopt such
other incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board of Managers in its
discretion determines desirable, including, without limitation, the granting of
options otherwise than under this Plan.
19.CAPTIONS
The use of captions in this Plan or any Unit Option Agreement is for
the convenience of reference only and shall not affect the meaning of any
provision of this Plan or such Unit Option Agreement.
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<PAGE> 15
20.WITHHOLDING TAXES
The Company shall have the right to deduct from payments of any kind
otherwise due to a Holder any federal, state, or local taxes of any kind
required by law to be withheld with respect to any payments, distributions and
property transferred under this Plan, and upon demand the Holder will promptly
pay to the Company any additional amounts that the Company may reasonably
determine to be necessary to satisfy such withholding tax obligation. Such
payment shall be made in cash or cash equivalents.
21.OTHER PROVISIONS
Each Unit Option Agreement under this Plan may contain such other
terms and conditions not inconsistent with this Plan as may be determined by the
Board of Managers, in its sole discretion.
22.NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender,
etc., as the context requires.
23.SEVERABILITY
If any provision of this Plan or any Unit Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
24. GOVERNING LAW.
The validity and construction of this Plan and the instruments
evidencing the Unit Options granted hereunder shall be governed by the laws of
the State of Delaware.
* * *
This Plan was duly adopted and approved by the Board of Managers of
the Company on January 14, 1998.
Warren Bare, President
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<PAGE> 16
FORM OF HEADHUNTERS, L.L.C.
EMPLOYEE COMMON UNIT OPTION PLAN
OPTION AGREEMENT
<PAGE> 17
EMPLOYEE COMMON UNIT OPTION PLAN
OPTION AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Grant of Option.....................................................................................1
2. Terms of Plan.......................................................................................1
3. Option Price........................................................................................2
4. Vesting in Options..................................................................................2
5. Term and Exercise of Option.........................................................................2
e.(a) Term...................................................................................2
e.(b) Exercise...............................................................................2
e.(c) Limitations on Exercise of Option......................................................2
e.(d) Method of Exercise.....................................................................3
e.(e) Effective Date of Exercise.............................................................3
6. Repurchase..........................................................................................3
7. Transferability.....................................................................................4
g.(a) Nontransferability of Options..........................................................4
g.(b) Nontransferability of Common Units.....................................................4
8. Requirements of Law.................................................................................4
9. Effect Of Change In Control And Changes In Capitalization...........................................5
i.(a) Changes in Ownership Interests.........................................................5
i.(b) Reorganization in Which HeadHunters Is the Surviving Entity............................5
i.(c) Reorganization in Which HeadHunters Is Not the Surviving Entity
or Sale of Assets or Units.............................................................6
i.(d) Adjustments............................................................................6
i.(e) No Limitations on HeadHunters..........................................................6
10. Disclaimer of Rights................................................................................6
11. Forfeiture of Rights................................................................................7
12. Captions............................................................................................7
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C> <C>
13. Withholding of Taxes................................................................................7
14. Severability........................................................................................7
15. Interpretation of this Option Agreement.............................................................7
16. Governing Law.......................................................................................8
17. Binding Effect......................................................................................8
18. Notice..............................................................................................8
19. Entire Agreement....................................................................................8
</TABLE>
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<PAGE> 19
FORM OF HEADHUNTERS, L.L.C.
EMPLOYEE COMMON UNIT OPTION PLAN
OPTION AGREEMENT
This Common Unit Option Agreement is made as of ___________, 199___, by
and between HeadHunters, L.L.C., a Delaware limited liability company
("HEADHUNTERS"), and ________________, an individual who is employed by
HeadHunters (the "OPTIONEE").
WHEREAS, the Board of Managers of HeadHunters has duty adopted and
approved the HeadHunters, L.L.C. Employee Option Plan (the "PLAN"), which Plan
authorizes the Board of Managers to grant to eligible individuals options for
the purchase of Common Units of HeadHunters ("COMMON UNITS") pursuant to the
Plan; and
WHEREAS, HeadHunters has determined that it is desirable and in its best
interests to grant to the Optionee, pursuant to the Plan, an option to purchase
a specified number of Common Units, in order to provide the Optionee with an
incentive to advance the interests of HeadHunters, all according to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION.
Subject to the terms and conditions of the Plan (attached hereto as
Exhibit 1), the Board of managers hereby grants to the Optionee the right and
option (the "OPTION") to purchase ___________ Common Units (the "OPTION UNITS"),
on the terms and subject to the conditions set forth in the Plan and in this
Option Agreement. This Option shall not constitute an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE"). The date of grant (the "GRANT DATE") of this Option is
_____________, 199_____.
2. TERMS OF PLAN.
The Option granted pursuant to this Option Agreement is granted subject
to the terms and conditions set forth in the Plan. All terms and conditions of
the Plan are hereby incorporated into this Option Agreement by reference and
shall be deemed to be part of this Option Agreement, without regard to whether
such terms and conditions (including, for example, provisions relating to
exercise or termination of the Option following the Optionee's termination of
employment, disability, death, or retirement or certain changes in the
capitalization of HeadHunters) are not otherwise set forth in this Option
Agreement. To the extent any capitalized words used in this Option Agreement are
not defined, they shall have the definitions stated for them in the Plan. In the
event that there is any inconsistency between the provisions of this Option
Agreement and of the Plan, the provisions of the Plan shall govern.
<PAGE> 20
3. OPTION PRICE.
The purchase price (the "OPTION PRICE") for the Option Units subject to
the Option granted by this Option Agreement is $ ____________ per Option Unit.
4. VESTING IN OPTIONS.
This Option becomes vested as to forty percent of the Option Units
purchasable pursuant to the Option on the second anniversary of the date of
grant (the second "ANNIVERSARY DATE"), if Optionee has been providing services
to HeadHunters continuously from the date of grant to the Anniversary Date.
Thereafter, so long as continuous service has not been interrupted, the Option
becomes vested as to an additional twenty percent of the Option Units
purchasable pursuant to the Option after each of the next three Anniversary
Dates. Service for this purpose includes service as an employee, director,
advisor or consultant providing bona fide services to HeadHunters or an
Affiliate. For purposes of the Option Agreement, termination of service shall
not be deemed to occur if the Optionee, after terminating service in one
capacity, continues to provide service to HeadHunters or an Affiliate in another
capacity. Termination of service is sometimes also referred to herein as
termination of employment or other relationship with HeadHunters or an
Affiliate.
5. TERM AND EXERCISE OF OPTION.
E.(A) TERM.
The Option shall terminate and all rights to purchase the Option Units
thereunder shall cease upon the expiration of ten (10) years after the Grant
Date.
E.(B) EXERCISE.
Subject to the terms and conditions of this Option Agreement and the Plan
(including restrictions on the transferability of the Option and provisions
relating to exercise or termination of the Option following the Optionee's
termination of employment, disability, death, or retirement or certain changes
in the capitalization of HeadHunters), the Optionee may exercise the Option, in
whole or in part, to the extent the Option is vested and has not terminated, any
limitation on the exercise of an Option may be rescinded, modified or waived by
the Board of Managers, in its sole discretion, at any time and from time to time
after the Grant Date of the Option, so as to accelerate the time at which the
Option may be exercised.
E.(C) LIMITATIONS ON EXERCISE OF OPTION.
Notwithstanding the foregoing Sections, in no event may the Option be
exercised: (i) in whole or in part, after ten (10) years following the Grant
Date, as set forth in Section 1 above, (ii) following termination of employment
for Cause (as defined below), or (iii) after twelve (12) months following
termination of employment other than for Cause. The Option may be exercised
following termination of employment other than for Cause, to the extent vested
at the time of such termination until the first to occur of the
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<PAGE> 21
date that is twelve (12) months after the date of termination of employment or
the date that is ten (10) years after the Grant Date.
E.(D) METHOD OF EXERCISE.
An Option that is exercisable hereunder may be exercised, in whole or in
part, by the Optionee's delivery to HeadHunters of written notice of the
exercise and the Option Units for which the Option is being exercised. Such
delivery shall occur on any business day, at the principal office of
HeadHunters, addressed to the attention of the Board of Managers. Such notice
shall specify the number of Option Units with respect to which the Option is
being exercised and shall be accompanied by payment in full of the Option Price
for the Option Units for which the Option is being exercised. Payment of the
Option Price for the Option Units purchased pursuant to the exercise of the
Option shall be made in cash or in cash equivalents. An attempt to exercise any
Option granted hereunder other than as set forth above shall be invalid and of
no force and effect. Unless otherwise stated in this Option Agreement, an
individual holding or exercising the Option shall have none of the rights of a
member in HeadHunters (e.g., the right to vote or receive cash distributions
with respect to the Option Units) until the individual (i) pays the full Option
Price, (ii) agrees in writing to be bound by the terms of the Limited Liability
Company Agreement of HeadHunters, L.L.C., and (iii) consents to such amendments
to the Limited Liability Company Agreement of HeadHunters, L.L.C. as may be
requested by the Board of Managers at the time the Option is exercised, which
amendments will be provided to the individual within a reasonable time after the
Board of Managers receives the notice of Option exercise. No adjustment shall be
made for distributions or other rights for which the record date is prior to the
date of such issuance.
E.(E) EFFECTIVE DATE OF EXERCISE.
Any exercise shall be effective as of the first day of the Company's next
fiscal quarter (for financial reporting purposes) beginning after the date of
delivery to the Company of the exercise notice and the Unit Option Price. Unless
otherwise stated in the applicable Unit Option Agreement, an individual holding
or exercising Unit Options shall have none of the rights of an owner of a Common
Unit (e.g., the right to receive cash distributions attributable to the subject
Common Units) until the effective date of such exercise hereunder.
6. REPURCHASE.
At any time subsequent to the termination of the Optionee's employment by
HeadHunters (without regard to whether such termination is voluntary or
involuntary, or for cause or otherwise), HeadHunters may repurchase, and the
Optionee (and any transferee of Option Units) shall be obligated to sell, all
Option Units acquired through exercise of the Option for a price equal to the
Fair Market Value of such Option Units. Fair Market Value for this purpose shall
be the Fair Market Value of Option Units determined by the Board of Managers for
purposes of granting Option Units as of the most recent date preceding the date
on which notice is given of HeadHunter's exercise of this repurchase right. Upon
payment of the applicable amount to the Optionee (or
- 3 -
<PAGE> 22
transferee of the Option Units), all rights of the Optionee (or transferee of
the Option Units) with respect to the Option Units shall terminate, and if as a
result of such repurchase the Optionee (or transferee) no longer holds any Units
of HeadHunters, the Optionee (or transferee) shall cease to be a member of
HeadHunters. To exercise its right to repurchase Option Units hereunder,
HeadHunters shall give written notice to the Optionee of (i) its election to
repurchase the Option Units, (ii) the Fair Market Value of the Option Units to
be repurchased, and (iii) the closing date for the repurchase, which shall be
not later than sixty (60) days after the date of the notice required hereunder.
In the case of any repurchase by HeadHunters of Option Units under this SECTION
6, at the option of HeadHunters, HeadHunters may pay the purchase price to the
Optionee (or transferee of the Option Units) in four or fewer equal annual
installments. Interest shall be credited on the installments at the applicable
federal rate (as determined for purposes of Section 1274 of the Code) in effect
on the date on which the purchase is made. HeadHunters shall pay at least
one-fourth of the total purchase price each year, plus interest on the unpaid
balance, with the first installment being made on the closing date of the
purchase.
7. TRANSFERABILITY.
G.(A) NONTRANSFERABILITY OF OPTIONS.
During the lifetime of the Optionee, only such Optionee (or, in the event
of legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option. Notwithstanding the foregoing, the
Optionee may transfer all or part of the Option to (i) the spouse, children, or
grandchildren of the Optionee (an "IMMEDIATE FAMILY MEMBER"), (ii) a trust or
trusts for the exclusive benefit of any Immediate Family Member, or (iii) a
partnership or limited liability company in which Immediate Family Members and
trusts described in the foregoing clause (ii) are the only members or partners,
provided that (x) there may be no consideration for any such transfer, and (y)
subsequent transfer of the Option is prohibited except in accordance with this
Section 7 or by will or the laws of descent and distribution. Following
transfer, the Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, and the provisions
of the Plan shall continue to be applied to the transferred Option with
reference to the original Optionee.
G.(B) NONTRANSFERABILITY OF COMMON UNITS.
The Optionee (or any other person who is entitled to exercise an Option
pursuant to the terms of the Plan) shall not sell, pledge, assign, give,
transfer or otherwise dispose of any Common Unit acquired pursuant to the
Option, except as the HeadHunters Limited Liability Company Agreement otherwise
provides.
8. REQUIREMENTS OF LAW.
HeadHunters shall not be required to sell or issue any securities under
the Option if the sale or issuance of such securities would constitute a
violation by the Optionee, the individual exercising the Option, or HeadHunters
of any provisions of any law or
- 4 -
<PAGE> 23
regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. If at any time HeadHunters
shall determine, in its discretion, that the listing, registration or
qualification of any securities subject to the Option upon any securities
exchange or under any governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the issuance, or purchase of securities
hereunder, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to HeadHunters, and
any delay caused thereby shall in no way affect the date of termination of the
Option. Specifically in connection with the 1933 Act, upon the exercise of the
Option, unless a registration statement under such act is in effect with respect
to the securities covered by the Option, HeadHunters shall not be required to
sell or issue such securities unless the Board of Managers has received evidence
satisfactory to it that the holder of such Option may acquire such securities
pursuant to an exemption from registration under such act. Any determination in
this connection by the Board of Managers shall be final, binding, and
conclusive. HeadHunters may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the 1933 Act. HeadHunters shall not be
obligated to take any affirmative action in order to cause the exercise of the
Option or the issuance of securities pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that the Option shall not be exercisable until the
securities covered by such Option are registered or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
9. EFFECT OF CHANGE IN CONTROL AND CHANGES IN CAPITALIZATION.
I.(A) CHANGES IN OWNERSHIP INTERESTS.
If the outstanding Units in HeadHunters are increased or decreased or the
Units are changed into or exchanged for a different number or kind of interests
or other securities of HeadHunters on account of any recapitalization,
reclassification, split-up, reverse split, combination of interests, exchange of
interests, dividend or other distribution payable in Units, or other increase or
decrease in such Units effected without receipt of consideration by HeadHunters,
the number and kinds of Units as to which the Option may be exercised shall be
adjusted proportionately and accordingly by the Board of Managers so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be equivalent as immediately before such event. Any
such adjustment in the Option shall not change the Option Price with respect to
Units that are subject to the unexercised portion of the Option but shall
include a corresponding proportionate adjustment in the Option Price per Unit.
I.(B) REORGANIZATION IN WHICH HEADHUNTERS IS THE SURVIVING ENTITY.
Subject to SECTION 9.(C), if HeadHunters shall be the surviving entity in
any reorganization, merger, or consolidation of HeadHunters with one or more
other entities,
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<PAGE> 24
the Option shall pertain to and apply to the securities to which a holder of the
number of Units subject to such Option would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price per Unit so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the
Units remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation.
I.(C) REORGANIZATION IN WHICH HEADHUNTERS IS NOT THE SURVIVING ENTITY OR SALE
OF ASSETS OR UNITS.
Upon the dissolution or liquidation of HeadHunters, or upon a merger,
consolidation, or reorganization of HeadHunters with one or more other entities
in which HeadHunters is not the surviving entity, or upon a sale of
substantially all of the assets of HeadHunters to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
HeadHunters is the surviving entity) approved by the Board of Managers that
results in any person or entity (or person or entities acting as a group or
otherwise in concert) owning 80 percent or more of the combined voting power of
all classes of securities of HeadHunters, the Plan, this Option Agreement and
the Option hereunder shall terminate, except to the extent provision is made in
writing in connection with such transaction for the continuation of the Plan and
this Option Agreement or the assumption of such Options theretofore granted, or
for the substitution for such Options of new options covering the stock, limited
liability company interests or units, or partnership interests or units of a
successor company, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan, this Option Agreement, and the Option granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan and this Agreement, the Board of Managers in its sole
discretion may (but shall not be obligated to) grant to the Optionee the right
(subject to the general limitations on exercise set forth in herein), during
such period occurring before such termination as the Board of Managers in its
sole discretion shall determine and designate, to exercise the Option in whole
or in part, whether or not the Option was otherwise exercisable at the time such
termination occurs. The Board of Managers shall send written notice of an event
that will result in such a termination to the Optionee not later than the time
at which HeadHunters gives notice thereof to its members.
I.(D) ADJUSTMENTS.
Adjustments under this SECTION 9 related to Units or securities of
HeadHunters shall be made by the Board of Managers, whose determination in that
respect shall be final, binding, and conclusive.
I.(E) NO LIMITATIONS ON HEADHUNTERS.
The grant of Options pursuant to the Plan and this Option Agreement shall
not affect or limit in any way the right or power of HeadHunters to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure or to
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<PAGE> 25
merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any
part of its business or assets.
10. DISCLAIMER OF RIGHTS.
No provision in this Option Agreement shall be construed to confer upon
any individual the right to remain in the employ or service of HeadHunters or
any Affiliate, or to interfere in any way with any contractual or other right or
authority of HeadHunters or any Affiliate either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment between any individual and HeadHunters or an Affiliate. In
addition, notwithstanding anything contained in the Plan to the contrary, the
Option shall not be affected by any change of duties or position of the Optionee
(including a transfer to or from HeadHunters or an Affiliate), so long as such
Optionee continues to be an employee of HeadHunters or an Affiliate.
11. FORFEITURE OF RIGHTS.
HeadHunters at any time shall have the right to cause a forfeiture of the
rights of the Optionee on account of the Optionee taking actions in competition
with HeadHunters. Unless otherwise specified in a written agreement between
HeadHunters and the Optionee, the Optionee takes actions in competition with
HeadHunters if he or she directly or indirectly owns any interest in, operates,
joins, controls or participates as a partner, director, principal, officer, or
agent of, enters into the employment of, acts as a consultant to, or performs
any services for, any entity which has material operations which compete with
any business in which HeadHunters is engaged during the Optionee's employment
with HeadHunters or at the time of the Optionee's termination of employment.
12. CAPTIONS.
The use of captions in this Option Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of such Option
Agreement.
13. WITHHOLDING OF TAXES.
HeadHunters shall have the right to deduct from payments of any kind
otherwise due to an Optionee any federal, state, or local taxes of any kind
required by law to be withheld with respect to any payments, distributions and
property transferred under this Option Agreement. At the time of exercise, the
Optionee shall pay to HeadHunters any amount that HeadHunters may reasonably
determine to be necessary to satisfy such withholding obligation.
14. SEVERABILITY.
If any provision of the Plan or this Option Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions thereof and hereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.
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<PAGE> 26
15. INTERPRETATION OF THIS OPTION AGREEMENT.
All decisions and interpretations made by HeadHunters or the Board of
Managers with regard to any question arising under the Plan or this Option
Agreement shall be final, binding and conclusive on HeadHunters and the Optionee
and any other person entitled to exercise the Option as provided for herein.
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<PAGE> 27
16. GOVERNING LAW.
The validity and construction of this Option Agreement shall be governed
by the laws of the State of Delaware.
17. BINDING EFFECT.
Subject to all restrictions provided for in this Option Agreement, the
Plan and by applicable law limiting assignment and transfer of this Option
Agreement and the Option provided for herein, this Option Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors, and assigns.
18. NOTICE.
All notices or other communications which may be or are required to be
given by any party to any other party pursuant to this Option Agreement shall be
in writing and shall be mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by hand delivery
(including express delivery service), telecopier (fax) or telex, addressed as
follows:
IF TO HEADHUNTERS:
HeadHunters, L.L.C.
1430 Boundary Boulevard
Suwanee, Georgia 30024
FACSIMILE: 770/495-6363
Attention: Board of Managers
IF TO OPTIONEE:
At the address set forth below under Optionee's name on the signature
page of this Agreement.
Each party may designate by notice in writing a new address to which any
notice or other communication may thereafter be so given. Each notice or other
communication which shall be mailed, delivered or transmitted in the manner
described above, shall be deemed sufficiently given for all purposes at such
time as it is delivered to the addressee with the return receipt, the delivery
receipt, the affidavit of personal courier or, with respect to a telex, upon
receipt of the answerback and with respect to a telecopy upon acknowledgment of
receipt there of and in all cases at such time as delivery is refused by the
addressee upon presentation.
19. ENTIRE AGREEMENT.
This Option Agreement and the Plan together constitute the entire
agreement and supersede all Awards granted or entered into with the Optionee
pursuant to the
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<PAGE> 28
HeadHunters, L.L.C. Employee Common Unit Option Plan and all prior
understandings and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof. Neither this Option Agreement nor any term
hereof may be amended, waived, discharged or terminated except by a written
instrument signed by HeadHunters and the Optionee, provided, however, that
HeadHunters unilaterally may waive any provision- hereof in writing to the
extent that such waiver does not adversely affect the interests of the Optionee
hereunder, but no such waiver shall operate as or be construed to be a
subsequent waiver of the same provision or a waiver of any other provision
hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Option Agreement, or caused this Option Agreement to be duly executed and
delivered in their name and on their behalf, as of the day and year first above
written.
HEADHUNTERS, L.L.C. OPTIONEE:
By: Signature:
------------------------------ ------------------------------
Name: Name:
---------------------------- -----------------------------------
Title: Address:
--------------------------- --------------------------------
--------------------------------
--------------------------------
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<PAGE> 29
EXHIBIT 1: HEADHUNTERS, L.L.C. EMPLOYEE COMMON UNIT OPTION PLAN
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<PAGE> 1
EXHIBIT 10.3
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered into
as of July 16, 1998, by and between HeadHunter.NET, Inc., a Georgia corporation
("BORROWER"), ITC Service Company, a Georgia corporation ("LENDER"), and ITC
Holding Company, Inc., a Delaware corporation.
BACKGROUND
WHEREAS, HeadHunters, L.L.C., a Delaware limited liability company and
predecessor to Borrower ("PREDECESSOR"), and ITC Holding Company, Inc. entered
into that certain Loan and Security Agreement, dated as of October 30, 1997,
(the "ORIGINAL LOAN AND SECURITY AGREEMENT"); and
WHEREAS, Borrower and ITC Holding Company, Inc. have agreed to amend
and restate the Original Loan and Security Agreement in the manner hereinafter
set forth for the purpose, among others, of providing that Lender shall replace
ITC Holding Company, Inc. for all purposes under the Original Loan and Security
Agreement, as so amended and restated;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree to
amend and restate the Original Loan and Security Agreement in its entirety such
that on and after the date hereof, it shall read in its entirety as follows:
1. LOANS
1.1. REVOLVING CREDIT LOAN
Subject to the terms and conditions set forth in SECTION 3
below, during the period beginning on the date hereof (the "CLOSING DATE") and
ending (the "ENDING DATE") on the earlier of: (i) December 31, 1998 or (ii) the
closing of an initial public offering of equity securities by Borrower, Lender
shall make advances (the "REVOLVING CREDIT LOAN") to Borrower in such amounts
(each a "BORROWING") as Borrower shall reasonably request from time to time,
provided that the maximum outstanding aggregate principal amount of all such
advances shall at no time exceed $2,500,000 (the "COMMITMENT"). Each Borrowing
shall be made upon written or e-mail notice of the Borrower, received by the
Lender not later than 5:00 PM five (5) Business Days (as hereinafter defined)
prior to the date of the proposed Borrowing, and the amount of such proposed
Borrowing shall not be in an amount of less than $100,000. Under the Revolving
Credit Loan, Borrower
<PAGE> 2
may borrow, repay, and reborrow, subject to the limitations set forth above.
The Revolving Credit Loan shall be evidenced by a promissory note of Borrower
(the "NOTE"), dated the Closing Date and in substantially the form of the
promissory note attached hereto as EXHIBIT A (the terms and provisions of which
Note are incorporated herein by reference), and shall be secured as hereinafter
set forth.
1.2. INTEREST
The outstanding principal amount of the Revolving Credit
Loan shall bear interest at the following rate or rates, as applicable: (1) the
applicable annual rate of interest on the portion of the outstanding principal
amount of the Revolving Credit Loan from time to time that is equal to One
Million Dollars ($1,000,000) or less will be the rate approximating Lender's
cost of debt capital as reasonably determined, from time to time, by Lender;
and (2) the applicable annual rate of interest on the portion of the
outstanding principal amount of the Revolving Credit Loan from time to time
that is greater than One Million Dollars ($1,000,000) will be the rate of
fourteen percent (14%). Lender shall notify Borrower in writing or by e-mail
(the "INTEREST NOTICE") of any adjustment in such interest rate and any such
adjustment to such interest rate shall be effective as of the fifth day of the
next calendar month after Borrower's receipt of the applicable Interest Notice.
Interest shall be payable monthly in arrears within ten
days after the close of each calendar month.
1.3. ISSUANCE OF STOCK PURCHASE WARRANT
Subject to the terms and conditions set forth in SECTION 3
hereof, Borrower shall issue to Lender on the Closing Date a stock purchase
warrant (the "WARRANT"), in substantially the form of the stock purchase
warrant attached hereto as EXHIBIT B. The terms and provisions of such Warrant
are incorporated herein by reference.
1.4. USE OF PROCEEDS
The proceeds of Revolving Credit Loan shall be used by
Borrower only to: (i) provide Borrower with funds for working capital and
capital improvements, and (ii) for other lawful corporate purposes.
2. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and
to make the Revolving Credit Loan, Borrower hereby makes the following
representations and warranties to Lender, which representations and warranties
shall survive the execution and delivery hereof and of the Note:
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<PAGE> 3
2.1. ORGANIZATION AND STANDING; AUTHORITY
Borrower (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its
incorporation, (b) is qualified to do business as a foreign corporation and is
in good standing in all jurisdictions where its activities or ownership of
property require such qualification, except for any such jurisdictions where
the failure to be so qualified would not have a material adverse effect on the
ability of Borrower to perform or comply with all terms, conditions, and
agreements to be performed or complied with by Borrower under this Agreement or
under any of the other Loan Documents (as hereinafter defined), or to perform
the transactions contemplated hereby or thereby, and (c) has the power and
authority to own, operate, and lease its properties, to carry on its business
as currently conducted, to execute and deliver and perform this Agreement, the
Note, and any other instruments or agreements executed pursuant hereto or
thereto (this Agreement, the Note, and such other instruments and agreements
hereinafter collectively referred to as the "LOAN DOCUMENTS"), to incur the
obligations provided for in the Loan Documents, and to perform the transactions
contemplated in the Loan Documents (including, without limitation, the creation
of a first lien and security interest in favor of Lender in the Collateral (as
hereinafter defined)), all of which have been duly and validly authorized by
all proper and necessary action (all of which actions are in full force and
effect).
2.2. APPROVALS
No approval, consent or other action by any governmental
authority or by any other person or entity, which has not been obtained, is or
will be necessary to permit the valid execution, delivery or performance by
Borrower of this Agreement or any of the other Loan Documents.
2.3. BINDING EFFECT, NO VIOLATIONS
Each of the Loan Documents, upon its execution and
delivery, will constitute a legal, valid, and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms. The execution,
delivery, and performance of the Loan Documents will not (a) violate, conflict
with, or constitute a default under, any law, regulation, order or any other
requirement of any court, tribunal, arbitrator, or governmental authority, any
terms of the Borrower's Articles of Incorporation, or any material contract,
agreement or other arrangement binding upon or affecting Borrower or any of its
properties, or (b) result in the creation, imposition or acceleration of any
indebtedness or any mortgage, pledge, lien, charge, reservation, covenant,
restriction, security interest, or other encumbrance (an "ENCUMBRANCE") of any
nature upon, or with respect to, Borrower or any of its properties (other than
the Encumbrance created pursuant to the Loan Documents).
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<PAGE> 4
2.4. LITIGATION
There is no claim, litigation, proceeding, or investigation
pending, threatened or reasonably anticipated against or affecting Borrower and
relating to this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, before or by any court, tribunal,
arbitrator, or governmental authority.
2.5. TITLE TO ASSETS
As of the date hereof, Borrower has good, valid, and
marketable title to all of its properties and assets (whether real or
personal), and there exist no Encumbrances on any of Borrower's properties or
assets, including, without limitation, the Collateral, other than those set
forth in EXHIBIT C attached hereto. All personal property of Borrower is in
good operating condition and repair, and is suitable and adequate for the uses
for which it is being used. Upon the execution and delivery of this Agreement,
and upon the filing of financing statements as referred to in SECTION 5.2
hereof and/or the taking by Lender of possession of the Collateral on or prior
to the date hereof, as the case may be, Lender will have a good and valid
security interest in the Collateral, subject to no Encumbrance in favor of any
other person or entity.
2.6. INFORMATION
The statements made and the documents delivered by Borrower
to Lender in connection with this Agreement and the other Loan Documents are
true, correct and complete in all material respects and omit no material facts
which are necessary to prevent such statements from being misleading.
2.7. NO CHANGE
No change in the business, operations, properties or
condition (financial or otherwise) of Borrower, or any other event, has
occurred since the date of the most recent information submitted to Lender by
Borrower as described in SECTION 2.6 hereof, which change could reasonably be
expected to have a material adverse effect on the ability of Borrower to
perform or comply with all terms, conditions, and agreements to be performed or
complied with by Borrower under this Agreement or under any of the other Loan
Documents, or to perform the transactions contemplated hereby and thereby.
2.8. TAXES
Both Predecessor and Borrower have filed all tax returns
and reports required by any governmental authority to be filed by either
Predecessor or Borrower, and such returns and reports are true and correct in
all material respects. Both Predecessor and Borrower have paid all taxes,
assessments, and
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<PAGE> 5
other government charges imposed upon them or their income, profits or
properties, or upon any part thereof, other than those presently payable
without penalty or interest and those which are being contested in good faith.
2.9. NO DEFAULT
No Event of Default (as hereinafter defined), and no event
which with notice, lapse of time or other condition would constitute an Event
of Default, has occurred and is continuing.
2.10. COMPLIANCE WITH LAWS
Borrower has complied and is in compliance with all
applicable laws, regulations, orders, and other requirements of any
governmental authority or arbitrator, and with all terms of Borrower's Articles
of Incorporation and each agreement or other arrangement binding upon or
affecting Borrower or any of its properties, except for any non-compliance with
any of the foregoing which would not have a material adverse effect on the
ability of the Borrower to perform or comply with all terms, conditions, and
agreements to be performed or complied with by Borrower under this Agreement or
under any of the other Loan Documents, or to perform the transactions
contemplated hereby or thereby.
2.11. LICENSES AND CONTRACTS
All material franchises, licenses, permits, certificates,
consents, approvals, authorizations, agreements, and contracts necessary to
operate Borrower's business as it currently is being operated have been
obtained and are in full force and effect.
2.12. CAPITAL STOCK
The capital stock of Borrower (the "Capital Stock")
described on EXHIBIT D hereto constitutes all the issued and outstanding
Capital Stock of the Borrower. Except for the Warrant and as set forth on
EXHIBIT D hereto, no person has conversion rights with respect to, or any
subscription rights, calls, committments or claims of any character for, or any
repurchase or redemption options relating to the Capital Stock of Borrower.
There are no outstanding contractual obligations of Borrower to repurchase,
redeem or otherwise acquire any of its Capital Stock or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
other person. As of the date hereof, all of the Capital Stock of Borrower will
be duly issued, fully paid and non-assessable.
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<PAGE> 6
3. CONDITIONS PRECEDENT
3.1. CONDITIONS PRECEDENT TO FIRST ADVANCE OF REVOLVING CREDIT
LOAN ON OR AFTER THE DATE HEREOF
The obligation of Lender to make the first advance of the
Revolving Credit Loan on or after the date hereof is subject to the
satisfaction (in the reasonable judgment of Lender), at or before the date of
such advance, of the following conditions precedent:
3.1.1. REPRESENTATIONS AND WARRANTIES; COMPLIANCE
All representations and warranties made by Borrower in
this Agreement or any of the other Loan Documents shall be true and correct in
all material respects on and as of the date of such advance with the same force
and effect as though such representations and warranties had been made on and
as of the date of such advance. All of the agreements, terms, covenants, and
conditions required by this Agreement to be complied with and performed prior
to the date of such advance by Borrower shall have been complied with and
performed.
3.1.2. DOCUMENTS
Borrower shall deliver to Lender copies of all documents
and other items reasonably requested by Lender evidencing Borrower's authority
to enter into and perform this Agreement and the other Loan Documents.
3.1.3. EXECUTED NOTE AND OTHER LOAN DOCUMENTS
Borrower shall deliver to Lender the fully executed Note
and fully executed copies of all other Loan Documents.
3.1.4. FINANCING STATEMENTS
All Financing Statements deemed necessary by Lender under
SECTION 5 hereof shall have been properly filed and shall be effective as
required by Lender.
3.2. CONDITIONS PRECEDENT TO THE SECOND AND EACH SUBSEQUENT
ADVANCE OF THE REVOLVING CREDIT LOAN
The obligation of Lender to make the second and each
subsequent advance of the Revolving Credit Loan, is subject to the satisfaction
(in the reasonable judgment of Lender), as of the date of each such Revolving
Credit Loan advance, of the conditions precedent specified in SECTION 3.1
hereof.
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<PAGE> 7
4. COVENANTS OF BORROWER
Until all obligations of Borrower under this Agreement and
the other Loan Documents are paid in full and performed, Borrower hereby
covenants and agrees that it shall, unless Lender otherwise consents in advance
in writing:
4.1. PAYMENT OF NOTE
Punctually pay the principal of and interest on the Note at
the times and places and in the manner specified therein.
4.2. CORPORATE EXISTENCE
Preserve, maintain, and keep in full force and effect its
existence as a corporation in the State of Georgia.
4.3. CORPORATE RIGHTS AND FRANCHISES; QUALIFICATION; CONDUCT OF
BUSINESS
Preserve, maintain, and keep in full force and effect all
franchises, licenses, permits, certificates, consents, approvals,
authorizations, agreements, and contracts material to the operation of
Borrower's business as it currently is being conducted, whether now existing or
hereafter granted to or obtained by Borrower; qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its activities and ownership of property; and continue to
engage in a business of the same general type as now conducted by it.
4.4. TAXES, CHARGES, AND OBLIGATIONS
Pay and discharge all taxes, assessments, and governmental
charges or levies imposed upon it or upon its income, profits, properties or
any part thereof, prior to the date on which penalties attach thereto, as well
as all claims which, if unpaid, might become an Encumbrance upon any properties
of Borrower, and pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all of the indebtedness and
other obligations of whatever nature of Borrower; provided, however, that
Borrower shall not be required to pay any such tax, assessment, charge, levy,
claim, indebtedness or obligation so long as (a) the validity thereof is being
contested by Borrower in good faith and by proper proceedings, (b) Borrower
sets aside on its books adequate reserves therefor, and (c) in the case where
any such tax, assessment, charge, claim or levy might become an Encumbrance
upon any item of the Collateral or any part thereof, Borrower makes
arrangements acceptable to Lender to secure the payment thereof.
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<PAGE> 8
4.5. MAINTENANCE OF COLLATERAL
Keep all Collateral in good repair, working order, and
condition, and from time to time make all necessary repairs thereof.
4.6. INSURANCE
Maintain and keep in full force and effect, with
financially sound and reputable insurance companies acceptable to Lender,
insurance in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which Borrower operates. Lender shall be named as an
additional insured with Borrower on all policies insuring any of the
Collateral. Additionally, Borrower shall use its reasonable best efforts to
obtain and maintain a key man insurance policy on the life of Warren Bare,
President of Borrower (the "KEY MAN LIFE INSURANCE POLICY"), in the amount of
at least $3,500,000. Such policy must be reasonably satisfactory in form and
content to Lender and shall provide that, in the event a payment is made
thereunder, the insurance company shall be obligated to pay directly to Lender
an amount equal to the outstanding amount of the Obligations (as hereinafter
defined).
4.7. COMPLIANCE WITH LAWS
Comply with all applicable laws, regulations, orders, and
other requirements of any court, tribunal, arbitrator, or governmental
authority, non-compliance with which could have a material adverse effect on
the business, operations, property or condition (financial or otherwise) of
Borrower.
4.8. BOOKS AND RECORDS
Keep and maintain adequate and proper records and books of
account, in which complete entries are made in accordance with generally
accepted accounting principles consistently applied and in accordance with all
laws, regulations, orders, and other requirements of any court, tribunal,
arbitrator, or governmental authority, reflecting all financial and other
transactions of Borrower normally and customarily included in records and books
of account of companies engaged in the same or similar businesses and
activities as Borrower.
4.9. ACCESS TO BORROWER'S EMPLOYEES, PROPERTIES, AND BOOKS AND
RECORDS
Permit Lender and any agents or representatives thereof,
during normal business hours and upon reasonable notice to Borrower, to visit
and inspect the properties of Borrower, to examine and make abstracts from any
of Borrower's books and records, and to discuss the business, operations,
properties, and condition (financial or otherwise) of Borrower with any of the
officers, directors,
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<PAGE> 9
employees, agents or representatives (including, without limitation, the
independent certified public accountants) of Borrower.
4.10. FINANCIAL STATEMENTS
Furnish to Lender (a) within one hundred twenty (120) days
after the end of each fiscal year of Borrower, the audited balance sheet of
Borrower as of the end of such fiscal year and the related audited statements
of income, changes in stockholders' equity and changes in financial position of
Borrower for such fiscal year, all prepared in accordance with generally
accepted accounting principles consistently applied, and certified without
qualification by an independent certified public accountant of recognized
standing; (b) within sixty (60) days after the end of each quarter of each
fiscal year of Borrower, a balance sheet and related statement of income,
changes in members' equity, and changes in financial position of Borrower, as
of the end of such quarter, certified by Borrower's chief financial officer as
having been prepared in accordance with generally accepted accounting
principles consistently applied; and (c) not later than fifteen (15) days after
each calendar month end, a balance sheet and income statement of Borrower as of
the last day of such month.
4.11. COLLATERAL
Execute, deliver, and file, or cause the execution,
delivery, and filing of, any and all documents (including, without limitation,
financing statements and continuation statements), necessary or desirable for
Lender to create, perfect, preserve, validate, or otherwise protect a first
lien and security interest in the Collateral; maintain, or cause to be
maintained, at all times Lender's first lien and security interest in the
Collateral; immediately upon learning thereof, report to Lender any
reclamation, return or repossession of any goods forming a part of the
Collateral, any material claim or dispute asserted by any debtor with respect
to any material account, and any other matters materially affecting the value
or enforceability or collectibility of any of the Collateral; defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein adverse to Lender, and pay all costs and
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with such defense; at Borrower's sole cost and expense (including
legal costs and reasonable attorneys' fees and expenses), settle any and all
stock claims, demands, and disputes, and indemnify and protect Lender against
any liability, loss or expense arising from any such claims, demands, or
disputes or out of any such reclamation, return or repossession of goods
forming a part of the Collateral and provide Lender with not less than thirty
(30) days prior notice before changing the location of its chief executive
office or any of its places of business.
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<PAGE> 10
4.12. NOTICE OF DEFAULT AND LOSS
Give immediate notice to Lender upon the occurrence of any
Event of Default or event which with notice or lapse of time or otherwise would
constitute an Event of Default and of any material loss or damage to any of the
Collateral.
4.13. INDEBTEDNESS
Not create, incur, assume, or suffer to exist any
indebtedness, except for (a) indebtedness under the Loan Documents; (b)
indebtedness incurred in the normal course of business and payable by its terms
within one (1) year after the incidence thereof; or (c) indebtedness to which
the Lender has consented in writing.
4.14. ENCUMBRANCES
Not create, incur, assume or suffer to exist any
Encumbrance (other than the Encumbrance created by this Agreement) upon any of
the Collateral, whether now owned or hereafter acquired, except for those
Encumbrances set forth in EXHIBIT C attached hereto.
4.15. FUNDAMENTAL CHANGES
Not amend its Articles of Incorporation by any amendment
which would adversely affect Borrower's ability to perform or comply with any
of the terms, conditions or agreements to be performed or complied with by
Borrower hereunder or to perform any of the transactions contemplated hereby,
consolidate or merge with any other limited liability company, corporation,
partnership, or other entity, or purchase, lease or otherwise acquire all or
substantially all of the assets of any other entity, except that Borrower may
own notes and other receivables acquired in the ordinary course of business.
4.16. TRANSFER OF COLLATERAL
Not sell, lease, assign, pledge or otherwise dispose of any
of the Collateral, whether now owned or hereafter acquired, except in the
ordinary course of business and for fair market value.
4.17. USE OF PROCEEDS
Not use, or allow the use of, the proceeds of the Revolving
Credit Loan for any purpose which would cause this Agreement to violate
Regulations U, T, or X of the Board of Governors of the Federal Reserve System
or for any purpose other than that specified in SECTION 1.4 hereof.
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<PAGE> 11
5. SECURITY
5.1. COLLATERAL
As security (a) for the punctual payment of the principal
of the Note, together with the interest and premium, if any, thereon, including
all advances thereunder, and all modifications, renewals, extensions, and
re-amortizations thereof or any part thereof, however evidenced, (b) for the
punctual payment of all other sums and interest, if any, thereon, becoming due
or payable to Lender under the provisions hereof or of any other Loan Document,
and (c) the due performance and observance by Borrower of all of the covenants,
conditions and other provisions hereof and of the other Loan Documents (all of
the indebtedness and other obligations of Borrower described in this SECTION
5.1 being hereinafter referred to collectively as the "OBLIGATIONS"), Borrower
hereby grants to Lender a security interest in, and assigns and pledges to
Lender all of the following (collectively, the "COLLATERAL"): (i) all accounts
(as hereinafter defined) now owned or hereafter acquired by Borrower; (ii) all
equipment (as hereinafter defined) now owned or hereafter acquired by Borrower;
and (iii) all proceeds (as hereinafter defined) of the foregoing. For purposes
of this Agreement: "ACCOUNTS," "EQUIPMENT" and "PROCEEDS" have the meanings
ascribed to them in Article 9 of the Uniform Commercial Code as in effect in
the State of Georgia on the date hereof.
5.2. FINANCING STATEMENTS
At the request of Lender, Borrower will join with Lender in
executing financing statements, continuation statements, and other documents
with respect to the Collateral pursuant to the Uniform Commercial Code and
otherwise, in form satisfactory to Lender, and Borrower will pay the cost of
filing the same in all public offices wherever Lender deems filing to be
necessary or desirable. Borrower grants Lender the right, at Lender's option,
to file any or all such continuation statements and such other documents
pursuant to the Uniform Commercial Code and otherwise, without Borrower's
signature where legally permissible, and irrevocably appoints Lender as
Borrower's attorney-in-fact to execute any such statements and documents in
Borrower's name and to perform all other acts which Lender deems appropriate to
perfect and continue the security interests conferred by this Agreement.
5.3. NO RELEASE
No injury to, or loss or destruction of, any item of the
Collateral shall relieve Borrower of any obligation under this Agreement or
under any of the other Loan Documents.
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<PAGE> 12
6. EVENTS OF DEFAULT AND REMEDIES
6.1. EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall constitute an Event of Default hereunder: (a) Borrower shall fail to pay,
when due, any sum payable under the Note, and such failure shall continue for
five (5) Business Days after the date on which Borrower receives written notice
of such failure; or (b) any representation or warranty made by or on behalf of
Borrower herein or in any other Loan Document shall prove to have been
incorrect or misleading or breached in any material respect on or as of any
date as of which made; or (c) Borrower shall at any time fail to observe,
satisfy or perform any of the covenants or agreements contained in SECTION 4 or
5 hereof and such failure shall continue unremedied for a period of five (5)
Business Days after written notice of the existence of such failure have been
received by Borrower from Lender; or (d) Borrower shall fail to observe or
perform any other term, covenant or agreement contained in this Agreement or in
any other Loan Document to be observed or performed on its part and such
failure shall continue unremedied for a period of five (5) Business Days after
written notice of the existence of such failure shall have been received by
Borrower from Lender; or (e) any event of default under any of the Loan
Documents shall occur; or (f) a decree or order for relief of Borrower shall be
entered by a court of competent jurisdiction in any involuntary case involving
Borrower under any bankruptcy, insolvency, or similar law now or hereafter in
effect, or a receiver, liquidator, or other similar agent for Borrower or for
any substantial part of Borrower's assets or property shall be appointed, or
the winding up or liquidation of Borrower's affairs shall be ordered; or (g)
Borrower shall commence a voluntary case under any bankruptcy, insolvency, or
similar law now or hereafter in effect, or Borrower shall consent to the entry
of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator or other similar
agent for Borrower or for any substantial part of Borrower's assets or
property, or Borrower shall make any general assignment for the benefit of
creditors, or Borrower shall take any action preparatory to or otherwise in
furtherance of any of the foregoing, or Borrower shall fail generally to pay
its debts as such debts come due; or (h) one or more judgments or decrees shall
be entered against Borrower involving in the aggregate a liability (not paid or
fully covered by insurance) of $50,000 or more, and all such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within sixty (60) days from the entry thereof.
6.2. RIGHTS AND REMEDIES OF LENDER
Upon the occurrence of any Event of Default, Lender may, at
its option, exercise any one or more of the following rights and remedies: (a)
declare the Commitment and Lender's obligation to make the Loans to be
terminated, and declare the entire unpaid principal amount of the Note, all
interest accrued and
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<PAGE> 13
unpaid thereon, and all other amounts payable under this Agreement and the
other Loan Documents to be accelerated, and to be immediately due and payable,
whereupon the Note, all such accrued interest, and all such amounts shall
become and be immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by
Borrower, anything contained herein or in any of the other Loan Documents to
the contrary notwithstanding; (b) notify all parties under the contracts and
accounts forming all or any part of the Collateral to make any payments due to
Borrower from such parties directly to Lender; (c) in Lender's own name, or in
the name of Borrower, demand, collect, receive, sue for, and give receipts and
releases for, any and all amounts due under such contracts and accounts; (d)
endorse as the agent of Borrower any chattel paper, documents, or instruments
forming all or any part of the Collateral; (e) take any other action which
Lender deems necessary or desirable to protect and realize upon its security
interest in the Collateral; and (f) in addition to the foregoing, and not in
substitution therefor, exercise any one or more of the rights and remedies
exercisable by Lender under other provisions of this Agreement, under the Note,
under any of the other Loan Documents, or provided by applicable law
(including, without limitation, the Uniform Commercial Code as in effect in the
State of Georgia).
6.3. APPLICATION OF PROCEEDS
Any proceeds from the collection or sale or other
disposition of the Collateral shall be applied in the following order of
priority: First, to the payment of all expenses of collecting, storing,
leasing, operating, managing, selling, or disposing of the Collateral, and to
the payment of all sums which Lender may be required or elect to pay, if any,
for taxes, assessments, insurance, and other charges upon such Collateral or
any part thereof, and of all other payments which Lender may be required or
authorized to make under any provision of this Agreement or of any other Loan
Document (including in each such case reasonable legal costs and attorneys'
fees and expenses); Second, to the payment of all Obligations; and Third, to
the payment of any surplus then remaining to Borrower, unless otherwise
provided by law or directed by a court of competent jurisdiction; provided that
Borrower shall be liable for any deficiency if the proceeds are insufficient to
satisfy all of the Obligations.
7. MISCELLANEOUS PROVISIONS
7.1. ADDITIONAL ACTIONS AND DOCUMENTS
Borrower shall take or cause to be taken such further
actions, shall execute, deliver, and file or cause to be executed, delivered,
and filed such further documents and instruments, and shall obtain such
consents as may be necessary or as Lender may reasonably request in order fully
to effectuate the purposes, terms, and conditions of this Agreement and the
other Loan Documents, whether before, at
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<PAGE> 14
or after the closing of transactions contemplated hereby and thereby or the
occurrence of an Event of Default hereunder.
7.2. EXPENSES
Borrower shall pay all expenses of Lender incident to this
Agreement, including legal and accounting fees and disbursements.
7.3. NOTICES
All notices, demands, requests, or other communications
provided for herein or in the other Loan Documents shall be in writing and
shall be hand delivered, mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, delivered by overnight air courier,
or transmitted by telegram, telex, or facsimile transmission, addressed as
follows:
(a) If to Borrower:
HeadHunter.NET, Inc.
6410 Atlantic Boulevard, Suite 160
Norcross, GA 30071
Attention: Warren Bare
Facsimile No.: (770) 300-9298
E-mail: [email protected]
(b) If to Lender:
ITC Service Company
1239 O.G. Skinner Drive
West Point, GA 31833
Attention: Bryan W. Adams
Facsimile No.: (706) 643-5067
E-mail: [email protected]
with a copy (which shall not constitute notice) to:
Kimberley E. Thompson
Vice President, General Counsel and Secretary
4717 Dolphin Lane
Alexandria, Virginia 22309
Facsimile No.: 703/619-9720
E-mail: [email protected]
or such other address as the addressee may indicate by written notice to the
other parties.
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<PAGE> 15
Each notice, demand, request or communication which shall
be given or made in the manner described above shall be deemed sufficiently
given or made for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of messenger or
(with respect to a facsimile) the confirmation being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
7.4. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement.
7.5. SURVIVAL
It is the express intention and agreement of the parties
hereto that all covenants, agreements, statements, representations, warranties,
and indemnities made by Borrower in the Loan Documents shall survive the
execution and delivery of the Loan Documents and the making of all advances and
extensions of credit thereunder.
7.6. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other right,
power or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such waiver
is sought and then only to the extent expressly specified therein.
7.7. RIGHTS CUMULATIVE
Except as specifically provided herein, the remedies
provided herein shall be cumulative and shall not preclude the assertion by
Borrower or by Lender of any other rights or the seeking of any other remedies
against the other, or its successors or assigns. Nothing contained herein shall
preclude a party from seeking equitable relief, where appropriate.
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<PAGE> 16
7.8. ENTIRE AGREEMENT; MODIFICATION
This Agreement, the exhibits hereto, and the other Loan
Documents constitute the entire agreement of the parties hereto with respect to
the matters contemplated herein, supersede all prior oral and written
agreements with respect to the matters contemplated herein, and may not be
modified, deleted or amended except by written instrument executed by the
parties. All terms of this Agreement and of the other Loan Documents shall be
binding upon, and shall inure to the benefit of and be enforceable by, the
parties hereto and their respective successors and assigns.
7.9. TERMINATION
This Agreement shall terminate upon payment in full of all
amounts payable and performance of all other obligations owed by Borrower to
Lender under this Agreement and under the other Loan Documents.
7.10. GOVERNING LAW
This Agreement and the other Loan Documents, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the State of
Georgia (excluding the choice of law rules thereof).
7.11. PRONOUNS
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity
of the person or entity may require.
7.12. HEADINGS
Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed
to be a part of this Agreement for any purpose, and shall not in any way define
or affect the meaning, construction or scope of any of the provisions hereof.
7.13. PAYMENTS
If any payment or performance of the Note or of any of the
other obligations under this Agreement or any of the other Loan Documents
becomes due on a day other than a Business Day, the due date shall be extended
to the next succeeding Business Day, and interest thereon (if applicable) shall
be payable at the then applicable rate during such extension. For the purposes
of this Agreement, "BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized by law
to close.
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<PAGE> 17
7.14. COUNTERPARTS
This Agreement and any of the other Loan Documents may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or the signatures of the persons required to bind any party, appear
on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of
this Agreement or any other Loan Document to produce or account for any
particular number of counterparts; but rather any number of counterparts shall
be sufficient so long as those counterparts contain the respective signatures
of, or on behalf of, all of the parties hereto.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf,
as of the day and year first hereinabove set forth.
BORROWER:
HeadHunter.NET, Inc.
By: /s/ Kenneth E. Dopher
-------------------------------------
Name: Kenneth E. Dopher
Title: CFO
LENDER:
ITC Service Company
By: /s/ J. Douglas Cox
-------------------------------------
Name: J. Douglas Cox
Title: Senior Vice President
ITC Holding Company, Inc.
By: /s/ J. Douglas Cox
-------------------------------------
Name: J. Douglas Cox
Title: Senior Vice President
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<PAGE> 1
EXHIBIT 10.4
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement") is entered into as of the ___
day of ______, 1998, between HeadHunter.NET, Inc., a Georgia corporation (the
"Corporation"), and _____________ ("Indemnitee").
WHEREAS, it is essential to the Corporation to retain and attract as
directors and officers the most capable persons available; and
WHEREAS, Indemnitee is a director [and officer] of the Corporation and from
time to time may also serve at the Corporation's request as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan, or other entity; and
WHEREAS, both the Corporation and Indemnitee recognize the risk of
litigation and other claims being asserted against directors and officers of
business corporations in today's environment; and
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability and in order to enhance Indemnitee's continued
service to the Corporation and such other entities in an effective manner, and
with the approval of the shareholders as evidenced by their approval and
authorization of this Agreement, the Corporation desires to extend to Indemnitee
the contractual rights to indemnification and advancement of expenses as
provided herein;
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions for Purposes of this Agreement. The following terms
as used in this Agreement shall have the meanings set forth below.
(a) "Corporation" includes any domestic or foreign predecessor entity
of the Corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the
transaction.
(b) "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the
Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, employee, or agent of another
domestic or foreign corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan, or other
entity. A Director is considered to be serving an employee benefit
plan at the Corporation's request if his duties to the Corporation
also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan. "Director"
<PAGE> 2
includes, unless the context requires otherwise, the estate or
personal representative of a Director.
(c) "Disinterested Director" or "Disinterested Officer" means a
Director or Officer, respectively, who at the time of an evaluation
referred to in Section 5 is not:
(1) A Party to the Proceeding; or
(2) An individual having a familial, financial, professional, or
employment relationship with Indemnitee, which relationship
would, in the circumstances, reasonably be expected to exert
an influence on the Director's or Officer's judgment when
voting on the decision being made.
(d) "Expenses" includes all reasonable counsel fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, investigating, being or preparing to be a witness in, or
otherwise participating in, a Proceeding.
(e) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable Expenses incurred with
respect to a Proceeding.
(f) "Officer" means an individual who is or was an officer of the
Corporation or an individual who, while an officer of the
Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan, or other
entity. An Officer is considered to be serving an employee benefit
plan at the Corporation's request if his duties to the Corporation
also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan. "Officer"
includes, unless the context requires otherwise, the estate or
personal representative of an Officer.
(g) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a Proceeding.
(h) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative,
arbitrative or investigative and whether formal or informal.
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<PAGE> 3
(j) "Reviewing Party" shall mean the person or persons making the
determination as to reasonableness of Expenses pursuant to Section
5 of this Agreement, and shall not include a court making any
determination under this Agreement or otherwise.
2. Basic Indemnification Arrangement.
(a) Obligation to Indemnify. The Corporation shall indemnify Indemnitee
against Liability incurred in a Proceeding; provided, however that
the Corporation shall not indemnify Indemnitee under this Agreement
for any Liability incurred in a Proceeding in which Indemnitee is
adjudged liable to the Corporation or is subjected to injunctive
relief in favor of the Corporation:
(1) For any appropriation, in violation of Indemnitee's
duties, of any business opportunity of the Corporation;
(2) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
(3) For the types of liability set forth in Section 14-2-832
of the Georgia Business Corporation Code; or
(4) For any transaction from which Indemnitee received an
improper personal benefit.
(b) Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement or otherwise to indemnification by the
Corporation for some portion of Liability incurred by him, but not
the total amount thereof, the Corporation shall indemnify
Indemnitee for the portion of such Liability to which he is
entitled.
3. Advances for Expenses.
(a) Obligations and Requirements. The Corporation shall, before final
disposition of a Proceeding, advance funds to pay for or reimburse
the reasonable Expenses incurred by Indemnitee as a Party to such
Proceeding if he delivers to the Corporation:
(1) A written affirmation of Indemnitee's good faith belief that
his conduct does not constitute behavior that could lead to
the kind of liability described in Section 2(a) above; and
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<PAGE> 4
(2) Indemnitee's written undertaking (meeting the qualifications
set forth below in Section 3(b)) to repay any funds advanced
if it is ultimately determined that Indemnitee is not entitled
to indemnification under this Agreement, the Georgia Business
Corporation Code or otherwise.
(b) Undertaking. The undertaking required by Section 3(a)(2) above must
be an unlimited general obligation of Indemnitee but need not be
secured and shall be accepted without reference to Indemnitee's
financial ability to make repayment. If Indemnitee seeks to enforce
his rights to indemnification in a court pursuant to Section 4
below, such undertaking to repay shall not be applicable or
enforceable unless and until there is a final court determination
that he is not entitled to indemnification, as to which all rights
of appeal have been exhausted or have expired.
4. Court-Ordered Indemnification and Advances for Expenses.
(a) Procedure. If Indemnitee is a Party to a Proceeding, he may apply
for indemnification or for advances for Expenses to the court
conducting the Proceeding or to another court of competent
jurisdiction. For purposes of this Agreement, the Corporation
hereby consents to personal jurisdiction and venue in any court in
which is pending a Proceeding to which Indemnitee is a Party.
Regardless of any determination by the Reviewing Party as to the
reasonableness of Expenses, and regardless of any failure by the
Reviewing Party to make a determination as to the reasonableness of
Expenses, such court's review shall be a de novo review. After
receipt of an application and after giving any notice it considers
necessary, the court shall:
(1) Order indemnification or the advance for Expenses if it
determines that Indemnitee is entitled to indemnification or
to advance for Expenses; or
(2) Order indemnification or the advance for Expenses if it
determines, in view of all the relevant circumstances, that it
is fair and reasonable to indemnify Indemnitee, or to advance
Expenses to Indemnitee, even if Indemnitee has failed to
comply with the requirements for advance of Expenses, or was
adjudged liable in a Proceeding referred to in Section 2(a)(4)
above.
(b) Payment of Expenses to Seek Court-Ordered Indemnification. If the
court determines that Indemnitee is entitled to indemnification or
to advance for Expenses, the Corporation shall pay Indemnitee's
reasonable Expenses to obtain such court-ordered indemnification or
advance for Expenses.
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<PAGE> 5
5. Determination of Reasonableness of Expenses.
(a) The Corporation acknowledges that indemnification of Indemnitee
under this Agreement has been pre-authorized by the Corporation as
permitted by Section 14-2-859(a) of the Georgia Business
Corporation Code, and that pursuant authority exercised under
Section 14-2-856 of the Georgia Business Corporation Code, no
determination need be made for a specific Proceeding that
indemnification of Indemnitee is permissible in the circumstances
because Indemnitee has met a particular standard of conduct.
Nevertheless, except as set forth in Section 5(b) below, evaluation
as to reasonableness of Expenses of Indemnitee for a specific
Proceeding shall be made as follows:
(1) If there are two or more Disinterested Directors, by the Board
of Directors of the Corporation by a majority vote of all
Disinterested Directors (a majority of whom shall for such
purpose constitute a quorum) or by a majority of the members
of a committee of two or more Disinterested Directors
appointed by such a vote; or
(2) If there are fewer than two Disinterested Directors, by the
Board of Directors (in which determination Directors who do
not qualify as Disinterested Directors may participate); or
(3) By the shareholders of the Corporation, but shares owned by or
voted under the control of a Director or Officer who at the
time does not qualify as a Disinterested Director or
Disinterested Officer may not be voted on the determination.
(b) Notwithstanding the requirement under Section 5(a) that the
Reviewing Party evaluate the reasonableness of Expenses claimed by
Indemnitee, any Expenses claimed by Indemnitee shall be deemed
reasonable if the Reviewing Party fails to make the evaluation
required by Section 5(a) within sixty (60) days following
Indemnitee's written request for indemnification or advance for
Expenses.
6. Vested Rights; Specific Performance. No amendment to the Articles of
Incorporation of the Corporation or any other corporate action shall in any way
limit Indemnitee's rights under this Agreement. In any Proceeding brought by or
on behalf of Indemnitee to specifically enforce the provisions of this
Agreement, the Corporation hereby waives the claim or defense therein that the
plaintiff or claimant has an adequate remedy at law, and the Corporation shall
not urge in any such Proceeding the claim or defense that such remedy at law
exists. The provisions of this Section 6, however, shall not prevent Indemnitee
from seeking a remedy at law in connection with any breach of this Agreement.
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<PAGE> 6
7. Liability Insurance. To the extent the Corporation maintains an
insurance policy or policies providing directors' or officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage provided under
such policy or policies in effect for any other Director or Officer of the
Corporation, as the case may be.
8. Witness Fees. Nothing in this Agreement shall limit the Corporation's
power to pay or reimburse Expenses incurred by Indemnitee in connection with his
appearance as a witness in a Proceeding at a time when he has not been made a
named defendant or respondent in the Proceeding.
9. Security for Indemnification Obligations. The Corporation may at any
time and in any manner, at the discretion of the Board of Directors, secure the
Corporation's obligations to indemnify or advance Expenses to Indemnitee
pursuant to this Agreement.
10. Non-exclusivity, No Duplication of Payments. The rights of Indemnitee
hereunder shall be in addition to any other rights with respect to
indemnification, advancement of Expenses or otherwise that Indemnitee may have
under the Corporation's Articles of Incorporation or Bylaws, the Georgia
Business Corporation Code or otherwise; provided, however, that the Corporation
shall not be liable under this Agreement to make any payment to Indemnitee
hereunder to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Articles of Incorporation or
Bylaws, or otherwise) of the amounts otherwise payable hereunder. The
Corporation's obligation to indemnify or advance expenses hereunder to
Indemnitee who is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of any other entity shall
be reduced by any amount Indemnitee has actually received as indemnification or
advancement of expenses from such other entity.
11. Amendments. To the extent that the provisions of this Agreement are
held to be inconsistent with the provisions of the Georgia Business Corporation
Code (including Section 14-2-856 thereof), such provisions of such statute shall
govern. To the extent that the Georgia Business Corporation Code is hereafter
amended to permit a Georgia business corporation, without the need for
shareholder approval, to provide to its directors greater rights to
indemnification or advancement of Expenses than those specifically set forth
hereinabove, this Agreement shall be deemed amended to require such greater
indemnification or more liberal advancement of Expenses to Indemnitee, in each
case consistent with the Georgia Business Corporation Code as so amended from
time to time. Otherwise, no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the Corporation and
Indemnitee.
12. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that
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<PAGE> 7
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Corporation effectively to bring suit to
enforce such rights.
13. Waiver. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
14. Binding Effect, Etc. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors or assigns (including any direct or indirect successor or assign by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Corporation), spouses, heirs, and personal and
legal representatives.
15. Applicability of Agreement. This Agreement shall apply retroactively
with respect to acts or omissions of Indemnitee occurring since the date that
Indemnitee first became a Director or Officer, and this Agreement shall continue
in effect regardless of whether Indemnitee continues to serve as a Director or
Officer, but only in respect of acts or omissions occurring prior to the
termination of Indemnitee's service as a Director or Officer.
16. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal, or unenforceable for any reason whatsoever: (a) the
validity, legality, and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal, or
unenforceable, that is not itself invalid, illegal, or unenforceable) shall not
in any way be affected or impaired thereby; (b) such provision or provisions
shall be deemed reformed to the extent necessary to conform to applicable law
and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal, or unenforceable, that is not itself
invalid, illegal, or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.
17. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
18. Headings. The headings of the Sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
19. Inducement. The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as a Director and/or Officer, and the
Corporation
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<PAGE> 8
acknowledges that Indemnitee is relying upon this Agreement in serving as a
director, officer, employee or agent of the Corporation or, at the request of
the Corporation, as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan, or other entity.
20. Notice by the Indemnitee. Indemnitee agrees promptly to notify the
Corporation in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information, or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee so to notify the Corporation shall
not relieve the Corporation of any obligation which it may have to Indemnitee
under this Agreement or otherwise.
21. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or (ii) mailed by certified or registered
mail with postage prepaid, on the third business day after the date on which it
is so mailed if to the Corporation, to the principal office address of the
Corporation, or if to Indemnitee, to the address of Indemnitee last on file with
the Corporation, or to such other address as may have been furnished to
Indemnitee by the Corporation or to the Corporation by Indemnitee, as the case
may be.
Executed as of the date first above written.
THE CORPORATION:
HeadHunter.NET, Inc.
By:
-------------------------------------
-------------------------------------
INDEMNITEE:
----------------------------------------
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<PAGE> 1
EXHIBIT 10.5
CONTRIBUTION AGREEMENT
BY AND AMONG
WARREN L. BARE,
ITC HOLDING COMPANY, INC.
AND
HEADHUNTER.NET, INC.
DATED AS OF JULY 15, 1998
<PAGE> 2
CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. - CONTRIBUTION AND RECEIPT OF SHARES 1
1.1. Contribution. 1
1.2. Issuance of Shares of the Company's Capital Stock. 2
1.3. Time and Place of Closing. 2
1.4. Default by Any Contributor at the Closing. 2
1.5. Legend on the Company's Capital Stock. 2
ARTICLE 2. - REPRESENTATIONS AND WARRANTIES OF BARE 3
2.1. Organization, Standing, and Power of Sub 3
2.2. Ownership of Sub Shares. 3
2.3. Authority; No Breach By Agreement. 3
2.4. Capital Stock. 3
2.5. Investments; Subsidiaries. 4
2.6. Financial Statements. 4
2.7. Absence of Undisclosed Liabilities. 4
2.8. Absence of Certain Changes or Events. 4
2.9. Tax Matters. 4
2.10. Assets. 5
2.11. Compliance with Laws. 5
2.12. Labor Relations. 5
2.13. Employee Benefit Plans. 5
2.14. Material Contracts. 6
2.15. Legal Proceedings. 7
2.16. Purchase for Investment; Accredited Investor Status. 7
2.17. Statements True and Correct. 7
ARTICLE 3. - REPRESENTATIONS AND WARRANTIES OF ITC 7
3.1. Organization, Standing, and Power of ITC 7
3.2. Ownership of ITC LLC Units. 8
3.3. Authority; No Breach By Agreement 8
3.4. Units 8
3.5. Legal Proceedings 8
3.6. Purchase for Investment; Accredited Investor Status 9
3.7. Statements True and Correct. 9
ARTICLE 4. - COVENANTS 9
4.1. Covenants of Bare. 9
4.2. Covenants of ITC. 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 5. - TERMINATION 10
5.1. Termination. 10
5.2. Effect of Termination. 10
ARTICLE 6. - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS; INDEMNIFICATION 10
ARTICLE 7. - REGISTRATION RIGHTS 10
ARTICLE 8. - MISCELLANEOUS 11
8.1. Definitions 11
8.2. Expenses 13
8.3. Entire Agreement 13
8.4. Amendments 13
8.5. Assignment 13
8.6. Notices 13
8.7. Governing Law 14
8.8. Severability 14
8.9. Counterparts 14
</TABLE>
ii
<PAGE> 4
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and
entered into as of this July 15, 1998, by and among Warren L. Bare, a resident
of Georgia ("Bare"), ITC Holding Company, Inc., a Delaware corporation ("ITC"),
and HeadHunter.NET, Inc., a Georgia corporation (the "Company"). Certain terms
used in this Agreement are defined in Section 8.1 of this Agreement.
SECTION 351 PLAN
This Agreement provides for the contribution to the Company of
(i) all of the issued and outstanding shares of capital stock of HNET, Inc., a
Georgia corporation formerly known as HeadHunter.NET, Inc. ("Sub"), by Bare and
(ii) 2,750,000 preferred units of HeadHunters, L.L.C., a Delaware limited
liability company ("HH LLC") by ITC, which constitutes 55% of all outstanding
equity interests in HH LLC, in exchange for shares of the Company's capital
stock as set forth in Exhibit 1 attached hereto. It is the intention of the
parties to this Agreement that the transactions contemplated by this Agreement
for federal income tax purposes shall qualify for treatment under Section 351 of
the Internal Revenue Code.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE 1. - CONTRIBUTION AND RECEIPT OF SHARES
1.1. CONTRIBUTION.
(a) BARE. For the consideration hereinafter provided and subject to the
terms and conditions of this Agreement, at the Closing Bare shall assign,
transfer, convey and deliver to the Company, free and clear of all Liens, and
the Company shall acquire from Bare (the "Bare Contribution"), all right, title
and interest in and to 26,000 shares of common stock of Sub held by Bare (the
"Sub Shares"). At Closing, Bare shall deliver to the Company certificate(s)
representing the Sub Shares contributed by Bare hereunder, together with
accompanying stock power(s) or instrument(s) of assignment, duly endorsed in
blank for the transfer of the Sub Shares to the Company.
(b) ITC. For the consideration hereinafter provided and subject to the
terms and conditions of this Agreement, at Closing, ITC shall assign, transfer,
convey and deliver to the Company, free and clear of all Liens, and the Company
shall acquire from ITC (the "ITC Contribution"), all right, title and interest
of ITC in and to 2,750,000 preferred units of HH LLC held by ITC (the "ITC LLC
Units"). At Closing, ITC shall deliver to the Company certificates or other
documents representing the ITC LLC Units contributed by ITC hereunder, together
with accompanying instrument(s) of assignment, duly endorsed in blank for the
transfer of the ITC LLC Units to the Company.
<PAGE> 5
1.2. ISSUANCE OF SHARES OF THE COMPANY'S CAPITAL STOCK.
(a) BARE. Subject to the provisions of this Agreement, at Closing the
Company shall deliver to Bare, in exchange for the Sub Shares, certificates
representing the number of shares of each class of the Company's capital stock
as set forth on Exhibit 1 hereto.
(b) ITC. Subject to the provisions of this Agreement, at Closing, the
Company shall deliver to ITC, in exchange for the ITC LLC Units, certificates
representing the number of shares of each class of the Company's capital stock
as set forth on Exhibit 1 hereto.
1.3. TIME AND PLACE OF CLOSING.
The Closing will take place on the Closing Date and shall be effective as of the
close of business on such date. The place of Closing shall be at the offices of
Alston & Bird LLP, located at One Atlantic Center, 1201 West Peachtree Street,
Atlanta, Georgia, 30309 or at such other place as the parties hereto mutually
agree.
1.4. DEFAULT BY ANY CONTRIBUTOR AT THE CLOSING.
If either Bare or ITC fails or refuses to deliver the Sub Shares or the ITC LLC
Units, as the case may be, or if either fails or refuses to consummate any of
the transactions described in this Agreement prior to or on the Closing Date,
the non-defaulting party, at its option and without prejudice to its rights
against any such defaulting party, may (i) acquire the shares of the Company's
stock which it is entitled to acquire hereunder, (ii) delay the Closing while
taking appropriate judicial action, or (iii) refuse to make such acquisition and
thereby terminate all of its obligations hereunder without liability therefore.
The parties acknowledge that the shares of the Company's capital stock, the Bare
Contribution and the ITC Contribution are each unique and otherwise not
available and agree that, in addition to any other remedies, the non-defaulting
party may invoke any equitable remedies to enforce delivery of the shares of the
Company's capital stock, the Bare Contribution or the ITC Contribution hereunder
including, without limitation, any action or suit for specific performance.
1.5. LEGEND ON THE COMPANY'S CAPITAL STOCK.
Bare and ITC agree and understand that the shares of the Company's capital stock
to be received hereunder have not been, and will not be, registered under the
1933 Act or the securities laws of any state, and that such shares may be sold
or disposed of only in one or more transactions (i) registered under the 1933
Act and/or under any applicable state securities laws or (ii) exempt from the
registration requirements of the 1933 act and/or applicable state securities
laws. Bare and ITC understand and agree that each certificate representing
shares of the Company's capital stock shall bear a restrictive legend that sets
forth the applicable restrictions on each class of the Company's capital stock.
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<PAGE> 6
ARTICLE 2. - REPRESENTATIONS AND WARRANTIES OF BARE
Bare hereby represents and warrants to ITC and the Company as follows:
2.1. ORGANIZATION, STANDING, AND POWER OF SUB.
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Georgia, and has the corporate power and
authority to carry on its business as now conducted and to lease, operate and
own its assets, including 2,200,000 common units of HH LLC and 50,000 preferred
units of HH LLC (collectively, the "Sub Units"), which comprise 45% of all
outstanding equity interests in HH LLC.
2.2. OWNERSHIP OF SUB SHARES.
Bare is the owner of all right, title and interest (legal and beneficial) in and
to the Sub Shares, free and clear of any and all Liens of any nature whatsoever,
except for ITC's right to purchase such shares pursuant to that certain Limited
Liability Company Agreement dated October 30, 1997, as amended (the "Limited
Liability Company Agreement"), which ITC waives pursuant to this Agreement. The
consummation of the Bare Contribution pursuant to the provisions of this
Agreement will transfer to the Company valid title to the Sub Shares free and
clear of any and all Liens. No person or entity has any Contract or Right
(whether preemptive or contractual) to purchase the Sub Shares or other capital
stock of Sub.
2.3. AUTHORITY; NO BREACH BY AGREEMENT.
(a) Bare has duly executed and delivered this Agreement, and upon such
execution and delivery, this Agreement constitutes a legal, valid, and binding
obligation of Bare, enforceable against Bare in accordance with its terms,
except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought.
(b) Neither (i) Bare's execution and delivery of this Agreement nor (ii)
his consummation of the transactions contemplated hereby, nor (iii) his
compliance with any of the provisions hereof will (1) conflict with or result in
a breach of any provision of Sub's Articles of Incorporation or Bylaws, (2)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any asset of Sub (including, without
limitation, the Sub Units) or the Sub Shares under, any Contract of Sub or Bare,
or (3) violate any law or order applicable to Sub or Bare or any assets of Sub
or the Sub Shares.
(c) No notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Bare or Sub of the transactions
contemplated herein.
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<PAGE> 7
2.4. CAPITAL STOCK.
As of the date hereof, the authorized capital stock of Sub consists of 50,000
shares of common stock, of which the Sub Shares are and will be the only issued
and outstanding shares of common stock. There are no other outstanding shares of
any capital stock of Sub. All of the Sub Shares are duly and validly issued and
outstanding and are fully paid and nonassessable under the Georgia Business
Corporation Code. None of the Sub Shares have been issued in violation of any
preemptive rights of current or past shareholders of Sub. There are no
outstanding options, warrants, securities or other rights which are exercisable
for or convertible into shares of Sub's capital stock.
2.5. INVESTMENTS; SUBSIDIARIES.
Except for a 45% equity interest in HH LLC, Sub holds no securities of any other
entity and has no subsidiaries.
2.6. FINANCIAL STATEMENTS.
Sub has provided to ITC and the Company copies of all Sub audited financial
statements for the years ended December 31, 1995, December 31, 1996 and December
31, 1997 and unaudited financial statements for the quarter ended June 30, 1998
prior to the date hereof and will deliver to ITC and the Company copies of all
Sub financial statements prepared subsequent to the date hereof through the
Closing Date. The Sub financial statements (as of the dates thereof and for the
periods covered thereby) (i) are or, if dated after the date of this Agreement,
will be in accordance with GAAP and (ii) present or will present, as the case
may be, fairly the financial position of Sub as of the dates indicated
2.7. ABSENCE OF UNDISCLOSED LIABILITIES.
Sub has no Liabilities of the type normally reflected on a balance sheet or the
notes thereto prepared in accordance with GAAP that are reasonably likely to
have, individually or in the aggregate, a material adverse effect on Sub, other
than Liabilities which are accrued or reserved against in the financial
statements of Sub previously delivered to ITC and the Company. Sub has not
incurred or paid any Liability since December 31, 1997, of the type normally
reflected on a balance sheet or the notes thereto prepared in accordance with
GAAP.
2.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since December 31, 1997, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a material adverse effect on Sub, and (ii) neither Sub nor Bare has
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of Bare provided in this Agreement.
2.9. TAX MATTERS.
(a) Sub is and has been a validly electing S corporation (as defined in
Section 1371 of the Internal Revenue Code) since November 29, 1995. Other than
the execution and delivery of
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<PAGE> 8
this Agreement, Bare has not taken any actions which has or will result in the
termination or revocation of Sub's S corporation status.
(b) All Tax returns required to be filed by or on behalf of (i) Sub and
(ii) Bare in connection with any Tax returns required to be filed by Bare in
connection with the Sub, have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on June 30,
1998, and on the date of the most recent fiscal year end immediately preceding
the Closing, and all returns filed are complete and accurate. All Taxes shown on
filed returns for Sub and Bare have been paid. There is no audit examination,
deficiency, or refund Litigation with respect to any Taxes of Sub. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(c) Neither Sub nor Bare has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(d) Sub and Bare are in compliance with all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
laws.
2.10. ASSETS.
Sub has good and marketable title to all of its assets free and clear of any and
all Liens, including, without limitation, the Sub Units.
2.11. COMPLIANCE WITH LAWS.
Sub has been and is in compliance in all material respects with all applicable
laws and orders of any court or governmental authorities applicable to it, its
assets or its conduct of business.
2.12. LABOR RELATIONS.
Sub is not the subject of any Litigation asserting that it has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other unfair labor practice (as defined above) dispute involving Sub pending or
threatened, nor, to the knowledge of Bare, is there any activity involving any
of the employees of Sub seeking to certify a collective bargaining unit or
engaging in any other organization activity.
2.13. EMPLOYEE BENEFIT PLANS.
(a) Sub does not have and has never had any pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, incentive, medical, vision, dental, health, life
insurance, employee benefit or fringe benefit plans, including "employee benefit
plans" as that term is defined in Section 3(3) of ERISA (collectively, the "Sub
Benefit Plans"). Sub does not now, and has never sponsored, in whole or
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<PAGE> 9
in part, or contributed to any such "employee benefit plan" for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries. Sub has not adopted, maintained, sponsored, in whole or in
part, or contributed to (i) a "defined benefit plan" (as defined in Section
414(j) of the Internal Revenue Code); (ii) a plan which is subject to Section
412 of the Internal Revenue Code; (iii) a plan which is subject to Title IV of
ERISA; or (iv) a multi-employer plan within the meaning of Section 3(37) of
ERISA.
(b) Sub does not have any current or projected Liability in respect of
post-employment or post-retirement health or medical or life insurance benefits
for retired or former employees of Sub.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any current or former employee of Sub
from Sub under any Sub Benefit Plan or otherwise; (ii) increase any benefits
otherwise payable under any Sub Benefit Plan; or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of Sub that, individually or collectively, could
give rise to the payment of any amount by Sub that would not be deductible
pursuant to the terms of Section 280G of the Internal Revenue Code.
(e) No tax under Section 4980B of the Internal Revenue Code has been
incurred in respect of any Sub Benefit Plan that is a group health plan, as
defined in Section 5000(b)(1) of the Internal Revenue Code.
2.14. MATERIAL CONTRACTS.
(a) Sub is not a party to, or is bound or affected by, or receives
benefits under, (i) any Contract which shall survive the Closing under which Sub
has created, incurred, assumed, or guaranteed (or may create, incur, assume, or
guarantee) indebtedness for borrowed money (including capitalized lease
obligations) involving more than $25,000, (ii) any Contract with Bare, (iii) any
Contract (including the lease of real or personal property from or to third
parties) providing for payments in excess of $25,000 per annum or in excess of
$50,000 for the remaining term of the Contract, (iv) any Contract in which Sub
is participating as a general partner or joint venturer, (v) any Contract
concerning noncompetition, (vi) any written employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $25,000, and (vii) any Contract that is
terminable upon a change in ownership of Sub.
(b) With respect to each Sub material Contract (i) such material Contract
is in full force and effect; (ii) Sub is not in Default thereunder; (iii) Sub
has not repudiated or waived any material provision of any such Contract; and
(iv) no other party to any such Contract is, to the knowledge of Bare, in
Default in any respect or has repudiated or waived any material provision
thereunder.
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<PAGE> 10
(c) With respect to any lease to which Sub is a party, (i) all rents and
other amounts currently due thereunder have been paid; (ii) no waiver or
indulgence or postponement of any obligation thereunder has been granted by any
lessor or sublessor or been requested by any lessee or sublessee; and (iii) Sub
has not received any notice that it has breached any term, condition or covenant
under any such lease.
(d) All of the indebtedness of Sub for money borrowed is prepayable at any
time by Sub without penalty or premium.
2.15. LEGAL PROCEEDINGS.
There is no Litigation instituted or pending, or, to the knowledge of Bare,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable material
outcome) against (i) Sub, (ii) any asset, interest, or right of Sub, including,
without limitation, the Sub Units, or (iii) the Sub Shares, nor are there any
orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against Sub, any asset, interest or right of Sub, or the
Sub Shares.
2.16. PURCHASE FOR INVESTMENT; ACCREDITED INVESTOR STATUS.
Bare is an "Accredited Investor" (as defined in Rule 501 of Regulation D
promulgated under the 1933 Act) and is acquiring shares of the Company's capital
stock for investment purposes and not with a present view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the shares of the Company's capital stock so acquired.
Bare has such knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of his investment in the Company's
capital stock. Bare is able to bear any economic risks associated with such
investment in the Company for an indefinite period of time.
2.17. STATEMENTS TRUE AND CORRECT.
No statement, certificate, instrument, or other writing furnished or to be
furnished by Bare or Sub or any Affiliate thereof to ITC or the Company pursuant
to this Agreement or any other document, agreement, or instrument referred to
herein contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
ARTICLE 3. - REPRESENTATIONS AND WARRANTIES OF ITC
ITC hereby represents and warrants to Bare and the Company as follows:
3.1. ORGANIZATION, STANDING, AND POWER OF ITC.
ITC is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its material assets, including the ITC LLC Units.
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<PAGE> 11
3.2. OWNERSHIP OF ITC LLC UNITS.
ITC is the owner of all right, title and interest (legal and beneficial) in and
to the ITC LLC Units free and clear of any and all Liens of any nature
whatsoever, except for Bare's right to purchase such units pursuant to the
Limited Liability Company Agreement, which Bare shall waive pursuant to this
Agreement prior to Closing. The consummation of the ITC Contribution pursuant to
the provisions hereof will transfer to the Company valid title to the ITC LLC
Units free and clear of any and all Liens. No person or entity has any Contract
or Right to purchase the ITC LLC Units.
3.3. AUTHORITY; NO BREACH BY AGREEMENT.
(a) ITC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of ITC. This Agreement represents a legal, valid, and
binding obligation of ITC, enforceable against ITC in accordance with its terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
(b) Neither ITC's execution and delivery of this Agreement, nor ITC's
consummation of the transactions contemplated hereby, nor ITC's compliance with
any of the provisions hereof, will (i) conflict with or result in a breach of
any provision of ITC's Certificate of Incorporation, or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on the Preferred Units of ITC under, any
material Contract of ITC, or (iii) violate any law or order applicable to ITC or
the ITC LLC Units.
(c) No notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by ITC of the transactions contemplated in
this Agreement.
3.4. UNITS.
As of the date hereof, the ITC LLC Units and the Sub Units are the only
outstanding equity interests of HH LLC. Schedule 1 attached hereto is a true and
accurate list that sets forth all options granted by HH LLC which are
exercisable for common units of HH LLC. There are no other outstanding options
or warrants or securities which are exercisable for or convertible into units of
HH LLC.
3.5. LEGAL PROCEEDINGS.
There is no Litigation instituted or pending or, to the knowledge of ITC,
threatened against ITC relating to, or affecting in any way, the ITC LLC Units,
nor are there any orders of any
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<PAGE> 12
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against ITC relating to, or affecting in any way, the ITC LLC Units.
3.6. PURCHASE FOR INVESTMENT; ACCREDITED INVESTOR STATUS.
ITC is an "Accredited Investor" and is acquiring shares of the Company's capital
stock for investment purposes and not with a present view toward, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the shares of the Company's capital stock so acquired.
ITC has such knowledge and experience in financial and business matters that ITC
is capable of evaluating the merits and risks of its investment in the Company's
capital stock. ITC is able to bear any economic risks associated with such
investment in the Company for an indefinite period of time.
3.7. STATEMENTS TRUE AND CORRECT.
No statement, certificate, instrument or other writing furnished or to be
furnished by ITC or any Affiliate thereof to Bare or the Company pursuant to
this Agreement or any other document, agreement or instrument referred to herein
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 4. - COVENANTS
4.1. COVENANTS OF BARE.
(a) Bare hereby consents to the ITC Contribution and waives any and all
rights that Bare and Sub have or may have to acquire the ITC LLC Units pursuant
to the Limited Liability Company Agreement or otherwise.
(b) Bare shall not take any affirmative action to terminate or revoke
Sub's S corporation status under the Internal Revenue Code.
(c) As soon as reasonably practicable after the Closing Date, Bare shall
timely file any and all Tax returns on behalf of himself and Sub for the short
Tax year commencing January 1, 1998 and ending on the Closing Date related to
the termination of operation of law of Sub's S corporation status.
(d) Bare hereby waives any and all registration rights that Bare and Sub
have or may have pursuant to the Limited Liability Company Agreement or
otherwise (except for the registration rights granted hereunder).
4.2. COVENANTS OF ITC.
(a) ITC hereby consents to the Bare Contribution and waives any and all
rights that ITC has or may have to acquire the Sub Units or Sub Shares pursuant
to the Limited Liability Company Agreement or otherwise.
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(b) ITC hereby waives any and all registration rights that ITC may have
pursuant to the Limited Liability Company Agreement or otherwise (except for the
registration rights granted hereunder).
ARTICLE 5. - TERMINATION
5.1. TERMINATION.
Notwithstanding any other provision of this Agreement, this Agreement may be
terminated and the Contributions abandoned at any time prior to the Closing:
(a) By mutual consent of Bare and ITC; or
(b) By Bare or ITC (provided that the terminating party is not then in
material breach of any representation, warranty, covenant, or other
agreement contained in this Agreement) in the event of a material breach
by the other party of any representation, warranty or covenant contained
in this Agreement which cannot be or has not been cured within 10 days
after written notice was sent to such party of such breach.
5.2. EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to this Section, this
Agreement shall become void and have no effect.
ARTICLE 6. - SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION
The respective representations, warranties, obligations, covenants, and
agreements of the parties shall survive the Closing for a period of one year
commencing from the Closing Date. Each party hereto shall indemnify (the
"Indemnitor") the other party (the "Indemnitee") for any Liability incurred or
any loss suffered by the Indemnitee which was caused by a breach of any
representation, warranty or covenant set forth herein by the Indemnitor.
ARTICLE 7. - REGISTRATION RIGHTS
If at any time the Company proposes to make a registered public offering
of its common stock, no par value per share, under the 1933 Act other than (A)
its initial public offering registered on Form S-1, or (B) an offering
registered on Form S-8, Form S-4 or similar forms in connection with (i) the
resale of shares issued to the Company's employees pursuant to the exercise of
stock options granted by the Company or (ii) a business combination with another
entity, the Company shall give written notice of the proposed registration to
Bare and ITC not less than 30 days prior to the proposed filing date of the
registration statement. At the written request of ITC or Bare within 15 days
after receipt of such notice, the Company shall include in
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such registered offering all shares of common stock held by ITC and Bare that
each has requested to be included in such offering; provided, however, that if
the managing underwriters advise the Company in writing that, in their opinion,
the number of shares requested to be included in such offering exceeds the
number of shares that can be sold in the offering without adversely affecting
the marketability of the offering, the Company will include in such registered
offering the primary shares that the Company proposes to sell and then, if
additional shares are to be sold in such offering, ITC and Bare shall each
include their pro-rata number of shares based on the number of shares requested
by them to be included in such offering.
ARTICLE 8. - MISCELLANEOUS
8.1. DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity
or voting interest of such Person; or (iii) any other Person for which a
Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Contribution Agreement, including the
Schedules and Exhibits delivered pursuant hereto and incorporated herein by
reference.
"CLOSING" shall mean the Closing of the transactions contemplated hereby.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, law or order.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of any
kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, assets or business.
"DEFAULT" shall mean (i) any breach or violation of or default under any
Contract or Order, (ii) any occurrence of any event that with the passage of
time or the giving of notice or both would constitute a breach or violation
of or default under any Contract or Order, or (iii) any occurrence of any
event that with or without the passage of time or the giving of notice would
give rise to a right to terminate or revoke, change the current terms
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<PAGE> 15
of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract or Order.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) Liens in the form of easements and
restrictive covenants on real property which do not materially adversely
affect the use of such property by the current owner thereof.
"LITIGATION" shall mean any action, arbitration, complaint, criminal
prosecution, governmental or other examination or investigation, hearing,
inquiry, administrative or other proceeding relating to or affecting a party,
its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement.
"MATERIAL" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality
in that instance.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any
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<PAGE> 16
character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of the capital stock of a Person or by which a
Person is or may be bound to issue additional shares of its capital stock
or other Rights.
"TAX" or "TAXES" shall mean any federal, state, county, local, or foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy, and other taxes, assessments,
charges, fares, or impositions, including interest, penalties, and additions
imposed thereon or with respect thereto.
8.2. EXPENSES.
Each of the parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder.
8.3. ENTIRE AGREEMENT.
This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
8.4. AMENDMENTS.
This Agreement may not be amended except by a writing signed by all parties
hereto.
8.5. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto (whether by operation of Law or otherwise)
without the prior written consent of each other party. Any such attempt to
assign this Agreement or the rights, interests or obligations hereunder without
the other party's consent shall be void.
8.6. NOTICES.
All notices or other communications which are required or permitted hereunder
shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail (postage pre-paid) or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
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<PAGE> 17
If to Bare: c/o HeadHunter.NET, Inc.
6410 Atlantic Boulevard
Suite 160
Norcross, Georgia 30071
Telecopy No.: (770) 300-9298
If to ITC: ITC Holding Company, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
Telecopy No.: (706) 619-9720
Attention: Kimberley E. Thompson,
General Counsel
8.7. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Georgia, without regard to the conflicts of laws principles
thereof.
8.8. SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable shall
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement.
8.9. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument.
(signatures on following page)
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<PAGE> 18
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
/s/ Warren L. Bare
----------------------------------------
Warren L. Bare
ITC HOLDING COMPANY, INC.
By: /s/ Bryan Adams
-------------------------------------
Name: Bryan Adams
--------------------------------
Title: Chief Financial Officer
-------------------------------
HEADHUNTER.NET, INC.
By: /s/ Warren L. Bare
-------------------------------------
Name: Warren L. Bare
--------------------------------
Title: President
-------------------------------
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<PAGE> 1
EXHIBIT 10.7
WORKLIFE'S lNTERNET CONTENT PARTNERS AGREEMENT
BY AND BETWEEN
WORKLIFE SOLUTIONS, INC.
AND
HEADHUNTER.NET
RECITALS
A. WorkLife Solutions Inc. (hereinafter known as "WorkLife") has developed a
method to store, classify and categorize career, employer and entrepreneurial
related content from the World Wide Web ("WWW") using the AltaVistaTM full-text
World Wide Web search engine and the AltaVista index.
B. Digital Equipment Corporation (hereinafter known as "Digital") has developed
and operates the AltaVistaTM full-text World Wide Web ("WWW")search engine and
the AltaVista index (known as "AltaVista").
C. HEADHUNTER.NET (hereinafter known as "ICP") has content and/or Internet
application software that addresses the needs of employers, entrepreneurs and/or
individuals interested in their career. The ICP will make such information
available to persons who access the WorkLife Career and Employer Zone through
the AltaVista Search Engine.
D. ICP and WorkLife agree that the following terms and conditions shall govern
their relationship under this Agreement.
AGREEMENT SUMMARY
WorkLife in conjunction with AltaVista will install, manage and market
a Career and Employer Zone. AltaVista will provide its customers with
continuous access to the Career and Employer Zone. The AltaVista
Subject Search Service will be accessible to Users through AltaVista's
URL either directly on the WWW or through Digital's existing AltaVista
Search Site, currently accessible through
http://www.altavista.digital.com..
Users will have access to the AltaVista Subject Search Service through
hyperlinks directly from the AltaVista Home Page and AltaVista Results
Pages. The AltaVista Subject Search Service will enable Users to browse
or search for Websites contained within WorkLife's hierarchy. When the
User initiates a search of such hierarchy, he or she will be presented
with a result set that contains matches from the AltaVista/WorkLife
index.
Therefore, an ICP which provides content for the site to index, whether
it be job ads, resumes, career, or entrepreneurial or human resource
related content, the matching results will link the User via a URL to
the content hosted on the ICP's
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server. The ICP is responsible for providing to WorkLife an updated
list of URL's to index on a monthly basis.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties do hereby agree as follows:
1. DEFINITIONS; RULES OF CONSTRUCTION
1.1. Definitions. For purposes of this Agreement the following
terms shall have the meanings ascribed to them below:
(a) "AltaVista Career Search Service" means the Internet
service developed by WorkLife and Digital pursuant to
this Agreement and which is described in Section 2.1
herein and includes an index of available jobs and
candidates as well as content of interest to
employers and candidates.
(b) "AltaVista Search Engine" means the software
program(s) developed by Digital that compares the
text query of an User to the text URL sites indexed
by AltaVista and that compiles those qualifying URLs
into a response file.
(c) "AltaVista Search Service" means the full-text WWW
search engine and the index of the entire WWW and
which was developed and is operated by or on behalf
of Digital, or any successor full-text WWW search
engine and index of the WWW operated by Digital or
any parent or subsidiary of Digital.
(d) "AltaVista Web Crawler" means the software program
owned and developed by Digital that follows URL
pointers, which utilize the hypertext transfer
protocol (http), from one Web Page to another on the
WWW in order to access and collect Web Pages
containing text responsive to a User's textual query.
(e) "User" means a person who accesses either Digital's
AltaVista or the Co-Branded Property.
(f) "URL" or "Uniform Resource Locator" means the address
of a Website on the WWW, an example of which is the
URL for the AltaVista Search Service available at
http://www.altavista.digital. com.
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<PAGE> 3
(g) "Website" means a repository of data and other
information in electronic form residing on one or
more servers that can be accessed via the WWW by an
User on an anonymous basis.
(h) "WorkLife Categories" means the list of web sites
that WorkLife or its designees has native content and
has or will categorize during the term of this
Agreement.
(i) "World Wide Web" or "WWW" means the Internet-based
distributed information service that utilizes the
hypertext transfer protocol (http) or any purchased
protocol.
2. DESCRIPTION OF OPERATION
2.1. Description of Operation.
(a) The AltaVista Career Search Service will be
accessible to Users through its own URL either
directly on the WWW or through Digital's existing
AltaVista Search Site. The AltaVista Career Search
Service would be separate from the AltaVista Search
Site and from WorkLife's Home Page. The User would
have access to the AltaVista Career Search Service
through hyperlinks directly from the AltaVista Home
Page and AltaVista Results Pages.
(b) The AltaVista Career Search Service would enable
Users to browse or search for Websites contained
within WorkLife's hierarchy.
(c) When a User initiates a search, the search will be
transmitted to the AltaVista/WorkLife Career Service
index, where it will be processed, and the results
will be sent to the AltaVista/WorkLife site.
(d) The process will not remove the User from the
AltaVista/WorkLife site.
(e) When a User selects one of the search results links
it will take them to the owner of that content page.
3. PROJECT COORDINATION
3.1 Project Coordinators. ICP shall designate a representative to
manage and coordinate its obligations under this Agreement ("Project
Manager"). The Project Manager shall in this regard: (i) be responsible
for overseeing such party's day-to-day obligations under this
Agreement; and (ii) serve as liaison to the other party's
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<PAGE> 4
Project Manager with respect to matters contemplated by this Agreement.
Neither party's Project Manager will have the right to amend, modify or
otherwise supplement this Agreement or to waive any provisions hereof.
4. WORKLIFE'S RESPONSIBILITIES
4.1 Development. WorkLife will be responsible for the presentation of
the content for the AltaVista/WorkLife site.
4.2 Design. WorkLife shall be responsible for designing the AltaVista/
WorkLife site based on the specifications provided by Digital.
5. ICP RESPONSIBILITIES
5.1 Production. The ICP is responsible for providing WorkLife the URL
listings for all content that is to be indexed by the AltaVista Crawler
on a monthly basis.
5.2 Monitoring. The ICP is responsible for monitoring the accuracy and
relevancy of URL's, ICP shall inform WorkLife of those URL's which are
no longer valid links and therefore need to be removed on a weekly
basis.
6. PROPRIETARY RIGHTS
6.1 WorkLife. Subject to ICP's underlying ownership interests in its
content, WorkLife shall own all right, title and interest in and to the
content developed by and provided by WorkLife to Users hereunder and
the WorkLife categories including, but not limited to, the intellectual
property rights embodied therein except as to permit ICP to perform
hereunder.
6.2 Agreement, ICP shall own all right, title and interest in and to
any content provided by ICP hereunder including, but not limited to,
the intellectual property rights embodied therein except as to permit
WorkLife to perform their obligations hereunder.
7. TRADEMARKS
7.1 ICP Marks. ICP hereby grants to WorkLife a non-exclusive and
limited license to use the ICP tradenames, logos and other ICP
trademarks and service marks ("ICP" Marks) on all ICP content shown on
the AltaVista Search Service, Web Crawler, URL Index and WorkLife Web
Site. WorkLife use shall be in accordance with ICP's written policies
regarding advertising and trademark usage as established from time to
time by ICP. WorkLife agrees to cooperate with ICP in facilitating
ICP's monitoring and control of the nature and quality of products and
services bearing the ICP Marks, and to supply ICP with specimens of
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<PAGE> 5
WorkLife's use of the ICP Marks upon request. In the event that ICP
determines that WorkLife's use of the ICP is inconsistent with ICP's
quality standards, then upon ICP written request, WorkLife shall within
a reasonable period thereafter conform such use or services to ICP's
standards. If WorkLife fails to conform such use or services, ICP shall
have the right to suspend such use of the ICP's Marks.
7.2 WorkLife Marks. WorkLife hereby grants to ICP a non-exclusive and
limited license to use the WorkLife tradenames, logos and other
WorkLife trademarks and service marks ("WorkLife" Marks) on all
WorkLife content shown on the ICP Web Site. ICP use shall be in
accordance with WorkLife's written policies regarding advertising and
trademark usage as established from time to time by WorkLife. ICP
agrees to cooperate with WorkLife in facilitating WorkLife's monitoring
and control of the nature and quality of products and services bearing
the WorkLife Marks, and to supply WorkLife with specimens of ICP's use
of the WorkLife Marks upon request. In the event that WorkLife
determines that ICP's use of the WorkLife is inconsistent with
WorkLife's quality standards, then upon WorkLife's written request, ICP
shall within a reasonable period thereafter conform such use or
services to WorkLife's standards. If ICP falls to conform such use or
services, WorkLife shall have the right to suspend such use of
WorkLife's Marks.
8. CONFIDENTIALITY
8.1 Confidential Information. "Confidential Information" means
information about the disclosing party's business or activities that
are proprietary or confidential, which shall include business,
financial, technical and other data. All such confidential information
shall be marked or designated by such party as "confidential" or
"proprietary"; or information which, by the nature of the circumstances
surrounding the disclosure, ought in good faith to be treated as
confidential; provided that information shall not be considered
Confidential Information of a party if it can be shown that such
information: (i) is known to the recipient on the Effective Date
directly or indirectly from a source other than one having an
obligation of confidentiality to the providing party); (ii) hereafter
becomes known (independently of disclosure by the providing party to
the recipient directly or indirectly from a source other than one
having an obligation of confidentiality to the providing party; (iii)
becomes publicly known or otherwise ceases to be confidential, except
through a breach of this Agreement by the recipient; or (iv) was
independently developed by the recipient without use of Confidential
Information.
8.2 Protection of Confidential Information. The parties recognize that,
in connection with the performance of this Agreement, each of them may
disclose to the other its Confidential Information, including the
creation of materials and the development of technology and techniques
that are not generally known in the
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<PAGE> 6
industry. The party receiving any Confidential Information of the other
party agrees to maintain the confidential status of such Confidential
Information for a period of 2 years from the date of disclosure and not
to use any such Confidential Information for any purpose other than the
purposes for which it was originally disclosed to the receiving party,
and not to disclose any of such Confidential Information to any third
party. Upon expiration or termination of this Agreement, the receiving
party shall return promptly to the other party or destroy, at that
party's option, all tangible materials that disclose or embody
Confidential Information.
8.3 Permitted Disclosure. The parties acknowledge and agree that each
may disclose any given Confidential Information: (i) as required by law
or generally accepted accounting practices; (ii) to their respective
directors, officers, employees, attorneys, accountants and other
advisors or independent contractors, who are under an obligation of
confidentiality no less stringent than set forth herein, on a
"need-to-know" basis; or (iii) in connection with disputes or
litigation between the parties that relates to such Confidential
Information and each party shall endeavor to limit disclosure to that
purpose. In the event that the receiving party is ordered to disclose
the other party's Confidential Information pursuant to a judicial or
governmental request, requirement or order, the receiving party shall
promptly notify the other party and take reasonable steps to assist
that party in contesting such request, requirement, or order or in
otherwise in protecting that party's rights prior to disclosure.
8.4 Applicability. The foregoing obligations shall apply to directors,
officers, employees and representatives of the parties and any other
person to whom the parties have delivered copies of, or permitted
access to, such Confidential Information in connection with the
performance of this Agreement, and each party shall advise each of the
above of the obligations set forth in this Section 8.
8.5 Third Party Confidential Information. Any Confidential Information
of a third party disclosed to WorkLife shall be treated by WorkLife, as
the case may be, in accordance with the terms under which such third
party Confidential Information was disclosed; provided that (i) the
party disclosing such third party Confidential Information shall first
notify the other party that such information constitutes Confidential
Information and the terms applicable to such third party Confidential
Information; and (ii) either party may, in its sole discretion, decline
to accept all or any portion of such third party Confidential
Information.
8.6 Confidentiality of Agreement. Except as required by law or
generally accepted accounting principles, and except to assert its
rights hereunder or for disclosures on a "need-to-know" basis to its
own officers, directors, employees and professional advisers or to
prospective investors or acquirers in connection with a pending
investment in or acquisition of such party, and under an obligation of
confidentiality no less stringent that as set forth herein, each party
hereto agrees
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<PAGE> 7
that neither it nor its directors, officers, employees, consultants or
agents shall disclose the terms of this Agreement or specific matters
relating hereto without the prior consent of the other party.
8.7 Publicity Restrictions. Neither party shall make any public
announcement of this Agreement or the relationship between the parties
without the prior written consent of the other party. The parties shall
agree upon the form, content and timing of any public announcements
9. GENERAL REPRESENTATIONS AND WARRANTIES
9.1 ICP Representations and Warranties. ICP hereby represents and
warrants to WorkLife that as of the Effective Date:
(a) ICP has the full corporate right, power and authority to
enter into this Agreement and to perform the acts required of
it hereunder;
(b) the execution of this Agreement by ICP, and the
performance by ICP of its obligations and duties hereunder, do
not and will not violate any agreement to which ICP is a party
or by which it is otherwise bound;
(c) ICP acknowledges that WorkLife makes no representations,
warranties or agreements related to the subject matter hereof
that are not expressly provided for in this Agreement.
9.2 WorkLife's Representations and Warranties. WorkLife hereby
represents and warrants to ICP that as of the Effective Date:
(a) WorkLife has the full corporate right, power and authority
to enter into this Agreement, to perform the acts required of
it, and to grant the rights granted by it hereunder;
(b) the execution of this Agreement by WorkLife, and the
performance by WorkLife of its obligations and duties
hereunder, do not and will not violate any agreement to which
WorkLife is a party or by which it is otherwise bound; and
(c) WorkLife acknowledges that ICP makes no representations,
warranties or agreements related to the subject matter hereof
that are not expressly provided for in this Agreement.
10. DISCLAIMER OF WARRANTIES
10.1 ICP HEREBY ACKNOWLEDGES AND AGREES THAT THE WORKLIFE CONTENT BEING
PROVIDED TO ICP (IF ANY) IS PROVIDED
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<PAGE> 8
"AS IS, WITH ALL FAULTS," AND THAT WORKLIFE MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE USEFULNESS, ACCURACY,
COMPLETENESS, FEASIBILITY, RELIABILITY OR EFFECTIVENESS OF THE WORKLIFE
CONTENT OR SHALL MEET THE OBJECTIVES OR NEEDS OF ICP OR ANY THIRD
PARTY, THAT THE OPERATION OF ALTAVISTA WILL BE UNINTERRUPTED OR
ERROR-FREE, OR THAT DEFECTS IN ALTAVISTA HAVE BEEN OR WILL BE
CORRECTED. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, WORKLIFE
MAKES NO REPRESENTATIONS AS TO THE COMPLETENESS OF WORKLIFE'S CONTENT
OR APPLICATIONS AND THEIR ABILITY TO OPERATE ON THE ALTAVISTA SEARCH
ENGINE. WITHOUT LIMITING THE FOREGOING, WORKLIFE HEREBY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE. IN NO
EVENT SHALL WORKLIFE BE LIABLE TO ICP FOR ANY FAILURE, DISRUPTION,
DOWNTIME, INTERRUPTION, MISCALCULATION, INCORRECT LINKAGE, DELAY,
INACCURACY OR OTHER NONPERFORMANCE OF WORKLIFE.
10.2 WORKLIFE HEREBY ACKNOWLEDGES AND AGREES THAT THE ICP CONTENT IS
BEING PROVIDED TO WORKLIFE "AS IS, WITH ALL FAULTS," AND THAT ICP MAKES
NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
USEFULNESS, ACCURACY, COMPLETENESS, FEASIBILITY, RELIABILITY OR
EFFECTIVENESS OF THE ICP CONTENT OR SHALL MEET THE OBJECTIVES OR NEEDS
OF ICP OR ANY THIRD PARTY, THAT THE OPERATION OF THE ICP WEB SITE WILL
BE UNINTERRUPTED OR ERROR-FREE, OR THAT DEFECTS IN THE ICP WEB SITE
HAVE BEEN OR WILL BE CORRECTED. IN PARTICULAR, AND WITHOUT LIMITING THE
FOREGOING, ICP MAKES NO REPRESENTATIONS AS TO THE COMPLETENESS OF ICP'S
CONTENT OR APPLICATIONS. WITHOUT LIMITING THE FOREGOING, ICP HEREBY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE. IN NO EVENT SHALL ICP BE LIABLE TO WORKLIFE FOR ANY FAILURE,
DISRUPTION, DOWNTIME, INTERRUPTION, MISCALCULATION, INCORRECT LINKAGE,
DELAY, INACCURACY OR OTHER NONPERFORMANCE OF WORKLIFE.
11. INDEMNIFICATION
11.1 WorkLife Indemnity. Subject to the limitations set forth below,
WorkLife at its own expense, shall indemnify, defend (or at WorkLife's
option and expense, settle) and hold ICP harmless from and against any
judgment, losses, deficiencies, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses), whether required to be paid to a third party or
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<PAGE> 9
otherwise incurred in connection with or arising from any claim, suit,
action or proceeding (collectively, a "Claim"), incurred or suffered by
ICP to the extent the basis of such Claim is that (1) the WorkLife
Content infringes any (a) patent; (b) trademark or (c) copyright; or
(2) the display of a WorkLife Mark infringes any trademark or service
rights of a third party; or to the extent that such Claim arises out of
or is in connection with the categorization of any Website(s) performed
by WorkLife; provided that WorkLife shall have no obligation to ICP
pursuant to this Section 13.1 unless: (x) ICP gives WorkLife prompt
written notice of the Claim (except to the extent that WorkLife already
has notice of such Claim); (y) WorkLife is given the right to control
and direct the investigation, preparation, defense and settlement of
the Claim; and (z) ICP reasonably cooperates with WorkLife in the
defense or settlement thereof. In connection with the defense of any
such Claim, ICP may have its own counsel in attendance at all
interactions and substantive negotiations at its own cost and expense.
Upon notice of an alleged infringement or if in WorkLife's reasonable
opinion such a claim is likely, WorkLife shall obtain, at its expense,
(and in addition to its other obligations hereunder) a license to
continue to use, thereby obtaining for ICP the right to continue the
use, display and distribution of such data, modify the data so that it
is no longer infringing but functionally equivalent. In the event that
none of the above options are reasonably available, ICP may terminate
this Agreement.
11.2 ICP Indemnity. ICP, at its own expense, shall indemnify, defend
(or at ICP's option and expense, settle) and hold WorkLife harmless
from and against any judgment, losses, deficiencies, damages,
liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), whether required to be paid
to a third party or otherwise incurred in connection with or arising
from any Claim, incurred or suffered by WorkLife to the extent that the
basis of such Claim is that the display of an ICP Mark infringes any
trademark or service rights of a third party; provided that ICP shall
have no obligation to WorkLife pursuant to this Section 11.2 unless:
(x) WorkLife gives ICP prompt notice of the Claim (except to the extent
that WorkLife already has notice of such Claim); (y) ICP is given the
right to control and direct the investigation , preparation, defense
and settlement of the Claim; and (z) WorkLife reasonably cooperates
with ICP in the defense or settlement thereof. In connection with the
defense of any such Claim, WorkLife may have its own counsel in
attendance at all interactions and substantive negotiations at its own
cost and expense.
12. TERM AND TERMINATION
12.1 Term. This Agreement will be valid for four (4) years from the
Effective Date and shall continue in full force and effect, unless
earlier terminated in accordance with the provisions contained in this
Agreement. Thereafter, this Agreement will renew on a year-to-year
basis, in accordance with the criteria in 12.2. Notwithstanding the
forgoing, either party may terminate this agreement at any time after 1
year from the effective date upon 30 days prior written notice.
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<PAGE> 10
12.2 Each party reserves the right to review the current business model
prior to any renewal term. In the event that the current business model
is significantly different the parties will negotiate in good faith to
resolve such differences. In the event such negotiations can not be
successfully completed within 45 days of the intended renewal date, the
parties will establish a process for termination of the Agreement
within six months from the intended renewal date. The parties agree to
be bound by the terms of the last renewal of this Agreement during any
negotiations or termination process hereunder.
12.3 Events of Termination. This Agreement shall be subject to
termination upon the occurrence of the following events:
(a) if either party hereto defaults on any of its material
obligations, representations or warranties under this
Agreement, the non-defaulting party shall notify the other
party in writing, specifying in sufficient detail the nature
and extent of such breach and, unless within thirty (30)
calendar days after written notice of such default the
defaulting party remedies the default, this agreement will
terminate.
(b) if (a) either party files a petition for bankruptcy or is
adjudicated a bankrupt; (b) a petition in bankruptcy is filed
against either party; (c) either party becomes insolvent or
makes an assignment for the benefit of its creditors or an
arrangement for its creditors pursuant to any bankruptcy law;
(d) either party discontinues its business; or (e) a receiver
is appointed for either party or its business, then the other
party shall have the right to terminate this agreement
immediately upon written notice;
12.4 Effect of Termination.
(a) Termination of this Agreement by either party hereto shall
not act as a waiver of any breach of this Agreement and shall
not act as a release of either party hereto from any liability
for breach of such party's obligations under this Agreement.
(b) Within forty-five (45) calendar days of the expiration or
termination of this Agreement, the parties shall pay to the
other party all sums, if any, due and owing as of the date of
expiration or termination.
12.5 Survival. The respective rights and obligations of WorkLife under
the provisions of Sections 9.1, 9.2, 11, 12, 13, 7, 8, 9, 10, and 11
hereof shall survive expiration or termination of this Agreement.
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<PAGE> 11
13. MISCELLANEOUS
13.1 No Joint Venture. The sole relationship between the parties shall
be that of licensor and licensee. The parties are independent
contractors and neither is the agent of the other. Each party shall be
solely responsible for the actions of all their respective employees,
agents and representatives.
13.2 Governing Law. This Agreement shall be interpreted and construed
in accordance with the laws of the Commonwealth of New York without
regard to the principles of conflicts of laws, and with the same force
and effect as if only executed and performed therein, and the laws of
the United States of America.
13.3 Remedies Cumulative. Except as otherwise expressly specified
herein, the rights and remedies granted to each party under this
Agreement are cumulative and in addition to, and not in lieu of, any
other rights or remedies that such party may possess at law or in
equity.
13.4 Amendment or Modification. This Agreement may not be amended,
modified or supplemented by the parties in any manner, except by an
instrument in writing signed on behalf of each of the parties by a duly
authorized officer or representative.
13.5 Non Assignment. Neither party shall transfer or assign any rights
or delegate any of its obligations hereunder, in whole or in part,
whether voluntarily or by operation of law, without the prior written
consent of the other party, whose consent will not be unreasonably
withheld. Any purported transfer, assignment or delegation without the
appropriate prior written approval shall be null and void and of no
force or effect. Notwithstanding the forgoing, no consent shall be
required if the transfer is the result of merger or sale of either
party.
13.6 Notices. All notices, requests, demands or other communications
under this Agreement shall be in writing and may be sent by mail,
facsimile, or an authorized electronic address to the addressee and
offices specified below. Either party may change its address for
purposes hereof upon prior notice to the other party. Notices hereunder
shall be directed :
If to ICP If to WorkLife Solutions, Inc.
Attention: Warren Bare
HEADHUNTER.NET Attention: Dan Cahn
6410 Atlantic Blvd., Suite 160 12828 Northup Way, Suite 210
Norcross, GA 30071 Bellevue, WA 98005
13.7 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and supersedes
all prior and/or
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<PAGE> 12
contemporaneous agreements and understandings, written or oral between
the parties with respect to the subject matter hereof.
13.8 Waiver. The party entitled to the benefit thereof may waive any of
the provisions of this Agreement. Neither party shall be deemed, by any
act or omission, to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the waiving party, and
then only to the extent specifically set forth in such writing. A
waiver with reference to one event shall not be construed as continuing
or as a bar to or waiver of any night or remedy as to a subsequent
event.
13.9 No Third Party Beneficiaries. Nothing express or implied in this
Agreement is intended to confer, nor shall anything herein confer, upon
any person other than the parties and the respective successors or
assigns of the parties, any rights, remedies, obligations or
liabilities whatsoever.
13.10 Severability. If the application of any provision or provisions
of this Agreement to any particular facts of circumstances shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, then: (i) the validity and enforceability of such
provision or provisions as applied to any other particular facts or
circumstances and the validity of other provisions of this Agreement
shall not in any way be affected or impaired thereby; and (ii) such
provision or provisions shall be reformed without further action by the
parties hereto and only to the extent necessary to make such provision
or provisions valid and enforceable when applied to such particular
facts and circumstances.
13.11 Counterparts; Facsimiles. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall
constitute one and the same instrument.
Each party shall receive a duplicate original of the counterpart copy
or copies executed by it. For purposes hereof, a facsimile copy of this
Agreement, including the signature pages hereto, shall be deemed to be
an original. Notwithstanding the foregoing, the parties shall each
deliver original execution copies of this Agreement to one another as
soon as practicable following execution thereof.
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<PAGE> 13
IN WITNESS WHEREOF, the parties to this Agreement by their duly authorized
representatives have exerted this agreement as of the date first above written.
HEADHUNTER.NET FOR WORKLIFE SOLUTIONS, INC:
By: /s/ Warren Bare By: /s/ Daniel Cahn
----------------------------- ---------------------------
Name: Warren Bare Name: Daniel Cahn
--------------------------- -------------------------
Title: President Title: CEO
-------------------------- ------------------------
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<PAGE> 1
EXHIBIT 10.8
YAHOO! INC.
CONTENT LICENSE AGREEMENT
THIS CONTENT LICENSE AGREEMENT (the "Agreement") is made as of this
15th day of April, 1998 (the "Effective Date") between YAHOO!, INC., a
California corporation, with offices at 3400 Central Expressway, Suite 201,
Santa Clara, CA 95051, ("YAHOO") and HeadHunter.NET, ("Licensor"), a Georgia
corporation, with offices at 6410 Atlantic Blvd., Suite 160, Norcross, GA 30071.
In consideration of the mutual promises contained herein, the parties agree as
follows:
SECTION 1: DEFINITIONS.
Unless otherwise specified, capitalized terms used in this Agreement
shall have the meanings attributed to them in Exhibit A hereto.
SECTION 2: GRANT OF LICENSES.
2.1 Grant of Licenses. Subject to the terms and conditions of this Agreement
Licensor hereby grants to Yahoo, under Licensor's Intellectual Property Rights:
(a) A non-exclusive, worldwide license to use, modify, reproduce,
distribute, display and transmit the Licensor Content in electronic
form in connection with Yahoo Properties via the Internet, and to
permit users of the Yahoo Properties to download and print the Licensor
Content for personal use. Yahoo's license to modify the Licensor
content shall be limited to modifying the Licensor Content to fit the
format and look and feel of the Yahoo Property.
(b) A non-exclusive, worldwide, fully paid license to use, reproduce and
display the Licensor's Brand Features: (1) in connection with the
presentation of the Licensor Content on the Content Pages in the Yahoo
Properties; and (ii) in connection with the marketing and promotion of
the Yahoo Properties.
(c) Yahoo shall be entitled to sublicense the rights set forth in this
Section 2.1 (1) to its Affiliates only for inclusion in Yahoo
Properties, and (2) in connection with any mirror site, derivative
site, or distribution arrangement concerning a Yahoo Property.
SECTION 3: DELIVERY OF LICENSOR CONTENT; ADVERTISING REVENUE.
3.1 Yahoo's Responsibilities. [In addition to any responsibilities that may be
set forth in Exhibit C,] Yahoo will be responsible for the design, layout,
posting, and maintenance of the Content Pages. In no event is Yahoo under any
obligation, express or implied, to
<PAGE> 2
post or otherwise include any of the Licensor Content in any Yahoo Property,
including without limitation, in any Content Pages.
3.2 Licensor Assistance. [In addition to any responsibilities that may be set
forth in Exhibit C,] Licensor will provide on-going assistance to Yahoo with
regard to technical, administrative and service-oriented issues relating to the
utilization, transmission and maintenance of the Licensor Content, as Yahoo may
reasonably request. Licensor will use its reasonable best efforts to ensure that
the Licensor Content is accurate, comprehensive and updated regularly as set
forth in Exhibit C.
3.3 Advertising Rights. Yahoo shall have the sole right to sell and retain all
Advertising Rights with respect to Content Pages.
3.4 Notices. Yahoo will not alter or impair any acknowledgment of copyright or
other Intellectual Property Rights of Licensor that may appear in the Licensor
Content and the Licensor Brand Features, including all copyright, trademark and
similar notices that Licensor may reasonably request.
3.5 Links. The parties will maintain the hypertext links specified in Exhibit D.
SECTION 4: DELIVERY OF LICENSOR CONTENT
During the term of this Agreement, Licensor shall deliver updates of
the Licensor Content to Yahoo in accordance with the Delivery Specifications set
forth in Exhibit C. Licensor also shall provide Yahoo with reasonable prior
notice of any significant Enhancements that generally affect the appearance,
updating, delivery or other elements of the Licensor Content, and shall make
such Enhancements available to Yahoo upon commercially reasonable terms.
SECTION 5: INDEMNIFICATION
Licensor, at its own expense, will indemnify, defend and hold harmless
Yahoo, its Affiliates and their employees, representatives, agents and
affiliates, against any claim, suit, action, or other proceeding brought against
Yahoo or an Affiliate based on or arising from a claim that the Licensor Content
as delivered to Yahoo or any Licensor Brand Feature infringes in any manner any
Intellectual Property Right of any third party or contains any material or
information that is obscene, defamatory, libelous, slanderous, that violates any
person's right of publicity, privacy or personality, or has otherwise resulted
in any tort, injury, damage or harm to any person; provided, however, that in
any such case: (x) Yahoo provides Licensor with prompt notice of any such claim;
(y) Yahoo permits Licensor to assume and control the defense of such action,
with counsel chosen by Licensor (who shall be reasonably acceptable to Yahoo);
and (z) Licensor does not enter into any settlement or compromise of any such
claim without Yahoo's prior written consent, which consent shall not be
unreasonably withheld. Licensor will pay any and all costs, damages, and
expenses, including, but not limited to, reasonable attorneys' fees and
-2-
<PAGE> 3
costs awarded against or otherwise incurred by Yahoo or an Affiliate in
connection with or arising from any such claim, suit, action or proceeding. It
is understood and agreed that Yahoo does not intend and will not be required to
edit or review for accuracy or appropriateness any Licensor Content.
SECTION 6: LIMITATION OF LIABILITY.
EXCEPT AS PROVIDED IN SECTION 5, UNDER NO CIRCUMSTANCES SHALL LICENSOR,
YAHOO, OR ANY AFFILIATE BE LIABLE TO ANOTHER PARTY FOR INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING FROM THIS AGREEMENT, EVEN IF
THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT
LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.
SECTION 7: TERM AND TERMINATION
7.1 Initial Term and Renewals. This Agreement will become effective as of the
Effective Date and shall, unless sooner terminated as provided below or as
otherwise agreed, remain effective for an initial term of twelve (12) months
following the first date of public availability of the Licensor Content on a
Content Page within a Yahoo Property (the "Initial Term"). After the Initial
Term, this Agreement will be automatically renewed for successive additional one
year periods ("Extension Terms"), unless otherwise terminated by either party by
giving notice to the other party not less than sixty (60) days prior to the end
of a Term. As used herein, the "Term" means the Initial Term and any Extension
Term(s).
7.2 Termination for Cause. Notwithstanding the foregoing, this Agreement may be
terminated by either party immediately upon notice if the other party: (w)
becomes insolvent; (x) files a petition in bankruptcy; (y) makes an assignment
for the benefit of its creditors; or (z) breach any of its obligations under
this Agreement in any material respect, which breach is not remedied within
thirty (30) days following written notice to such party.
7.3 Effect of Termination. Any termination pursuant to this Section 7 shall be
without any liability or obligation of the terminating party, other than with
respect to any breach of this Agreement prior to termination. The provisions of
Sections 5, 6, 7, 8, 9, 10, and this Section 7.3 shall survive any termination
or expiration of this Agreement.
SECTION 8: OWNERSHIP.
8.1 By Licensor. Yahoo acknowledges and agrees that: (i) as between Licensor on
the one hand, and Yahoo and its Affiliates on the other, Licensor owns all
right, title and interest in the Licensor Content and the Licensor Brand
Features; (ii) nothing in this Agreement shall confer in Yahoo or an Affiliate
any right of ownership in the Licensor
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<PAGE> 4
Content or the Licensor Brand Features; and (iii) neither Yahoo or its
Affiliates shall now or in the future contest the validity of the Licensor Brand
Features. No licenses are granted by either party except for those expressly set
forth in this Agreement.
8.2 By Yahoo. Licensor acknowledges and agrees that: (i) as between Licensor on
the one hand, and Yahoo and its Affiliates on the other, Yahoo or the Affiliates
own all right, title and interest in any Yahoo Property and the Yahoo Brand
Features; (ii) nothing in this Agreement shall confer in Licensor any license or
right of ownership in the Yahoo Brand Features; and (iii) Licensor shall not now
or in the future contest the validity of the Yahoo Brand Features. No licenses
are hereby granted by Yahoo. Yahoo or its Affiliates shall own all derivative
works created by Yahoo from the Licensor Content, including the Content Pages,
pursuant to this Agreement, to the extent such is separable from the Licensor
Content.
SECTION 9: PUBLIC ANNOUNCEMENTS.
The parties will cooperate to create any and all appropriate public
announcements relating to the relationship set forth in this Agreement. Neither
party shall make any public announcement regarding the existence or content of
this Agreement without the other party's prior written approval and consent.
SECTION 10: NOTICE; MISCELLANEOUS PROVISIONS.
10.1 Notices. All notices, requests and other communications called for by this
agreement shall be deemed to have been given immediately if made by telecopy or
electronic mail (confirmed by concurrent written notice sent first class U.S.
mail, postage prepaid), if to Yahoo at 3400 Central Expressway, Suite 201, Santa
Clara, CA 95051, Fax: (408) 731-3301 Attention: Vice President (e-mail:
[email protected]), with a copy to its General Counsel (e-mail:
[email protected]), and if to Licensor at the physical and electronic mail
addresses set forth on the signature page of this Agreement, or to such other
addresses as either party shall specify to the other. Notice by any other means
shall be deemed made when actually received by the party to which notice is
provided.
10.2 Miscellaneous Provisions. This Agreement will bind and inure to the benefit
of each party's permitted successors and assigns. Neither party may assign this
Agreement, in whole or in part, without the other party's written consent;
provided, however, that: (i) either party may assign this Agreement without such
consent in connection with any merger, consolidation, any sale of all or
substantially all of such party's assets or any other transaction in which more
than fifty percent (50%) of such party's voting securities are transferred. Any
attempt to assign this Agreement other than in accordance with this provision
shall be null and void. This Agreement will be governed by and construed in
accordance with the laws of the State of California, without reference to
conflicts of laws rules, and without regard to its location of execution or
performance. If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the
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<PAGE> 5
maximum extent permissible, and the other provisions of this Agreement will
remain in force. Neither this Agreement, nor any terms and conditions contained
herein may be construed as creating or constituting a partnership, joint venture
or agency relationship between the parties. No failure of either party to
exercise or enforce any of its rights under this Agreement will act as a waiver
of such rights. This Agreement and its exhibits are the complete and exclusive
agreement between the parties with respect to the subject matter hereof,
superseding and replacing any and all prior agreements, communications, and
understandings, both written and oral, regarding such subject matter. This
Agreement may only be modified, or any rights under it waived, by a written
document executed by both parties. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute a single
instrument. Execution and delivery of this Agreement may be evidenced by
facsimile transmission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
<TABLE>
<CAPTION>
YAHOO! INC. LICENSOR
<S> <C>
By:/s/ Ellen Siminoff By: /s/ Warren Bare
------------------------------------- ------------------------------
Ellen Siminoff, Vice President
Title: Business Development Title: President
---------------------------------- ---------------------------
Address: 3400 Central Expy Ste.201 Address: 6410 Atlantic Blvd #160
-------------------------------- ------------------------
Santa Clara, CA 95051 Norcross, GA 30071
- ---------------------------------------- ------------------------
Telecopy: (408) 731-3301 Telecopy: (770) 300-9298
------------------------------- ------------------------
E-mail: [email protected] E-mail: [email protected]
------------------------------- ---------------------------
</TABLE>
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<PAGE> 6
EXHIBIT A
DEFINITIONS
"Advertising Rights" shall mean the advertising and promotional rights
sold or licensed with respect to Content Pages.
"Affiliates" shall mean any company or any other entity world-wide,
including, without limitation, corporations, partnerships, joint ventures, and
Limited Liability Companies, in which Yahoo owns at least a twenty percent
ownership, equity, or financial interest.
"Content Pages" shall mean those pages in the Yahoo Property that
contain Licensor Content and that are co-branded with both Licensor Brand
Features and Yahoo Brand Features.
"Enhancements" shall mean any updates, improvements or modifications
made to, or derivative works created from, the Licensor Content by Licensor.
"Intellectual Property Rights" shall mean all rights in and to trade
secrets, patents, copyrights, trademarks, know-how, as well as moral rights and
similar rights of any type under the laws of any governmental authority,
domestic or foreign.
"Internet" shall mean the collection of computer networks commonly
known as the Internet, and shall include, without limitation, the World Wide
Web.
"Licensor Brand Features" shall mean all trademarks, service marks,
logos and other distinctive brand features of Licensor that are used in or
relate to the Licensor Content, including, without limitation, the trademarks,
service marks and logos described in Exhibit B hereto.
"Licensor Content" shall mean, collectively, all materials, data, and
similar information collected and owned by Licensor, which is a collection of
HTML files and certain related scripts, as further described in Exhibit B
attached hereto, including, without limitation, all Enhancements.
"Yahoo Brand Features" shall mean all trademarks, service marks, logos
and other distinctive brand features of Yahoo that are used in or relate to a
Yahoo Property, including, without limitation, the trademarks, service marks and
logos described in Exhibit B.
"Yahoo Properties" shall mean any Yahoo branded or co-branded media
properties, including, without limitation, Internet guides, developed in whole
or in part by Yahoo or its Affiliates and distributed or made available by Yahoo
or its Affiliates over the Internet.
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EXHIBIT B
LICENSOR CONTENT
For current employment listings available in the HeadHunter.NET
(http://www.headhunter.net) database which meet Yahoo!'s specification (outlined
on the URL below), which HeadHunter.NET will send to Yahoo!, HeadHunter.NET
agrees to provide Yahoo!, as a minimum, the following information (for further
details regarding industry and function codes, please see
http://classifieds.yahoo.com/instructions/employment.html):
* Company Name
* Job Location (either zipcode or city/state)
* Industry Code
* Job Title
* Function Code
* Responsibilities
* Requirements (desired) and Requirements (minimum) as available
* Contact Information: either phone, fax, postal mailing address, email
information or any combination of these in fields which correspond to the Yahoo!
Classifieds specification.
In addition to the delivery of the fields above, HeadHunter.NET agrees to the
following:
* To provide complete information in each field, including Responsibilities, not
to exceed 2000 bytes in any one field.
* To provide accurate mappings for both Industry and Function codes.
* To remove from its listings feed those listings which Yahoo! does not approve
as being complete and accurately mapped.
LICENSOR BRAND FEATURES
HeadHunter.NET
HeadHunter.NET Related Logos
YAHOO BRAND FEATURES
Yahoo!
Yahoo related logos
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<PAGE> 8
EXHIBIT C
DELIVERY AND TECHNICAL SPECIFICATIONS
Licensor Agrees To:
1. Make available to Yahoo! the Licensor content specified in Exhibit B,
according the format found at
http://classifieds.yahoo.com/instructions/employment.html.
2. Allow Yahoo! to include Licensor content in the relevant areas of
Yahoo!'s network of properties.
3. Update at least weekly all information provided to Yahoo! to ensure the
accuracy and timeliness of all data offered by this service.
4. Place a "Back to Yahoo! Classifieds" logo and link to Yahoo!
Classifieds on pages which reside on the HeadHunter.NET site pointed
to from Yahoo! Classifieds.
5. Maintain its current level of advertising on Yahoo! for the term of
this agreement ($240,000/year minimum during this term).
Yahoo! Agrees To:
1. Place the HeadHunter.NET employment listings within the Yahoo!
Classifieds service.
C. Format of Content Delivery:
FTP (file transfer protocol)
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<PAGE> 9
EXHIBIT D
LINKS
During the Term of this Agreement, all links that exist between Yahoo!
Classifieds and HeadHunter.NET will be maintained in the following manner:
<TABLE>
<CAPTION>
LOCATION OF LINK LINK TO WHERE SPECIFICS OF LINK
<S> <C> <C>
At the bottom of each listing To Licensor web page with This will be a text link
provided by Licensor to Yahoo! further details on the specific determined by Yahoo!; the link
Classifieds, within the Yahoo! job being advertised. will currently read "more listing
Classifieds site. At the top of detail"
every page on HeadHunter.NET
which has been linked to from Link back to Yahoo! Employment This is a Yahoo! Classifieds logo
Yahoo! Classifieds. On the Classifieds. which links back to Yahoo!
partner / alliance page/s of Employment Classifieds.
HeadHunter.NET.
Link to Yahoo! Employment This is a Yahoo! Classifieds logo
Classifieds. which links back to Yahoo!
Employment Classifieds.
</TABLE>
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EXHIBIT 10.9
[ ITC Holding Company Letterhead ]
October 29, 1997
Mr. Warren Bare
Software Technology Corporation
1430 Boundary Boulevard
Sewanee, GA 30174
Dear Warren:
Reference: Employment Letter - Headhunters L.L.C.
As you know, ITC Holding Company, Inc. ("ITC"), is planning to make a
substantial investment in a new limited liability corporation that is being
formed to succeed to the assets and business of HeadHunter.net, Inc.
("Headhunters"). Following the investment, ITC will be the majority stockholder
of Headhunters. In connection with these transactions, ITC hereby acknowledges
and agrees that Headhunters will employ you as President and Chief Executive
Officer. We also expect that upon completion of the transactions you will serves
on the Headhunters Board of Members. We are excited about the opportunities in
our industry and in Headhunters. We are confident hat you will make major
contributions to Headhunters' growth and will continue to lead the company to
future success.
Outlined below is a summary of a proposed compensation package for you
from Headhunters, which we have already agreed upon:
COMPENSATION
ANNUAL BASE SALARY: $75,600 per year paid bi-weekly
ANNUAL PERFORMANCE
INCENTIVE: An annual performance incentive of 30% of base pay
will be paid at 100% of annual objective, as
determined by Headhunters' Board of Members.
Headhunters will guarantee that for 1998 your cash
compensation will not be lower than target,
regardless of Headhunters' results. If Headhunters
overachieves it Board-approved plan for 1998,
<PAGE> 2
your compensation shall be adjusted upward along with
and calculated by using the "3 up 3 down multiplier"
as described in our letter of intent dated September
12, 1997.
ANNUAL LONG TERM INCENTIVE
COMPENSATION: To the extent Headhunters corporate offices receive
annual Long-term Incentive Compensation, you will
participate on a going forward basis. Structuring
compensation, including Long-term awards and
incentives recommendations will become your
responsibility as CEO.
ITC STOCK OPTION: As soon as practicable after closing, ITC will grant
you a non-qualified option to purchase 5,000 shares
of stock in ITC Holding Company at the then-current
fair market value on the date of the grant. This
option will vest pro-rata upon permanent repayment of
amounts borrowed by Headhunters from ITC.
BENEFITS: We would anticipate that benefits for you would be
the same as provided for any other employees.
Warren, we are looking forward to working with you as we continue to
grow Headhunters into the nation's premier Internet employment site.
Sincerely,
/s/ William H. Scott
-----------------------------------
William H. Scott, III
cc: Cam B. Lanier, III
Kimberly E. Thompson
The foregoing reflects my understanding of the initial employment
relationship between myself and Headhunters, L.L.C.
/s/ Warren Bare
- ------------------------
Warren Bare
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<PAGE> 1
EXHIBIT 10.10
[Software Technology Corporation Letterhead]
Thursday, November 13, 1997
Mr. Ken Dopher
2207 Doe Crossing Court
Orlando, FL 32837
Dear Ken:
We are pleased to extend to you an offer to come to work at HeadHunters LLC as
our Chief Financial Officer. We are excited about the opportunities in our
industry and in our company. We are confident that you will make major
contributions to our immediate and future success.
Outlined below is a summary of your compensation package:
ANNUAL BASE SALARY
90,000 per year paid semi-monthly.
ANNUAL PERFORMANCE INCENTIVE BONUS
A $13,500 per year performance based bonus. This bonus will be based on
overall company performance and specific performance of the employees
working for you.
INITIAL OWNERSHIP OPTION
An incentive option plan for 100,000 units of ownership in HeadHunters
LLC at the current fair market value. The current ownership pool
consists of 5,000,000 units. Since the option plan has not been
finalized, these specific numbers may change, but we will reflect any
change to the plan in your option so that it accomplishes the same
objective.
BENEFITS
When eligible, you will come under the HeadHunters LLC employee
benefits program. At a minimum, this will include major medical
insurance and term life insurance. Other benefits may be added from
time to time. Until medical coverage begins under employee benefits
program, the cost of extending your existing employer's major medical
coverage will be covered as provided under COBRA laws.
<PAGE> 2
START DATE
Your start date will be no later than January 26th. We are sensitive to
the issues associated with your January bonus and encourage you to do
all you can to start earlier without jeopardizing the bonus.
RELOCATION EXPENSE
We will cover relocation expenses as outlined in your November 12th
relocation estimate fax with a cap of $34,000. We ask that you use your
best reasonable efforts to keep the cost low, and where applicable,
select the lowest of 3 estimates.
We are looking forward to working with you as we grow HeadHunter.NET into one of
the largest and most popular web sites on the Internet. As you have said, this
job will require you to wear a lot of hats. I am convinced that you are
absolutely the best person for the job and I am 100% committed to your success!
Sincerely,
/s/ Warren Bare
- ----------------------------
Warren Bare
President
The foregoing reflects my understanding of my employment relationship with
HeadHunters LLC.
/s/ Kenneth Dopher
- ----------------------------
Ken Dopher
-2-
<PAGE> 1
EXHIBIT 10.11
[HeadHunter.NET Letterhead]
Monday, May 18, 1998
Judith G. Hackett
4327 Stilson Circle
Atlanta, GA 30092
Dear Judy:
We are pleased to extend an offer to you to join HeadHunteres LLC as the Senior
Vice President of Marketing. We are excited about the opportunities in our
industry and in our company, and we are confident that you will make major
contributions to our immediate and future success.
As we discussed in our meeting, this job will have broad responsibilities
concerning marketing and business development. You will report to Warren Bare,
CEO. We expect to grow the company rapidly over the next several years and we
think you will be an outstanding resource to help pull our company forward.
Outlined below is a summary of your compensation package:
ANNUAL BASE SALARY
$125,000 per year paid semi-monthly.
ANNUAL PERFORMANCE INCENTIVE BONUS
A $20,000 per year performance based bonus will be available to be paid
quarterly. Half of this bonus will be based on performance metrics
directly under your control or under the control of the team you work
with. The other half of the bonus will be based on overall performance
of the company.
INITIAL OWNERSHIP OPTION
An incentive option plan for 50,000 units of ownership in HeadHunters
LLC at the current fair market value as of the date the options are
granted. The current ownership pool consists of 5,000,000 units with an
additional 500,000 units designated for our option program.
BENEFITS
When eligible, you will come under the HeadHunteres LLC employee
benefits program which includes major medical insurance through Blue
Cross, and term life insurance through Blue Cross, and Jefferson Pilot.
The health insurance provides for a $15 co pay for office visits, a $50
co pay for Emergency room visits, a $5 co pay on generic prescription
drugs and a $15 co pay on brand name
<PAGE> 2
prescription drugs as well as provisions for mental health claims and
dental claims. The life insurance benefits include a $10,000 policy
from Blue Cross and a Jefferson Pilot policy equaling two and a half
times your basic annual earnings. Vacation benefits will be accrued at
a rate of .42 day/pay period. Available sick time will be accrued one
half day/month to a maximum of 6 days/year. Other benefits may be added
from time to time. Until medical coverage begins under the employee
benefits program, the cost of extending your existing employer's major
medical coverage will be covered as provided under COBRA laws.
START DATE
We would like you to start on May 21, 1998.
Please review this offer and fax a signed copy back to us at (770)300-9298 by
Monday, May 18, 1998. We are looking forward to working with you as we grow
HeadHunter.NET into one of the largest and most popular web sites on the
Internet.
Sincerely,
/s/ Kenneth Dopher
- ------------------------
Kenneth Dopher
Chief Financial Officer
The foregoing reflects my understanding of my employment relationship with
HeadHunters LLC.
/s/ Judith G. Hackett
- ------------------------
Judith G. Hackett
-2-
<PAGE> 1
EXHIBIT 10.12
STATE OF GEORGIA
COUNTY OF GWINNETT
LEASE CONTRACT
THIS LEASE, made this 4th day of June, 1998, by and between MICHAEL G.
PERKINS (hereinafter called "Landlord") and HEADHUNTERS, LLC, (hereinafter
called "Tenant");
W I T N E S S E T H:
PREMISES 1. The Landlord, for and in consideration of
the rents, covenants, agreements, and stipulations
hereinafter mentioned, reserved, and contained, to be
paid, kept and performed by the Tenant, has leased
and rented, and by these presents does lease and
rent, unto the said Tenant, and said Tenant hereby
agrees to lease and take upon the terms and
conditions which hereinafter appear, the following
described property (hereinafter called the
"Premises"), to wit:
26,775 rentable (25,500 usable) square feet
of office space being the entire second floor of
Suite 200, at 2469 Satellite Boulevard, Gwinnett
County, Georgia (hereinafter called the "Land"), as
the Premises are more particularly described in
Exhibit "A" attached hereto and made a part hereof
and as the Land is more particularly described in
Exhibit "B" attached hereto and made a part hereof.
The Building is to be completed according to Approved
Plans and Specifications (as hereinafter defined)
prepared by Hughes Good O'Leary and Ryan which shall
be attached hereto as Exhibit "C", made a part hereof
and initialed by the parties. Agreements regarding
construction of the Premises are set forth in Exhibit
"D" attached hereto and made a part hereof.
No easement for light or air is included in the
Premises.
TERM 2. To have and to hold the same for a term
beginning on the 1st day of November, 1998 (referred
to in this Lease as the "Commencement Date"), and
ending on the 30th day of October, 2008 (herein
referred to as the "Expiration Date"), at midnight,
unless sooner terminated or extended as hereinafter
provided. All references to "terms of this Lease"
shall refer to the term of the Lease as it may be
renewed or extended in accordance with the terms
hereof.
<PAGE> 2
RENTAL 3. Tenant agrees to pay Landlord, by payments to
Landlord at any place designated by Landlord promptly
on the 1st day of each month in advance, during the
term of this Lease, a monthly rental as set forth
hereinbelow:
<TABLE>
<CAPTION>
Month Rental Rate Monthly Rental Obligation
----- ----------- -------------------------
<S> <C> <C>
1st through 9th $13.25 $23,187.50
10th through 12th $13.25 $29,564.06
13th through 24th $13.52 $30,155.34
25th through 36th $13.79 $30,758.45
37th through 48th $14.06 $31,373.62
49th through 60th $14.34 $32,001.62
61st through 72nd $14.63 $32,641.11
73rd through 84th $14.92 $33,293.94
85th through 96th $15.22 $33,959.81
97th through 108th $15.52 $34,639.01
109th through 120th $15.83 $35,331.79
</TABLE>
The above is subject to verfification of the rentable
square footage of the premises after completion.
However, no change in the rent schedule will result
unless the actual square footage differs by more than
five percent (5%) from the lease document. In the
event Tenant occupies the entire building, the
rentable square footage will be fifty-one thousand
(51,000) square feet subject to the plans dated May
25, 1998.
As reflected in the foregoing, (i) the monthly rental
rate shall escalate by two percent (2%) on every
anniversary of the Commencement Date throughout the
initial term of the Lease, and (ii) Tenant will
occupy the entire second floor (approximately 26,775
rentable square feet) of the Building beginning on
the Commencement Date, but shall pay monthly rental
based only on 21,000 rentable square feet for the
first nine (9) months of the initial term of this
Lease. It is further agreed that the Tenant will not
pay any rent for the first two (2) weeks it occupies
the premises and then commence its ten (10) year
term.
Tenant shall also pay a late charge of five percent
(5%) of any rental payment not received by Landlord
within five (5) days from the date it is due,
provided that Tenant shall have three (3) grace
periods during the term of this Lease during which no
late charge will be due until Landlord gives Tenant
written notice of Landlord's non-receipt of any past
due payment. Tenant shall pay to the Landlord the
first and last month's rent in advance, on the
Commencement Date.
-2-
<PAGE> 3
LIABILITY AND
CASUALTY INSURANCE 4. Tenant agrees to procure and maintain at
Tenant's expense, prior to entry upon the Premises, a
policy or policies of general liability insurance
against claims and damages in connection with the
Premises in amounts of not less than $1,000,000.00
with respect to damage to property or to injuries or
death suffered by any one person; and not less than
$1,000,000.00 with respect to injuries or death
suffered or damage to property in any one accident.
Landlord agrees to obtain and maintain throughout all
terms of this Lease casualty insurance on the
Building and all other improvements serving the
Premises at commercially reasonable rates and with
commercially reasonable coverage in the amount of the
full replacement cost thereof.
USE OF
PREMISES 5. Premises shall be used for office use and
general business purposes and no other. Premises
shall not be used for any illegal purposes; nor in
any manner to create any unreasonable nuisance or
trespass; nor in any manner to vitiate the insurance
or increase the rate of insurance on Premises;
provided that, if at any time Landlord believes that
activities of Tenant in the Premises will cause
increases in the cost of Landlord's insurance on the
Building or will cause Landlord's insurer to cancel
such insurance, Landlord shall provide Tenant with
thirty (30) days' prior notice of such belief and
Tenant's specific activity involved, and Tenant shall
be entitled to cease or otherwise cure any such
activity within such period and thereby avoid any
charge for any such increase; provided, however, that
Tenant shall not be required to comply with any
requirement which is not a valid legal requirement of
Landlord's insurer. Landlord agrees that Tenant's
proposed use of the Premises for the purposes
specifically permitted in this Lease shall not
increase Landlord's insurance rates or cause
Landlord's insurance to be canceled if Tenant's use
of the Premises for such permitted purpose is
conducted in accordance with all laws applicable
thereto.
TAX PRORATION 6. Tenant shall pay all ad valorem tax on any
personal property located in the Premises.
SERVICES 7. During all terms of this Lease Landlord
shall furnish to the Premises the services at
Landlord's sole cost: (i) hot and cold water to the
kitchen and bathroom areas of the Premises: (ii)
seasonable air-conditioning and heat from 7:00 A.M.
to 6:00 P.M. Mondays through Fridays and 8:00 A.M. to
1:00 P.M. on Saturdays, national holidays, Sundays
excepted, which air-conditioning and heating shall
maintain a uniform temperature throughout the
Premises within shall be the range of 70 to 75
degrees Fahrenheit and in no event be less
comfortable to
-3-
<PAGE> 4
Tenant's employees than the heating and air
conditioning levels generally provided in comparable
"Class A" office buildings in the Satellite
Boulevard/Sugarloaf office sub-market area of
Atlanta, Georgia; (iii) "after hours" heating and
cooling at Tenant's expense for the direct cost
thereof; (iv) cleaning in accordance with the
specifications attached hereto as Exhibit "G" and
made a part hereof and generally care for the
Premises by janitors or cleaning personnel retained
by Landlord; (v) elevator service (with a passenger
elevator in operation on a twenty-four (24)-hour
basis); and (iv) electrical current for the operation
of Tenant's electrical equipment (excepting
electrical current used by any separate heating and
air-conditioning system desired by Tenant, which
current shall be separately metered and paid for by
Tenant), Landlord hereby representing to Tenant that
throughout all terms of this Lease there will be
sufficient feeder and riser capacity to the Premises
to provide electric service of at least 7.5 watts per
square foot to all of the Premises excepting said
computer room. If due to the failure of Landlord or
any other party to provide such services for any
other reason the Premises become unusable for
Tenant's normal business operations for more than
five (5) consecutive business days, all rental
payable under this Lease shall abate during the
period in which the Premises are uninhabitable.
ABANDONMENT OF
LEASED PREMISES 8. Tenant agrees not to abandon or vacate the
Premises during the period of this Lease, and agrees
to use said Premises for the purpose herein leased
until the expiration hereof; provided, however, that
Tenant shall not be deemed to have "abandoned" the
Premises unless Tenant is otherwise in default under
this Lease (after notice of default has been given by
Landlord and all applicable cure periods have passed
without cure of such default, all as provided in this
Lease) and permanently vacates all or a substantial
portion of the Premises..
REPAIRS BY LANDLORD 9. (a) Tenant shall accept the Premises in
their present condition and as suited for the uses
intended by Tenant after completion of the Landlord's
work shown or described in or reasonably inferable
from the Approved Plans and Specifications referred
to in Exhibit "C" of this Lease and Landlord's "Punch
List" work referred to in Exhibit "D" of this Lease.
Except as otherwise expressly provided in this Lease,
during all terms of this Lease Landlord shall make
all necessary repairs or improvements to the
Premises, including without limitation repairs to the
foundation, exterior walls or roof of the Building as
necessary for safety, tenantability and usability of
the Premises by Tenant as an administrative office;
repairs to underground utility and sewer pipes
outside the exterior walls of the Building, or under
or within the floor of the Premises; and all repairs
and replacements of all electrical, plumbing, heating
and air conditioning
-4-
<PAGE> 5
systems and any and all other systems, parts,
components and fixtures within or serving the
Premises.
(b) Landlord shall be responsible for the maintenance
of those areas around the Building, including
driveways, walkways, parking areas, planted areas and
landscaped areas which shall be open for the joint
use by tenants of the Building or the public.
Landlord shall maintain such areas in a first-class
manner.
(c) Tenant shall report to Landlord any defect,
damage or condition to or in the Premises which
Landlord is obligated to maintain or repair under
this Lease with reasonable promptness following
Tenant's becoming aware thereof. In the event that
Landlord fails to perform any of the maintenance or
repairs required under subparagraphs (a) and (b)
above and such lack of maintenance or repair
interferes, in any material respect, with Tenant's
operation of its business or damages or threatens to
damage any property within the Premises, upon thirty
(30) days' prior written notice to Landlord, Tenant
shall have the right to perform the necessary
maintenance and repairs on behalf of Landlord and to
deduct any reasonable costs and expenses incurred by
Tenant in connection with such maintenance and
repairs from Tenant's next owing obligations for
monthly rent and any additional rental due Landlord
under this Lease; however, notwithstanding the
foregoing, in the event of an emergency, Tenant shall
use its best efforts to notify Landlord prior to
performing the maintenance or repairs pursuant to its
rights provided herein, and, in such event, Tenant
shall not be required to wait for the expiration of
the aforementioned thirty (30) day period.
The Building elevator(s) shall be in satisfactory
operating condition on the Commencement Date, and
Landlord shall maintain said elevator(s) in good
operating condition during the term of this Lease, or
any extension thereof.
REPAIRS BY TENANT 10. Upon occupancy of the Premises, Tenant shall
accept, subject to the Punch List items referred to
hereinafter in this Lease, the Premises in their then
present condition and as suited for the uses intended
by Tenant. Tenant shall, throughout the initial terms
of this Lease and all renewals thereof, at its
expense, maintain in good order and repair the
Premises, except those repairs expressly required to
be made by Landlord. Tenant agrees to return said
Premises to Landlord at the expiration, or prior
termination, of this Lease in as good condition and
repair as when first received, natural wear and tear,
damage by storm, fire, lightning, earthquake or other
casualty and condemnation alone excepted.
-5-
<PAGE> 6
DESTRUCTION OF, 11. If Premises are totally destroyed by storm,
OR DAMAGE TO, fire, lightning, earthquake or other casualty, this
PREMISES Lease shall terminate as of the date of such
destruction, and rental shall be accounted for as
between Landlord and Tenant as of that date. In the
event the Premises cannot reasonably be restored
within ninety (90) days following the date of such
damage or destruction or if Landlord's mortgagee
elects to apply the insurance proceeds arising from
such casualty to the mortgage loan held thereby, then
Landlord shall notify Tenant in writing to such effect
within fifteen (15) days following the date of the
damage or destruction, and Tenant shall then have the
right to terminate this Lease by written notice to
Landlord, with all rent and other sums payable by
Tenant hereunder being accounted for as of the date of
such casualty. If this Lease is not terminated as
hereinabove provided, Landlord shall, within said
ninety (90)-day period, repair, restore, rebuild,
reconstruct or replace the damaged or destroyed
portion of the Premises to a condition as good or
better than that existing immediately prior to such
damage or destruction. Tenant's obligation to pay
monthly and additional rental under this Lease shall
abate until Landlord has repaired, restored, rebuilt,
reconstructed or replaced the Premises, as required
herein, in proportion to the degree of use of the
Premises then lost to Tenant.
The foregoing notwithstanding, in the event
the Premises are destroyed to the extent that Tenant
is forced to cease substantially all of its operations
therein, Landlord shall have the right to notify
Tenant in writing, by no later than the fifteenth
(15th) business day following the date of such
casualty, as to whether Landlord in good faith
believes and intends to restore the Building within
ninety (90) days following the date of such casualty
to a condition allowing Tenant's occupancy and use of
the Premises for the purposes for which the Premises
were used by Tenant prior to such casualty. If at the
end of such ninety (90)-day period, such restoration
of the Premises is substantially completed (subject
only to punch list items which do not prevent Tenant's
use and occupancy of the entire Premises for Tenant's
intended purposes) and a certificate of occupancy has
been issued by the applicable governmental authority,
then Landlord shall promptly complete or repair such
punchlist items, and the Rental hereunder shall
resume. In the event Landlord does not so
substantially complete said restoration within such
ninety (90)-day period (or, if during the course of
such ninety (90)-day restoration, Landlord for any
reason becomes unable to reconfirm in writing to
Tenant, immediately following Tenant's written
request, that Landlord will be able to meet such
ninety (90) day completion date for such restoration),
then Tenant shall have the right to terminate this
Lease in the manner set forth hereinabove in this
Section 11.
INDEMNITY 12. Tenant agrees to indemnify and save harmless
the Landlord against all claims for damages to persons
or property arising from Tenant's
-6-
<PAGE> 7
negligence or willful wrongdoing in connection with
Tenant's use or occupancy of the Premises, and all
expenses incurred by Landlord because thereof,
including attorneys' fees and court costs. Landlord
agrees to indemnify and save harmless Tenant against
all claims for damages to persons or property arising
from Landlord's negligence or willful wrongdoing in
connection with Landlord's leasing of the Premises to
Tenant, and all expenses incurred by Tenant because
thereof, including attorneys' fees and court costs.
GOVERNMENTAL ORDERS 13. Landlord agrees, at Landlord's own expense,
to promptly comply with all requirements of any
legally constituted public authority made necessary by
reason of Tenant's use of said Premises. Landlord
agrees to promptly comply with any such requirements
if not made necessary by reason of Tenant's use of the
Premises. It is mutually agreed, however, between
Landlord and Tenant, that if in order to comply with
such requirements, the cost of Landlord or Tenant, as
the case may be, shall exceed a sum equal to one
year's rent, then Landlord or Tenant who is obligated
to comply with such requirements is privileged to
terminate this Lease by giving written notice of
termination to the other party, by registered mail,
which termination shall become effective sixty (60)
days after receipt of such notice, and which notice
shall eliminate necessity of compliance with such
requirement by party giving such notice unless party
receiving such notice of termination shall, before
termination becomes effective, pay to party giving
notice all cost of compliance in excess of one year's
rent, or secure payment of said sum in manner
satisfactory to party giving notice.
CONDEMNATION 14. If the whole of the Premises be condemned by
any legally constituted authority for any public use
of purpose, then in either of said events the term
hereby granted shall cease from the time when
possession thereof is taken by public authorities, and
rental shall be accounted for as between Landlord and
Tenant as of that date. Such termination, however,
shall be without prejudice to the rights of either
Landlord or Tenant to recover compensation and damage
caused by condemnation from the condemnor. It is
further understood and agreed that neither the Tenant
nor Landlord shall have any rights in any award made
to the other by any condemnation authority. In the
event the Premises (including without limitation
access thereto or parking serving the Premises) are
damaged by condemnation to a lesser extent than set
forth hereinabove but to an extent that the degree of
Tenant's use of the Premises is reduced by five
percent (5%) or more, Tenant shall have the right to
terminate this Lease by written notice to Landlord. If
Tenant elects not to so terminate this Lease or if
such damage to the Premises is less than five percent
(5%), Landlord shall promptly repair and restore the
Premises at Landlord's expense to at least as good a
condition as existed prior to such damage, and the
monthly rental
-7-
<PAGE> 8
hereunder shall be equitably reduced based on both the
square footage and the degree of use lost to Tenant by
such reduction in size of the Premises.
The foregoing notwithstanding, in the event
the parking area of the Premises is substantially
reduced by such a condemnation, then nonetheless
Tenant shall continue to have the right, superior to
that of any other tenants of the Building or of
Landlord's adjacent property, to use 127 (or more, if
the Premises has been expanded after the Commencement
Date) spaces within the parking lot initially
constructed to serve the Building, and Landlord agrees
to designate and assign to Tenant such portion of the
rear area of the parking lot adjacent to the Building
as will allow Tenant's exclusive use of such 127
spaces; otherwise, Tenant shall have the right to
terminate this Lease as set forth hereinabove. Rental
under this Lease shall be equitably reduced in a
manner equivalent to compensate Tenant for such loss
of use of the Premises by reduction in parking
therefor.
ASSIGNMENT AND
SUBLETTING 15. Tenant may, following written notice to
Landlord to such effect, sublease portions of the
Premises to others provided such sub-lessee's
operation is a part of the general operation of Tenant
and under the supervision and control of Tenant and
provided such operation is within the purposes for
which said F Premises shall be used. Except as
provided in preceding sentence, Tenant shall not,
without the prior written consent of Landlord endorsed
hereon, assign this Lease or any interest hereunder,
or sublet Premises or any part thereof, or permit the
use of Premises by any party other than Tenant.
Consent to any assignment or sublease shall not
destroy this provision, and all later assignments or
subleases shall be made likewise only on the prior
written consent of Landlord. Assignee of Tenant, at
option of Landlord, shall become directly liable to
Landlord for all obligations of Tenant hereunder, but
no sublease or assignment by Tenant shall relieve
Tenant of any liability hereunder.
In the event Tenant desires to assign this Lease or
sublet all or part of the Premises to a third party,
Landlord agrees not to unreasonably withhold or delay
Landlord's consent to a written request delivered to
Landlord by Tenant for such assignment or subleasing;
in the event Landlord does not respond to such written
request within ten (10) business days after Landlord's
received the same, then such request shall deem to be
approved, and Tenant shall be entitled to proceed with
such assignment or a subleasing and shall furnish
Landlord with notice at the time such assignment or a
sublease has been entered into.
-8-
<PAGE> 9
REMOVAL OF
FIXTURES 16. Tenant shall not be required to remove any
fixtures or improvements to the Premises at or at any
time prior to the end of the final term of this
Lease. Tenant may, at Tenant's option and at any time
prior to the expiration of this Lease, or any
extension thereof, remove all fixtures and equipment
which Tenant has placed in Premises, provided Tenant
repairs all damage to Premises caused by such
removal.
CANCELLATION OF
LEAVE BY LANDLORD 17. It is mutually agreed that in the event the
Tenant shall default in the payment of rent herein
reserved, when due, by failing to make any payment
required under this Lease within ten (10) business
days after Tenant's receipt of written notice from
Landlord to Tenant, nor will an event of default have
occurred if Tenant shall be in default in performing
any of the terms or provisions of this Lease other
than the foregoing provision requiring the payment of
rent if Tenant in good faith commences to cure any
such non-monetary default within thirty (30) days
after Tenant's receipt of written notice from
Landlord and thereafter diligently pursues such cure
to completion, or if Tenant is adjudicated
bankruptcy; or if a permanent receiver is appointed
for Tenant's property and such receiver is not
removed within sixty days after written notice from
Landlord to Tenant to obtain such removal; or if,
whether voluntarily or involuntarily, Tenant takes
advantage of any debtor relief proceedings under any
present or future law, whereby the rent or any part
thereof is, or is proposed to be, reduced or payment
thereof deferred, or if Tenant makes an assignment
for benefit of creditors, or if Tenant's effects
should be levied upon or attached under process
against Tenant, not satisfied or dissolved within
thirty (30) days after written notice from Landlord
to Tenant to obtain satisfaction thereof; then, and
in any of said events, Landlord at Landlord's option
may at once, or within six (6) months thereafter (but
only during continuance of such default or
condition), terminate this Lease by written notice to
Tenant; whereupon this Lease shall end. After an
authorized assignment or subletting of the entire
Premises covered by this Lease, the occurring of any
of the foregoing defaults or events shall affect this
Lease only if caused by, or happening to, the
assignee or sublessee. Any notice provided in this
paragraph may be given by Landlord or Landlord's
attorney. Upon such termination by Landlord, Tenant
will at once surrender possession of the Premises to
Landlord; and Landlord may forthwith re-enter the
Premises and repossess himself thereof, and remove
all persons and effects therefrom, using such force
as may be necessary without being guilty of trespass,
forcible entry or detainer or other tort.
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<PAGE> 10
RELETTING BY
LANDLORD 18. Landlord, as Tenant's agent, without
terminating this Lease, upon Tenant's breaching this
contract, may at Landlord's option enter upon and rent
Premises at the best price obtainable by reasonable
effort, without advertisement and by private
negotiations and for any term Landlord deems proper.
Tenant shall be liable to Landlord for the deficiency,
if any, between Tenant's rent hereunder and the price
obtained by Landlord on reletting.
EXTERIOR SIGNS 19. During all terms of the Lease, Tenant shall
be entitled to install and maintain roof or exterior
wall signage displaying Tenant's name or trade name,
logo and related information so long as such signs are
maintained in compliance with rules and regulations
governing such signs, and the Tenant shall be
responsible to Landlord for any damage caused by
installation, use, or maintenance of said signs, and
Tenant agrees upon removal of said signs to repair all
damage incident to such removal. So long as Tenant is
leasing 25,000 or more rentable square feet within the
Building, Landlord agrees that Tenant shall have the
exclusive right to signage on the Building and agrees
not to allow or grant to any other tenant of the
Building or any other party the right to place signs
on the roof or exterior walls of the Building.
ENTRY FOR
CARDING, ETC. 20. Landlord may card Premises "For Rent" or
"For Sale" thirty (30) days before the termination of
this Lease. Landlord may enter the Premises at
reasonable hours to exhibit same to prospective
purchasers or tenants and to make repairs required of
Landlord under the terms hereof, or to make repairs to
Landlord's adjoining property, if any. Landlord may
further enter the Premises upon reasonable notice for
the purpose of inspecting the Premises at any time
during normal business hours, or without notice if
necessary to affect any repairs or maintenance
required by Landlord.
EFFECT OF TERMIN-
ATION OF LEASE 21. No termination of this Lease prior to the
normal ending thereof, by lapse of time or otherwise,
shall affect Landlord's right to collect rent for the
period prior to termination thereof.
MORTGAGEE'S
RIGHTS 22. Tenant's rights shall be subject to any bona
fide mortgage or deed to secure debt which is now, or
may hereafter be, placed upon the Premises by
Landlord.
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<PAGE> 11
NO ESTATE
IN LAND 23. This contract shall create the relationship
of Landlord and Tenant between the parties hereto; no
estate shall pass out of Landlord. Tenant has only a
usufruct, not subject to levy and sale, and not
assignable by Tenant except by Landlord's consent.
HOLDING OVER 24. If Tenant remains in possession of Premises
after expiration of the term hereof, with Landlord's
acquiescence and without any express agreement of
parties, Tenant shall be a tenant at will at rental
rate in effect at end of Lease; and there shall be no
renewal of this Lease by operation of law.
ATTORNEYS' FEES
AND HOMESTEAD 25. If any rent owing under this Lease is
collected by or through an attorney at law, Tenant
agrees to pay fifteen percent (15%) thereof as
attorneys' fees. Tenant waives all homestead rights
and exemptions which Tenant may have under any law as
against any obligation owing under this Lease. Tenant
hereby assigns to Landlord Tenant's homestead and
exemption.
RIGHTS
CUMULATIVE 26. All rights, powers and privileges conferred
hereunder upon parties hereto shall be cumulative but
not restrictive to those given by law.
SERVICE OF NOTICE 27. Notwithstanding any other provision of this
Lease, any notice or document required to be
delivered under the terms of this Lease shall be
deemed delivered when received by the addressee
either (i) after deposit in the United States Mail,
postage prepaid, certified mail, return receipt
requested, or (ii) by personal delivery by hand or
(iii) by local or air express courier. Either
Landlord or Tenant may by notice to the other specify
a different address for payments or for delivery of
notices. A copy of all notices under this Lease shall
also be sent to Tenant's last known address, if
different from said Premises.
WAIVER OF RIGHTS 28. No failure of Landlord to exercise any
power given Landlord hereunder, or to insist upon
strict compliance by Tenant with Tenant's obligation
hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a
waiver of Landlord's right to demand exact compliance
with the terms hereof.
TIME OF ESSENCE 29. Time is of the essence of this agreement.
DEFINITIONS 30. "Landlord" as used in this Lease shall
include Landlord, Landlord's heirs, representatives,
assigns and successors in title to Premises. "Tenant"
shall include Tenant, its successors, and if this
Lease shall be validly assigned or sublet, shall
include also Tenant's assignee or
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<PAGE> 12
sublessees, as to Premises covered by such assignment
or sublease. "Landlord" and "Tenant" shall include
male and female, singular and plural, corporation,
partnership or individual, as may be the particular
parties.
BROKERAGE 31. Landlord and Tenant acknowledged that
Insignia/ESG, a real estate broker licensed under the
laws of the State of Georgia (hereinafter referred to
as "Broker") is the procuring cause of the leasing
transaction set forth in this Lease and has
represented and acted as broker for Tenant and not for
Landlord in this leasing transaction. Landlord shall
nonetheless pay, pursuant to the terms of a separate
commission agreement between Landlord and Broker, a
leasing commission of Broker as set forth in such
separate agreement. The provisions of this Section 31
shall survive the expiration or earlier termination of
this Lease and any sale or transfer of the Building or
Land by Landlord.
SPECIAL STIPULATIONS 32. Insofar as the following stipulations
conflict with any of the foregoing provisions, the
Special Stipulations are continued on Exhibit "E"
attached shall control.
This Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises or agreements, oral or otherwise, between
the parties, not embodied herein, shall be of any force or effect.
IN WITNESS WHEREOF, the parties herein have hereunder set their hands
and seals, in duplicate, the day and year first above written.
As to Landlord: LANDLORD:
Signed, sealed and delivered in the
presence of:
/s/Michael G. Perkins (SEAL)
--------------------------------
MICHAEL G. PERKINS
- ------------------------------------
- ------------------------------------
Notary Public (affix stamp and seal)
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<PAGE> 13
As to Tenant: TENANT:
Signed, sealed and delivered in the HEADHUNTERS, LLC
presence of:
By: /s/ Kenneth Dopher
- ------------------------------------ ---------------------------------
Title: CFO
- ------------------------------------ -----------------------------
Notary Public (affix stamp and seal) By:
---------------------------------
Title:
---------------------------
(affix corporate seal)
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<PAGE> 14
EXHIBIT "A"
THE PREMISES
Refer to Floor Plan of Second Floor for the Premises (such Plan being hereby
incorporated into this Lease) prepared by Hollis Puckett, Architect,
dated May 25, 1998
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<PAGE> 15
EXHIBIT "B"
THE LAND
B-1
<PAGE> 16
EXHIBIT "C"
APPROVED PLANS AND SPECIFICATIONS
FOR THE BUILDING AND THE PREMISES
Refer to Plans and Specifications (such Plans and Specifications being hereby
incorporated into this Lease) for the Premises and for the Building at 2469
Satellite Boulevard, Gwinnett County, Georgia, prepared by Hollis Puckett,
Architect, dated May 25, 1998
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<PAGE> 17
EXHIBIT "D"
CONSTRUCTION
1. TERMS RELATING TO CONSTRUCTION OF BUILDING AND PREMISES. The
following terms, defined hereinbelow, shall be used in connection with
Landlord's construction of the Building:
(i) "Approved Plans and Specifications" - The plans
and specifications for the Building and the Premises, which plans and
specifications are attached hereto as Exhibit "C" and initialed in writing by
Landlord and Tenant.
(ii) "Architect's Certificate" - The certificate
Landlord shall deliver to Tenant prepared by Hughes Good O'Leary and Ryan
immediately prior to the Commencement Date, certifying: (a) the Rentable Area of
the Premises; (b) the Rentable Area of the Building; and (c) the Proration
Percentage, as hereinafter defined in this Lease. If the Architect's Certificate
discloses any variance from the area calculations set forth in this Lease, this
Lease shall be amended by setting forth in amendment hereto the correct area
calculations from the Architect's Certificate.
(iii) "Rentable Area" or "the rentable square
footage" of the Premises shall not be less than either 25,500 usable square feet
or the square footage calculated per the Approved Plans and Specifications.
(iv) "Commencement Date" - Landlord shall notify
Tenant in writing at least thirty (30) days in advance of the date that Landlord
anticipates that the Premises will be Ready for Occupancy. The term of this
Lease shall commence on the date the Premises are Ready for Occupancy, as
defined hereinbelow, which date as presently estimated by Landlord shall be
November 1, l998. If the Premises are not Ready for Occupancy on or before the
Deadline Completion Date of November 15, 1998, then Tenant shall be entitled to
two (2) days of abatement of Base Rental and additional rent for each day after
the Deadline Completion Date until the Premises are Ready for Occupancy.
(v) "Ready for Occupancy" - The last of the
following to occur: (a) the Building and the Premises are completed in a good
and workmanlike manner; (b) all of the improvements to the Premises have been
completed substantially in accordance with the Approved Plans and
Specifications; and (c) Landlord has delivered written notice to Tenant stating
that all necessary certificates of occupancy for the Building and the Premises
have been issued and that the Premises are fully ready for Tenant to move in and
commence the full operation of Tenant's business. Landlord agrees to provide
Tenant with a copy of all certificates of occupancy for the Building and the
Premises upon Landlord's receipt of same.
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<PAGE> 18
(vi) "Required Date for Beginning of Construction"
Landlord agrees, as a material inducement to Tenant to enter into this Lease, to
obtain Landlord's development permit for the Building and all related
improvements to the Land no later than June 1, 1998, and the "Required Date for
Beginning of Construction" shall be the earlier of the fifth (5th) calendar day
after Landlord has obtained the said development permit or June 5, 1998, as such
date may be extended for each day that Tenant fails to approve the Approved
Plans and Specifications. If such Construction has not commenced by such date,
then as its sole remedy Tenant shall have the right to terminate this Lease by
written notice to Landlord given no later than fifteen (l5) days following the
Required Date for Beginning of Construction.
(vii) "Deadline Completion Date" - November 15, 1998.
The Deadline Completion Date shall be extended only for delays caused by Tenant,
including change orders requested by Tenant, of which delays Tenant was notified
by Landlord in writing prior to Landlord's approval of the change order, or
Tenant's interference with construction or Tenant's delays in providing
approvals required of Tenant under this Lease.
2. CONSTRUCTION.
(a) Covenant to Construct. Landlord hereby covenants to Tenant
that Landlord shall construct the Building and the Premises as shown in the
Approved Plans and Specifications (as defined hereinbelow) at Landlord's sole
cost and expense in a good and workmanlike manner and in compliance with all
applicable governmental codes and regulations. Landlord shall commence
construction on or before the Required Date for Beginning of Construction (as
defined hereinbelow) and shall prosecute such construction diligently and
continuously so that the Premises shall be Ready for Occupancy (as defined
hereinbelow) on or before the Deadline Completion Date (as defined hereinbelow).
(b) Approval of Plans and Specifications. Landlord and Tenant
each adopt and approve the Approved Plans and Specifications attached hereto as
Exhibits "C", "H" and "I". Landlord shall not make any changes to the Approved
Plans and Specifications which would or might have an adverse affect on the size
or quality of the Building or the Premises or of Tenant's use or enjoyment
thereof without the prior written consent of Tenant. If a change is desired by
Landlord requiring Tenant's approval, Landlord shall submit to Tenant a written
request for approval, which request shall contain the appropriate information
describing the change requested. If Tenant disapproves the requested change,
Tenant shall provide such disapproval in writing within ten (10) calendar days
following Landlord's said request for approval and shall state the reasons for
its disapproval. If Landlord makes unauthorized changes to the Approved Plans
and Specifications which adversely affect the Premises and, if Landlord does not
or is for any reason unable to restore the Premises to the condition shown on
the Approved Plans and Specifications within ten (10) days after receipt of
Tenant's said notice, then in addition to any other remedies Tenant may have
under the Lease or at law
D-2
<PAGE> 19
or in equity, Tenant shall also have the right, by written notice to Landlord,
to terminate this Lease.
(c) Construction Status. At the request of Tenant, Landlord
agrees to make representatives of Landlord available to meet with Tenant at
reasonable intervals until the Building and the Premises are completed to review
the status of construction of the Building and the remises. Landlord shall
advise Tenant in writing of the Tenant's estimated Commencement Date of the term
of this Lease no later than the sixtieth (60th) calendar day prior to the date
which Landlord reasonably estimates will be the Commencement Date.
(d) Utilities. Landlord hereby covenants and represents that,
on or prior to the Commencement Date, the Premises will be served by all
utilities necessary for the intended use of the Premises by Tenant, including
but not limited to gas, electric, telephone, water and sewer.
(e) Tenant's "Punch List". At a time and date mutually
agreeable to both Landlord and Tenant within thirty (30) days following
occupancy of the Premises by Tenant of the Premises to Tenant, Tenant shall
inspect the Premises and notify Landlord of any "punch list" items requiring
Landlord's completion or repair; after receipt of such punch list, Landlord
shall have thirty (30) days in which to complete all construction and make all
such repairs provided, however, that Landlord shall have such reasonably longer
period than thirty (30) days as may be needed to accomplish an item of such
completion or repair which reasonably requires a period of repair longer than
thirty (30) days if Landlord promptly commences and diligently and continuously
pursues to completion such repair or remedy. Upon Landlord's completion of such
repairs to the reasonable satisfaction of Tenant, Tenant agrees to execute and
deliver to Landlord a Certificate Regarding Tenant's Acceptance of Premises as
set forth in Exhibit "F" attached hereto and made a part hereof.
After Landlord's initial completion or repair of such initial punch
list items, at a time and date mutually agreeable to both Landlord and Tenant
within thirteen (13) months following delivery of possession of the Premises to
Tenant, Tenant shall again have the right to notify Landlord of any
then-existing items requiring Landlord's completion or repair; after receipt of
such second punch list, Landlord shall have thirty (30) days in which to
complete all construction and make all such repairs; provided, however, that
Landlord shall have such reasonably longer period than thirty (30) days as may
be needed to accomplish an item of such completion or repair which reasonably
requires a period of repair longer than thirty (30) days if Landlord promptly
commences and diligently and continuously pursues to completion such repair or
remedy.
Notwithstanding the foregoing, Tenant's acceptance of the air
conditioning system of the Premises shall not be requested by Landlord until
Tenant has made seasonal use of such system for at least thirty (30) consecutive
days.
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<PAGE> 20
(f) Tenant's Change Orders. In the event during the
construction of the Premises Tenant advises Landlord in writing of changes which
Tenant desires to be made to the Premises (which were not included in a
reasonably inferable from the original plans and specifications approved by
Tenant), and if the cost of such change creates an increase in cost of
construction of the Premises to Landlord, then Tenant shall have the option of
(a) paying Landlord the amount documented by Landlord to be its reasonable cost
of making such change or (b) increasing the rent over the initial term of this
Lease to reflect such additional cost payable by Landlord. The parties shall set
forth their agreement in such respect in a "Change Order Agreement" to be
executed by both parties prior to Landlord's commencement of the change order
work requested by Tenant.
D-4
<PAGE> 21
EXHIBIT "E"
SPECIAL STIPULATIONS
1. EXTENSION OR RENEWAL OPTIONS - PREVAILING RATE: If at the end of the
original ten(10)-year term of this Lease, Tenant is not in default which is
uncured after any applicable notice and cure period in any of the terms,
conditions or covenants of the Lease, Tenant is hereby granted an option to
extend or renew the term of this Lease for an additional term of five (5) years
upon the same terms and conditions contained in this Lease, with the exception
that the rental for the extension or renewal term shall be based upon the
then-prevailing rental rates within the Building for spaces of equivalent
quality, size, utility and location, with the length of the Lease term and
credit standing of the tenant to be taken into account.
If Tenant desires to so extend or renew the term of this Lease, Tenant
shall notify Landlord of Tenant's intention to renew no later than six (6)
months prior to the last day of the original term of this Lease. Landlord shall
within the following fifteen (15) days notify Tenant in writing of the proposed
rental rate for the extension or renewal term, and Tenant shall within the
next-following fifteen (15) days notify Landlord in writing of Tenant's
acceptance or rejection of the proposed rental rate. If Tenant rejects
Landlord's proposed rental rate, then Tenant shall so promptly notify Landlord,
and both parties shall work in good faith promptly to reach an agreement as to
the renewal rate. If an agreement has not been reached within forty-five (45)
days of Landlord's original notification to Tenant of Landlord's proposed rental
rate, Tenant and Landlord shall each appoint an appraiser who shall be a member
of the American Institute of Real Estate Appraisers to represent Tenant and
Landlord respectively. These two appraisers shall each appoint a third appraiser
who shall also be a member of the American Institute of Real Estate Appraisers,
and such three appraisers shall, using data available for comparable facilities
as aforesaid, determine a rental rate which shall be binding upon Tenant and
Landlord for such renewal term.
2. OPTION TO EXPAND. Tenant is entering into this Lease in reliance on the
benefit of a possible expansion of the Premises at such time as any space in the
Building is not under lease to any party other than Tenant. Accordingly, as a
condition of Tenant's entering into this Lease, Landlord hereby agrees with
Tenant that Landlord will not grant to any third party tenant or other occupant
of the Building or other party whatsoever any refusal, expansion, extension,
renewal, or other options or rights unless such rights are made specifically
secondary and subordinate to Tenant's option to expand set forth hereinbelow.
Landlord hereby grants to Tenant the continuing first and prior right
to lease any leasable portion of the first floor of the Building not included
within the Premises which becomes vacant during any term of this Lease, and at
such earlier time as (i) Tenant notifies Landlord in writing that Tenant desires
to lease such expansion area or (ii) Landlord notifies Tenant in writing that
Landlord has a prospective tenant desiring to
E-1
<PAGE> 22
lease such expansion area, in which latter event Tenant shall accept or reject
such space within ten (10) business days following receipt of such notice from
Landlord; failure of Tenant to so accept such space shall be deemed a rejection.
In the event Tenant desires to lease such expansion area, if such space has not
then been previously leased to a third party, such expansion area shall be added
to the Premises on terms and conditions, including without limitation any
construction allowance, which new or prospective tenants of the Building are
then being offered by Landlord.
In the event at any time Tenant is offered but rejects any such
expansion space, Tenant's aforesaid option to expand shall remain in full force
and effect over all leasable space in the Building not under lease to Tenant and
shall revive as to space offered to a third party at such time as the space
again becomes vacant and available for lease, to third parties.
3. RIGHT OF FIRST REFUSAL: Tenant is entering into this Lease in reliance
on the benefit of a possible expansion of the Premises at such time as any space
in the Building is not under lease to any party other than Tenant. Accordingly,
as a condition of Tenant's entering into this Lease, Landlord hereby agrees with
Tenant that Landlord will not grant to any third party tenant or other occupant
of the Building or other party whatsoever any refusal, expansion, extension,
renewal, or other options or rights unless such rights are made specifically
secondary and subordinate to Tenant's right of first refusal set forth
hereinbelow. In connection with the foregoing agreement with Tenant, Landlord
hereby agrees with Tenant that Landlord will not lease any space on the first
floor of the Building for a term longer than five (5) years nor grant any
extension, renewal or expansion rights in connection with any lease unless such
extension, renewal or expansion right is made specifically subordinate to
Tenant's right and option to lease such extension, renewal or expansion space as
set forth in this Lease.
Tenant shall have the following continuing right of first refusal on
all space within the Building which is at any time not under lease to any party
other than Tenant: prior to leasing any space in the Building to a third party
(which term "third party" shall include any previous or then-current occupancy
of such space whose Lease terms do not contain a right or option of extension or
renewal), (i) if Tenant initiates with Landlord Tenant's leasing of any
available expansion space in the Building, such leasing shall be on all the
terms and conditions of this Lease, including without limitation the Rental
schedule then applicable hereunder, plus future escalations as set forth in
Section 3 of this Lease; provided, however, that (ii) if Landlord receives from
a good faith, bona fide third party prospective tenant a written offer to lease
such space, setting forth all terms and conditions of such offer, Landlord shall
promptly forward Tenant a copy thereof, and Tenant shall have ten (10) business
days after receipt of such offer from Landlord in which to lease the space
covered by such offer on the terms of such offer or to reject the same;
provided, however, that, if the rental in such offer reflects consideration for
Landlord's providing non-standard improvements (whether in quantity or quality),
such offered rental shall be equitably adjusted and discounted to reflect the
extent to which Tenant will not require Landlord to make such non-standard
improvements to such space.
E-2
<PAGE> 23
In the event Tenant elects to lease the space offered, Tenant shall so
notify Landlord within five (5) business days after receiving written notice of
Landlord's desire to lease the space to a third party. In the event such
acceptance notice from Tenant is not received, Landlord shall be free to lease
such space to a third party upon agreed upon terms and conditions; provided,
however, that, if for any reason Landlord does not lease such refusal space to
such third party on the same terms and conditions offered to Tenant within six
(6) months following Tenant's receipt of such offer, or if the refusal space is
so leased but the term of such Lease terminates prior to the expiration of this
Lease, Tenant's right of first refusal shall again be in force and effect over
such refusal space.
4. PARKING. Landlord shall provide to Tenant four and six/tenths (4.6)
parking spaces for each 1,000 rentable square feet in the Premises for use by
Tenant, its employees, agents, customers, guests and invitees, on the
Commencement Date and thereafter throughout all terms of this Lease, such number
of spaces to increase in the event of expansion of the Premises. Landlord shall
use reasonable efforts to obtain Gwinnett County approval to locate all
handicapped parking spaces next to the entrance doors of the Building. Further,
at any time that Tenant exercises any right of first refusal or option to expand
the Premises granted in this Lease and accepts additional space in the Building,
Landlord shall provide Tenant with such additional parking spaces as are
available in an effort to provide a minimum ratio of four and six/tenths (4.6)
parking spaces for each 1,000 rentable square feet included in such expansion.
5. REASONABLENESS OF LANDLORD. Landlord hereby agrees with Tenant that,
at any time during any term of this Lease that Landlord has the right or
privilege of giving approval, consent, making a judgment, exercising an option
or election, making an expenditure for which reimbursement may be claimed from
Tenant, or otherwise making a decision or taking action or inaction affecting
the rights of Tenant under this Lease, no such approval or consent shall be
unreasonably withheld or delayed and all such judgments, elections and
decisions by Landlord shall be made both reasonably and with reasonable
promptness.
6. ACCESS. Tenant shall have access to, and the right to use all systems
of, the Building twenty-four hours per day, fifty-two weeks per year during all
terms of this Lease.
7. SALE BY LANDLORD. In the event of any sale, conveyance, transfer or
assignment by Landlord of its interest in and to the Premises, all obligations
under this Lease of the party selling, conveying, transferring, assigning or
otherwise disposing shall cease and terminate and Tenant releases said party
from same and Tenant shall thereafter look only and solely to the party to whom
or which the Premises were sold, conveyed, transferred, assigned or otherwise
disposed of for performance of all of Landlord's duties and obligation under
this Lease; provided, however, that Landlord shall not be released from
responsibility for any rental prepaid by Tenant unless and until the transferee
thereof has
E-3
<PAGE> 24
acknowledged to Tenant in writing its receipt thereof and its agreement to abide
by the terms of this Lease.
8. COVENANT OF QUIET ENJOYMENT. So long as Tenant observes and performs the
covenants and agreements contained herein to be observed and performed by
Tenant, Landlord covenants and agrees that Tenant shall at all times during the
term of this Lease peacefully and quietly have and enjoy possession of the
Premises, but always subject to the terms hereof.
9. SUBORDINATION AND ATTORNMENT. Landlord shall within thirty (30) calendar days
following full execution and delivery of this Lease obtain from its present
lenders a nondisturbance agreement in form and substance reasonably acceptable
to Tenant, providing that, in the event the deed to secure debt or mortgage
instrument is foreclosed, Tenant's possession of the Premises shall not be
disturbed so long as no event of default of Tenant shall have occurred and is
continuing and so long as Tenant continues to comply with the terms of this
Lease (a "Nondisturbance Agreement"). As to any future deed to secure debt or
mortgage instrument placed against the Premises or the Building after the date
of this Lease, Landlord shall likewise obtain from such lender a Nondisturbance
Agreement in form and substance reasonably acceptable to Tenant.
10. HAZARDOUS SUBSTANCES. Tenant covenants and agrees that it shall not cause or
permit any Hazardous Substances (as hereinafter defined) to be generated, used,
treated, stored, released or disposed of in, on, at, or under the Premises, the
Building or the Land without Landlord's prior written consent. Tenant further
covenants and agrees to indemnify Landlord for any loss, cost, damage, liability
or expense (including, without limitation, attorneys' fees), as well as
environmental impairment damages, that Landlord might ever incur because of
Tenant's failure to comply with the provisions of the immediately preceding
sentence, this indemnification to survive the expiration or other termination of
this Lease. For the purposes of this Stipulation, Hazardous Substances shall
mean and refer to (i) all those substances, elements, materials, compounds or
wastes defined or classified as hazardous or restricted under (A) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended from time to time, the regulations promulgated thereunder and
analogous state statutes and regulations, (B) the Resource Conservation and
Recovery Act of 1976, as amended from time to time, the regulations promulgated
thereunder and analogous state statutes and regulations, (C) the Toxic
Substances Control Act, as amended from time to time, the regulations
promulgated thereunder and analogous state statutes and regulations; and (ii)
petroleum products, including, without limitation, waste oils; and (iii)
"asbestos," as defined in 29 C.F.R. Sec. 1910.1001 et seq. (or analogous
regulations promulgated under the Occupational Safety and Health Act of 1970, as
amended from time to time, and the regulations promulgated thereunder); and (iv)
"PCBs," as defined in 40 C.F.R. Sec. 761 et seq. and "TCDD," as defined in 40
C.F.R. Sec. 775 et seq. (or in either case analogous regulations promulgated
under the Toxic Substances Control Act, as amended from time to time); and (v)
any other substance, element, material or compound defined or restricted as a
hazardous, toxic, radioactive or dangerous substance, material or waste by the
E-4
<PAGE> 25
Environmental Protection Agency or by any other ordinance, statute, law, code,
or regulation of any federal, state or local governmental entity or any agency,
department or other subdivision thereof, whether now or later enacted, issued,
or promulgated.
The foregoing notwithstanding, Tenant's use of normal cleaning solvent
and computer hardware maintenance products shall not be a violation of the
foregoing hazardous substances provision so long as the same are used
substantially in accordance with manufacturers' instructions and are disposed of
in a lawful manner. Landlord and Tenant each agree not to allow Hazardous
Substances to be brought into or be a part of the Premises or the Building.
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<PAGE> 26
EXHIBIT "F"
CERTIFICATE REGARDING TENANT'S ACCEPTANCE OF PREMISES
Tenant: HEADHUNTERS, L.L.C., a Georgia limited liability company
Landlord: MICHAEL G. PERKINS
Date Lease Signed: , 1998
Term of Lease: Ten Years
Address of Leased Premises: Suite _______ containing approximately __________
square feet, located at 2469 Satellite Boulevard, Gwinnett County, Georgia
Commencement Date: _________________________, 1998
Termination Date:___________________________, 2008
Rentable Area in Premises:________________________rentable square feet
Rentable Area of the Building: _____________________ rentable square feet
The Proration Percentage: ____%
The above described Premises are accepted by Tenant as suitable for the purpose
for which they were leased from Landlord.
TENANT:
HEADHUNTERS, L.L.C., a Georgia limited liability company
By:
---------------------------------
Title:
---------------------------
LANDLORD:
By:
----------------------------------(SEAL)
Michael G. Perkins
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<PAGE> 27
EXHIBIT "G"
CLEANING SPECIFICATIONS
JANITORIAL SERVICES PER LEASE are to be provided on a daily, weekly,
semi-monthly and quarterly basis as provided below:
I. Weekday Daily Services:
A. Cleared desks, cabinets and book shelves dusted as required.
B. Waste containers emptied, liners replaced as necessary.
C. Vinyl tile areas swept and stains removed.
D. Finger prints removed from interior glass windows and partitions.
E. Carpets vacuumed as required.
F. Hallways, stairwells and common areas serving Premises swept,
vacuumed and dusted.
G. Floors in bathrooms and lobbies damp mopped spray buffed.
H. All bathroom fixtures cleaned an sanitized.
I. Bathroom stall partitions and walls cleaned.
J. Drinking fountains cleaned.
K. Ash trays (if any) emptied and cleaned.
II. Weekly Services:
A. All carpeted areas vacuumed thoroughly.
B. Clean and polish all floors.
C. Dust all woodwork..
III. Semi-Monthly Services:
A. Vacuum upholstered furniture.
IV. Quarterly:
A. High dusting of all ledges and lights.
B. Floors stripped and waxed as needed.
C. Wash all glass partitions.
D. Spot clean carpets as needed.
E. Strip and refinish quarry tile floors in lobbies.
V. Semi-annual: exterior and interior glass cleaning.
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<PAGE> 28
EXHIBIT "H"
ELECTRICAL SPECIFICATIONS
Refer to Plans and Specifications (such Plans and Specifications being hereby
incorporated into this Lease) for the Premises, prepared by Hollis Puckett,
Architect, dated __________________, 1998
H-1
<PAGE> 29
EXHIBIT "I"
HEATING, VENTILATING AND AIR CONDITIONING SPECIFICATIONS
Refer to Plans and Specifications (such Plans and Specifications being hereby
incorporated into this Lease) for the Premises, prepared by Hollis Puckett,
Architect, dated __________________, 1998
<PAGE> 30
FIRST AMENDMENT TO LEASE CONTRACT
BETWEEN MICHAEL PERKINS, AS LANDLORD,
AND HEADHUNTERS, LLC, AS TENANT
THIS FIRST AMENDMENT TO LEASE CONTRACT, made and entered into this as
of the 4th day of June, 1998 by and between MICHAEL G. PERKINS, hereinafter
referred to as "Landlord", and HEADHUNTERS, LLC, hereinafter referred to as
"Tenant"
W I T N E S S E T H:
WHEREAS, as of the 4th day of June, 1998 Landlord and Tenant entered
into a certain Lease Contract (hereinafter referred to as "the Lease") for
certain Premises described therein and being the entire second floor of Suite
200, at 2469 Satellite Boulevard, Gwinnett County, Georgia; and
WHEREAS, Landlord and Tenant desire to amend the Lease for the purposes
set forth hereinbelow in this First Amendment to Lease Contract;
NOW, THEREFORE, in consideration of the mutual covenants flowing to and
from each of the parties hereto, Landlord and Tenant hereby amend the Lease by
adding thereto and incorporating therein the following new Section 33 captioned
Landlord's Operating Expenses, as follows:
33. LANDLORD'S OPERATING EXPENSES. If in any Lease Year (the "First
Lease Year" being hereby defined as the first period of twelve (12) months
following the date on which Tenant is obligated under the Lease to commence
paying monthly rental, and a "Lease Year" being defined as the First Lease Year
and each twelve month period thereafter during the terms of the Lease) the
Actual Operating Expenses, as defined hereinbelow, exceed the First Lease Year's
Operating Expenses of the building in which the Premises are located (for the
purposes of Operating Expense calculations, the term "Building" shall include
the building in which the Premises are located and the common areas thereof
usable under the Lease by Tenant and its employees), Tenant agrees to pay
Landlord, as maintenance rent ("Maintenance Rent"), a Proportionate Share of
such excess Operating Expenses based on the ratio of the net rentable area of
the Premises to the net rentable area of the Building, which Proportionate Share
shall be deemed to be fifty percent (50%) and is hereinafter referred to as
"Tenant's Proportionate Share".
(a) For the purpose of calculating Maintenance Rent to be paid pursuant
to the terms of this First Amendment, within ninety (90) days following the end
of the second Lease Year and each Lease Year thereafter, Landlord shall compute
the actual amount of the Operating Expenses (the "Actual Operating Expenses") of
the Building for the Lease Year just ended and provide Tenant with a detailed
accounting of such Actual Operating Expenses. If the Actual Operating Expenses
so detailed for such preceding Lease Year exceed the First Lease Year's
Operating Expenses, Tenant shall, within thirty (30) calendar days following the
date of Tenant's receipt of such written notice from Landlord, pay to Landlord
an amount equal to Tenant's Proportionate Share of the excess of the Actual
Operating Expenses for such preceding Lease Year over the First Lease Year's
Operating Expenses.
<PAGE> 31
(b) The term "Operating Expenses" shall include and be limited to
the reasonable (when compared to comparable office buildings in the Satellite
Boulevard/Sugarloaf office sub-market area of Atlanta, Georgia) costs of only
the following items of Landlord's expenses of operating the Building:
(i) The cost of all real estate taxes and assessments
levied or imposed with respect to the Building and the portion of the
real property on which the Building is located which the applicable
taxing authority designates as the tax parcel on which is situated the
Building;
(ii) The cost of water, sewer, gas, electricity, fuel,
light, heat, steam, natural gas and other utilities utilized in the
common areas of Building and in the Premises;
(iii) The cost of premiums of casualty, liability and other
insurance related to the Building;
(iv) The cost for security services for the Building, if
any;
(v) The cost of janitorial and cleaning supplies and
services for the Building;
(vi) The cost of window cleaning for the Building;
(vii) The cost of landscaping services provided for the
Building; and
(viii) The cost of services provided by Landlord and
attributable to the operation, repair and maintenance of the Building
to the extent required of Landlord under the Lease, including, without
limitation, any such services related to the heating, air conditioning,
ventilating, plumbing, electrical, elevator or other systems of the
Building.
(c) Upon reasonable prior written request at any time during
the term of the Lease, Tenant shall have the right to examine and audit
Landlord's books and records at Landlord's office in the Atlanta, Georgia area
with regard to all Operating Expenses shown in each of Landlord's billings to
Tenant. Landlord shall promptly reimburse Tenant for any overcharge and
overpayment revealed by such audit and, if such overcharge exceeds three percent
(3%) of the actual amount of Operating Expenses which should have been charged
to Tenant, Landlord shall also promptly reimburse Tenant for the reasonable cost
of Tenant's audit.
EXCEPT AS HEREINABOVE AMENDED, all of the terms, conditions and
provisions of the Lease shall be applicable, and the parties hereto shall be
bound thereby.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
<PAGE> 32
IN WITNESS WHEREOF, Landlord and Tenant have duly set their hands and
seals, in duplicate, to this First Amendment to Lease Contract under seal as of
the day and year first written above.
As to Landlord: LANDLORD:
Signed, sealed and delivered in the
presence of: /s/ Michael G. Perkins (SEAL)
----------------------------
MICHAEL G. PERKINS
- -------------------------------------
- -------------------------------------
Notary Public (affix stamp and seal)
As to Tenant: TENANT:
Signed, sealed and delivered in the HEADHUNTERS, LLC
presence of:
By: Kenneth E. Dopher
-------------------------------
Title: CFO
- ------------------------------------- --------------------------
- ------------------------------------- By:
Notary Public (affix stamp and seal) ------------------------------
Title:
------------------------
(affix corporate seal)
<PAGE> 1
EXHIBIT 10.17
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS AND CANNOT BE OFFERED, SOLD OR TRANSFERRED IN THE
ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS AND REGULATIONS
PROMULGATED THEREUNDER. THE TRANSFERABILITY OF THIS WARRANT ALSO IS RESTRICTED
AS PROVIDED IN SECTION 4 HEREOF.
STOCK PURCHASE WARRANT
This Warrant is issued as of July 16, 1998, by HeadHunter.NET, Inc.
(the "COMPANY"), a Georgia corporation, to ITC Service Company ("ITC"), a
Georgia corporation (ITC and any subsequent assignees or transferees hereof are
hereinafter referred to collectively as "HOLDER" or "HOLDERS").
1. ISSUANCE OF WARRANT; TERM.
For and in consideration of ITC's agreement to enter into that certain
Amended and Restated Loan and Security Agreement (the "LOAN AGREEMENT"), dated
as of July 16, 1998, by and between the Company, ITC and ITC Holding Company,
Inc., and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company hereby grants to Holder the right to
purchase that number of shares of Company's Common Stock, par value $.01 per
share (the "COMMON STOCK") as determined under the provisions of SECTION 2. The
shares of Common Stock issuable upon exercise of this Warrant are hereinafter
referred to as the "SHARES". This Warrant shall be exercisable commencing on
the earlier of the closing of an Initial Public Offering (as defined below) by
the Company or December 31, 1998 and ending on July 16, 2008 (the "WARRANT
TERM").
2. EXERCISE PRICE; NUMBER OF SHARES.
(a) The exercise price ("EXERCISE PRICE") per share for which all or
any of the Shares may be purchased pursuant to the terms of this Warrant shall
be that per share value as determined under SUBSECTION (B) of SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as applicable.
(b) Subject to the terms set forth in this Warrant (including,
without limitation, the adjustment provisions of SECTION 2(C) and SECTION 7),
on any date during the Warrant Term, the Holder hereof shall be entitled to
purchase such number of Shares as is calculated below:
(i) if the Company closes an Initial Public Offering before
December 31, 1998, Holder shall be entitled to purchase such number of Shares
as
1
<PAGE> 2
is equal to the quotient of (A) 375,000, divided by (B) the per share selling
price to the public of the Common Stock in the Initial Public Offering;
(ii) if the Company closes a Private Equity Funding (as
defined below) before December 31, 1998, Holder shall be entitled to purchase
such number of Shares as is equal to the quotient of (A) 375,000, divided by
(B) the per share selling price to investors of the Common Stock in the Private
Equity Funding; or
(iii) if the Company does not close an Initial Public Offering
or a Private Equity Funding before December 31, 1998, Holder shall be entitled
to purchase such number of Shares as is equal to the quotient of (A) 375,000,
divided by (B) the fair market value of a share of Common Stock as of December
31, 1998, as jointly determined in good faith by the Company and ITC.
The quotient of the applicable calculation set forth in SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as the case may be, as determined as of December 31,
1998, is hereinafter referred to as the "ORIGINAL SHARE AMOUNT."
(c) If any amounts, whether principal, interest or otherwise, remain
outstanding after December 31, 1998 under that certain Revolving Credit Loan
(the "LOAN") made available pursuant to the Loan Agreement, the number of
Shares purchasable pursuant to this Warrant shall, without adjustment to the
per share Exercise Price, increase from the Original Share Amount to equal the
sum of (1) the Original Share Amount, plus (2) the product of (A) the Original
Share Amount, multiplied by (B) the Loan Factor (as defined below). The
adjustment set forth in this section shall apply whether or not the Holder has
exercised its right to purchase any shares purchasable hereunder prior to the
date of any such adjustment.
"LOAN FACTOR" shall be equal to the product of (A) 0.1, multiplied by
(B) the number of calendar months (with any fraction of a calendar month to be
considered to be a whole calendar month) that any amounts under the Loan,
whether principal, interest or otherwise, remain outstanding after December 31,
1998.
"INITIAL PUBLIC OFFERING" shall mean a public sale of the Company's
Common Stock pursuant to the registration provisions of the Securities Act of
1933, as amended (the "SECURITIES ACT"), at a minimum aggregate offering price
to the public of $20 million, as a result of which a public trading market for
the Common Stock is created.
"PRIVATE EQUITY FUNDING" shall mean any Private Placement (as defined
below) in excess of $20 million the proceeds of which are allocated, in whole
or in part, to the repayment of outstanding amounts under the
Loan.
2
<PAGE> 3
"PRIVATE PLACEMENT" any sale, transfer, exchange, pledge or other
disposition of the Company's Common Stock not requiring registration under the
Securities Act.
3. EXERCISE.
This Warrant may be exercised by the Holder hereof (but only on the
conditions hereinafter set forth) as to all or any increment or increments of
One Hundred (100) Shares (or the balance of the Shares if less than such
number), upon delivery of written notice of intent to exercise to the Company
at the following address: HeadHunter.NET, Inc., 6410 Atlantic Boulevard, Suite
160, Norcross, GA 30071; Attention: Warren Bare, or such other address as the
Company shall designate in a written notice to the Holder hereof, together with
this Warrant and a check payable to the Company (or wire transfer of funds to
the Company) for the aggregate purchase price of the Shares so purchased. Upon
exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Shares for which this Warrant is being exercised in such
names and denominations as are requested by such Holder. If this Warrant shall
be exercised with respect to less than all of the Shares, the Holder shall be
entitled to receive a new Warrant covering the number of Shares in respect of
which this Warrant shall not have been exercised, which new Warrant shall in
all other respects be identical to this Warrant. The Company covenants and
agrees that it will pay when due any and all state and federal issue taxes
which may be payable in respect of the issuance of this Warrant or the issuance
of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS.
The above provisions are subject to the following:
(a) Neither this Warrant nor the Shares have been
registered under the Securities Act or any state securities laws
("BLUE SKY LAWS"). This Warrant has been acquired for investment
purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or
otherwise transferred without an effective registration statement for
such Warrant under the Securities Act and such applicable Blue Sky
Laws, or the availability of an exemption from registration under the
Securities Act and applicable Blue Sky Laws. Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the
same manner and to the same extent as the Warrant, and the
certificates representing such Shares shall bear substantially the
following legend:
3
<PAGE> 4
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY
OF AN EXEMPTION FROM REGISTRATION, UNDER THE
SECURITIES ACT AND REGULATIONS PROMULGATED THEREUNDER
AND APPLICABLE STATE SECURITIES LAWS.
The Holder hereof and the Company agree to execute such other
documents and instruments as the Company reasonably deems necessary to
effect the compliance of the issuance of this Warrant and any shares
of Common Stock issued upon exercise hereof with applicable federal
and state securities laws.
(b) The Company covenants and agrees that (i) all
Shares which may be issued upon exercise of the Warrant, upon
issuance, shall be fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof; (ii)
the Company will not close its books against the exercise of the
Warrant or the transfer of the Common Stock issued or issuable upon
exercise of the Warrant in any manner which would interfere with the
timely exercise of the Warrant; and (iii) the Company will at all
times reserve and keep available out of its authorized Common Stock,
solely for the purpose of effecting the exercise of the Warrant, the
full number of shares of Common Stock which would be deliverable upon
the exercise of the Warrant.
5. TRANSFER OF WARRANT.
(a) Prior to July 16, 1999, ITC may not transfer,
in whole or in part, without the written consent of the Company, this Warrant
or the Shares to any person or business entity other than Affiliates (as
defined in Rule 144(a) of the Securities Act) of ITC.
(b) Subject to the provisions of SECTION 4 and
SECTION 5(A) hereof, this Warrant may be transferred, in whole or in part, on
or after July 16, 1999, to any person or business entity, by presentation of
the Warrant to the Company with written instructions for such transfer. Upon
such presentation for transfer, the Company shall promptly execute and deliver
a new Warrant or Warrants in the form hereof in the name of the assignee or
assignees and in the denominations specified in such instructions. The Company
shall pay all expenses incurred by it
4
<PAGE> 5
in connection with the preparation, issuance and delivery of Warrants under
this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company,
then all shares of Common Stock that are subject to this Warrant shall be
deemed to be outstanding and owned by the Holder and the Holder shall be
entitled to participate in such rights offering.
7. ADJUSTMENT UPON CHANGES IN STOCK.
The Exercise Price and the number of Shares purchasable hereunder are
subject to adjustment from time to time as follows:
(a) Stock Dividend, Stock Split or Subdivision of Shares.
If the number of shares of Common Stock outstanding at any time after
the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common
Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Exercise Price shall be appropriately
decreased and the number of shares of Common Stock issuable on
exercise of each Warrant shall be increased in proportion to such
increase in outstanding shares.
(b) Combination of Shares. If, at any time after the date
hereof, the number of shares of Common Stock outstanding is decreased
by a combination of the outstanding shares of Common Stock, then,
following the record date for such combination, the Exercise Price
shall be appropriately increased and the number of shares of Common
Stock issuable on exercise of each Warrant shall be decreased in
proportion to such decrease in outstanding shares.
(c) Merger, Consolidation, Share Exchange, Reorganization,
Etc. If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, recapitalization, exchange of
shares, or reorganization of the Company, sale or transfer of
substantially all of the assets of the Company, or other similar
event, occurring after the date hereof, as a result of which shares of
Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of securities of the
Company or another entity, then lawful provision shall be made by the
Company so that the Holder exercising this Warrant shall
5
<PAGE> 6
receive, for the aggregate Exercise Price paid upon such exercise,
the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such
merger, consolidation, recapitalization, exchange of shares,
reorganization, sale or other similar event.
8. CERTAIN NOTICES.
(a) Adjustment Certificate. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to
SECTION 2(C) or SECTION 7, the Company shall issue a certificate to
each Holder setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment.
(b) Specific Notices. In case:
(i) the Company shall take a record of the holders
of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other
right, or
(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
Company, or any conveyance of all or substantially all of the
assets of the Company to another Company, or
(iii) of any voluntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will notify each Holder of, as the
case may be, (1) the date on which a record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, or (2) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock (or such
stock or securities at the time receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
6
<PAGE> 7
conveyance, dissolution, liquidation, or winding-up. For any such notification
required under either (1) or (2) above, the Company shall provide to Holder
written notice at least twenty (20) days prior to the date specified therein.
9. NO FRACTIONAL SHARES.
No fractional shares shall be issued upon the exercise of this
Warrant. If any adjustment under either SECTION 2(C) or SECTION 7 would create
a fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward.
10. AMENDMENTS.
The terms and provisions of this Warrant may not be modified or
amended, or any provisions hereof waived, temporarily or permanently, except by
written consent of the Company and a majority in interest of the Holders
hereof.
11. GOVERNING LAW.
This Warrant shall be governed by, and construed in accordance with,
the laws of the State of Georgia (excluding the choice of law rules thereof).
---------------------------------------
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Warrant to be duly executed on their behalf as of the date first above written.
HEADHUNTER.NET, INC., a
Georgia corporation
By: /s/ Kenneth E. Dopher
----------------------------------------
Title: CFO
-------------------------------------
ITC SERVICE COMPANY, a
Georgia corporation
By: /s/ J. Douglas Cox
----------------------------------------
Title: Senior Vice President
-------------------------------------
8
<PAGE> 1
EXHIBIT 21.1
HEADHUNTER.NET, INC. SUBSIDIARIES
NAME OF SUBSIDIARY STATE OF ORGANIZATION
HeadHunters, L.L.C.(1) Delaware
HNET, Inc. Georgia
(1) The Registrant directly holds a 55% equity interest in HeadHunters, L.L.C.
The remaining 45% equity interest is held by HNET, Inc., a wholly-owned
subsidiary of the Registrant.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our firm included in or made part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
July 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 196,366
<SECURITIES> 0
<RECEIVABLES> 155,365
<ALLOWANCES> 32,249
<INVENTORY> 0
<CURRENT-ASSETS> 480,429
<PP&E> 195,355
<DEPRECIATION> 23,965
<TOTAL-ASSETS> 1,524,696
<CURRENT-LIABILITIES> 753,560
<BONDS> 0
0
28,000
<COMMON> 22,000
<OTHER-SE> 771,136
<TOTAL-LIABILITY-AND-EQUITY> 1,524,696
<SALES> 0
<TOTAL-REVENUES> 278,051
<CGS> 0
<TOTAL-COSTS> 1,344,976
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 32,249
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,059,381)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,059,381)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,059,381)
<EPS-PRIMARY> (0.48)
<EPS-DILUTED> (0.46)
</TABLE>
