<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HEADHUNTER.NET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
GEORGIA 7370 58-2403177
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
ROBERT M. MONTGOMERY, JR.
PRESIDENT AND 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:
<TABLE>
<S> <C>
JOEL J. HUGHEY, ESQ. GLENN W. STURM, ESQ.
ADAM V. BATTANI, ESQ. JON H. KLAPPER, ESQ.
SCOTT L. O'MELIA, ESQ. JONATHAN R. COE, ESQ.
ALSTON & BIRD LLP NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
ONE ATLANTIC CENTER FIRST UNION PLAZA
1201 WEST PEACHTREE STREET 999 PEACHTREE STREET, N.E., SUITE 1400
ATLANTA, GEORGIA 30309-3424 ATLANTA, GEORGIA 30309
TELEPHONE: (404) 881-7000 TELEPHONE: (404) 817-6000
FACSIMILE: (404) 881-7777 FACSIMILE: (404) 817-6050
</TABLE>
------------------------
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
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock, $.01 par value................................ $46,000,000 $12,788
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares which the underwriters have an option to purchase from a
selling shareholder to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933. In accordance
with Rule 457(o) under the Securities Act, the number of shares being
registered and the proposed maximum offering price per share are not
included in this table.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 17, 1999
PROSPECTUS
SHARES
[HEADHUNTER.NET LOGO]
COMMON STOCK
HeadHunter.NET is offering shares of its common stock. This is our
initial public offering and no public market currently exists for our shares. We
anticipate that the initial public offering price will be between $ and
$ per share.
------------------------
We intend to apply to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "HHNT."
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES MATERIAL RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
------------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT HEADHUNTER.NET
--------------- ------------ --------------
<S> <C> <C> <C>
Per Share......................................... $ $ $
Total............................................. $ $ $
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
A selling shareholder has granted the underwriters the right to purchase up
to an additional shares of common stock to cover over-allotments. The
underwriters expect to deliver the shares of common stock to purchasers on or
about , 1999.
------------------------
FIRST UNION CAPITAL MARKETS CORP.
J.C. BRADFORD&CO.
WACHOVIA SECURITIES, INC.
, 1999.
<PAGE> 3
[PICTURES OF PAGES FROM OUR WEB SITE WITH DESCRIPTIONS OF KEY FEATURES]
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
Special Note Regarding Forward-Looking
Statements.......................... 13
Market Data........................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 14
Dilution.............................. 15
Capitalization........................ 16
Selected Financial Data............... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business.............................. 26
Management............................ 34
Certain Transactions.................. 40
Principal and Selling Shareholders.... 41
Description of Capital Stock.......... 42
Shares Eligible For Future Sale....... 46
Underwriting.......................... 47
Legal Matters......................... 48
Experts............................... 48
Available Information................. 48
Index to Financial Statements......... F-1
</TABLE>
------------------------
This prospectus includes statistical data regarding HeadHunter.NET, the
Internet and the online recruiting industry. This data is based on our records
or is taken or derived from information published or prepared by various
sources, including interbiznet.com, Forrester Research and Media Metrix, Inc.
Our logo and certain titles of our service offerings mentioned in this
prospectus are our service marks and trademarks. All other brand names or
trademarks appearing in this prospectus are the property of their respective
holders.
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
which is contained in this prospectus. We are offering to sell shares of common
stock and seeking offers to buy shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of our common stock.
Unless otherwise indicated, all information in this prospectus assumes (1)
the shares of common stock will be sold at $ per share, (2) the underwriters
will not exercise their over-allotment option and (3) all outstanding shares of
our Class A preferred stock convert into shares of common stock.
<PAGE> 5
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary is not complete and does not contain all of the
information that you should consider before buying shares in this offering. We
urge you to read the entire prospectus carefully.
OUR BUSINESS
We provide a leading online recruiting service to employers, recruiters and
job seekers via our web site at www.headhunter.net. Our web site enables
employers and recruiters to advertise job opportunities and review resumes and
enables job seekers to identify, research and evaluate a broad range of job
opportunities. We believe that we provide a superior online recruiting service
to employers, recruiters and job seekers based on the benefits our service
provides to each of them.
We provide employers and recruiters with:
- access to a large number of qualified job seekers -- as evidenced by our
average of over 100,000 unique users per business day during May 1999;
- an innovative pricing model that enables employers and recruiters to
improve the placement and increase the exposure of advertised job
opportunities through our upgrade service; and
- the ability to track, measure and analyze the results of their online
recruiting efforts through detailed statistics we provide in billing
statements and in real-time on our web site.
Advantages from our web site to job seekers include:
- detailed and current information regarding a large number of
geographically dispersed job opportunities representing a wide variety of
industries and occupations;
- access to job opportunities posted by recruiters, as well as employers,
which increases the breadth of available job opportunities;
- its ease of use and functionality; and
- the ability to conduct highly focused job searches using our advanced
search capabilities.
Based on data compiled by interbiznet.com in its 1999 Electronic Recruiting
Index, our web site ranked first in "Customer Satisfaction," "Quality" and
"Quality of Resumes Generated" among recruiting web sites that feature job
opportunities from multiple industries, including sites such as Monster.com,
HotJobs.com and CareerBuilder.com.
At June 15, 1999, approximately 3,300 employers and recruiters were paying
for our online recruiting services. We generate our revenues primarily from fees
paid by employers and recruiters to post job opportunities and to improve the
position of their job opportunities in search results. We also generate revenues
from employers and recruiters who pay an additional fee to exclusively review
recently submitted or reserved resumes. In addition, we derive revenues from the
sale of banner advertising.
THE MARKET OPPORTUNITY
The emergence of the Internet and the growth in its use have made it an
attractive medium for online recruiting. We believe online recruiting is
superior to traditional means of hiring and job searching because it is
interactive, easily accessible, timely and more cost-effective. As Internet
usage becomes more widespread, we expect companies from a broad range of
industries to increase their online recruiting efforts. According to Forrester
Research, the size of the online recruiting market will increase from $105
million in 1998 to $1.7 billion in 2003. As the online recruiting market
matures, we believe that employers and recruiters will increasingly utilize only
those online recruiting services that enable them to access a large number of
qualified job seekers and exercise a high degree of control over the exposure of
their job opportunities. We believe our easy-to-use, cost effective online
recruiting service positions us to take advantage of this market opportunity.
1
<PAGE> 6
OUR GROWTH STRATEGY
Our objective is to be the leading provider of online recruiting services
to employers and recruiters. The key elements of our strategy to accomplish this
objective include the following:
Increase Awareness of the HeadHunter.NET Brand. We plan to increase
awareness of the HeadHunter.NET brand through an aggressive marketing campaign
that combines online and traditional advertising, direct marketing and strategic
relationships.
Aggressively Expand Our Sales Force. We plan to rapidly expand our direct
sales and telesales efforts by increasing the size of our existing sales force
in Atlanta and Chicago and by opening additional sales offices in major
metropolitan areas to further penetrate these markets.
Enhance Web Site Functionality. We intend to continue to make the process
of posting and searching job opportunities on our web site easier, faster and
more secure by increasing the functionality of our web site.
Develop Alternative Channels of Distribution Through Strategic
Relationships. We have entered into and continuously evaluate strategic
relationships as a means to increase traffic to our web site, enhance visibility
of job opportunities, increase awareness of the HeadHunter.NET brand, and
provide marketing and cross-promotional opportunities.
Pursue Strategic Acquisitions of Complementary Businesses or
Technologies. We will explore acquisition or investment opportunities if we
believe they will enable us to accelerate our growth, add new content, develop
new technologies or penetrate new markets.
CORPORATE INFORMATION
Our principal executive offices are located at 6410 Atlantic Boulevard,
Suite 160, Norcross, Georgia 30071, and our telephone number is (770) 300-9272.
Our web site at www.headhunter.net was launched in October 1996. The information
on our web site is not incorporated by reference into this prospectus.
2
<PAGE> 7
THE OFFERING
Common stock offered................ shares
Common stock to be outstanding after
the offering........................ shares(1)
Use of proceeds..................... Repayment of debt to one of our
principal shareholders; and working
capital and general corporate purposes,
primarily for marketing and selling
costs. See "Use of Proceeds" and
"Certain Transactions."
Proposed Nasdaq National Market
symbol.............................. HHNT
- ---------------
(1) Excludes shares of common stock issuable upon the exercise of
outstanding options at a weighted average exercise price of $ per share and
shares of common stock issuable upon the exercise of an outstanding
warrant at an exercise price of $ per share.
3
<PAGE> 8
SUMMARY FINANCIAL DATA
Set forth below is summary financial data for the year ended December 31,
1998, which we have derived from our audited financial statements, and the other
periods indicated, which we have derived from our unaudited financial
statements. You should read this summary financial data in conjunction with "Use
of Proceeds," "Selected Financial Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," our financial statements and
notes thereto, and the other financial data included elsewhere in this
prospectus. The weighted average shares outstanding data does not give effect to
the conversion of our Class A preferred stock into our common stock. As adjusted
data reflects our sale of shares of common stock in this offering and
the application of the estimated net proceeds from this offering. See "Use of
Proceeds."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED ------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1998 1998 1998 1998 1998 1999
------------ --------- --------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $ 1,099,868 $ 79,569 $ 198,482 $ 392,577 $ 429,240 $ 828,027
Costs and expenses:
Costs of revenues................... 86,963 18,220 19,319 26,201 23,223 25,433
Marketing and selling............... 2,719,330 158,549 349,831 1,220,301 990,649 1,232,352
General and administrative.......... 1,714,756 189,018 478,373 687,851 359,514 492,270
Stock compensation expense(1)....... 205,574 -- 32,705 95,113 77,756 2,861,676
Depreciation and amortization....... 276,706 55,080 63,003 74,062 84,561 88,895
----------- --------- --------- ----------- ----------- -----------
Total costs and expenses.............. 5,003,329 420,867 943,231 2,103,528 1,535,703 4,700,626
----------- --------- --------- ----------- ----------- -----------
Operating loss........................ (3,903,461) (341,298) (744,749) (1,710,951) (1,106,283) (3,872,599)
Other income (expense)................ (442,407) 7,533 11 (165,683) (284,268) (9,423)
----------- --------- --------- ----------- ----------- -----------
Net loss.............................. $(4,345,868) $(333,765) $(744,738) $(1,876,634) $(1,390,731) $(3,882,022)
=========== ========= ========= =========== =========== ===========
LOSS PER SHARE:(2)
Basic.................................
Diluted...............................
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic.................................
Diluted...............................
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 165,923
Working deficit............................................. (338,812)
Total assets................................................ 2,190,906
Total debt, including current maturities.................... 800,000
Total shareholders' equity.................................. 918,461
</TABLE>
- ---------------
(1) See note 6 to our financial statements for further information regarding the
stock compensation expense.
(2) Pursuant to Staff Accounting Bulletin 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.
4
<PAGE> 9
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The trading price of our common stock could decline due to
any of these risks, and you could lose all or part of your investment. You also
should refer to the other information in this prospectus, including our
financial statements and the related notes.
RISKS RELATED TO OUR BUSINESS
WE ARE AN EARLY-STAGE COMPANY, AND OUR LIMITED OPERATING HISTORY MAKES
EVALUATING OUR BUSINESS AND PROSPECTS DIFFICULT.
We launched our web site in October 1996 and have substantially modified it
since that time. As a result, we have a limited operating history upon which you
can base an evaluation of our business and prospects. You must consider the
risks, expenses and problems frequently encountered by companies in their early
stages of development, particularly companies in new and rapidly evolving
markets such as online recruiting. Some of the risks which we may face include
our ability to:
- implement our business model and strategy and adapt them as needed;
- hire and retain an effective sales force and other qualified personnel;
- meet competitive developments and other changes in our market;
- establish and enhance our brand;
- attract employers, recruiters and job seekers to our web site; and
- develop strategic relationships with industry-focused Internet sites.
If we fail to manage these risks successfully, our business will suffer.
WE HAVE A HISTORY OF LOSSES, WE ANTICIPATE FUTURE LOSSES AND WE MAY NEVER
ACHIEVE PROFITABILITY.
We have a history of losses and may never be profitable. We incurred net
losses of $35,000, $176,000 and $4.3 million for the 10 months ended October 31,
1997, two months ended December 31, 1997 and the year ended December 31, 1998,
respectively. As of March 31, 1999, we had an accumulated deficit of
approximately $8.4 million. We expect operating losses and negative cash flow to
continue for the foreseeable future. We anticipate our losses will increase
significantly from current levels because we expect to incur additional costs
and expenses related to:
- increased marketing and advertising to strengthen brand awareness;
- rapid expansion of our sales and other personnel;
- continued development of our web site and service offerings; and
- development of strategic relationships with industry-focused Internet
sites.
Our ability to become profitable depends on our ability to generate and
maintain greater revenues while incurring reasonable expenses. Our ability to
generate greater revenues depends on (1) our ability to convince employers and
recruiters to utilize our web site for their online recruiting needs, (2) the
growth of acceptance of the Internet as a recruiting tool, (3) the number of job
seekers who visit our web site, and (4) the number of job opportunities posted
on our web site. If we do achieve profitability, we cannot be certain that we
will be able to sustain or increase profitability on a quarterly or annual basis
in the future. Our inability to achieve or maintain profitability or positive
cash flow could cause the market price of our common stock to decrease.
5
<PAGE> 10
WE HAVE RECENTLY CHANGED OUR PRICING MODEL, WHICH MAY DECREASE THE NUMBER OF JOB
OPPORTUNITIES AND USERS ON OUR WEB SITE AND RESULT IN DECREASED REVENUE.
Until recently, employers and recruiters could post job opportunities on
our web site free of charge. Since June 1, 1999, they must pay a fee for each
job opportunity they post on our web site. As a result of this pricing change,
many employers and recruiters may choose to discontinue posting job
opportunities, or to post fewer job opportunities than they had in the past. In
the event the number of job opportunities in our database decreases, job seekers
may find that our web site is not as useful as other online recruiting sites. A
decrease in the number of job seekers on our web site may cause employers and
recruiters to further reduce the number of job opportunities they post, or the
upgrade fees that they are willing to pay. Our business may suffer as a result
of these decreases.
OUR FUTURE REVENUES ARE UNPREDICTABLE, AND OUR FINANCIAL RESULTS MAY FLUCTUATE.
Our quarterly revenue and results of operations are difficult to predict,
and we expect them to fluctuate significantly from quarter to quarter. If our
quarterly revenue or results of operations fall below the expectations of
investors or public market analysts, the price of our common stock could fall
substantially. Our quarterly revenue and results of operations may fluctuate
significantly in response to the following factors, many of which are beyond our
control:
- the cancellation of a significant number of customer accounts;
- changes in the demand for our service offerings;
- changes in our pricing policies or those of our competitors;
- the timing and effectiveness of marketing campaigns;
- the hiring cycles of employers;
- our ability to hire and retain qualified sales people;
- seasonal trends in user traffic;
- introduction of additional, or enhancement of existing, service offerings
by us or our competitors;
- the incurrence of costs related to acquisitions of businesses or
technologies;
- the costs of establishing, and the timing of, strategic relationships;
and
- general economic conditions, including the effects of a recession.
IF WE FAIL TO FURTHER DEVELOP OUR BRAND, OUR BUSINESS MAY SUFFER.
We believe that maintaining and strengthening the HeadHunter.NET brand is
an important aspect of our business. Our brand name is critical in our efforts
to attract employers, recruiters and job seekers. We believe that the importance
of brand recognition will increase due to the continued growth in the number of
competitors entering the online recruiting market. Our ability to promote and
position our brand depends largely on the success of our marketing efforts and
our ability to effectively satisfy the needs of employers, recruiters and job
seekers.
To promote our brand, we intend to substantially increase our marketing
budget. Our growth strategy and future success is also dependent on rapidly
increasing the size of our sales force. If we fail to successfully promote and
maintain our brand, or if we incur excessive expenses attempting to promote and
maintain our brand, or if we are unable to attract, train or retain qualified
sales personnel, our business may suffer.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST EXISTING AND FUTURE
COMPETITORS.
The market for online recruiting is highly fragmented and intensely
competitive. We compete on the Internet with other online recruiting sites,
corporate Internet sites, Internet portal sites, Internet content
6
<PAGE> 11
providers and nonprofit professional organizations. Many of our competitors have
longer operating histories in the online recruiting market, significantly
greater financial, technical and marketing resources, more users and larger
databases than we do.
We also compete with traditional recruiting methods, such as classified
advertising, radio, television and traditional recruiting firms, for a share of
the total recruiting budgets of employers and recruiters.
Presently, the barriers to entry by competitors in the market for online
recruiting are low. Current and new competitors can launch new Internet sites
and add substantial content on their sites at a low cost within a short time
period. Therefore, we expect competition to continue to intensify, and the
number of competitors could increase significantly in the near future.
IF WE LOSE KEY PERSONNEL, OR CANNOT RECRUIT AND RETAIN ADDITIONAL SKILLED
PERSONNEL, OUR BUSINESS MAY SUFFER.
If we lose the services of one or more key personnel, our business may
suffer. We depend on the continued services and performance of our senior
management and other key personnel, particularly Robert M. Montgomery, Jr., our
President and Chief Executive Officer. Our future success also depends upon the
continued service of our other executive officers and key sales, marketing and
technical personnel. We do not have key person life insurance policies covering
any of our key employees.
Competition for personnel with experience in online recruiting and commerce
is intense. If we are unsuccessful in attracting and training new employees, or
retaining and motivating our current and future employees, our business could
suffer significantly.
WE DO NOT HAVE LONG-TERM AGREEMENTS WITH EMPLOYERS AND RECRUITERS.
We derive a substantial majority of our revenues from employers and
recruiters that pay to post job opportunities on our web site and purchase
upgrades to their listings or other service offerings. Generally, these
employers and recruiters post their job opportunities on a monthly basis. They
have no obligation to purchase any upgrades or other service offerings, or to
post any job opportunities for more than a month at a time. As a result, an
employer or recruiter that generates substantial revenue for us in one month may
not do so in a later month. We must continually maintain existing accounts and
establish and develop new accounts with employers and recruiters.
WE MAY BE UNABLE TO EFFECTIVELY MANAGE OUR RAPID GROWTH.
We have rapidly expanded our operations and anticipate that further
expansion will be required to execute our growth strategy. Our rapid growth has
placed significant demands on our management, financial, technical and other
resources. These demands are likely to continue and increase. To manage our
future growth, we must adapt to changing business conditions and improve
existing systems or implement new systems for our financial and management
controls, reporting systems and procedures. In addition, in order to achieve
rapid growth, we may acquire technologies or products or enter into strategic
alliances. For us to succeed, we must make our existing technology, business and
systems work effectively with those of any strategic partners without undue
expense, management distraction or other disruptions to our business. If we fail
to manage any of the above growth challenges successfully, our business could
suffer.
WE DEPEND ON THIRD PARTIES TO FACILITATE ACCESS TO OUR WEB SITE, AND FACE RISKS
OF CAPACITY CONSTRAINTS.
We depend on Internet service providers and other web site operators, which
may experience Internet connectivity outages. Such outages may cause users to
experience difficulties in accessing our web site. Any system failures at these
third parties may cause an interruption in service or a decrease in
responsiveness of our web site and may impair users' perceptions of our web
site. Any failure to handle current or increased volumes of traffic on our web
site would also cause our business to suffer.
We derive a substantial majority of our revenues from employers and
recruiters that pay to post and upgrade their job opportunities. The amounts
they are willing to pay to post and upgrade their job
7
<PAGE> 12
opportunities depend to a significant degree on the number of job seekers who
visit our web site. We depend on the performance, reliability and availability
of our web site to attract and retain these job seekers. Capacity constraints
could prevent them from accessing our web site for extended periods of time and
decrease our traffic. Decreased traffic could result in fewer employers and
recruiters posting job opportunities on our web site or buying fewer upgrades
and other enhanced services. This would result in decreased revenues. In
addition, if the number of employers, recruiters and job seekers on our web site
increases substantially, we may experience capacity constraints and need to
expand or upgrade our technology at a time when we do not have adequate funds to
do so, or when that technology is not readily available.
WE FACE RISKS IN ACQUIRING OTHER COMPANIES.
One element of our growth strategy is to acquire other companies that we
believe will complement our business. Acquiring other businesses involves
numerous risks, including:
- difficulties in integrating the operations, services, products and
personnel of the acquired company into ours;
- diversion of our management's attention from other business concerns;
- inability to retain and motivate key personnel of the acquired business;
- entry into markets in which we have little or no direct prior experience;
and
- inability to retain clients or goodwill of the acquired business.
In pursuing acquisitions, we may compete with competitors that may be
larger and have greater financial and other resources than we have. Competition
for these acquisition targets could result in increased prices of acquisition
targets.
In the future, we may take accounting charges in connection with
acquisitions. We cannot guarantee that the costs and expenses actually incurred
will not exceed the estimates we use to take the accounting charges.
WE MAY NOT BE ABLE TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS.
Our success and ability to compete depend to a significant degree on our
internally developed proprietary technology and on our brand, marks and domain
names. We rely on trademark, patent and other intellectual property laws, and on
confidentiality and non-disclosure agreements with our employees and third
parties, to establish and protect our proprietary rights. We cannot assure you
that the steps we have taken to protect our proprietary rights will be adequate
or that we will be able to defend our marks or obtain patents for any of our
internally developed systems. If we are unable to secure or protect our marks
and systems, our business may suffer. In addition, we cannot assure you that
potential users of our web site will not confuse our domain name with other
similar domain names such as headhunters.com, headhunter.org or headhunters.org.
If any confusion occurs, we may lose business to a competitor, or some of our
users may have negative experiences with these other web sites that they
mistakenly associate with us.
Third parties may claim that our business activities infringe upon their
proprietary rights. From time to time in the ordinary course of business we have
been, and expect to continue to be, subject to claims of infringement of third
parties' trademarks and other intellectual property rights. Although such claims
have not had a material adverse effect on our business, such claims could
subject us to significant liability and result in invalidation of our
proprietary rights. These claims could also be time-consuming and expensive to
defend, and could result in a diversion of our management's time and attention.
Any of these factors could cause our business to suffer.
8
<PAGE> 13
WE FACE RISKS RELATED TO YEAR 2000 FAILURES.
The risks posed by year 2000 issues could adversely affect our business in
a number of significant ways. Our internally developed proprietary software and
our information technology systems, which depend on third party software and
hardware, could fail due to year 2000 issues. These failures could harm our
business and results of operations. In addition, the Internet could face serious
disruptions arising from year 2000 issues.
We cannot assure you that:
- our systems, or the systems of third parties upon which we rely, will be
year 2000 compliant in a timely manner, or that there will not be
significant problems with these systems;
- users will be able to access our web site without serious disruptions
arising from year 2000 issues;
- disruptions with other Internet sites and our strategic partners will not
adversely affect our business; or
- our costs related to year 2000 compliance will be insignificant.
OUR RELATIONSHIP WITH ITC MAY PRESENT POTENTIAL CONFLICTS OF INTEREST.
Our controlling shareholder, ITC Holding Company, Inc., is the parent of,
or a significant investor in, a group of companies involved in a wide range of
activities, including broadband cable services, telecommunications services,
conference calling and videoconferencing, and Internet access and content
services. Our Chairman and most of our other directors (Messrs. Scott,
Montgomery, Cox, Misikoff and Weber and Ms. Thompson) are directors, officers or
stockholders of ITC. In addition, Robert Montgomery, our Chief Executive Officer
and President, previously served as Chief Executive Officer of another
subsidiary of ITC. When the interests of ITC and its affiliates diverge from our
interests, ITC and its affiliates may exercise their influence in their own best
interests. Some decisions concerning our operations or finances may present
conflicts of interest between us and ITC or its affiliates. Due to the extensive
relationships between ITC and us, we may make decisions that potentially favor
ITC or its affiliates at our expense. Furthermore, Georgia law may prohibit you
from successfully challenging these decisions, if the decision received the
affirmative vote of a majority, but not less than two, of our "qualified
directors," or disinterested directors, who received full disclosure of the
existence and nature of the conflict.
OUR ARTICLES OF INCORPORATION AND BYLAWS AND GEORGIA LAW CONTAIN PROVISIONS THAT
COULD DISCOURAGE A TAKEOVER OF OUR COMPANY.
Our articles of incorporation and bylaws contain provisions that could make
it more difficult for another company to acquire us, even if that acquisition
would benefit our shareholders. Further, we have adopted provisions of Georgia
law that could delay, prevent or make more difficult a merger, tender offer or
proxy contest involving HeadHunter.NET. See "Description of Capital Stock."
RISKS RELATED TO OUR INDUSTRY
WE DEPEND ON THE ACCEPTANCE OF THE INTERNET AS A RECRUITING MEDIUM.
The Internet is a relatively new medium for recruiting, and employers,
recruiters and job seekers have not reached any consensus that online recruiting
is an effective means for satisfying their recruitment needs. A large number of
employers and recruiters have only limited experience in using the Internet for
recruitment. They are not yet spending a significant amount of their recruiting
budgets on online recruiting or committing to doing so over a long period. As a
result, our sales force spends a substantial amount of time and resources
retaining existing accounts, and educating employers and recruiters about our
services and the online recruiting market. We may be unable to persuade a large
number of employers, recruiters and job seekers that our services will satisfy
their needs more successfully than traditional recruiting
9
<PAGE> 14
methods. If we cannot meet the needs of employers, recruiters and job seekers or
adapt our services to meet their demands, our business will suffer.
OUR MARKET IS SUBJECT TO RAPID CHANGE.
Our market is characterized by rapidly changing technology, introductions
and enhancements of competitive services, and changing user demands.
Accordingly, our future success depends on our ability to adapt to such rapid
changes in technology and improve the features, reliability and functionality of
our service offerings in response to our competitors. We cannot assure you that
we will succeed in addressing these issues.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION.
We are currently not subject to direct federal, state, local or foreign
regulation or laws or regulations applicable to the Internet, other than
regulations applicable to businesses generally. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted covering user privacy, freedom of expression,
pricing, content, quality of products and services, taxation, advertising,
intellectual property rights and information security. For example, we believe
that more than 200 pieces of legislation relating to privacy issues and the
Internet have been, or will be, introduced during 1999 by various legislative
bodies. Moreover, the applicability to the Internet of existing laws governing
intellectual property ownership and infringement, copyright, trademark, trade
secret, obscenity, libel, employment and personal privacy is uncertain and
developing. The nature and effect of any proposed legislation or regulation, or
the application or interpretation of existing laws, cannot be fully determined.
Any new law or regulation pertaining to the Internet, or the application or
interpretation of existing laws, could decrease the demand for our services,
increase our operational costs or otherwise adversely impact our business.
The adoption of any such legislation could also dampen the growth in use of
the Internet generally and decrease its acceptance as a communications,
commercial and advertising medium. Any legislation which has an adverse impact
on the growth of the Internet could decrease the demand for our services. This
decrease could harm our business.
WE MAY BE LIABLE FOR INFORMATION RETRIEVED FROM OR TRANSMITTED OVER THE
INTERNET.
We may be sued for defamation, obscenity, negligence, copyright or
trademark infringement or other legal claims relating to information that is
posted or made available on our web site. Other claims may be brought based on
the nature, publication or distribution of our content or based on errors or
false or misleading information provided on our web site. We could also be sued
for the content that is accessible from our web site through links to other
Internet sites. Our insurance may not adequately protect us against these types
of claims. In addition, we could incur significant costs in investigating and
defending such claims, even if we ultimately are not found liable. Any of these
events could harm our business.
CONCERNS REGARDING SECURITY OF TRANSACTIONS AND TRANSMITTING CONFIDENTIAL
INFORMATION OVER THE INTERNET MAY NEGATIVELY IMPACT OUR ELECTRONIC COMMERCE
BUSINESS.
We believe that concern regarding the security of confidential information
transmitted over the Internet, such as credit card numbers, prevents many
potential customers from engaging in online transactions. If we do not add
sufficient security features to our web site, our services may not gain market
acceptance or there may be additional legal exposure to us. We have included
basic security features in some of our products to protect the privacy and
integrity of customer data, such as password requirements to access some data.
Despite the measures we have taken, our infrastructure is potentially
vulnerable to physical or electronic break-ins or similar problems. If a person
circumvents our security measures, he or she could misappropriate proprietary
information or cause interruptions in our operations. Security breaches that
result in access to confidential information could damage our reputation and
expose us to a risk of loss or
10
<PAGE> 15
liability. We may be required to make significant investments and efforts to
protect against or remedy security breaches. Additionally, as electronic
commerce becomes more prevalent, our customers will become more concerned about
security. If we do not adequately address these concerns our business could
suffer.
COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS AND MAY
ADVERSELY AFFECT OUR BUSINESS.
Computer viruses may cause our systems to incur delays or other service
interruptions. In addition, the inadvertent transmission of computer viruses
could expose us to a material risk of loss or litigation and possible liability.
Moreover, if a computer virus affecting our system is highly publicized, our
reputation could be materially damaged and our visitor traffic may decrease. Any
of these events could cause our business to suffer.
A RECESSION COULD ADVERSELY IMPACT OUR BUSINESS.
Online recruiting is a relatively new industry and we do not know how
sensitive it is to general economic conditions. The level of economic activity
and employment in the United States may significantly and adversely affect the
demand for online recruiting services. A recession could cause employers and
recruiters to reduce or postpone their recruiting efforts generally, and their
online recruiting efforts in particular. If a recession or significant economic
downturn occurs in the United States, our business could suffer.
RISKS RELATED TO THIS OFFERING
WE MAY BE UNABLE TO MEET OUR FUTURE CAPITAL REQUIREMENTS.
Based on our current operating plan, we anticipate that the net proceeds of
this offering, together with our available funds, will be sufficient to satisfy
our anticipated needs for working capital, including our increased marketing
expenses, capital expenditures and business expansion for at least the next 12
months. After that time, or in the event that we do not meet our operating plan,
we may need additional capital. Alternatively, we may need to raise additional
funds prior to such time in order to fund more rapid expansion, to increase
brand development and market awareness, to develop new or enhanced technology,
to respond to competitive pressures or to establish strategic relationships. If
we raise additional funds by issuing equity or convertible debt securities, the
percentage ownership of our shareholders will be diluted. Any new securities
could have rights, preferences and privileges senior to those of our common
stock.
We currently do not have any commitments for additional financing. We
cannot be certain that additional financing will be available when and to the
extent required or that, if available, it will be on acceptable terms. If
adequate funds are not available on acceptable terms, we may not be able to fund
our expansion, increase brand development and market awareness, develop or
enhance our service offerings, respond to competitive pressures or establish
strategic relationships.
OUR MANAGEMENT HAS BROAD DISCRETION OVER USE OF PROCEEDS FROM THIS OFFERING.
The net proceeds of this offering are estimated to be approximately
$ million. Management has allocated approximately $ of the net
proceeds of the offering for repayment of debt to ITC. Our management will
retain broad discretion regarding the allocation of the remainder of the net
proceeds of this offering. Our management intends to use a majority of the
remainder of the net proceeds for increased marketing and selling expenses. They
may use the net proceeds for purposes with which you disagree. Management's
failure to apply the proceeds effectively could harm our business.
11
<PAGE> 16
OUR EXISTING SHAREHOLDERS WILL CONTROL SHAREHOLDER ACTION AFTER THIS OFFERING.
Upon completion of the offering and conversion of all outstanding shares of
Class A preferred stock, ITC and Warren L. Bare will beneficially own % and
%, respectively, of our outstanding common stock. As a result, these
shareholders, voting together, will possess the ability to elect all of the
members of our board of directors and to approve significant corporate
transactions. This control or share ownership may also have the effect of
delaying or preventing a change in control of our company, impeding a merger,
consolidation, takeover or other business combination involving us or
discouraging a potential acquiror from making a tender offer or otherwise
attempting to obtain control of us.
OUR COMMON STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL LOSSES
FOR INDIVIDUAL SHAREHOLDERS.
Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after the offering. We negotiated and determined the initial public
offering price with the underwriters based on several factors. This price may
vary from the market price of the common stock after this offering. The market
price of the common stock may fluctuate significantly in response to the
following factors, some of which are beyond our control:
- variations in quarterly operating results;
- changes in financial estimates by securities analysts;
- our announcements of significant contracts, milestones, acquisitions,
strategic relationships or capital commitments;
- additions or departures of key personnel;
- sales of common stock or termination of stock transfer restrictions; and
- fluctuations in stock market price and volume, which are particularly
common among securities of Internet companies.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation often has been
instituted against that company. Such litigation is expensive and diverts
management's attention and resources.
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN NET TANGIBLE BOOK
VALUE PER SHARE.
The initial public offering price will be substantially higher than the pro
forma tangible book value per share of our outstanding common stock. If you
purchase our common stock in this offering, the shares you buy will experience
an immediate and substantial dilution in tangible book value per share. The
shares of common stock owned by our existing shareholders will receive a
material increase in the tangible book value per share. The dilution to
investors in this offering will be approximately $ per share. See
"Dilution."
SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK AFTER THE OFFERING COULD CAUSE
THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE.
Sales of a substantial number of shares of common stock in the public
market, or the perception that these sales may occur, could adversely affect the
market price of our common stock. This could also impair our ability to raise
additional capital through the sale of our equity securities. After this
offering, we will have shares of common stock outstanding, or
shares if the underwriters exercise in full their over-allotment
option. The shares sold in this offering will be freely tradeable. Shares held
by affiliates of ours will be subject to the limitations of Rule 144 under the
Securities Act. The remaining shares are "restricted shares" and
will become eligible for sale in the public market at various times after 180
days after the date of this prospectus, subject to the limitations and
conditions of Rule 144.
12
<PAGE> 17
In addition, ITC and Warren L. Bare have registration rights with respect
to their shares of our common stock. This will allow them to sell their shares
of our common stock in the market simultaneously with any future public
offerings by us of our equity securities. See "Shares Eligible for Future Sale."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. All statements
regarding future events, our financial performance and operating results, our
business strategy and our financing plans are forward-looking statements. In
some cases you can identify forward-looking statements by terminology, such as
"may," "will," "would," "should," "could," "expect," "intend," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of such terms or other comparable terminology. These statements are
only predictions. Known and unknown risks, uncertainties and other factors could
cause actual results to differ materially from those contemplated by the
statements. In evaluating these statements, you should specifically consider
various factors, including the risks outlined under "Risk Factors." These
factors may cause our actual results to differ materially from any
forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are under no duty to update any of the
forward-looking statements after the date of this prospectus to conform those
statements to actual results or to changes in our expectations.
MARKET DATA
This prospectus contains market data related to our business and the
Internet. This market data includes projections that are based on a number of
assumptions. The assumptions include the following:
-- no catastrophic failure of the Internet will occur;
-- the number of people online and the total number of hours spent online
will increase significantly over the next five years; and
-- Internet security and privacy concerns will be adequately addressed.
If any one or more of these assumptions turns out to be incorrect, actual
results may differ from the projections based on these assumptions. The
Internet-related markets may not grow over the next three to four years at the
rates projected by these market data, or at all. The failure of these markets to
grow at these projected rates may have a material adverse impact on our business
and the market price of our common stock.
13
<PAGE> 18
USE OF PROCEEDS
We will receive an estimated $ million in net proceeds from the sale of
the shares of common stock offered by us in this offering after
deducting the underwriting discount and other estimated offering expenses. We
will not receive any proceeds from the sale of common stock by the selling
shareholder if the underwriters exercise the over-allotment option.
The principal purposes of this offering are to increase our working
capital, including funds for marketing and selling expenses, and to create a
public market for our common stock. We intend to use approximately $1.8 million
of the net proceeds to repay our credit facility with ITC, and the balance of
the net proceeds for working capital and other general corporate purposes,
primarily for marketing and selling expenses. Pending use of the net proceeds as
described above, we intend to invest the net proceeds in interest-bearing,
investment grade securities.
The credit facility with ITC provides for advances to us of up to $3.0
million and is payable in full on the closing of this offering. Amounts
outstanding under the credit facility accrue interest at an annual rate of 11%.
We used the funds that we borrowed under this credit facility for working
capital and other general corporate purposes.
DIVIDEND POLICY
In November 1997, our predecessor company made a distribution to one of our
principal shareholders in the amount of $100,000. See "Certain Transactions." We
do not intend to pay any cash dividends on our common stock in the foreseeable
future because we intend to retain our earnings, if any, to finance our growth
and for general corporate purposes.
14
<PAGE> 19
DILUTION
Our net tangible book value at March 31, 1999 was approximately $ ,
or $ per share. Net tangible book value per share represents the amount of
our total tangible assets reduced by the amount of our total liabilities, and
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 in this offering and
the application of the net proceeds as set forth under "Use of Proceeds," our
pro forma net tangible book value as of March 31, 1999 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 this offering. The following table illustrates this
per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $
Net tangible book value at March 31, 1999................. $
Increase attributable to new investors....................
Pro forma net tangible book value after the offering........
------
Dilution per share to new investors......................... $
======
</TABLE>
The following table sets forth the number of shares of common stock
purchased from us, the total consideration paid and the average price per share
paid by our existing shareholders and to be paid by new investors in this
offering.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders..............
New investors......................
----------- --- ------------ ---
Total.............................. 100% 100%
=========== === ============ ===
</TABLE>
The above tables assume no exercise of outstanding stock options or
warrants. As of the date of this prospectus, we had outstanding options to
purchase shares of common stock at a weighted average exercise price of
$ per share and an outstanding warrant to purchase shares of common
stock at an exercise price of $ per share. To the extent any of these
options and warrants are exercised, new investors will incur further dilution.
15
<PAGE> 20
CAPITALIZATION
The following table sets forth our capitalization at March 31, 1999: (1) on
a historical basis and (2) as adjusted to give effect to our sale of
shares of common stock offered in this offering and the
application of the net proceeds therefrom. See "Use of Proceeds." This table
should be read in conjunction with our financial statements and the notes
thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the other financial data appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1999
--------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Short-term borrowings....................................... $ 800,000 $
Shareholders' equity:
Class A preferred stock, $0.01 par value, 7,500,000 shares
authorized, 5,404,500 shares issued and outstanding
(actual), none outstanding (as adjusted)............... 54,045
Class B serial preferred stock, $0.01 par value, 5,000,000
shares authorized, none issued and outstanding......... --
Common stock, $0.01 par value, 45,500,000 shares
authorized, shares issued and outstanding
(actual), shares issued and outstanding (as
adjusted)(1)........................................... 22,000
Additional paid-in capital................................ 12,125,842
Accumulated deficit....................................... (8,404,282)
Stock warrants............................................ 341,834
Deferred compensation(2).................................. (3,220,978)
----------- -----------
Total shareholders' equity............................. 918,461
----------- -----------
Total capitalization.............................. $ 1,718,461 $
=========== ===========
</TABLE>
- ---------------
(1) Excludes shares of common stock that were subject to outstanding
options at March 31, 1999 at a weighted average exercise price of $ per
share.
(2) See note 6 to our financial statements for further information regarding
deferred compensation.
16
<PAGE> 21
SELECTED FINANCIAL DATA
The following table sets forth our selected financial data as of and for
our inception period (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 year ended December 31, 1998, which have been derived
from the audited financial statements of the predecessor to our company and our
audited financial statements. The selected financial data as of and for the
three months ended March 31, 1998 and 1999 have been derived from our unaudited
financial statements and, in the opinion of our management, include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of such information. Operating results for the three months ended
March 31, 1999 are not necessarily indicative of the results that may be
expected for the entire year. The selected financial data set forth below should
be read in conjunction with "Use of Proceeds," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," our financial
statements and the notes thereto and the other financial data included elsewhere
in this prospectus. The weighted average shares outstanding data does not give
effect to the conversion of our Class A preferred stock into our common stock.
As adjusted data reflects our sale of shares of common stock offered in
this offering and the application of the estimated net proceeds from this
offering.
<TABLE>
<CAPTION>
PREDECESSOR TO OUR COMPANY OUR COMPANY
----------------------------------------- -----------------------------------------------------
FROM
INCEPTION TEN
(OCTOBER 10, MONTHS TWO MONTHS THREE MONTHS ENDED
1995) TO YEAR ENDED ENDED ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, -----------------------
1995 1996 1997 1997 1998 1998 1999
------------ ------------ ----------- ------------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................... $50,754 $190,146 $124,437 $ 29,591 $ 1,099,868 $ 79,569 $ 828,027
Costs and expenses:
Costs of revenues........... -- -- 29,390 2,906 86,963 18,220 25,433
Marketing and selling....... -- 2,740 23,301 41,123 2,719,330 158,549 1,232,352
General and
administrative............ 5,073 52,105 95,967 126,268 1,714,756 189,018 492,270
Stock compensation
expense................... -- -- -- -- 205,574 -- 2,861,676
Depreciation and
amortization.............. 516 6,842 10,099 41,912 276,706 55,080 88,895
------- -------- -------- --------- ----------- --------- -----------
Total costs and expenses...... 5,589 61,687 158,757 212,209 5,003,329 420,867 4,700,626
------- -------- -------- --------- ----------- --------- -----------
Operating income (loss)....... 45,165 128,459 (34,320) (182,618) (3,903,461) (341,298) (3,872,599)
Net income (loss)............. $45,165 $128,623 $(35,163) $(176,392) $(4,345,868) $(333,765) $(3,882,022)
======= ======== ======== ========= =========== ========= ===========
LOSS PER SHARE:(1)
Basic.........................
Diluted.......................
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic.........................
Diluted.......................
</TABLE>
17
<PAGE> 22
<TABLE>
<CAPTION>
PREDECESSOR TO OUR
COMPANY OUR COMPANY
------------------- -----------------------------------------------------------------
AT DECEMBER 31, AT MARCH 31,
AT DECEMBER 31, ------------------------- -------------------------------------
------------------- 1999 1999
1995 1996 1997 1998 1998 ACTUAL AS ADJUSTED
-------- -------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents... $14,326 $25,973 $ 853,989 $ 254,937 $ 531,751 $ 165,923
Working capital (deficit)... 31,214 33,706 788,976 (3,446,422) 492,007 (338,812)
Total assets................ 43,030 58,550 1,922,915 2,225,180 1,690,214 2,190,906
Total debt, including
current maturities........ -- -- -- 3,500,000 -- 800,000
Total shareholders' equity
(deficit)................. 42,865 55,500 1,830,517 (1,967,943) 1,496,752 918,461
</TABLE>
- ---------------
(1) Pursuant to Staff Accounting Bulletin 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.
Per share data for the predecessor to our company is not shown, as it is not
comparable with our data.
18
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with our financial
statements and the notes thereto and other financial information appearing
elsewhere in this prospectus. This prospectus contains forward-looking
statements relating to our future economic performance and other financial
items. In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "would," "could," "should," "expect," "estimate,"
"anticipate," "believe," "plan," "predict," "intend," and other similar
expressions. These statements are only predictions. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined in "Risk Factors." These factors may cause our actual results to
differ materially from any forward-looking statement. We have rounded the dollar
amounts and percentages provided below to simplify the presentation.
OVERVIEW
We provide a leading online recruiting service to employers, recruiters and
job seekers via our web site at www.headhunter.net. We were founded in October
1995 and from our inception until late 1996, we derived all of our revenues from
web site development consulting services. As a result of the experience that we
gained during this period, we identified online recruiting as an emerging
industry. We launched our web site in October 1996, and since that time have
been focused on growing our online recruiting services business.
In October 1997, we entered into an investment agreement with ITC to form
HeadHunters, L.L.C. and to fund our continued growth. In July 1998, HeadHunters,
L.L.C., ITC and Warren L. Bare reorganized us by entering into a contribution
agreement under which Mr. Bare contributed all of his 45% interest in
HeadHunters, L.L.C. to us in exchange for shares of our common stock
and 50,000 shares of our Class A preferred stock, and ITC contributed its 55%
interest in HeadHunters, L.L.C. to us in exchange for shares of our
Class A preferred stock. This transaction was accounted for in a manner similar
to a pooling of interest.
We derive revenue primarily from fees paid by employers and recruiters to
post a job opportunity on our web site and improve the placement of a job
opportunity by purchasing our upgrade service. To a lesser extent, we earn
revenue from fees paid by employers and recruiters for additional services and
from the sale of banner advertisements. Initially, we charged one flat fee for a
combination of our services, although we did not charge employers and recruiters
to post job opportunities on our web site. As a result, revenue was earned
principally from a combination of upgrade fees and the sale of banner
advertisements on our web site, with sales of banner advertising comprising a
more significant percentage of our revenues. We modified our pricing structure
effective as of August 1, 1998 and began offering upgrade services on a per job
basis. As a result of this pricing change and the growth of our sales force,
revenue from upgrade fees has continued to grow as a percentage of our revenues.
On June 1, 1999, we began to charge employers and recruiters a fee to post
job opportunities on our web site. Employers and recruiters can post job
opportunities by paying a flat fee of approximately $20 per job opportunity for
a 30-day basic listing. Employers and recruiters who want to improve the
placement of their jobs in a search result in order to increase the visibility
and exposure of their job opportunity can pay an additional fee. Upgrades are
purchased for 30-day periods and start at $25 per job opportunity, with
increases in $25 increments. We generally provide favorable pricing terms to
employers and recruiters that post a significant number of job opportunities. We
believe that job posting fees and upgrade fees will account for a substantial
majority of our revenues for the foreseeable future.
We implemented our "VIP Resume Reserve" service in April 1999. This service
allows employers and recruiters to pay a quarterly or annual subscription fee to
access our VIP Resume Reserve.
We record advance billings prior to the delivery of services or the display
of an advertisement as deferred revenues and recognize them as revenue ratably
when the services are provided or the advertisements are displayed. At March 31,
1999, we had approximately $52,000 of deferred revenues.
19
<PAGE> 24
Our costs and expenses include:
(1) costs of revenues, consisting of bandwidth access fees, co-location
costs and Internet connection charges;
(2) marketing and selling expenses, consisting primarily of salaries and
commissions for sales, marketing and customer service personnel,
advertising costs and other marketing-related expenses (including
strategic relationship and product design costs);
(3) general and administrative expenses, consisting primarily of salaries
and related costs for general corporate functions, including finance
and accounting personnel, software development and technical personnel,
office facilities and fees for professional services; and
(4) depreciation and amortization, including depreciation of computer and
other equipment and amortization of goodwill.
We have recently made significant changes to our pricing policy.
Accordingly, we have an extremely limited operating history on which you can
base an evaluation of our company. Thus, period-to-period comparisons of our
operating results are not particularly meaningful, and you should not rely on
the results for any period as an indication of our future performance. We have
experienced, and expect to continue to experience, seasonality in our user
traffic, with lower traffic during the summer vacation and year-end holiday
periods. Because our business model is new, we do not know if our results of
operations are subject to seasonal fluctuations. We believe that revenue from
classified advertising and other traditional recruiting services is generally
lower in the months of July, November and December because of vacation periods
and holiday seasons. As the online recruiting market develops, we believe that
we may experience similar seasonal patterns or discover other seasonal patterns.
We have a history of losses and at March 31, 1999, we had an accumulated
deficit of approximately $8.4 million. We expect to continue to incur losses and
negative cash flow for the foreseeable future. In addition, to foster our
planned growth, we expect to continue to significantly increase our operating
expenses in the areas of marketing, sales and technology.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999, AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1998
Revenues. Our revenues increased $748,000, or 935%, from $80,000 for the
three months ended March 31, 1998 to $828,000 for the three months ended March
31, 1999. Revenues from upgrade fees grew from $25,000 to approximately
$659,000. This increase primarily resulted from the growth of our direct sales
force from five people as of March 31, 1998 to 32 people as of March 31, 1999,
coupled with a more aggressive marketing campaign. During the same time frame,
our advertising revenue grew from $55,000 to $169,000. This growth resulted from
an increase in traffic to our web site over the same quarter last year, which
enabled us to sell more advertising impressions.
Costs of revenues. Our costs of revenues increased $7,000, or 39%, from
$18,000 for the three months ended March 31, 1998 to $25,000 for the three
months ended March 31, 1999. Costs of revenues increased primarily due to growth
in traffic and content on our web site. However, as a percentage of revenue, our
costs of revenues decreased from 23% for the three months ended March 31, 1998
to 3% for the comparable period in 1999. The decrease in costs as a percentage
of revenues was primarily due to economies of scale.
Marketing and selling expenses. Marketing and selling expenses increased
$1.0 million, or 629%, from $159,000 for the three months ended March 31, 1998
to $1.2 million for the three months ended March 31, 1999. Marketing expenses
increased $622,000, or 527%, from $118,000 for the three months ended March 31,
1998 to $740,000 for the three months ended March 31, 1999. This increase is
primarily the result of aggressive advertising and marketing campaigns designed
to attract more employers, recruiters and job seekers to our web site. Selling
expenses increased $452,000, or 1,130%, from $40,000 for the three months ended
March 31, 1998 to $492,000 for the three months ended March 31, 1999. This
20
<PAGE> 25
increase is primarily due to the addition of 27 direct sales personnel to our
sales force from March 31, 1998 through March 31, 1999, and sales management and
administrative personnel hired to support our sales effort.
General and administrative expenses. General and administrative expenses
increased $295,000, or 156%, from $189,000 for the three months ended March 31,
1998 to $484,000 for the three months ended March 31, 1999. The increase in
these expenses was primarily due to the hiring of additional personnel, and
accounting and professional fees incurred in connection with our year end audit
and other organizational changes. We expect general and administrative expenses
to continue to grow as we hire additional personnel and incur additional
expenses to support the growth of our operations.
Stock compensation expense. Stock compensation expense was $2.9 million
for the three months ended March 31, 1999. During the three months ended March
31, 1999, we sold 271,167 shares of Class A preferred stock to certain executive
officers, key employees and directors at $1.50 per share. In accordance with
Accounting Principles Board Opinion No. 25, we recognized $2.5 million in
compensation expense related to the difference between the purchase price and
the estimated fair value of the shares of Class A preferred stock. Further, we
recognized $339,000 of compensation expense related to option grants in the
three months ended March 31, 1999.
Depreciation and amortization. Depreciation and amortization increased
$34,000, or 62%, from $55,000 for the three months ended March 31, 1998 to
$89,000 for the three months ended March 31, 1999. The increase in depreciation
was primarily the result of the purchase of additional capital equipment. The
amortization expense remained relatively level and relates to goodwill of
approximately $1.0 million created upon the formation of HeadHunters, L.L.C.
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1998; THE TWO MONTHS ENDED DECEMBER 31,
1997;
THE TEN MONTHS ENDED OCTOBER 31, 1997; AND THE YEAR ENDED DECEMBER 31, 1996
Revenues. We generated revenues of $1.1 million for the year ended
December 31, 1998, $30,000 for the two months ended December 31, 1997, $124,000
for the ten months ended October 31, 1997 and $190,000 for the year ended
December 31, 1996. Our revenues consisted of upgrade fees of $462,000, $14,000,
$42,000, and $0, banner advertising sales of $661,000, $16,000, $9,000 and $0,
and consulting revenues of $0, $0, $52,000 and $184,000, respectively for such
periods. The increase in revenues from upgrade fees and sales of banner
advertising and the corresponding decrease in consulting revenues from 1996
through 1998 resulted primarily from the change from a web site development
consulting business to an online recruiting business which commenced with the
launch of our web site in October 1996. Our predecessor company generated
revenues primarily from providing consulting services, which we no longer
provide. As a result, we do not believe a comparison of our predecessor
company's operating results to current operations is meaningful.
Costs of revenues. Our costs of revenues were $87,000 for the year ended
December 31, 1998, $3,000 for the two months ended December 31, 1997, $29,000
for the ten months ended October 31, 1997 and $0 for the year ended December 31,
1996. Costs of revenues grew primarily due to increased Internet connectivity
and co-location expenses following the launch of our web site related to growth
in content and traffic on our web site.
Marketing and selling expenses. Our marketing and selling expenses were
$2.7 million for the year ended December 31, 1998, $41,000 for the two months
ended December 31, 1997, $23,000 for the ten months ended October 31, 1997 and
$3,000 for the year ended December 31, 1996. The substantial increase in these
expenses beginning in late 1997 relates primarily to the development of our
sales force and increased advertising spending.
General and administrative expenses. Our general and administrative
expenses were $1.7 million for the year ended December 31, 1998, $126,000 for
the two months ended December 31, 1997, $96,000 for the ten months ended October
31, 1997 and $52,000 for the year ended December 31, 1996. The increase in these
expenses in 1998 from prior periods was primarily due to our hiring of
additional personnel and
21
<PAGE> 26
accounting and professional fees incurred in connection with our previously
contemplated initial public offering.
Depreciation and amortization. Our depreciation and amortization expenses
were $277,000 for the year ended December 31, 1998, $42,000 for the two months
ended December 31, 1997, $10,000 for the ten months ended October 31, 1997 and
$7,000 for the year ended December 31, 1996. The increase in depreciation
expense in 1998 and the two months ended December 31, 1997 was primarily the
result of our purchase of additional capital equipment, and the increase in
amortization expense in such periods primarily relates to goodwill of
approximately $1.0 million created upon the formation of HeadHunters, L.L.C.
Other income (expense). Other income (expense) was $(442,000) for the year
ended December 31, 1998, $6,000 for the two months ended December 31, 1997,
$(800) for the ten months ended October 31, 1997 and $200 for the year ended
December 31, 1996. The increase in other loss in 1998 was primarily the result
of increased interest expense related to the warrant issued to ITC and increased
outstanding balance under the credit facility with ITC.
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth unaudited statement of operations data for
our five most recent quarters. This quarterly information has been derived from
our unaudited financial statements and, in the opinion of management, includes
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the information for the periods covered. The quarterly
data should be read in conjunction with our financial statements and related
notes. The operating results for any quarter are not necessarily indicative of
the operating results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
STATEMENT OF OPERATIONS DATA: 1998 1998 1998 1998 1999
- ----------------------------- --------- --------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $ 79,569 $ 198,482 $ 392,577 $ 429,240 $ 828,027
Costs and expenses:
Costs of revenues................ 18,220 19,319 26,201 23,223 25,433
Marketing and selling............ 158,549 349,831 1,220,301 990,649 1,232,352
General and administrative....... 189,018 478,373 687,851 359,514 492,270
Stock compensation expense....... -- 32,705 95,113 77,756 2,861,676
Depreciation and amortization.... 55,080 63,003 74,062 84,561 88,895
--------- --------- ----------- ----------- -----------
Total costs and expenses........... 420,867 943,231 2,103,528 1,535,703 4,700,626
--------- --------- ----------- ----------- -----------
Operating loss..................... (341,298) (744,749) (1,710,951) (1,106,283) (3,872,599)
Other income (expense)............. 7,533 11 (165,683) (284,268) (9,423)
--------- --------- ----------- ----------- -----------
Net loss........................... $(333,765) $(744,738) $(1,876,634) $(1,390,731) $(3,882,022)
========= ========= =========== =========== ===========
</TABLE>
Our quarterly revenue and results of operations may fluctuate significantly
from quarter to quarter, which may cause the price of our common stock to fall
substantially if they do not match the expectations of investors or securities
analysts. Factors which may cause these fluctuations include the demand for our
services, the cancellation of significant numbers of customer accounts, changes
in our pricing policies, the introduction of new services by us or our
competitors, seasonal trends in user traffic, the hiring cycles of employees and
costs associated with acquisitions of businesses or technologies.
LIQUIDITY AND CAPITAL RESOURCES
From our inception until November 1997, we financed our operations
primarily through revenue generated from providing web site development
consulting services. Since November 1997, we have financed our operations and
capital needs principally from an equity investment by and borrowings from ITC.
In January 1999, we agreed to convert $3.5 million of outstanding principal
under a revolving credit
22
<PAGE> 27
facility with ITC into 2,333,333 shares of our Class A preferred stock. At that
time, we also paid in cash approximately $100,100 of accrued and unpaid interest
under the facility. On January 28, 1999, we entered into a loan and security
agreement with ITC under which ITC provides a revolving line of credit of up to
$3.0 million. As of March 31, 1999, the outstanding balance borrowed against the
line of credit facility was $800,000, with remaining available borrowings of
$2.2 million. All outstanding amounts under this facility will be repaid at the
closing of this offering and the facility will terminate. See "Use of Proceeds."
In addition, during the quarter ended March 31, 1999, some of our officers and
directors purchased approximately $400,000 of our Class A preferred stock. As of
March 31, 1999, we had approximately $166,000 in cash.
Net cash used in operating activities was $1.2 million for the quarter
ended March 31, 1999 and $3.6 million for the year ended December 31, 1998. Net
cash used in operating activities primarily consisted of the net loss for the
periods and increases in accounts receivable.
Capital expenditures were approximately $100,000 for the quarter ended
March 31, 1999 and $434,000 for the year ended December 31, 1998. The majority
of the capital purchases relate to telecommunications and computer equipment to
build our network infrastructure and office furniture to accommodate our
increased personnel. We currently have no material commitments for capital
expenditures other than in the ordinary course of business.
We have incurred losses and negative cash flows from operations since
inception as a result of efforts to build out our network infrastructure,
increase staffing, and develop our systems. We currently estimate that our
working capital generated from operations, our borrowing capacity on the
revolving line of credit, and the net proceeds of the offering will be
sufficient to meet our anticipated operating and capital expenditure needs for
at least the next 12 months. After this period of time, we may need to seek to
raise additional funds through borrowings or the issuance of equity or debt
securities.
Our ability to grow will depend in part on our ability to expand and
improve our Internet operations, the effectiveness of our sales and marketing
efforts, and our customer support capabilities. We may need to raise additional
funds in order to take advantage of new opportunities, to react to unforeseen
difficulties or to otherwise respond to competitive pressures. If we raise
additional funds by issuing equity or convertible debt securities, the
percentage ownership of our existing shareholders will be reduced, shareholders
may experience additional dilution, and such securities may have rights,
preferences or privileges senior to those of our common stock.
YEAR 2000 READINESS DISCLOSURE
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. These
problems generally arise from the fact that most computer hardware and software
has historically used only two digits to identify the year in a date, often
meaning that the computer will recognize a code of "00" as the year 1900 rather
than the year 2000.
State of Readiness
Our overall plan to achieve year 2000 readiness includes the following
phases: (1) assessment of repair requirements, which includes creating awareness
of the issue throughout our company and assessment of all systems, significant
business processes and external interfaces and dependencies; (2) remediation,
which includes updating or modifying systems which are identified as critical to
our efforts to become year 2000 ready; (3) testing, which includes the testing
of systems which have been altered or replaced as part of our efforts to become
year 2000 ready; and (4) contingency planning.
We have substantially completed our assessment phase, including the
determination of whether the system we were reviewing was: (1) internally
developed; (2) a third party system critical to our operations or (3) a
non-critical system or piece of software or hardware. We have tested all
internally developed
23
<PAGE> 28
systems to ensure year 2000 readiness. We have confirmed that most of our
critical third party products or services are either year 2000 compliant or that
information and assistance is available to ensure compliance, which we intend to
test and complete by August 30, 1999. We believe that none of our non-critical
systems or software provide a material risk of significant year 2000 related
disruptions, but we will continue to review and update these systems and
software as additional information becomes available or as revisions are
distributed. In conducting this review, we recognized that some of our hardware
contains embedded processors. In general, we are vulnerable to a significant
supplier's or vendor's inability to remedy its own year 2000 issues. We cannot
assure you that the software and hardware provided by third parties will be year
2000 ready in a timely manner.
Risks
Our failure to correct a material year 2000 problem could result in an
interruption in, or a failure of, normal business activities or operations.
Presently, however, we perceive that our most reasonably likely worst case
scenario related to the year 2000 is associated with potential concerns with
third party services or products.
In order for users to access our web site through the Internet, we are
dependent upon Internet service providers, providers of telecommunication and
data services, government agencies, utility companies, and other third party
service providers over which we can assert little control. If any of these
entities fail to correct their year 2000 issues, our users may be unable to
access our web site, and our operations would suffer.
To date, we have not incurred any material expenses in connection with our
assessment, remediation or testing of our program to achieve year 2000
readiness. We also have not identified any business activity that we believe
will suffer a material disruption as a result of a year 2000 related event. We
expense as incurred all costs associated with our year 2000 compliance program.
Contingency Plans
We intend to develop contingency plans for significant business risks that
might result from year 2000 related events. As noted above, we have not
identified any specific business activity that we believe will be materially at
risk of significant year 2000 related disruptions. As we identify specific risks
to our operations, we plan to develop contingency plans to address such risks.
The estimates and conclusions included in this discussion contain
forward-looking statements and are based on our management's best estimates of
future events. Our expectations about risks, future costs and the timely
completion of our required year 2000 modifications may turn out to be incorrect
and any variance from these expectations could cause actual results to differ
materially from our above discussion. Factors that could influence risks, amount
of future costs and the effective timing of remediation efforts include our
success in identifying and correcting potential year 2000 issues and the ability
of third parties to address their year 2000 issues. The discussion above is a
"Year 2000 Readiness Disclosure" as defined in the Year 2000 Information and
Readiness Disclosure Act of 1998.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
We believe our exposure to market risks is immaterial. We hold no market
risk sensitive instruments for trading purposes. At present, we do not employ
any derivative financial instruments, other financial instruments or derivative
commodity instruments to hedge any market risks and we do not currently plan to
employ them in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, which must be
adopted by the year 2000. This statement establishes accounting and reporting
standards for derivative instruments -- including certain derivative instruments
24
<PAGE> 29
embedded in other contracts -- and for hedging activities. Adoption of this
statement is not expected to have a material impact on our financial statements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. This statement requires
capitalization of certain costs of internal-use software. Adoption of this
statement is not expected to have a material impact on our financial statements.
25
<PAGE> 30
BUSINESS
GENERAL
We provide a leading online recruiting service to employers, recruiters,
and job seekers via our web site at www.headhunter.net. Our web site enables
employers and recruiters to advertise job opportunities and review resumes and
enables job seekers to identify, research and evaluate a broad range of job
opportunities. We believe that we provide a superior online recruiting service
to employers, recruiters and job seekers based on the benefits our service
provides to each of them.
We provide employers and recruiters with:
- access to a large number of qualified job seekers -- as evidenced by our
average of over 100,000 unique users per business day during May 1999;
- an innovative pricing model that enables employers and recruiters to
improve the placement and increase the exposure of advertised job
opportunities through our upgrade service; and
- the ability to track, measure and analyze the results of their online
recruiting efforts through detailed statistics we provide in billing
statements and in real-time on our web site.
Advantages from our web site to job seekers include:
- detailed and current information regarding a large number of
geographically dispersed job opportunities representing a wide variety of
industries and occupations;
- access to job opportunities posted by recruiters, as well as employers,
which increases the breadth of available job opportunities;
- its ease of use and functionality; and
- the ability to conduct highly focused job searches using our advanced
search capabilities.
Based on data compiled by interbiznet.com in its 1999 Electronic Recruiting
Index, our web site ranked first in "Customer Satisfaction," "Quality" and
"Quality of Resumes Generated" among recruiting web sites that feature job
opportunities from multiple industries, including sites such as Monster.com,
HotJobs.com and CareerBuilder.com.
THE MARKET OPPORTUNITY
According to industry sources, businesses in the United States spent in
excess of $13 billion in 1997 to hire new employees by advertising job openings
in newspapers and by hiring recruitment search firms. We believe that factors
such as the increasing labor shortage and employee turnover are forcing
employers to increase spending for recruiting efforts in order to maintain and
grow their workforce.
The Internet has emerged as a global mass communications medium enabling
millions of people worldwide to share information, communicate and conduct
business electronically. International Data Corporation projects that the number
of individual users online will grow from 69 million in 1997 to 320 million by
2002. This growth is a result of several factors, including the continued
increase in personal computer use in the home and at the office, the development
of easier and faster ways to access the Internet, and the increase in
information, services and capabilities provided on the Internet.
We believe that the demand for recruiting services generally, coupled with
the rapid increase in online users, has made the Internet an attractive medium
for online recruiting. Forrester Research estimates that the size of the online
recruiting market will increase from $105 million in 1998 to $1.7 billion by
2003. We believe that online recruiting has a number of advantages over
traditional means of recruiting and job searching because it:
- is interactive, allowing immediate links to additional information;
- provides information about local and geographically dispersed job seekers
and job opportunities;
26
<PAGE> 31
- allows employers, recruiters and job seekers to conduct more focused
searches;
- allows employers, recruiters and job seekers to research and gather
information anonymously;
- is more cost-effective; and
- is accessible at any time by employers, recruiters and job seekers.
As Internet usage becomes more widespread, we expect companies from a broad
range of industries to increase their online recruiting efforts. As the demand
for online recruiting services expands, we believe employers and recruiters will
increasingly deploy their online recruiting efforts in the most efficient manner
possible. Currently, employers and recruiters advertising job opportunities
across several geographic regions or industries are likely to post these job
opportunities on multiple recruiting web sites. Each web site offers these
employers or recruiters different services and varying degrees of control to
manage their online recruiting. As a result, they must spend significant time
and resources to manage numerous relationships and understand various
technologies and posting processes. We believe that employers and recruiters
will increasingly utilize only those online recruiting services that enable them
to access a large number of qualified job seekers and exercise a high degree of
control over the exposure of their job opportunities.
THE HEADHUNTER.NET SOLUTION
We believe that we provide a superior online recruiting service to
employers, recruiters and job seekers by providing them a wide array of
benefits. These include the following:
A Large Number of Qualified Job Seekers. We believe that employers and
recruiters consider access to a large number of qualified job seekers a critical
factor in determining which online recruiting service to use. Our online
recruiting service attracts a large number of qualified job seekers. During May
1999, our web site averaged over 100,000 unique users and more than 1.2 million
page views per business day. Based on data compiled by interbiznet.com in its
1999 Electronic Recruiting Index, our web site ranked first in "Quality of
Resumes Generated" among recruiting web sites that feature job opportunities
from multiple industries. In addition, based on Media Metrix statistics for
April 1999, our web site rated first in terms of average unique pages viewed per
user, average minutes spent per user on the site and return traffic, when
compared to web sites that feature job opportunities from multiple industries.
Employers and Recruiters Can Improve the Placement and Increase Exposure of
Their Job Opportunities. Due to the breadth of job opportunities posted on our
web site, a single focused job search can return numerous job opportunities on
several pages. In order to enhance the visibility of their job opportunities, we
enable employers and recruiters to improve their placement in a search result by
purchasing upgrades. We list job postings in a search result according to the
amount of upgrade fees paid for each job opportunity. The higher the upgrade fee
paid for a job opportunity, the closer to the top of the list it appears in a
search result. Our data shows that job seekers view upgraded job opportunities
more than twice as often as those not upgraded. These upgrades are purchased in
30-day increments for an additional fee and can be increased at any time. We
believe these upgrade services provide employers and recruiters with a high
degree of flexibility to manage their online recruiting needs.
Employers and Recruiters Can Track, Measure and Analyze Results of Their
Online Recruiting Efforts. We provide employers and recruiters with information
in their monthly billing statement regarding the number of times (1) each of
their job opportunities was retrieved by a job search, (2) the page containing
each of their job opportunities was viewed, (3) job seekers "clicked-through"
for more information on their job opportunities, and (4) job seekers responded
online to their job opportunities. Employers and recruiters may also access
current information through our web site regarding click-throughs and responses
and can use this information to frequently evaluate the results of each job
opportunity posted and to better manage their online recruiting needs.
Breadth of Job Opportunities Available on Our Web Site. We enable
employers, recruiters and job seekers to fulfill their recruiting and job search
needs through a single web site. Our web site provides information regarding a
large number of geographically diverse job opportunities representing a wide
27
<PAGE> 32
variety of industries and occupations. We provide access to job opportunities
posted by recruiters, as well as employers, which increases the breadth of
available job opportunities.
Ease of Use and Functionality of Our Web Site. We make the process of
posting job opportunities and searching for jobs on our web site easy, fast and
secure. Based on data compiled by interbiznet.com, our web site ranked first in
terms of "Ease of Use of the Posting Process" among recruiting web sites that
feature job opportunities from multiple industries. Employers and recruiters can
post job opportunities and instantly update them online, eliminating delays
associated with paperwork and telephone or facsimile confirmations. This allows
employers and recruiters to better manage their online recruiting needs because
they can post job opportunities quickly and adjust them at any time.
Advanced Search Capabilities On Our Web Site. We believe we provide
employers, recruiters and job seekers with the most extensive searching
capabilities in the online recruiting industry, allowing them to conduct more
efficient and focused searches. Employers and recruiters can search resumes and
job seekers can search job opportunities using a wide array of search criteria
including keyword, job type, education, geographic location and compensation.
OUR GROWTH STRATEGY
Our objective is to be the leading provider of online recruiting services
to employers and recruiters. The key elements of our strategy to accomplish this
objective include the following:
Increase Awareness of the HeadHunter.NET Brand. We plan to increase
awareness of the HeadHunter.NET brand through an aggressive marketing campaign
that combines online and traditional advertising, direct marketing and strategic
relationships. Building the HeadHunter.NET brand is important to our success
because we believe it will increase the number of job seekers using our online
recruiting service and, as a result, we believe that employers and recruiters
will be more willing to use our services. We also believe that increasing the
awareness of our brand among employers and recruiters will increase the
effectiveness of our sales efforts. We plan to use a significant portion of the
proceeds from this offering to support our branding efforts.
Aggressively Expand Our Sales Force. We plan to rapidly expand our direct
sales and telesales efforts by increasing the size of our existing sales force
in Atlanta and Chicago and opening additional sales offices in major
metropolitan areas, such as Boston, Dallas, Los Angeles, New York City, San
Francisco and Washington, D.C., in order to further penetrate those markets. We
believe that local market presence gives us a better understanding of that
market's particular recruiting needs.
Enhance Web Site Functionality. We believe that our web site currently
provides an easy, efficient, secure and cost-effective method of conducting
online recruiting. Employers and recruiters can post job opportunities and
update or change them in real-time. We intend to add enhancements that increase
the functionality of our web site for employers and recruiters. Additionally, we
intend to enhance the design and functionality of our web site so that job
seekers can conduct faster, more focused and more accurate searches.
Develop Alternative Channels of Distribution Through Strategic
Relationships. We have entered into and continuously evaluate strategic
relationships as a means to increase traffic to our web site, enhance visibility
of job opportunities, increase awareness of the HeadHunter.NET brand, and
provide marketing and promotional opportunities. For example, we plan to
establish strategic relationships with industry specific web sites.
Pursue Strategic Acquisitions of Complementary Businesses and
Technologies. We plan to evaluate possible acquisitions of complementary
businesses, products and technologies. We will explore acquisition or investment
opportunities if we believe they will enable us to accelerate our growth, add
new content, develop new technologies or penetrate new markets. We do not
currently have any commitments or understandings for any acquisitions or
investments.
28
<PAGE> 33
OUR SERVICES
We offer three paid services, which enable employers and recruiters to: (1)
post job opportunities; (2) upgrade job postings; and (3) access recently
submitted or reserved resumes. We also allow job seekers to post their resumes
and access our database of job opportunities free of charge.
Services to Employers and Recruiters.
Posting Job Opportunities. Employers and recruiters post job opportunities
on our web site for a minimum of 30 days. They can post job opportunities and
instantly update, change or remove them online without delay. Each job posting
is available to the large number of qualified job seekers who use our web site
and is also cross-posted to other web sites with which we have relationships.
Employers and recruiters who post job opportunities with us can access
statistics online regarding click-throughs and responses and can use this
information to quickly evaluate the results of any posted job opportunity. They
can also receive online applications from job seekers who respond to job
opportunities posted on our web site.
Upgrading Job Opportunities. Due to the breadth of job opportunities on
our web site, a single focused job search can return numerous job opportunities
on several pages. In order to enhance the visibility of their job opportunities,
we enable employers and recruiters to improve their placement in a search result
by purchasing upgrades. We list job postings in a search result according to the
amount of upgrade fees paid for each job opportunity. The higher the upgrade fee
paid for a job opportunity, the closer it appears to the top of the list in a
search result. Our data shows that job seekers view upgraded job opportunities
more than twice as often as those not upgraded. These upgrades are purchased in
30-day increments for an additional fee and can be increased at any time. We
believe this service provides employers and recruiters with a high degree of
flexibility to manage their online recruiting needs.
VIP Resume Reserve. We hold all resumes in our VIP Resume Reserve for
seven days before we post them for general review on our web site. The reserve
also contains resumes that job seekers specifically request to remain in the
reserve instead of being posted for general review. Employers and recruiters can
purchase access to our VIP Resume Reserve for periods of three months or one
year for an additional fee.
Employers and recruiters can purchase our services through one of the
following accounts:
- easeEPost. easeEPost allows employers and recruiters immediate access to
any of our services online using a credit card. This completely automated
account is designed for employers and recruiters with occasional
recruiting needs. Employers and recruiters pay a monthly fee for job
postings and upgrades, and an annual or quarterly fee for access to the
VIP Resume Reserve.
- Reach Hire. Reach Hire provides employers and recruiters with a package
of services tailored to meet their needs. This service is designed for
employers and recruiters that regularly post multiple job opportunities
on our web site. Reach Hire participants receive monthly billing
statements containing statistical information that they can use to track
and measure the success of their online recruiting efforts. In addition,
we provide Reach Hire participants with a link from their job posting to
their web site, so that job seekers can easily click-through for more
information about them. Employers and recruiters using this service may
also establish company profiles containing key information about them,
which job seekers may access from a job posting. Through our Reach Hire
service, employers and recruiters can also establish job banks listing
all of their job opportunities posted on our web site. In addition, they
can automatically post a large number of job opportunities on our web
site at one time. Reach Hire participants pay a negotiated monthly fee
for the package of services they choose.
Services to Job Seekers.
Job seekers may post their resumes and conduct searches free of charge. We
believe this attracts a large number of job seekers who explore, evaluate and
compare job opportunities on our web site, making our web site a valuable tool
for employers and recruiters to reach job seekers. Job seekers can also request
29
<PAGE> 34
that we hold their resume in the VIP Resume Reserve to be viewed only by those
employers and recruiters who choose to purchase that service. We offer an online
monthly newsletter called CareerBytes, which provides online career advice and
information for job seekers.
OUR WEB SITE
[Graphics showing web pages relating to employers and recruiters, and job
seekers]
OUR CUSTOMERS
Our customers are employers and recruiters who have a large number of
geographically dispersed job opportunities representing a wide variety of
industries and occupations. At June 15, 1999, approximately 3,300 employers and
recruiters were paying for our online recruiting services. Our customers have
month-to-month accounts and typically do not sign long-term agreements for our
services. No single customer accounts for 5% or more of our revenues.
SALES AND SUPPORT SERVICES
As of May 31, 1999, we employed 35 full-time sales personnel located in
Atlanta and Chicago. We plan to rapidly expand our direct sales and telesales
efforts by increasing the size of our existing sales force in Atlanta and
Chicago and opening additional sales offices in major metropolitan areas, such
as Boston, Dallas, Los Angeles, New York City, San Francisco and Washington,
D.C., in order to further penetrate those markets.
Our sales force engages in a blend of direct sales and telesales to reach
prospective employers and recruiters. We work closely with employers and
recruiters in order to customize service packages to meet their online
recruiting needs. By taking a consultative approach, we believe that we are able
to build and maintain stronger relationships with the employers and recruiters
that utilize our services. The majority of our sales to date have been through
telesales. Telesales is an effective sales method because our sales
representatives and prospective customers can simultaneously view our web site
while our sales representatives explain and demonstrate its use and features.
Because we believe that local market presence gives us a better understanding of
that market's particular recruiting needs, we plan to place a greater emphasis
on direct sales as we increase the number of our sales personnel and open new
sales offices.
We believe that one of the most important services our sales personnel
provides to employers and recruiters is ongoing consulting services. Our sales
staff consults regularly with employers and recruiters to customize our service
offerings to meet their recruiting needs. We compensate our sales personnel for
maintaining and expanding relationships with the employers and recruiters who
already use our web site.
We believe that our support services are a key component in attracting and
retaining employers, recruiters and job seekers. We solicit questions and
feedback from employers, recruiters and job seekers who use our web site, and
our support staff responds by e-mail to inquiries concerning technical aspects
of our web site and service offerings. We also provide telephone support to
employers and recruiters regarding our service offerings, billing and technical
aspects on our web site.
ADVERTISING AND MARKETING
Our advertising and marketing strategy is designed to establish
www.headhunter.net as the leading recruiting web site. We use multiple channels
to advertise, market and promote our web site, including online advertising,
traditional advertising and direct marketing. We plan to use a significant
portion of the proceeds of this offering to increase our advertising and
marketing efforts through each of these channels. See "Use of Proceeds."
30
<PAGE> 35
Online Advertising
We advertise online to increase market awareness of the HeadHunter.NET
brand. We advertise on web sites of major Internet content providers, including
America Online, AltaVista, Lycos, Excite and GoTo.com, that enable us to target
potential job seekers and allow them to click-through to www.headhunter.net. We
also purchase keyword targeted banners and permanent buttons or links to our web
site whenever they are available at reasonable rates. Generally, our agreements
to purchase advertising are short-term and we receive a guaranteed number of
banner advertisement impressions for a fixed fee.
Traditional Advertising
We believe that traditional advertising is also an effective means of
increasing awareness of the HeadHunter.NET brand and attracting employers,
recruiters and job seekers. Our traditional advertising efforts have included:
- advertisements in recruitment magazines, information technology consumer
magazines and specialty newspapers;
- advertisements on billboards and truck and bus exteriors; and
- radio traffic report sponsorships.
Having run successful pilot programs in targeted metropolitan areas, we
plan to expand our billboard advertising and radio traffic report sponsorships
in these and other metropolitan markets later this year.
Direct Marketing
Our direct marketing efforts include direct mail, fax and e-mail campaigns
aimed at human resources executives, recruiters and recruitment advertising
agencies. We also publish two monthly newsletters via e-mail, CareerBytes for
job seekers and Hireadigm for employers and recruiters. In addition, we actively
market at trade shows, job seminars and career fairs to reach employers and
recruiters and inform them of the benefits of our web site.
TECHNOLOGY
We use an internally developed software system that is scalable and
specifically designed to support a high volume of web site traffic and searches,
as well as immediate additions, modifications and deletions of job opportunities
and resumes. We deliver content from our web servers to the Internet via leased
high speed telecommunications lines from Pentium-based servers installed at
multiple locations. We contract co-location services from third party providers.
We maintain location redundancy such that in the event one location experiences
service interruption, the delivery speed of our web site will not be
significantly impacted.
We route requests for information from our web site to the closest server
with available capacity. This architecture balances the user load across diverse
geographic locations and provides fault tolerance. We route requests for
information away from any location that may be suffering from a network outage.
This architecture allows our web site to remain available 24-hours-a-day,
seven-days-a-week. If any server needs routine maintenance, we can temporarily
route requests for information to alternate servers.
We distribute job opportunities and resumes submitted to our web site to
all of our servers simultaneously, using an internally developed proprietary
technology. This technology is essential to maintaining consistency across a
collection of geographically dispersed parallel servers while still providing
employers, recruiters and job seekers with immediate access to new and changing
job opportunities and resumes.
31
<PAGE> 36
COMPETITION
The market for online recruiting services is relatively new, intensely
competitive and rapidly evolving. There are minimal barriers to entry, and
current and new competitors can launch new web sites and add content at
relatively low costs within relatively short time periods. We expect competition
to persist and intensify and the number of competitors to increase significantly
in the future. We compete against other online recruiting services, as well as
corporate Internet sites, and not-for-profit web sites operated by individuals,
educational institutions and governments. In addition to this online
competition, we compete against a variety of companies that provide similar
content through one or more media, such as classified advertising, radio and
television. Many of our current and potential competitors have significantly
greater financial, technical and marketing resources, longer operating
histories, better name recognition and more experience than we do. Many of our
competitors also have established relationships with employers, recruiters and
other job posters.
To compete successfully, we must attract more employers, recruiters and job
seekers, and generate fees. The competitive factors attracting employers,
recruiters and job seekers to our web site include the quality of presentation
and the relevance, timeliness, depth and breadth of recruiting information and
services offered on, and the ease of use of, our web site. The competitive
factors also include, among others, the fees charged to list job opportunities,
the cost of upgrades and other services and the cost and accessibility of
similar services through the Internet or competing media. Our competitors'
services may be sufficiently attractive to employers, recruiters and job seekers
to dissuade them from using our web site. If we are unable to attract a
significant number of employers, recruiters and job seekers to our web site, our
business, financial condition and results of operations will suffer.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
There is an increasing number of laws and regulations pertaining to the
Internet, including laws or regulations relating to user privacy, liability for
information retrieved from or transmitted over the Internet, online content
regulation, user privacy and domain name registration. Moreover, the
applicability to the Internet of existing laws governing issues such as
intellectual property ownership and infringement, copyright, patent, trademark,
trade secret, obscenity, libel, employment and personal privacy is uncertain and
developing.
Privacy Concerns. Government agencies are considering adopting regulations
regarding the collection and use of personal identifying information obtained
from individuals when accessing web sites. While we have implemented and intend
to implement additional programs designed to enhance the protection of the
privacy of its users, these programs may not conform to any regulations adopted
by these agencies. In addition, these regulatory and enforcement efforts may
adversely affect our ability to collect demographic and personal information
from users, which could have an adverse effect on our ability to provide
advertisers with demographic information. The European Union has adopted a
directive that imposes restrictions on the collection and use of personal data.
The directive could impose restrictions that are more stringent than current
Internet privacy standards in the United States. The directive may adversely
affect the activities of businesses that engage in data collection from users in
European Union member countries.
Domain Names. Domain names are the user's Internet "addresses." The
current system for registering, allocating and managing domain names has been
the subject of litigation and of proposed regulatory reform. Although we have
applied to register "HeadHunter.NET" as a trademark, third parties may bring
claims for infringement against us for the use of this trademark. There can be
no assurance that our domain name will not lose its value, or that we will not
have to obtain entirely new domain names in addition to or in lieu of our
current domain names if reform efforts result in a restructuring in the current
system.
Jurisdictions. Due to the global nature of the Internet, it is possible
that, although our transmissions over the Internet originate primarily in
Atlanta, the governments of other states and foreign countries might attempt to
regulate our business activities. In addition, because our service is available
over the
32
<PAGE> 37
Internet in multiple states and foreign countries, these jurisdictions may
require us to qualify to do business as a foreign corporation in each of these
states or foreign countries, which could subject us to taxes and other
regulations.
INTELLECTUAL PROPERTY
Our success and ability to compete depends significantly on our internally
developed proprietary technology and on our brand and marks. We rely upon
trademark, patent and other intellectual property laws, and on confidentiality
and non-disclosure agreements with our employees and third parties to establish
and protect our proprietary rights. We have obtained a federal registered mark
for "HeadHunters," and we have a pending federal trademark application for
"HeadHunter.NET." We have also made U.S. patent applications on our proprietary
variable pricing program. We cannot assure you that any of our 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. If our 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 we will be able to enter
into arrangements on commercially reasonable terms to allow us to continue to
use that trademark.
In addition, we seek to protect our proprietary rights through the use of
confidentiality agreements with employees, consultants, advisors and others. We
cannot assure you that these agreements will provide adequate protection for our
proprietary rights if there is any unauthorized use or disclosure of our
proprietary information or if our employees, consultants, advisors or others
fail to maintain the confidentiality of our proprietary information. We also
cannot assure you that our proprietary information will not otherwise become
known, or be independently developed, by competitors.
EMPLOYEES
As of May 31, 1999, we had 64 full-time employees, most of whom are based
at our executive offices. Of these employees, 41 are in sales and marketing, 15
are in technology and operations and eight are performing general and
administrative functions. None of our employees are represented by a labor union
and we consider our employee relations to be good.
FACILITIES
Our executive offices are located in Norcross, Georgia, at 6410 Atlantic
Boulevard. We believe that our current executive office space will be adequate
for our needs for the remainder of 1999. We are currently evaluating lease
options for additional executive office space to accommodate our needs after
1999. We also sublease office space in Chicago, Illinois, and we plan to
evaluate lease options for additional office space to expand our direct sales
and telesales efforts in select major metropolitan markets. See "Use of
Proceeds" and "Certain Transactions."
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. From time to time,
we may be subject to legal proceedings and claims in the ordinary course of
business. Such claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources.
33
<PAGE> 38
MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The following table sets forth specific information regarding our executive
officers, key employees and directors as of the date of this prospectus:
<TABLE>
<CAPTION>
NAME AGE CLASS(1) POSITION
- ---- --- --------- --------
<S> <C> <C> <C>
William H. Scott, III(2)............. 51 III Chairman of the Board and Director
Robert M. Montgomery, Jr............. 41 I President, Chief Executive Officer and
Director
Warren L. Bare....................... 32 III Vice Chairman of the Board and Director
Mark W. Partin....................... 31 -- Chief Financial Officer and Assistant
Secretary
Judith G. Hackett.................... 39 -- Senior Vice President -- Marketing
James R. Canfield.................... 40 -- Vice President of Sales
C. Eric Presley...................... 32 -- Vice President of Technology
Mark W. Fouraker..................... 37 -- Vice President of Operations
Burton B. Goldstein, Jr.(2)(3)....... 51 I Director
Donald W. Weber(3)................... 62 II Director
J. Douglas Cox(3).................... 48 II Director
Michael G. Misikoff(2)............... 46 I Director
Kimberley E. Thompson................ 41 II Director and Secretary
</TABLE>
- ---------------
(1) Class II term expires at the annual meeting of shareholders in 2000, Class
III term expires at the annual meeting of shareholders in 2001, and Class I
term expires at the annual meeting of shareholders in 2002.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
William H. Scott, III has served as a director of HeadHunter.NET 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 Holding Company, Inc., a
diversified telecommunications and technology holding company and principal
shareholder of HeadHunter.NET, and has served on its board of directors since
May 1989. Mr. Scott serves as a director of Powertel, Inc., a wireless
telecommunications services company; KNOLOGY Holdings, Inc., a broadband
telecommunications services provider; Mindspring Enterprises, Inc., an Internet
service provider; ITC'DeltaCom, Inc., a regional telecommunications services
provider; Innotrac Corporation, a provider of customized technology-based
marketing and support services; and nFront, Inc., a provider of full-service
Internet banking solutions for community banks.
Robert M. Montgomery, Jr. has served as a director of HeadHunter.NET since
January 1998, our President since January 1999 and our Chief Executive Officer
since March 1999. Since 1992, Mr. Montgomery has served as a Vice President of
ITC Holding Company, Inc. In 1991, Mr. Montgomery founded InterCall, Inc., a
teleconferencing company and a wholly-owned subsidiary of ITC Holding Company,
Inc., and served as its President and Chief Executive Officer until April 1999.
From 1993 to April 1999, 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. Currently, Mr. Montgomery serves as a director of InterCall, Inc.
Warren L. Bare founded HeadHunter.NET in October 1995 and has served as a
member of our board of directors since inception. Mr. Bare has served as our
Vice Chairman of the board since March 1999 and currently serves as a consultant
to HeadHunter.NET. From October 1995 to January 1999, Mr. Bare served as our
President and from October 1995 to March 1999, Mr. Bare served as our Chief
Executive Officer. From 1992 to October 1995, Mr. Bare served as the Director of
Technology at United Systems,
34
<PAGE> 39
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.
Mark W. Partin has served as our Chief Financial Officer and Assistant
Secretary since May 1999. From 1997 to 1999, Mr. Partin served as Vice President
of Finance at Sunchoice Medical Supply, Inc., a national medical supply company.
From 1995 to 1997, Mr. Partin was controller/director of mergers and
acquisitions for Williams Group International, a diversified holding company.
From 1991 to 1995, Mr. Partin worked in the audit and operational consulting
divisions of Arthur Andersen LLP. Mr. Partin is a certified public accountant.
Judith G. Hackett has served as our Senior Vice President -- Marketing
since May 1998. 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.
James R. Canfield has served as our Vice President of Sales since September
1998. From May 1998 to August 1998, Mr. Canfield served as Vice President of
Sales and Marketing for Abaxis, Inc., a manufacturer of point-of-care blood
analyzers. From December 1994 to May 1998, Mr. Canfield served in various
positions, including Director of Sales, Director of Marketing, Vice President of
Sales and Marketing Idexx Informatics, and Vice President/General Manager Idexx
Veterinary Services at Idexx Laboratories, Inc., a manufacturer and distributor
of animal health diagnostic products. From December 1989 to December 1994, Mr.
Canfield served as Area Manager Microscan Division, Area Vice President Baxter
Diagnostics and Region Vice President Baxter Distribution for Baxter Healthcare
Corporation, a multinational medical products company.
C. Eric Presley has served as our Vice President of Technology since
October 1998. From December 1997 to April 1998, Mr. Presley served as our
Manager of Technology and from April 1998 to October 1998, he served as our
Director of Technology. From 1993 to 1997, Mr. Presley held several positions at
Advance Technology Corporation, 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.
Mark W. Fouraker has served as our Vice President of Operations since
October 1998. From April 1998 to October 1998, Mr. Fouraker served as our
Director of Operations. In 1989, Mr. Fouraker co-founded Advance Technology
Corporation and, from that time until April 1998, he held several positions
there 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.
Burton B. Goldstein, Jr. has served as a director of HeadHunter.NET since
July 1998. Mr. Goldstein is currently President of netWorth Partners, LLC, an
Internet venture capital fund. 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 HeadHunter.NET 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 Holding Company, Inc.. From 1993 to
1997, Mr. Weber served as President and Chief Executive Officer of ViewStar
Entertainment Services, Inc., a digital satellite services company. From 1987 to
1991, Mr. Weber held various executive positions, including President and Chief
Executive Officer, at and served as a director of Contel Corporation, a
telecommunications company. Currently, Mr. Weber serves as a director of
Powertel, Inc., Pegasus Communications Corporation, a media and communications
company, KNOLOGY Holdings, Inc., and HIE, Inc., a health care software provider.
35
<PAGE> 40
J. Douglas Cox has served as a director of HeadHunter.NET since October
1997. Since September 1997, Mr. Cox has served as Senior Vice
President -- Corporate Development of ITC Holding Company, Inc. He has also
served as Chief Financial Officer and Vice President (Finance) of ITC Holding
Company, Inc. and several of its subsidiaries 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.
Michael G. Misikoff has served as a director of HeadHunter.NET since May
1999. Since February 1999, Mr. Misikoff has also served as a consultant to
HeadHunter.NET. From January 1995 to February 1999, Mr. Misikoff served as Vice
President, Chief Financial Officer, Secretary, Treasurer and a director of
Mindspring Enterprises, Inc. From January 1992 to December 1994, Mr. Misikoff
was the acting Chief Financial Officer and a director of InterCall, Inc.
Kimberley E. Thompson has served as a director of HeadHunter.NET and our
Secretary since May 1999. Since September 1997, Ms. Thompson has served as
Senior Vice President, General Counsel and Secretary of ITC Holding Company,
Inc. and from June 1996 to September 1997, she served as its Vice President,
General Counsel and Secretary. From 1989 to 1996, Ms. Thompson was a partner
with Hogan & Hartson L.L.P., a Washington D.C. law firm.
BOARD COMMITTEES
In July 1998, our board of directors established a Compensation Committee
and an Audit Committee. The Compensation Committee reviews and recommends to the
board of directors all compensation and benefit arrangements of our executive
officers and also administers our incentive and stock option plans. The Audit
Committee recommends to the board of directors the engagement of our independent
auditors and reviews and consults with the independent auditors regarding the
scope and results of the audits, our internal accounting controls, audit
practices and the professional services furnished by the independent auditors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to establishing the Compensation Committee in July 1998, our board of
directors determined executive compensation. Except for Mr. Scott, none of our
executive officers currently serves as a member of the Compensation Committee or
as a director of any entity of which any of our directors serve as an executive
officer. Mr. Scott is a director of ITC for which Messrs. Cox and Montgomery and
Ms. Thompson are executive officers. Mr. Montgomery was a member of the
Compensation Committee until April 1999.
DIRECTOR COMPENSATION
Our bylaws allow our board of directors to determine from time to time the
compensation that directors may receive for their services as directors.
However, since inception, our 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, Goldstein and Misikoff, and Ms. Thompson were
granted options to purchase 10,000 shares of common stock at exercise prices of
$0.40, $0.40, $0.40, $1.40, $1.40, $2.00, and $2.00, respectively. Directors are
eligible to receive options and awards under the HeadHunter.NET, Inc. 1998
Long-Term Incentive Plan.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to our Chief Executive Officer and
our three most highly compensated executive officers for services rendered to us
during the year ended December 31, 1998. Except as set forth in the table
36
<PAGE> 41
below, no other executive officer's salary and bonus exceeded $100,000 during
the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------
--------------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- --------------------------- ---- --------- -------- ---------------------
<S> <C> <C> <C> <C>
Warren L. Bare(1)............................... 1998 $ 75,600 $22,680 --
President and Chief Executive Officer
Kenneth E. Dopher(2)............................ 1998 108,157 13,500 100,000
Chief Financial Officer and Secretary
Judith G. Hackett(3)............................ 1998 76,564 12,253 50,000
Senior Vice President -- Marketing
James R. Canfield(4)............................ 1998 29,167 3,375 100,000
Vice President of Sales
</TABLE>
- ---------------
(1) Mr. Bare served as our President from October 1995 to January 1999 and our
Chief Executive Officer from October 1995 to March 1999.
(2) Mr. Dopher served as our Chief Financial Officer and Secretary from January
1998 to May 1999.
(3) Ms. Hackett began serving as our Senior Vice President -- Marketing in May
1998.
(4) Mr. Canfield began serving as our Vice President of Sales in September 1998.
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1998
The following table sets forth summary information concerning individual
grants of stock options made during the year ended December 31, 1998 to each of
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTIONS TERMS(2)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(#) YEAR ($/SH)(1) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Warren L. Bare................... -- -- -- -- -- --
Kenneth E. Dopher................ 100,000 19.9% 0.40 01/14/08 1,822,000 2,790,000
Judith G. Hackett................ 50,000 10.0% 1.40 05/21/08 861,000 1,345,000
James R. Canfield................ 100,000 19.9% 1.50 10/22/08 1,712,000 2,680,000
</TABLE>
- ---------------
(1) We granted all options at the market value on the date of grant as
determined by our board of directors.
(2) Amounts reported in these columns represent hypothetical amounts that may be
realized on exercise of options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation of our common
stock over the term of the options. These numbers are calculated based on
rules promulgated by the Securities and Exchange Commission and do not
reflect our estimate of future stock price growth. Actual gains, if any, on
stock option exercises and common stock holdings are dependent on the timing
of such exercises and the future performance of our common stock. We cannot
assure you that we can achieve the rates of appreciation assumed in this
table or that the individuals in this table will receive the amounts
reflected.
37
<PAGE> 42
FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding the:
- number of unexercised options held by the executive officers named in the
Summary Compensation Table at December 31, 1998; and
- aggregate dollar value of unexercised options held at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY END FY-END($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Warren L. Bare............................. -- -- -- --
Kenneth E. Dopher.......................... -- 100,000 --
Judith G. Hackett.......................... -- 50,000 --
James R. Canfield.......................... -- 100,000 --
</TABLE>
- ---------------
(1) These values have been calculated by subtracting the option exercise price
from the assumed initial public offering price, and multiplying that figure
by the total number of exercisable/unexercisable options.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with some of our executive
officers which set forth their initial annual salary and bonus, and provide for
the grant of an option. We have entered into these agreements with Messrs.
Partin and Canfield, and Ms. Hackett under which we have agreed to pay them
initial annual salaries of $95,000, $100,000 and $125,000, respectively. Under
these agreements, Messrs. Partin and Canfield, and Ms. Hackett are eligible for
initial annual bonuses of $20,000, $50,000 and $20,000, respectively. Our board
of directors and Compensation Committee periodically review such salaries and
bonuses and, from time to time, elect to increase an officer's salary or bonus
based on individual performance and our overall performance. None of our
employment agreements contains severance provisions or provisions requiring
payments to an officer upon a change-of-control of our company.
HEADHUNTERS, L.L.C. EMPLOYEE COMMON UNIT OPTION PLAN
We assumed certain options that had been granted by HeadHunters, L.L.C. to
purchase its common units under the HeadHunters, L.L.C. Employee Common Unit
Option Plan. Such options have been converted into options to purchase an equal
number of shares of our common stock. The converted options will be administered
by our board of directors or our Compensation Committee substantially in
accordance with the terms of the assumed common unit option plan. As of the date
of this prospectus, 19 persons hold outstanding converted options to purchase a
total of 309,750 shares of our common stock. 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 and Cox each hold a converted option to
purchase 10,000 shares of common stock at an exercise price of $0.40. See
"-- Director Compensation." We do not intend to grant any additional options
pursuant to this plan.
HEADHUNTER.NET, INC. 1998 LONG-TERM INCENTIVE PLAN
On July 15, 1998, our board of directors adopted the HeadHunter.NET, Inc.
1998 Long-Term Incentive Plan and on July 16, 1998, our shareholders approved
this plan. We amended the plan in April 1999 to increase the number of shares
available for issuance under the plan and the shareholders approved such
amendment to the plan in April 1999. We have reserved 1,000,000 shares of common
stock for issuance in connection with options and awards granted under this
plan. We may grant options and awards to our officers and employees, and to our
non-employee directors and consultants after our common stock is listed on the
Nasdaq National Market. As of the date hereof, there are approximately 71
persons eligible to participate in the incentive plan and there were 71 persons
holding outstanding options to
38
<PAGE> 43
purchase 532,750 shares of common stock that we granted under the incentive
plan. The incentive plan authorizes the granting of awards to eligible
participants in the form of (1) options to purchase shares of common stock,
which may be incentive stock options or non-qualified stock options, (2) stock
appreciation rights, (3) performance shares, (4) restricted stock awards, (5)
dividend equivalents or (6) other stock-based awards. The incentive plan is
administered by our board of directors or the Compensation Committee in
accordance with its terms.
39
<PAGE> 44
CERTAIN TRANSACTIONS
In October 1997, HNET, Inc., a corporation wholly-owned by Warren L. Bare,
contributed all of its assets and liabilities related to our web site to
HeadHunters, L.L.C. in exchange for a 45% equity interest, and ITC contributed
$1,100,000 in cash in exchange for a 55% equity interest, under an investment
agreement between Mr. Bare, HNET, Inc. and ITC.
In November 1997, HeadHunters, L.L.C. paid a dividend of $100,000 to Warren
L. Bare, which was included in the initial equity contribution under the terms
of an investment agreement between Mr. Bare, HNET, Inc. and ITC.
In January 1998, we entered into an arrangement with ITC'DeltaCom, Inc.
under which ITC'DeltaCom, Inc. serves as our Internet service provider and our
local and long-distance telephone services provider. ITC'DeltaCom, Inc. is
related to ITC through both common ownership and board membership. Internet
access and long-distance telephone charges totaled $72,028 for the year ended
December 31, 1998.
On July 15, 1998, under a contribution agreement, we granted ITC and Mr.
Bare registration rights regarding their shares of our Class A preferred stock
and our common stock.
On July 16, 1998, we entered into an amended and restated credit facility
with ITC, which was amended in October 1998, under which ITC made available to
us a revolving line of credit of up to $3.5 million until December 31, 1998. In
connection with this credit facility, we issued a warrant to ITC to purchase
416,667 shares of common stock at an exercise price of $1.50 per share. This
warrant vested upon issuance and is exercisable for a term of 10 years. In
January 1999, the outstanding principal of $3.5 million under this credit
facility was converted at a rate of $1.50 per share into 2,333,333 shares of
Class A preferred stock, which were issued to ITC. In January 1999, we paid ITC
in cash the total accrued interest of $100,100 with respect to the credit
facility.
On January 28, 1999, we entered into a loan and security agreement with ITC
pursuant to which ITC made available to us a revolving line of credit of up to
$3.0 million. Principal amounts outstanding under the credit facility bear
interest at an annual rate of 11%. On the closing date of this offering, we will
use a portion of the net proceeds to repay all outstanding principal balance and
interest under this facility, which will then terminate. Assuming this offering
closes on August 31, 1999, the outstanding amounts under the facility to be
approximately $1.8 million, including interest of approximately $75,000.
In January 1999, we sold to some of our executive officers, key employees
and directors a total of 271,167 shares of Class A preferred stock at $1.50 per
share. Messrs. Montgomery and Canfield each purchased 100,000 shares.
In February 1999, in connection with Mr. Bare's resignation as our Chief
Executive Officer, we entered into a separation agreement with him. As part of
this agreement, Mr. Bare will remain a consultant to us until March 1, 2001 for
an annual fee of $75,000. If Mr. Bare chooses to discontinue his consulting
services during the term of the agreement, we have agreed to pay him $50,000 a
year until March 1, 2001.
In May 1999, we sold Messrs. Montgomery, Partin and Misikoff 100,000,
20,000 and 20,000 shares of our common stock, respectively, at $2.00 per share.
On June 1, 1999, we entered into a sublease with InterCall, Inc., a
wholly-owned subsidiary of ITC, for office space in Chicago, Illinois, under
which we pay rent of $5,455 per month. Mr. Montgomery is a director of
InterCall, Inc.
40
<PAGE> 45
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of the date of this prospectus, and as adjusted
to reflect the sale of our common stock offered hereby with respect to: (1) each
of our directors, (2) our Chief Executive Officer and each of the executive
officers named in the Summary Compensation Table; (3) all of our executive
officers and directors as a group; and (4) each person known by us to own
beneficially more than 5% of our common stock. Warren L. Bare will sell up to
shares of common stock if the underwriters exercise their
over-allotment option. The table assumes full conversion of the Class A
preferred stock prior to and after this offering and no exercise of the
underwriters' over-allotment option.
<TABLE>
<CAPTION>
PERCENTAGE BENEFICIALLY OWNED
SHARES ---------------------------------
NAME BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
- ---- ------------------ --------------- --------------
<S> <C> <C> <C>
ITC Holding Company, Inc.(1).....................
ITC Service Company(2)...........................
Warren L. Bare(3)................................
William H. Scott, III(7).........................
Robert M. Montgomery, Jr.(4)(7)..................
Judith G. Hackett................................
James R. Canfield(5).............................
J. Douglas Cox(7)................................
Burton B. Goldstein, Jr..........................
Donald W. Weber(7)...............................
Michael G. Misikoff..............................
Kimberley E. Thompson(7).........................
Kenneth E. Dopher(6).............................
All directors and executive officers as a group
(11 persons)...................................
</TABLE>
- ---------------
* Less than 1%
(1) ITC's address is 1239 O.G. Skinner Drive, West Point, Georgia 31833.
Includes shares of common stock subject to a warrant held by ITC
Service Company, a wholly-owned subsidiary, exercisable within 60 days of
the date of this prospectus.
(2) ITC Service Company's address is 1239 O.G. Skinner Drive, West Point,
Georgia 31833. Consists of shares of common stock subject to a
warrant exercisable within 60 days of the date of this prospectus.
(3) Mr. Bare resigned as President in January 1999 and as Chief Executive
Officer in March 1999. Mr. Bare's address is 1430 Boundary Boulevard,
Suwanee, Georgia 30024. Mr. Bare has granted the underwriters an option to
purchase up to shares to cover over-allotments. The purchase price
for the shares will equal the initial price of this offering minus the
underwriting discount. If the underwriters exercise the over-allotment
option in full, Mr. Bare will beneficially own shares, or %
of our common stock after this offering.
(4) Includes shares subject to options exercisable within 60 days of the
date of this prospectus.
(5) Includes shares held in an individual retirement account.
(6) Mr. Dopher resigned as Chief Financial Officer in May 1999.
(7) Includes shares beneficially owned by ITC, with respect to which
Messrs. Montgomery, Scott, Weber and Cox, and Ms. Thompson as officers
and/or directors of ITC, may be deemed to be the beneficial owner. Messrs.
Montgomery, Scott, Weber and Cox, and Ms. Thompson disclaim beneficial
ownership of all such shares.
41
<PAGE> 46
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 45,500,000 shares of common stock,
$0.01 par value per share, 7,500,000 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.
As of March 31, 1999, we had shares of common stock outstanding
held by five shareholders of record, shares of Class A preferred stock
outstanding held by 10 shareholders of record, and no shares of Class B serial
preferred stock outstanding. Upon the closing of this offering, and after giving
effect to the conversion of the Class A preferred stock and the issuance of
shares of common stock in this offering, we will have shares common
stock outstanding and no shares of Class A preferred stock and Class B serial
preferred stock outstanding.
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 our board of directors, in its sole discretion,
out of funds legally available therefor, and are further entitled to share
ratably in any distribution of our assets, after payment of all of our debts and
other liabilities, upon our liquidation, dissolution or winding up. 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
HeadHunter.NET.
There is currently no active trading market for our common stock. We intend
to apply to have our common stock approved for quotation on the Nasdaq National
Market under the symbol "HHNT."
PREFERRED STOCK
Class A Preferred Stock. Upon the closing of this offering, each share of
Class A preferred stock will automatically convert into one share of common
stock, and there will be no shares of Class A preferred stock outstanding. Prior
to this offering, holders of Class A preferred stock were 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. Our 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 HeadHunter.NET, may discourage
bids for our common stock at a premium over the market price of our common stock
and may adversely affect the market price and the voting and other rights of
holders of our common stock. We have 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
Business Corporation Code and our 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
HeadHunter.NET or a change in management.
42
<PAGE> 47
Classified Board of Directors; Removal of Directors
Our board of directors is divided into three classes of directors, serving
staggered three-year terms. As a result, approximately one-third of our board of
directors will be elected each year. 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 common stock. The classification of
directors, together with the limitation on the removal of directors, and the
ability of 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.
Advance Notice of New Business and Director Nominations
Our bylaws provide that any shareholder proposals or director nominations
must be provided to us 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 us
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.
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 (1) its board of
directors approves the business combination or the transaction in which the
shareholder became an interested shareholder, prior to the date the shareholder
became an interested shareholder, (2) the interested shareholder acquires 90% of
the company's voting stock in the same transaction in which it exceeds 10%, or
(3) 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 applies only if a corporation's bylaws specifically
provide that it applies. We have 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
with any person who owns 10% or more of the common stock. These statutory
requirements restrict business combinations with, and accumulations of shares of
voting stock of, certain Georgia corporations. The fair price statute applies
only if a corporation elects to be covered by its restrictions. We have elected
to be covered by the fair price statute.
Ability to Consider Other Constituencies
Our articles of incorporation permit our board of directors to consider the
interests of our employees, customers, suppliers and creditors, the communities
in which our offices or other establishments are located and all other factors
the directors consider pertinent, in addition to considering the effects of any
actions on us and our shareholders, when determining what is in the best
interests of our 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 our shareholders.
43
<PAGE> 48
INDEMNIFICATION AND LIMITATION OF LIABILITY
Our articles of incorporation eliminate the personal liability of our
directors to HeadHunter.NET or our shareholders for monetary damage for any
breach of duty as a director, provided that we cannot eliminate or limit the
liability of a director for:
- a breach of duty involving appropriation of a business opportunity of
HeadHunter.NET;
- an act or omission which involves intentional misconduct or a knowing
violation of law;
- any transaction from which the director receives an improper personal
benefit; or
- unlawful corporate distributions.
In addition, if at any time the Georgia Code is amended to authorize
further elimination or limitation of the personal liability of a director, then
the liability of each of our directors shall be eliminated or limited to the
fullest extent permitted by such provisions, as so amended, without further
action by the shareholders, unless otherwise required. 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
HeadHunter.NET.
Our bylaws require us to indemnify 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 our right) because such
person is or was one of our directors or officers, against liability incurred by
the director of officer in such proceeding except for any liability incurred in
a proceeding in which the director or officer is adjudged liable to us or is
subjected to injunctive relief in our favor for:
- any appropriation, in violation of such director's or officer's duties,
of any business opportunity of HeadHunter.NET;
- acts or omissions which involve intentional misconduct or a knowing
violation of law;
- unlawful corporate distributions; or
- any transaction from which such officer or director received an improper
personal benefit.
In addition, our bylaws provide that we (1) 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 (2) may indemnify and
advance expenses to our employees or agents who are not also directors or
officers to the same extent that we could to a director.
We have entered into separate indemnity agreements with each of our
directors and certain of our executive officers, whereby we agree to indemnify
them and to advance them 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 our directors,
officers, employees or other agents as to which indemnification is being sought,
nor are we aware of any pending or threatened litigation that may result in
claims for indemnification by any director, officer, employee or other agent.
REGISTRATION RIGHTS
Under a contribution agreement dated July 15, 1998, we granted to ITC and
Warren L. Bare registration rights regarding their shares of common stock. If we
undertake any registered public offering of our common stock, other than this
offering or an offering registered on Form S-8 or S-4, we must provide written
notice to ITC and Mr. Bare not less than 30 days prior to the proposed filing
date of such registration statement. At either's written request, we shall
include in such registered offering, all shares of common stock as are set forth
in the written request provided by them within 15 days after receipt of the
written notice from us; provided, however, that if our managing underwriters
advise us in writing that, in their opinion, the number of shares of common
stock requested to be included in such registered offering
44
<PAGE> 49
exceeds the number which can be sold in such offering without adversely
affecting the marketability of such offering, we shall include in such
registered offering (1) first, the primary shares of common stock that we
propose to sell, and (2) 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.
TRANSFER AGENT AND REGISTRAR
Our transfer agent and registrar for our common stock is American Stock
Transfer & Trust.
45
<PAGE> 50
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our 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 our ability to raise equity capital in the future.
Upon completion of this offering, we will have shares of common
stock outstanding, assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options and warrants. Of these shares, the
shares sold in this offering ( shares if the underwriters'
over-allotment option is exercised in full) will be freely tradable without
restriction by persons other than affiliates of HeadHunter.NET. The remaining
shares of common stock outstanding will be "restricted" securities
within the meaning of Rule 144 under the Securities Act of 1933 and may not be
sold in the absence of registration, unless an exemption from registration is
available, including the safe harbor provisions set forth in Rule 144.
ITC, all of our executive officers and directors, and we 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 First
Union Capital Markets Corp., except for shares sold in this offering and except
that we may issue shares of common stock in connection with acquisitions.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year is entitled to sell within any three-month period a
number of shares that does not exceed the greater of (1) 1% of the number of
shares of our common stock then outstanding or (2) the average weekly trading
volume of our common stock during the four calendar weeks preceding the filing
of a notice on Form 144 with respect to that sale. Sales under Rule 144 also are
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about us.
Under Rule 144(k), a person who is not deemed an "affiliate" of ours at any
time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years, including the holding period
of any prior owner other than an affiliate, would be entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. As of the date of this prospectus,
substantially all of the restricted shares are held by our affiliates and 90
days after this offering, all restricted 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.
In general, under Rule 701 of the Securities Act of 1933, any of our
employees, officers or directors who exercise an option are eligible to resell
those shares 90 days after the effective date of this offering in reliance on
Rule 144, but without compliance with some of its restrictions, including the
holding period.
Our employees, officers, consultants and directors hold outstanding options
to purchase up to an aggregate of shares of our common stock. We intend
to file a registration statement on Form S-8 to register the shares issuable
upon exercise of such options and options and awards granted in the future under
our stock option and incentive plans. Upon such registration, such shares will
be eligible for resale in the public market without restrictions by persons who
are not affiliates of HeadHunter.NET, and to the extent they are held by
affiliates, pursuant to Rule 144 without observance of the holding period
requirements.
ITC and Mr. Bare have certain registration rights regarding the and
shares of common stock held by each, respectively.
In connection with a prior credit facility provided by ITC to us, we
granted ITC a warrant to purchase a shares of common stock. The warrant
vested upon issuance and is exercisable for a term of 10 years from the grant
date. We have not registered the warrant or the underlying shares. The shares of
common stock issuable upon exercise of the 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.
46
<PAGE> 51
UNDERWRITING
The underwriters named below, acting through their representatives, First
Union Capital Markets Corp., J.C. Bradford & Co. and Wachovia Securities, Inc.,
who we refer to as the "Representatives," have severally agreed with us to
purchase the number of shares of common stock listed opposite their names below.
The underwriters are committed to purchase and pay for all such shares, if any
are purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------- ---------
<S> <C>
First Union Capital Markets Corp............................
J.C. Bradford & Co..........................................
Wachovia Securities, Inc....................................
Total.............................................
</TABLE>
The Representatives have advised us that they propose to offer the shares
of common stock to the public at the offering price given on the cover page of
this prospectus and to certain dealers at such price less a concession of not
more than $ per share, of which $ may be reallowed to other
dealers. After completion of this offering, the public offering price,
concession and reallowance to dealers may be reduced by the Representatives.
We and the selling shareholder have granted the underwriters an option,
exercisable during the 30-day period after the date of this prospectus, to
purchase up to additional shares of common stock at the initial public
offering price solely to cover over-allotments, if any. To the extent that the
underwriters exercise such option, each of them will have a firm commitment to
purchase approximately the same percentage of such additional shares that the
number of shares of common stock to be purchased by it shown in the above table
represents as a percentage of the shares offered by this prospectus.
If purchased, the underwriters will sell those additional shares on the same
terms as those on which the shares are being sold.
The underwriting agreement contains covenants of indemnity among the
underwriters and us against certain civil liabilities, including liabilities
under the Securities Act of 1933 and liabilities arising from breaches of
representations and warranties contained in the underwriting agreement.
Each of our executive officers and directors and some of our shareholders
have agreed with the Representatives not to offer to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge or grant any rights with respect to any
shares of common stock, any options or warrants to purchase any shares of common
stock, or any securities convertible into or exchangeable for shares of common
stock owned as of the date of this prospectus or later acquired directly or
indirectly by such holders for a period of 180 days following the date of this
prospectus, without the prior written consent of First Union Capital Markets
Corp. First Union Capital Markets Corp. in its sole discretion at any time or
from time to time, without notice, may release all or any portion of the
securities subject to the lock-up agreements. Approximately of such
shares will be eligible for immediate public sale following expiration of the
lock-up period, subject to the provisions of Rule 144. See "Shares Eligible For
Future Sale."
The Representatives have advised us that, pursuant to rules promulgated by
the SEC, certain persons participating in the offering may engage in
transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, which may have the effect of stabilizing or
maintaining the market price of the common stock at a level above that which
might otherwise prevail in the open market. A "stabilizing bid" is a bid for or
the purchase of the common stock on behalf of the underwriters for the purpose
of fixing or maintaining the price of the common stock. A "syndicate covering
transaction" is the bid for or the purchase of the common stock on behalf of the
underwriters to reduce a short position incurred by the underwriters in
connection with the offering. A "penalty bid" is an arrangement permitting the
Representatives to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with the offering if the common
stock originally sold by such underwriter or syndicate member is repurchased by
the Representatives in syndicate covering transactions, in stabilizing
47
<PAGE> 52
transactions or otherwise. The Representatives have advised us that such
transactions may be effected on the Nasdaq National Market or otherwise and, if
begun, may be discontinued at any time.
The Representatives have informed us that the underwriters do not expect to
make sales to accounts over which they exercise discretionary authority in
excess of 5% of the number of shares of common stock offered by this prospectus.
Before this offering, no public market for our securities has existed. The
initial public offering price of the common stock will be determined by
negotiation among us and the Representatives. Among the factors to be considered
in such negotiations will be prevailing market conditions, the results of our
operations in recent periods, market valuations of publicly traded companies
that we and the Representatives believe to be comparable to us, estimates of our
business potential, the present state of our development, the current state of
the industry and the economy as a whole, and other factors deemed relevant.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby
and certain other matters will be passed upon for HeadHunter.NET 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 and subsidiaries
for the years ended December 31, 1996, the ten months ended October 31, 1997,
the two months ended December 31, 1997 and the year ended December 31, 1998
included 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 said reports.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-1 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 and the exhibits thereto. Statements contained in this
prospectus regarding the contents of any contract or any other document to which
reference is made are not necessarily complete, and, in each instance where a
copy of such contract or other document has been filed as an exhibit to the
registration statement, reference is made to the copy so filed, each such
statement being qualified in all respects by such reference. A copy of the
registration statement and the exhibits thereto may be inspected without charge
at the Public Reference Room of the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549; and copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the SEC upon
payment of the fees prescribed by the SEC. The SEC also maintains a web site
(http://www.sec.gov) that contains reports, proxy, information statements, and
registration statements and other information electronically filed with the SEC.
We intend to provide our shareholders with annual reports containing
audited financial statements and quarterly reports containing unaudited
financial data for the first three quarters of each year.
48
<PAGE> 53
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET.INC.
(PREDECESSOR COMPANY)
DECEMBER 31, 1997 AND 1998
AND MARCH 31, 1999
(UNAUDITED)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets -- December 31, 1997 and 1998
and March 31, 1999 (unaudited)............................ F-3
Consolidated Statements of Operations for the Year Ended
December 31, 1996, the Ten Months Ended October 31, 1997,
the Two Months Ended December 31, 1997, the Year Ended
December 31, 1998, and the Three Months Ended March 31,
1998 and 1999 (unaudited)................................. F-5
Consolidated Statements of Shareholders' Equity (Deficit)
for the Year Ended December 31, 1996, the Ten Months Ended
October 31, 1997, the Two Months Ended December 31, 1997,
the Year Ended December 31, 1998, and the Three Months
Ended March 31, 1999 (unaudited).......................... F-6
Consolidated Statements of Cash Flows for the Year Ended
December 31, 1996, the Ten Months Ended October 31, 1997,
and the Two Months Ended December 31, 1997, the Year Ended
December 31, 1998, and the Three Months Ended March 31,
1998 and 1999 (unaudited)................................. F-7
Notes to Consolidated Financial Statements.................. F-9
</TABLE>
F-1
<PAGE> 54
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To HeadHunter.NET, Inc. and Subsidiaries:
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, 1997 and 1998 and the related
consolidated statements of operations, shareholders' equity (deficit), and cash
flows for the year ended December 31, 1996, the ten months ended October 31,
1997, the two months ended December 31, 1997, and the year ended December 31,
1998. 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, 1997 and 1998 and the results of their operations and their cash
flows for the year ended December 31, 1996, the ten months ended October 31,
1997, the two months ended December 31, 1997, and the year ended December 31,
1998 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
February 5, 1999
F-2
<PAGE> 55
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, MARCH 31,
1997 1998 1999
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................... $ 853,989 $ 254,937 $ 165,923
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$0, $37,346, and $75,524 at December 31, 1997
and 1998, and March 31, 1999, respectively..... 8,865 296,654 403,339
Affiliates (Note 4).............................. 5,100 -- 43,875
Prepaid expenses.................................... 13,420 195,110 320,496
---------- ---------- ----------
Total current assets........................ 881,374 746,701 933,633
---------- ---------- ----------
PROPERTY AND EQUIPMENT:
Telecommunications and computer equipment........... 66,082 376,558 463,032
Furniture and fixtures.............................. 28,664 152,539 166,549
---------- ---------- ----------
94,746 529,097 629,581
Accumulated depreciation and amortization........... (3,778) (81,772) (119,970)
---------- ---------- ----------
Total property and equipment, net........... 90,968 447,325 509,611
---------- ---------- ----------
GOODWILL, net of accumulated amortization of $32,633,
$228,428, and $277,377 at December 31, 1997 and
1998, and March 31, 1999, respectively.............. 946,343 750,548 701,599
---------- ---------- ----------
OTHER NONCURRENT ASSETS............................... 4,230 280,606 46,063
---------- ---------- ----------
Total assets................................ $1,922,915 $2,225,180 $2,190,906
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 56
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
PRO FORMA
LIABILITIES AND
SHAREHOLDERS'
DECEMBER 31, DECEMBER 31, EQUITY AT MARCH 31,
1997 1998 DECEMBER 31, 1998 1999
------------ ------------ ----------------- -----------
(NOTE 3) (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable:
Trade................................ $ 20,326 $ 397,425 $ 397,425 $ 137,415
Affiliates (Note 4).................. 23,843 -- -- --
Employees............................ 36,454 -- -- --
Short-term borrowings -- affiliates
(Notes 3 and 4)...................... -- 3,500,000 -- 800,000
Accrued interest -- affiliates (Note
4)................................... -- 100,100 100,100 5,469
Other accrued expenses.................. -- 128,098 128,098 261,911
Customer deposits....................... -- 27,936 27,936 15,543
Deferred revenue........................ 11,775 39,564 39,564 52,107
---------- ----------- ----------- -----------
Total current liabilities....... 92,398 4,193,123 693,123 1,272,445
---------- ----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY (DEFICIT):
Convertible Class A preferred stock,
$.01 par value; 2,800,000 shares
authorized, issued, and outstanding
at December 31, 1997 and 1998;
7,500,000 shares authorized and
5,404,500 shares issued and
outstanding at March 31, 1999
(unaudited).......................... 28,000 28,000 51,333 54,045
Class B Serial preferred stock, $.01 par
value; 5,000,000 shares authorized, 0
shares issued and outstanding........ -- -- -- --
Common stock, $.01 par value; 50,200,000
shares authorized, 2,200,000 shares
issued and outstanding at December
31, 1997 and 1998; 45,500,000 shares
authorized and 2,200,000 shares
issued and outstanding at March 31,
1999 (unaudited)..................... 22,000 22,000 22,000 22,000
Additional paid-in capital.............. 1,956,909 4,507,859 7,984,526 12,125,842
Accumulated deficit..................... (176,392) (4,522,260) (4,522,260) (8,404,282)
Stock warrants (Note 3)................. -- 341,834 341,834 341,834
Deferred compensation (Note 6).......... -- (2,345,376) (2,345,376) (3,220,978)
---------- ----------- ----------- -----------
Total shareholders' equity
(deficit)..................... 1,830,517 (1,967,943) 1,532,057 918,461
---------- ----------- ----------- -----------
Total liabilities and
shareholders' equity.......... $1,922,915 $ 2,225,180 $ 2,225,180 $ 2,190,906
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE> 57
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR COMPANY SUCCESSOR COMPANY
-------------------------- ---------------------------------------------------------
TEN
MONTHS TWO MONTHS THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1996 1997 1997 1998 1998 1999
------------ ----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES........................ $190,146 $124,437 $ 29,591 $ 1,099,868 $ 79,569 $ 828,027
-------- -------- --------- ----------- --------- -----------
COSTS AND EXPENSES:
Costs of revenues............. -- 29,390 2,906 86,963 18,220 25,433
Marketing and selling......... 2,740 23,301 41,123 2,719,330 158,549 1,232,352
General and administrative.... 52,105 95,967 126,268 1,714,756 189,018 492,270
Stock compensation expense.... -- -- -- 205,574 -- 2,861,676
Depreciation and
amortization................ 6,842 10,099 41,912 276,706 55,080 88,895
-------- -------- --------- ----------- --------- -----------
Total costs and
expenses............. 61,687 158,757 212,209 5,003,329 420,867 4,700,626
-------- -------- --------- ----------- --------- -----------
OPERATING INCOME (LOSS)......... 128,459 (34,320) (182,618) (3,903,461) (341,298) (3,872,599)
OTHER INCOME (EXPENSE).......... 164 (843) 6,226 (442,407) 7,533 (9,423)
-------- -------- --------- ----------- --------- -----------
NET INCOME (LOSS)............... $128,623 $(35,163) $(176,392) $(4,345,868) $(333,765) $(3,882,022)
======== ======== ========= =========== ========= ===========
LOSS PER SHARE:
Basic......................... $ (0.08) $ (1.98) $ (0.15) $ (1.76)
========= =========== ========= ===========
Diluted....................... $ (0.08) $ (1.55) $ (0.15) $ (1.34)
========= =========== ========= ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic......................... 2,200,000 2,200,000 2,200,000 2,200,000
========= =========== ========= ===========
Diluted....................... 2,200,000 2,794,949 2,232,741 2,907,488
========= =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 58
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CONVERTIBLE CLASS A RETAINED
PREFERRED STOCK COMMON STOCK ADDITIONAL EARNINGS
------------------- ------------------- PAID-IN (ACCUMULATED) STOCK
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) WARRANTS
--------- ------- --------- ------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR COMPANY:
BALANCE, December 31, 1995................ -- $ -- 260 $ 260 $ 5,040 $ 37,565 $ --
Dividends............................... -- -- -- -- -- (115,988) --
Net income.............................. -- -- -- -- -- 128,623 --
--------- ------- --------- ------- ----------- ----------- --------
BALANCE, December 31, 1996................ -- -- 260 260 5,040 50,200 --
Capital contribution.................... -- -- -- -- 30,000 -- --
Dividends............................... -- -- -- -- -- (121,941) --
Net loss................................ -- -- -- -- -- (35,163) --
--------- ------- --------- ------- ----------- ----------- --------
BALANCE, October 31, 1997................. -- $ -- 260 $ 260 $ 35,040 $ (106,904) $ --
========= ======= ========= ======= =========== =========== ========
- --------------------------------------------------------------------------------------------------------------------------------
SUCCESSOR COMPANY:
Initial capitalization of HeadHunters,
L.L.C. ............................... -- $ -- -- $ -- $ 2,000,000 $ -- $ --
Acquisition of Predecessor Company...... -- -- (260) (260) (35,040) 106,904 --
Reorganization (Note 1)................. 2,800,000 28,000 2,200,000 22,000 (43,091) -- --
Net loss................................ -- -- -- -- -- (176,392) --
--------- ------- --------- ------- ----------- ----------- --------
BALANCE, December 31, 1997................ 2,800,000 28,000 2,200,000 22,000 1,956,909 (176,392) --
Issuance of stock warrants.............. -- -- -- -- -- -- 341,834
Issuance of stock options............... -- -- -- -- 2,550,950 -- --
Amortization of deferred compensation... -- -- -- -- -- -- --
Net loss................................ -- -- -- -- -- (4,345,868)
--------- ------- --------- ------- ----------- ----------- --------
BALANCE, December 31, 1998................ 2,800,000 28,000 2,200,000 22,000 4,507,859 (4,522,260) 341,834
Conversion of short-term borrowings to
Convertible Class A preferred stock... 2,333,333 23,333 -- -- 3,476,667 -- --
Issuance of Class A preferred stock..... 271,167 2,712 -- -- 2,925,891 -- --
Issuance of stock options............... -- -- -- -- 1,215,425 -- --
Amortization of deferred compensation... -- -- -- -- -- -- --
Net loss................................ -- -- -- -- -- (3,882,022) --
--------- ------- --------- ------- ----------- ----------- --------
BALANCE, March 31, 1999 (unaudited)....... 5,404,500 $54,045 2,200,000 $22,000 $12,125,842 $(8,404,282) $341,834
========= ======= ========= ======= =========== =========== ========
<CAPTION>
DEFERRED
COMPENSATION TOTAL
------------ -----------
<S> <C> <C>
PREDECESSOR COMPANY:
BALANCE, December 31, 1995................ $ -- $ 42,865
Dividends............................... -- (115,988)
Net income.............................. -- 128,623
----------- -----------
BALANCE, December 31, 1996................ -- 55,500
Capital contribution.................... -- 30,000
Dividends............................... -- (121,941)
Net loss................................ -- (35,163)
----------- -----------
BALANCE, October 31, 1997................. $ -- $ (71,604)
=========== ===========
- --------------------------------------------------------------------------------------
SUCCESSOR COMPANY:
Initial capitalization of HeadHunters,
L.L.C. ............................... $ -- $ 2,000,000
Acquisition of Predecessor Company...... -- 71,604
Reorganization (Note 1)................. -- 6,909
Net loss................................ -- (176,392)
----------- -----------
BALANCE, December 31, 1997................ -- 1,830,517
Issuance of stock warrants.............. -- 341,834
Issuance of stock options............... (2,550,950) --
Amortization of deferred compensation... 205,574 205,574
Net loss................................ -- (4,345,868)
----------- -----------
BALANCE, December 31, 1998................ (2,345,376) (1,967,943)
Conversion of short-term borrowings to
Convertible Class A preferred stock... -- 3,500,000
Issuance of Class A preferred stock..... -- 2,928,603
Issuance of stock options............... (1,215,425) --
Amortization of deferred compensation... 339,823 339,823
Net loss................................ -- (3,882,022)
----------- -----------
BALANCE, March 31, 1999 (unaudited)....... $(3,220,978) $ 918,461
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 59
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR COMPANY SUCCESSOR COMPANY
-------------------------- ---------------------------------------------------------
TEN MONTHS TWO MONTHS THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1996 1997 1997 1998 1998 1999
------------ ----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................... $ 128,623 $(35,163) $ (176,392) $(4,345,868) $(333,765) $(3,882,022)
--------- -------- ---------- ----------- --------- -----------
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization..... 6,842 10,099 41,912 276,706 55,080 88,895
Amortization of debt issue
costs........................... -- -- -- 341,834 -- --
Compensation expense.............. -- -- -- 205,574 -- 2,861,676
Changes in current operating
assets and liabilities:
Accounts receivable............. 6,270 10,783 1,918 (287,789) (127,277) (106,685)
Due from affiliates............. -- -- (5,100) 5,100 5,100 (43,875)
Prepaid expenses................ -- -- (13,420) (181,690) (4,156) (125,386)
Other assets.................... -- -- (4,230) (244,293) (1,096) 232,793
Accounts payable................ 2,885 741 71,248 316,802 (48,626) (260,010)
Accrued expenses................ -- 2,548 -- 228,198 30,524 39,182
Customer deposits............... -- -- -- 27,936 -- (12,393)
Deferred revenue................ -- -- 11,775 27,789 117,660 12,543
--------- -------- ---------- ----------- --------- -----------
Total adjustments............ 15,997 24,171 104,103 716,167 27,209 2,686,740
--------- -------- ---------- ----------- --------- -----------
Net cash provided by (used
in) operating activities... 144,620 (10,992) (72,289) (3,629,701) (306,556) (1,195,282)
--------- -------- ---------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Internet domain name.... -- -- -- (35,000) -- --
Purchases of property and
equipment......................... (16,985) (14,830) (73,722) (434,351) (15,682) (100,482)
--------- -------- ---------- ----------- --------- -----------
Net cash used in investing
activities................. (16,985) (14,830) (73,722) (469,351) (15,682) (100,482)
--------- -------- ---------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Equity contribution................. -- 30,000 1,100,000 -- -- --
Proceeds from issuance of
Convertible Class A preferred
stock............................. -- -- -- -- -- 406,750
Proceeds from short-term
borrowings........................ -- -- -- 3,500,000 -- 800,000
Dividends paid (Note 4)............. (115,988) (21,941) (100,000) -- -- --
--------- -------- ---------- ----------- --------- -----------
Net cash (used in) provided
by financing activities.... (115,988) 8,059 1,000,000 3,500,000 -- 1,206,750
--------- -------- ---------- ----------- --------- -----------
</TABLE>
F-7
<PAGE> 60
<TABLE>
<CAPTION>
PREDECESSOR COMPANY SUCCESSOR COMPANY
-------------------------- ---------------------------------------------------------
TEN MONTHS TWO MONTHS THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, OCTOBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1996 1997 1997 1998 1998 1999
------------ ----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................... 11,647 (17,763) 853,989 (599,052) (322,238) (89,014)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD........................... $ 14,326 $ 25,973 $ -- $ 853,989 $ 853,989 $ 254,937
--------- -------- ---------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS, END OF
PERIOD.............................. $ 25,973 $ 8,210 $ 853,989 $ 254,937 $ 531,751 $ 165,923
========= ======== ========== =========== ========= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest Paid....................... $ -- $ -- $ -- $ 18,165 $ -- $ 105,130
========= ======== ========== =========== ========= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Initial noncash equity contributions
(Note 1).......................... $ -- $ -- $ 900,000 $ -- $ -- $ --
========= ======== ========== =========== ========= ===========
Conversion of short-term borrowings
to Convertible Class A preferred
stock............................. $ -- $ -- $ -- $ -- $ -- $ 3,500,000
========= ======== ========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-8
<PAGE> 61
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, including $21,000 in furniture and fixtures,
$979,000 in goodwill, and $100,000 in dividends payable.
On July 13, 1998, HeadHunter.NET, Inc. (the "Company" or the "Successor
Company") was incorporated under the laws of the state of Georgia.
On July 15, 1998, HNI's sole shareholder and ITC reorganized LLC and HNI as
follows (the "Reorganization"):
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. The transaction has been accounted for in a manner
similar to a pooling of interest.
Nature of Business
HeadHunter.Net provides a leading online recruiting service via its web
site at www.headhunter.net. Employers and recruiters use the web site to
advertise job opportunities and review resumes. Job seekers use the web site to
identify, research, and evaluate a broad range of job opportunities.
The Company has incurred losses and negative cash flows from operations
since inception 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. On January 28, 1999, under an extension
agreement between the Company and ITC Service Company, a revolving line of
credit of up to $3 million was made available to the Company and is payable in
full on December 31, 1999. Under the terms of the new agreement, the principal
balance outstanding under the Company's current line of credit was converted
into 2,333,333 shares of the Company's Convertible Class A preferred stock (Note
3). The Company also plans to complete an initial public offering (the
"Offering") of its common stock in the third quarter of 1999 (Note 9) 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 1999. However, there
can be no assurance that growth in the Company's revenue or customer base will
continue or that the Company will be able to achieve or sustain profitability
and/or positive cash flow.
F-9
<PAGE> 62
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 those 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 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
consolidated statements of operations for the Successor Period includes
amortization of goodwill. 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 recognizes 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 in the month impressions
are delivered.
Deferred Revenue
Deferred revenue represents the liability for advance billings to
customers. Such amounts are recognized as revenues when the related services are
provided.
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 cash equivalents. Cash and
cash equivalents are stated at cost, which approximates fair value.
F-10
<PAGE> 63
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>
Telecommunications and computer equipment................... Three years
Furniture and fixtures...................................... Three to five 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. Depreciation expense was $9,279 and $77,994 for the two months ended
December 31, 1997 and the year ended December 31, 1998, respectively.
Goodwill
The Company has classified the cost in excess of fair value of the net
liabilities acquired in a transaction accounted for as a purchase as goodwill
(Note 1). Goodwill includes all rights to the HeadHunter.NET web site and is
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.
Other Assets
Other assets consist of the following at December 31, 1998:
<TABLE>
<S> <C>
Deposits.................................................... $248,523
Acquired Internet domain name, net.......................... 32,083
--------
$280,606
========
</TABLE>
In July 1998, the Company acquired the rights to the Internet domain name,
www.HeadHunter.com for $35,000. The Company is amortizing the intangible asset
on a straight-line basis over a period of five years. Amortization expense was
$2,917 for the year ended December 31, 1998.
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"). 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 consolidated financial statements of the
Predecessor Company.
F-11
<PAGE> 64
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 utilizes 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 consolidated 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 year ended
December 31, 1996, $2,632 for the ten months ended October 31, 1997, $28,240 for
the two months ended December 31, 1997, and $1,627,011 for the year ended
December 31, 1998. Prepaid advertising costs of approximately $2,900 and
$405,000 were recorded as assets in the accompanying consolidated balance sheets
as of December 31, 1997 and 1998, respectively.
Advertising expenses included in marketing and selling expenses were
$101,202 and $573,386 for the three months ended March 31, 1998 and 1999.
Prepaid advertising costs of approximately $289,000 were recorded as assets in
the accompanying consolidated balance sheets as of March 31, 1999 (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 the Company
expands its network infrastructure and sells 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company's cash investment polices limit investments to short-term, low-risk
instruments. Concentrations of credit risk with respect to trade receivables are
limited due to advance billings to customers for services and the ability to
terminate service on delinquent accounts. In addition, the number of customers
comprising the customer base mitigates the concentration of credit risk. The
carrying amount of the Company's receivables approximates their fair value.
F-12
<PAGE> 65
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Segmental Disclosures
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 131, "Segmental Disclosures," effective December 31, 1998. The statement had
no effect as the Company has only one operating business segment.
Stock-Based Compensation Plans
The Company accounts for its stock-based compensation plans under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees." Effective in 1997, the Company adopted the disclosure option of
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 requires
that companies that do not choose to account for stock-based compensation as
prescribed by this statement shall disclose the pro forma effects on earnings
and earnings per share as if SFAS No. 123 had been adopted. Additionally,
certain other disclosures are required with respect to stock compensation and
the assumptions used to determine the pro forma effects of SFAS No. 123.
Net Loss Per Share
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 98, for the periods prior to the Company's initial public offering (Note 9),
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. The calculation of net
loss per share does not include the effects of any contingent warrants (Note 3).
Net loss per share is not shown for the Predecessor Company, as it is not
comparable.
3. CREDIT AGREEMENT
On October 31, 1997, the Company entered into a revolving credit agreement
(the "Credit Agreement") with ITC and ITC Service Company, an affiliate of ITC,
which allowed the Company to draw up to $1,000,000 at an interest rate
approximating ITC's cost of debt capital. ITC had 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.
On July 16, 1998, the Company, ITC and ITC Service Company amended and
restated the Credit Agreement, pursuant to which ITC made available to the
Company an additional revolving line of credit of up to $2.5 million which was
payable in full on December 31, 1998. On December 31, 1998, the Company, ITC,
and ITC Service Company amended the Credit Agreement to extend the due date to
January 31, 1999. 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 (6.8%) 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 $625,000 of common stock at
a price of $1.50 per share. This warrant vested upon issuance and is exercisable
for a term of ten years. In connection with the warrant issued to ITC Service
Company, the estimated $342,000 fair value of the warrant was calculated under
the Black-Scholes option pricing model at the date of grant and was included in
stock warrants and interest expense. Short-term borrowings under the Credit
Agreement were $3,500,000 for the year ended December 31, 1998.
F-13
<PAGE> 66
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 28, 1999, the Company and ITC Service Company entered into a
revolving loan and security agreement (the "Loan and Security Agreement"),
pursuant to which ITC Service Company made available to the Company a revolving
line of credit of up to $3 million and is payable in full the earlier of (i)
December 31, 1999, (ii) the closing of an initial public offering of the
Company's common stock at a minimum aggregate offering price of $20 million, or
(iii) any sale, transfer, or exchange of the Company's common stock, not
requiring registration under the Securities and Exchange Commission, in excess
of $20 million. Principal amounts outstanding under the credit facility bear
interest at a fixed rate of 11% per annum. In connection with the Loan and
Security Agreement, the Company issued to ITC Service Company a warrant to
purchase a contingent amount of the Company's common stock at a price per share
equal to an initial public or private equity offering, or at a fair market value
determined by both parties in the absence of any equity offering.
In conjunction with the Loan and Security Agreement, the principal balance
of $3.5 million outstanding under the Credit Agreement was converted into
2,333,333 shares of the Company's Convertible Class A preferred stock at a price
of $1.50 per share. The pro forma liabilities and shareholders' equity give
effect to the conversion of the Company's short-term borrowings under the Credit
Agreement as of December 31, 1998.
Short-term borrowings under the Loan and Security Agreement were $800,000
for the three months ended March 31, 1999 (unaudited).
In January 1999, the Company decreased the authorized number of common
stock to 45,500,000 shares and increased the number of Convertible Class A
preferred shares to 7,500,000.
In January 1999, the Company sold 271,167 shares of Convertible Class A
preferred stock to certain executive officers, key employees and directors at
$1.50 per share. In accordance with APB No. 25, the Company recognized
$2,521,853 in compensation expense related to the difference between the
purchase price and the estimated fair value of $10.80.
4. RELATED-PARTY TRANSACTIONS
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. Internet access and
long-distance telephone charges totaled $72,028 for the year ended December 31,
1998.
Short-term borrowings under a revolving credit agreement with ITC (Note 3)
were $0 and $3,500,000 during the two months ended December 31, 1997 and for the
year ended December 31, 1998, respectively. Accrued interest related to the
revolving credit agreement was $100,100 at December 31, 1998.
F-14
<PAGE> 67
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company utilizes an entity for insurance coverage that is related to
ITC through common ownership. Insurance expense related to this entity for the
two months ended December 31, 1997 and the year ended December 31, 1998 was
$3,000 and $8,928, respectively.
5. SHAREHOLDERS' EQUITY
The Company has authorized 50,200,000 shares of common stock, par value
$0.01 and 2,800,000 shares of Convertible Class A preferred stock, par value
$0.01, and 5,000,000 shares of Class B serial preferred 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 HNI'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 Convertible Class A preferred
stock. The sole shareholder of HNI received 2,200,000 shares of the Company's
common stock, $.01 par value, and 50,000 shares of the Company's Convertible
Class A preferred stock in return for the contribution of 100% of HNI.
6. EMPLOYEE BENEFIT PLANS
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 the date of the Reorganization, at which time the plan was
discontinued, the board of managers had granted 378,250 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 the common units granted as determined by the board of managers at the
dates of grant. The options vest over a five-year period as follows: (i) 40% at
the second anniversary of the dates of grant and (ii) an additional 20% at each
of the next three anniversary dates. The options expire ten years from the date
of grant.
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 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 board's compensation
committee in accordance with its term. Through December 31, 1998, the board of
directors has granted 172,500 of the options to various employees of the
Company. All options were granted with an exercise price of $1.50 per share,
which represents the estimated fair value of the options at the dates of grant.
The options vest over a five-year period as follows: (i) 40% at the second
anniversary of the dates of grant and (ii) an additional 20% at each of the next
three anniversary dates. The options expire ten years from the date of grant.
F-15
<PAGE> 68
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with the Reorganization, the Company assumed options granted
under LLC's Common Unit Option Plan and has converted such options to purchase
an equal number of shares of common stock on identical terms.
A summary of the status of the Company's stock options at December 31, 1998
and changes during the year then ended is presented in the following table:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
PRICE PER
SHARES SHARE
------- ---------
<S> <C> <C>
Outstanding at December 31, 1997............................ -- $ --
Granted................................................... 550,750 0.87
Forfeited................................................. (68,500) (0.43)
-------
Outstanding at December 31, 1998............................ 482,250 0.93
=======
Exercisable at December 31, 1998............................ -- --
=======
</TABLE>
During 1998, the Company granted options with exercise prices below the
fair value at the date of grant. The estimated fair value for options granted
February 1998 to December 1998 was $10.80. Accordingly, the Company recognized
deferred compensation of $2.5 million for options granted during the year ended
December 31, 1998. The Company amortizes deferred compensation over five years,
the vesting period of the options. The Company recognized $205,574 of
compensation expense related to option grants for the year ended December 31,
1998.
During the three months ended March 31, 1999, the Company granted options
with exercise prices below the fair value at the date of grant. The estimated
fair value for options granted during the three months ended March 31, 1999 was
$10.80. Accordingly, the Company recognized deferred compensation of $1.3
million for options granted during the three months ended March 31, 1999. The
Company amortizes deferred compensation over five years, the vesting period of
the options. The Company recognized $339,823 of compensation expense related to
option grants for the year ended December 31, 1998 and the three months ended
March 31, 1999 (unaudited).
Statement of Financial Accounting Standards No. 123
The Company accounts for its stock-based compensation plans in accordance
with APB No. 25, "Accounting for Stock Issued to Employees." SFAS No. 123
encourages but does not require the use of a fair value-based method of
accounting for stock-based compensation plans under which the fair value of
stock options is determined on the date of grant and expensed over the vesting
period of the stock options. While the Company has elected to continue to apply
the provisions of APB No. 25, under which no compensation cost has been
recognized by the Company, SFAS No. 123 requires pro forma disclosure of net
loss and loss per share as if the fair value based method under SFAS No. 123 had
been adopted. The value of all options for shares of the Company's common stock
to employees of the Company has been determined using the minimum value option
pricing model and the following assumptions in 1998:
<TABLE>
<S> <C>
Risk-free interest rate..................................... 5.3%
Expected dividend yield..................................... 0%
Expected lives.............................................. Five years
Expected volatility......................................... 79%
</TABLE>
F-16
<PAGE> 69
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total value of options granted during the year ended December 31, 1998
was computed as approximately $299,444, which would be amortized on a pro forma
basis over the vesting period of the options. No options were granted in 1997.
If the Company had accounted for these plans in accordance with SFAS No. 123,
the Company's net loss for the year ended December 31, 1998 would have increased
as follows:
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
----------- -----------
<S> <C> <C>
Net loss for the year ended December 31, 1998............. $(4,345,868) $(4,374,078)
Net loss per share for the year ended December 31, 1998:
Basic................................................... $ (1.98) $ (1.99)
Diluted................................................. (1.55) (1.50)
</TABLE>
7. INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and income tax purposes. Significant components of the Company's
deferred tax assets and liabilities for federal and state income taxes as of
December 31, 1998 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $1,029,386
Accumulated amortization.................................. 61,692
Allowance for doubtful accounts........................... 14,938
Deferred revenues......................................... 15,826
Other..................................................... 20,912
----------
Total deferred tax assets......................... 1,142,754
Deferred tax liabilities:
Accelerated depreciation.................................. 16,354
----------
Net deferred tax asset...................................... 1,126,400
Valuation allowance......................................... (1,126,400)
----------
Net deferred taxes.......................................... $ 0
==========
</TABLE>
The Company's net operating loss carryforward will expire in the year 2018
unless utilized. Due to the fact that the Company is unable to conclude that it
is more likely than not that its deferred tax assets will be recognized, the
Company has provided a 100% valuation allowance against its net deferred tax
assets. In addition, the Company's ability to recognize the benefit from the net
operating loss carryforwards may be limited under the Internal Revenue Code, as
the ownership of the Company has changed more than 50%, as defined.
F-17
<PAGE> 70
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the income tax provision computed at statutory tax
rates to the income tax provision for the years ended December 31, 1998 is as
follows:
<TABLE>
<S> <C>
Income tax benefit at statutory rate........................ (34)%
State and local income taxes................................ (6)
Increase in valuation allowance............................. 40
---
Total income tax provision........................ 0%
===
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
Operating Leases
Lease expense relates to the lease of office space. At December 31, 1998,
future minimum lease payments under this noncancelable operating lease are as
follows:
<TABLE>
<S> <C>
1999........................................................ $62,620
2000........................................................ 5,186
-------
$67,806
=======
</TABLE>
Rental expense under the operating lease amounted to $3,000 for the two
months ended December 31, 1997 and $45,050 for the year ended December 31, 1998.
Purchase Commitments
The Company has entered into various agreements with Internet companies to
purchase a minimum of $699,000 in banner advertisements in 1999. Purchase
commitments under the agreements are being expensed as incurred.
Legal Proceedings
The Company is not currently a party to any legal proceedings. The Company,
from time to time, may be subject to legal proceedings and claims in the
ordinary course of business, including 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.
Risks of Capacity Constraints
The Company derives a majority of revenues from employers and recruiters
that pay to post and upgrade their job opportunities. The amounts they are
willing to pay to post and upgrade their job opportunities depends to a
significant degree on the number of job seekers on the Company's web site. The
Company depends on the performance, reliability, and availability of its web
site to attract and retain job seekers. Capacity constraints could prevent them
from accessing the web site for extended periods of time and decrease the
Company's traffic. Decreased traffic could result in fewer employers and
recruiters posting job opportunities on the web site and buying fewer upgrades
and other enhanced services, which in turn would result in decreased revenues.
In addition, if the number of employers, recruiters, and job seekers on the web
site increases substantially, the Company may experience capacity constraints
and need
F-18
<PAGE> 71
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to expand or upgrade its technology at a time when the Company does not have
adequate funds to do so, or when that technology is not readily available.
9. SUBSEQUENT EVENT (UNAUDITED)
Equity Transactions
In February 1999, the stockholders of HeadHunter.NET's Convertible Class A
preferred and common stock entered into a stockholders' agreement. This
agreement provides, among other things, for a right of first refusal to the
Company and each of the other stockholders of the Company to purchase any
selling stockholders' shares at a price equal to that agreed to by a third
party. The stockholders' agreement terminates upon (i) voluntary or involuntary
dissolution of the Company, (ii) initial public offering, or (iii) acquisition,
consolidation, or merger of the Company into or with another corporation that
results in the stockholders owning publicly traded securities.
In April 1999, the Company increased the common shares reserved for
issuance in connection with options and awards granted under the Incentive Plan
to 1,000,000 shares.
In May 1999, the Company sold 100,000 shares of Convertible Class A
preferred stock to a certain executive officer and 40,000 shares of common stock
to a director and an executive officer.
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-19
<PAGE> 72
SHARES
[HEADHUNTER.NET LOGO]
COMMON STOCK
------------------
PROSPECTUS
------------------
FIRST UNION CAPITAL MARKETS CORP.
J.C. BRADFORD&CO.
WACHOVIA SECURITIES, INC.
---------------------
, 1999
---------------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. HeadHunter.NET and the selling shareholder are
offering to sell, and seeking offers to buy, shares of common stock only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of our common stock.
Until , 1999 (25 days after the date of this prospectus), all
dealers that buy, sell or trade in our common stock, whether or not
participating in this offering, may be required to deliver a prospectus. This
delivery requirement is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 73
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the offering
described in the registration statement. All amounts are estimates except the
SEC registration fee, the NASD fees and the Nasdaq listing fees:
<TABLE>
<S> <C>
SEC registration fee........................................ $12,788
NASD fees................................................... 5,100
Nasdaq listing fees......................................... *
Blue sky fees and expenses.................................. *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer agent fees......................................... *
Miscellaneous expenses...................................... *
-------
Total............................................. $ *
=======
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our articles of incorporation eliminate the personal liability of our
directors to HeadHunter.NET or our shareholders for monetary damage for any
breach of duty as a director, provided that we cannot eliminate or limit the
liability of a director for:
- a breach of duty involving appropriation of a business opportunity of
HeadHunter.NET;
- an act or omission which involves intentional misconduct or a knowing
violation of law;
- any transaction from which the director receives an improper personal
benefit; or
- unlawful corporate distributions.
In addition, if at any time the Georgia Business Corporation Code is
amended to authorize further elimination or limitation of the personal liability
of a director, then the liability of each of our directors shall be eliminated
or limited to the fullest extent permitted by such provisions, as so amended,
without further action by the shareholders, unless otherwise required.
Our bylaws require us to indemnify 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 our right) because such
person is or was one of our directors or officers, against liability incurred by
the director of officer in such proceeding except for any liability incurred in
a proceeding in which the director or officer is adjudged liable to us or is
subjected to injunctive relief in our favor for:
- any appropriation, in violation of such director's or officer's duties,
of any business opportunity of HeadHunter.NET;
- acts or omissions which involve intentional misconduct or a knowing
violation of law;
- unlawful corporate distributions; or
- any transaction from which such officer or director received an improper
personal benefit.
Our board of directors also has the authority to extend to employees and
agents the same indemnification rights held by directors. Indemnified persons
would also be entitled to have us advance expenses prior to the
II-1
<PAGE> 74
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 our officers and directors pursuant to these provisions, the SEC
has informed us that in its opinion such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
We have entered into separate indemnity agreements with each of our
directors and certain of our executive officers, whereby we agree to indemnify
them and to advance them expenses in a manner and subject to terms and
conditions similar to those set forth in our articles of incorporation and
bylaws.
We maintain a standard form of officers' and directors' liability insurance
policy which provides coverage to our officers and directors for certain
liabilities, including certain liabilities which may arise out of this
registration statement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Within the past three years, we have not sold any securities which were not
registered under the Securities Act except for:
- the issuance of shares of common stock and 50,000 shares of
Class A preferred stock to Warren L. Bare and 2,750,000 shares of Class A
preferred stock to ITC Holding Company, Inc., pursuant to a Contribution
Agreement dated July 15, 1998;
- the issuance to ITC Service Company of a warrant to purchase
shares of common stock in July 1998 in connection with a prior credit facility
with ITC Service Company;
- the grant by HeadHunters, L.L.C. to certain of our employees, officers
and directors of options to purchase common units under the HeadHunters, L.L.C.
Employee Common Unit Option Plan, that HeadHunter.NET assumed and converted into
options to purchase an equal number of shares of common stock in July 1998;
- our granting to certain of our employees, officers and directors of
options to purchase shares of common stock under individual stock option
agreements and the HeadHunter.NET, Inc. 1998 Long Term Incentive Plan since July
1998;
- the issuance of 2,333,333 shares of Class A preferred stock to ITC
Holding Company, Inc. in January 1999 in connection with the conversion of
approximately $3.5 million of debt, at a conversion rate of $1.50 per share,
that was outstanding under our prior credit facility with ITC Service Company;
- the sale to certain of our executive officers and directors of a total of
271,167 shares of Class A preferred stock at a per share price of $1.50 in
January 1999;
- the sale to certain of our executive officers and directors of a total of
140,000 shares of common stock at a per share price of $2.00 in May 1999.
Each issuance of securities described above was made in reliance on one or
more of the exemptions from registration under the Securities Act provided by
Sections 3(a)(9), 4(2) and 4(6) and Regulation D and Rule 701 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 us, to information about us.
II-2
<PAGE> 75
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation, as amended*
3.2 -- Bylaws
4.1 -- Specimen common stock certificate*
4.2 -- Article II of the Articles of Incorporation, as amended
(filed as part of Exhibit 3.1)*
5.1 -- Opinion of Alston & Bird LLP*
10.1 -- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan, as
amended
10.2 -- HeadHunters, L.L.C. Employee Common Unit Option Plan dated
January 14, 1998
10.3 -- Loan and Security Agreement dated January 28, 1999 between
ITC Service Company and HeadHunter.NET
10.4 -- Form of Indemnity Agreement between directors/executive
officers and HeadHunter.NET
10.5 -- Contribution Agreement dated July 15, 1998 among ITC Holding
Company, Inc., Warren L. Bare and HeadHunter.NET
10.6 -- WorkLife's Internet Content Partners Agreement between
WorkLife Solutions, Inc. and HeadHunter.NET
10.7 -- Letter Agreement dated September 11, 1998 between James R.
Canfield and HeadHunter.NET
10.8 -- Letter Agreement dated May 18, 1998 between Judith G.
Hackett and HeadHunter.NET
10.9 -- Letter Agreement dated May 13, 1999 between Mark W. Partin
and HeadHunter.NET
10.10 -- Amended and Restated Stock Purchase Warrant between ITC
Service Company and HeadHunter.NET
10.11 -- Investment Agreement dated October 30, 1997 among ITC
Holding Company, Inc., Software Technology Corporation and
Warren L. Bare
10.12 -- Form of Non-Employee Director Non-Qualified Stock Option
Agreement
10.13 -- Lycos, Inc. Advertising Contract, as amended, between Lycos,
Inc. and HeadHunters,NET*
10.14 -- Lease Agreement between AMB Property, L.P. and HeadHunters,
L.L.C. dated September 1, 1998, as amended by the First
Lease Extension and Modification Agreement dated January 27,
1999, as further amended by the Second Lease Extension and
Modification Agreement dated March 22, 1999.
10.15 -- Sublease Agreement between InterCall, Inc. and
HeadHunter.NET dated June 1, 1999*
10.16 -- Severance letter between HeadHunter.NET and Warren Bare
dated February 24, 1999
10.17 -- Severance letter between HeadHunter.NET and Kenneth E.
Dopher dated April 15, 1999
10.18 -- Form of Subscription Agreement between directors/executive
officers and HeadHunter.NET
10.19 -- Form of Loan and Security Agreement between executive
officers and HeadHunter.NET
10.20 -- DoubleClick Insertion Order Properties dated February 25,
1999*
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)
</TABLE>
II-3
<PAGE> 76
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
24.2 -- Power of Attorney -- Burton B. Goldstein, Jr.
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment
(B) FINANCIAL SCHEDULES
Schedule II -- Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
HeadHunter.NET hereby undertakes to provide to the underwriters 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
HeadHunter.NET pursuant to the foregoing provisions, or otherwise,
HeadHunter.NET 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
HeadHunter.NET of expenses incurred or paid by a director, officer or
controlling person of HeadHunter.NET 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, HeadHunter.NET 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.
HeadHunter.NET 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 HeadHunter.NET 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.
(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> 77
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 JUNE 17, 1999.
HEADHUNTER.NET, INC.
By: /s/ Robert M. Montgomery, Jr.
------------------------------------
Robert M. Montgomery, Jr.
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 or herself
and not for one another, does hereby constitute and appoint Robert M.
Montgomery, Jr. and Mark W. Partin, and each of them, a true and lawful attorney
in his/her 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 or herself 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/ Robert M. Montgomery, Jr. Chief Executive Officer, President June 17, 1999
- --------------------------------------------------- and Director (Principal Executive
Robert M. Montgomery, Jr. Officer)
/s/ Mark W. Partin Chief Financial Officer (Principal June 17, 1999
- --------------------------------------------------- Financial and Accounting Officer)
Mark W. Partin
/s/ William H. Scott III Chairman of the Board and Director June 17, 1999
- ---------------------------------------------------
William H. Scott, III
/s/ Warren L. Bare Vice Chairman of the Board and June 17, 1999
- --------------------------------------------------- Director
Warren L. Bare
* Director June 17, 1999
- ---------------------------------------------------
Burton B. Goldstein, Jr.
</TABLE>
II-5
<PAGE> 78
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DONALD W. WEBER Director June 17, 1999
- ---------------------------------------------------
Donald W. Weber
/s/ J. DOUGLAS COX Director June 17, 1999
- ---------------------------------------------------
J. Douglas Cox
/s/ MICHAEL G. MISIKOFF Director June 17, 1999
- ---------------------------------------------------
Michael G. Misikoff
/s/ KIMBERLEY E. THOMPSON Director June 17, 1999
- ---------------------------------------------------
Kimberley E. Thompson
*By: /s/ MARK W. PARTIN
----------------------------------------------
Mark W. Partin
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 79
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To HeadHunter.NET, Inc. and Subsidiaries:
We have audited in accordance with generally accepted auditing standards,
the financial statements of HEADHUNTER.NET, INC. AND SUBSIDIARIES (Successor
Company) and HNET, INC. (Predecessor Company) as of December 31, 1997 and 1998
and for the year ended December 31, 1996, the ten months ended October 31, 1997,
the two months ended December 31, 1997, and the year ended December 31, 1998,
and have issued our report thereon dated February 5, 1999. Our audits were made
for the purpose of forming an opinion on those statements taken as a whole. The
schedule listed under Schedule II herein as it relates to HeadHunter.Net, Inc.
(Successor Company) and HNET, Inc. (Predecessor Company) is the responsibility
of the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 5, 1999
II-7
<PAGE> 80
HEADHUNTER.NET, INC. AND SUBSIDIARIES
(SUCCESSOR COMPANY)
AND HNET, INC.
(PREDECESSOR COMPANY)
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS FOR THE
YEAR ENDED DECEMBER 31, 1996, THE TEN MONTHS ENDED
OCTOBER 31, 1997, THE TWO MONTHS ENDED DECEMBER 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CHARGED TO
BEGINNING COSTS ENDING
DESCRIPTION AND BALANCES EXPENSE WRITE-OFFS BALANCE
----------- --------------- ------- ---------- -------
<S> <C> <C> <C> <C>
1996 allowance for doubtful accounts................. $ -- $ -- $ -- $ --
October 1997 allowance for doubtful accounts......... $ -- $ -- $ -- $ --
December 1997 allowance for doubtful accounts........ $ -- $ -- $ -- $ --
1998 allowance for doubtful accounts................. $ -- $37,346 $ -- $37,346
</TABLE>
II-8
<PAGE> 81
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Articles of Incorporation, as amended*
3.2 -- Bylaws
4.1 -- Specimen common stock certificate*
4.2 -- Article II of the Articles of Incorporation, as amended
(filed as part of Exhibit 3.1)*
5.1 -- Opinion of Alston & Bird LLP*
10.1 -- HeadHunter.NET, Inc. 1998 Long-Term Incentive Plan, as
amended
10.2 -- HeadHunters, L.L.C. Employee Common Unit Option Plan dated
January 14, 1998
10.3 -- Loan and Security Agreement dated January 28, 1999 between
ITC Service Company and HeadHunter.NET
10.4 -- Form of Indemnity Agreement between directors/executive
officers and HeadHunter.NET
10.5 -- Contribution Agreement dated July 15, 1998 among ITC Holding
Company, Inc., Warren L. Bare and HeadHunter.NET
10.6 -- WorkLife's Internet Content Partners Agreement between
WorkLife Solutions, Inc. and HeadHunter.NET
10.7 -- Letter Agreement dated September 11, 1998 between James R.
Canfield and HeadHunter.NET
10.8 -- Letter Agreement dated May 18, 1998 between Judith G.
Hackett and HeadHunter.NET
10.9 -- Letter Agreement dated May 13, 1999 between Mark W. Partin
and HeadHunter.NET
10.10 -- Amended and Restated Stock Purchase Warrant between ITC
Service Company and HeadHunter.NET
10.11 -- Investment Agreement dated October 30, 1997 among ITC
Holding Company, Inc., Software Technology Corporation and
Warren L. Bare
10.12 -- Form of Non-Employee Director Non-Qualified Stock Option
Agreement
10.13 -- Lycos, Inc. Advertising Contract, as amended, between Lycos,
Inc. and HeadHunters,NET*
10.14 -- Lease Agreement between AMB Property, L.P. and HeadHunters,
L.L.C. dated September 1, 1998, as amended by the First
Lease Extension and Modification Agreement dated January 27,
1999, as further amended by the Second Lease Extension and
Modification Agreement dated March 22, 1999.
10.15 -- Sublease Agreement between InterCall, Inc. and
HeadHunter.NET dated June 1, 1999*
10.16 -- Severance letter between HeadHunter.NET and Warren Bare
dated February 24, 1999
10.17 -- Severance letter between HeadHunter.NET and Kenneth E.
Dopher dated April 15, 1999
10.18 -- Form of Subscription Agreement between directors/executive
officers and HeadHunter.NET
10.19 -- Form of Loan and Security Agreement between executive
officers and HeadHunter.NET
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
10.20 -- DoubleClick Insertion Order Properties dated February 25,
1999*
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)
24.2 -- Power of Attorney -- Burton B. Goldstein, Jr.
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 3.2
HEADHUNTER.NET, INC.
BYLAWS
Adopted as of July 15, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
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
</TABLE>
<PAGE> 5
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.
- 1 -
<PAGE> 6
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
- 2 -
<PAGE> 7
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
- 3 -
<PAGE> 8
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
- 4 -
<PAGE> 9
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.
- 5 -
<PAGE> 10
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.
- 6 -
<PAGE> 11
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.
- 7 -
<PAGE> 12
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
- 8 -
<PAGE> 13
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.
- 9 -
<PAGE> 14
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
- 10 -
<PAGE> 15
(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.
- 11 -
<PAGE> 16
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.
- 12 -
<PAGE> 17
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
- 13 -
<PAGE> 18
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.
- 14 -
<PAGE> 19
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.
- 15 -
<PAGE> 20
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.
- 16 -
<PAGE> 21
(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.
- 17 -
<PAGE> 22
(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
- 18 -
<PAGE> 23
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.
- 19 -
<PAGE> 24
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.
- 20 -
<PAGE> 25
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.
- 21 -
<PAGE> 26
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.
- 22 -
<PAGE> 1
EXHIBIT 10.1
HEADHUNTER.NET, INC.
1998 LONG-TERM INCENTIVE PLAN
(AS AMENDED THROUGH APRIL 29, 1999)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. PURPOSE............................................................................................3
2. EFFECTIVE DATE.....................................................................................3
3. DEFINITIONS........................................................................................3
4. ADMINISTRATION.....................................................................................7
4.1. Committee........................................................................................7
4.2. Action By The Committee..........................................................................8
4.3. Authority Of Committee...........................................................................8
4.4. Decisions Binding................................................................................9
5. SHARES SUBJECT TO THE PLAN.........................................................................9
5.1. Number Of Shares.................................................................................9
5.2. Lapsed Awards....................................................................................9
5.3. Stock Distributed................................................................................9
5.4. Limitation On Number Of Shares Subject To Awards.................................................9
6. ELIGIBILITY.......................................................................................10
7. STOCK OPTIONS.....................................................................................10
7.1. General.........................................................................................10
7.2. Incentive Stock Options.........................................................................10
8. STOCK APPRECIATION RIGHTS.........................................................................12
9. PERFORMANCE SHARES................................................................................13
9.1. Grant Of Performance Shares.....................................................................13
9.2. Right To Payment................................................................................13
9.3. Other Terms.....................................................................................13
10. RESTRICTED STOCK AWARDS...........................................................................13
10.1. Grant Of Restricted Stock......................................................................13
10.2. Issuance And Restrictions......................................................................13
10.3. Forfeiture.....................................................................................13
10.4. Certificates For Restricted Stock..............................................................14
11. DIVIDEND EQUIVALENTS..............................................................................14
12. OTHER STOCK-BASED AWARDS..........................................................................14
13. PROVISIONS APPLICABLE TO AWARDS...................................................................14
13.1. Stand-Alone, Tandem, And Substitute Awards.....................................................14
13.2. Exchange Provisions............................................................................15
13.3. Term Of Award..................................................................................15
13.4. Form Of Payment For Awards.....................................................................15
13.5. Limits On Transfer.............................................................................15
13.6. Beneficiaries..................................................................................15
13.7. Stock Certificates.............................................................................16
13.8. Acceleration Upon Death Or Disability..........................................................16
13.9. Acceleration Upon A Change In Control..........................................................16
13.10. Acceleration Upon Certain Events Not Constituting A Change In Control.........................16
13.11. Acceleration For Any Other Reason.............................................................17
13.12. Effect Of Acceleration........................................................................17
13.13. Performance Goals.............................................................................17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
13.14. Termination Of Employment.....................................................................17
13.15. Repurchase....................................................................................18
14. CHANGES IN CAPITAL STRUCTURE......................................................................18
15. AMENDMENT, MODIFICATION AND TERMINATION...........................................................19
15.1. Amendment, Modification And Termination........................................................19
15.2. Awards Previously Granted......................................................................19
16. GENERAL PROVISIONS................................................................................19
16.1. No Rights To Awards............................................................................19
16.2. No Shareholder Rights..........................................................................19
16.3. Withholding....................................................................................19
16.4. No Right To Continued Service..................................................................20
16.5. Unfunded Status Of Awards......................................................................20
16.6. Indemnification................................................................................20
16.7. Relationship To Other Benefits.................................................................20
16.8. Expenses.......................................................................................20
16.9. Titles And Headings............................................................................20
16.10. Gender And Number.............................................................................21
16.11. Fractional Shares.............................................................................21
16.12. Government And Other Regulations..............................................................21
16.13. Governing Law.................................................................................21
16.14. Additional Provisions.........................................................................21
16.15. Code Section 162(M)...........................................................................21
</TABLE>
ii
<PAGE> 4
HEADHUNTER.NET, INC.
1998 LONG-TERM INCENTIVE PLAN
(AS AMENDED THROUGH APRIL 29, 1999)
1. PURPOSE
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.
2. 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.
3. 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 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 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.
<PAGE> 5
(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 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
-4-
<PAGE> 6
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 Section 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 Section 11.
(k) "EFFECTIVE DATE" has the meaning assigned such term
in Section 2.
-5-
<PAGE> 7
(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
Section 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 Section 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 Section 9, to receive cash, Stock, or other Awards,
the payment of which is contingent upon achieving certain performance
goals established by the Committee.
-6-
<PAGE> 8
(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 Section 10 that is subject to certain restrictions
and to risk of forfeiture.
(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 Section 14.
(x) "STOCK APPRECIATION RIGHT" or "SAR" means a right
granted to a Participant under Section 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 Section 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.
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
-7-
<PAGE> 9
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.
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;
-8-
<PAGE> 10
(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;
(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.
5. SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES
Subject to adjustment as provided in Section 14, 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
1,000,000, 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 1,000,000. 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
-9-
<PAGE> 11
Participant for such Award) during any one calendar year under the Plan shall
be $5,000,000.
6. ELIGIBILITY
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.
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:
-10-
<PAGE> 12
(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:
(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 Section 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.
-11-
<PAGE> 13
(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.
(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.
8. STOCK APPRECIATION RIGHTS
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
-12-
<PAGE> 14
Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.
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.
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.
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
-13-
<PAGE> 15
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.
11. 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.
12. 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.
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.
-14-
<PAGE> 16
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), 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).
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
-15-
<PAGE> 17
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 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) 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
-16-
<PAGE> 18
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 Sections
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
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
-17-
<PAGE> 19
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.
14. CHANGES IN CAPITAL STRUCTURE
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
-18-
<PAGE> 20
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.
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.
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.
-19-
<PAGE> 21
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.
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.
-20-
<PAGE> 22
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 compensation payable
under this Plan until the expiration of the reliance period described in
Treasury Regulation 1.162-27(f) or any successor regulation.
-21-
<PAGE> 23
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 and amended through April 29, 1999.
HeadHunter.NET, Inc.
By: /s/ Robert M. Montgomery
------------------------
22
<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>
- ii -
<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>
- iii -
<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.
- 1 -
<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 10.
Unit Option Price: The purchase price for each Unit subject to a Unit
Option.
- 2 -
<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.
- 3 -
<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.
- 4 -
<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.
- 5 -
<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
- 6 -
<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
- 7 -
<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
- 8 -
<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.
- 9 -
<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.
- 10 -
<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.
- 11 -
<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
- 12 -
<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
(a) Term...................................................................................2
(b) Exercise...............................................................................2
(c) Limitations on Exercise of Option......................................................2
(d) Method of Exercise.....................................................................3
(e) Effective Date of Exercise.............................................................3
6. Repurchase..........................................................................................3
7. Transferability.....................................................................................4
(a) Nontransferability of Options..........................................................4
(b) Nontransferability of Common Units.....................................................4
8. Requirements of Law.................................................................................4
9. Effect Of Change In Control And Changes In Capitalization...........................................5
(a) Changes in Ownership Interests.........................................................5
(b) Reorganization in Which HeadHunters Is the Surviving Entity............................5
(c) Reorganization in Which HeadHunters Is Not the Surviving Entity
or Sale of Assets or Units.............................................................6
(d) Adjustments............................................................................6
(e) No Limitations on HeadHunters..........................................................6
10. Disclaimer of Rights................................................................................6
11. Forfeiture of Rights................................................................................7
12. Captions............................................................................................7
</TABLE>
- ii-
<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>
- iii -
<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.
(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.
(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.
(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
- 2 -
<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.
(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) 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.
(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.
(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.
(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.
(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,
- 5 -
<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.
(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.
(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.
(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
- 6 -
<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.
- 7 -
<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.
- 8 -
<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
- 9 -
<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:
--------------------------- --------------------------------
--------------------------------
--------------------------------
- 10 -
<PAGE> 1
EXHIBIT 10.3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of January 28,
1999, by and between HeadHunter.NET, Inc., a Georgia corporation ("BORROWER"),
and ITC Service Company, a Georgia corporation ("LENDER").
BACKGROUND
WHEREAS, Borrower and Lender desire to enter into a revolving credit
facility pursuant to which Lender will make credit available to Borrower for
working capital purposes;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. LOANS
1.1. REVOLVING CREDIT LOAN
Subject to the terms and conditions hereof, during the period
beginning on the date hereof (the "CLOSING DATE") and ending on the Ending Date
(as defined below), Lender shall make advances (each a "BORROWING") to Borrower
in such amounts as Borrower shall reasonably request from time to time, provided
that the maximum outstanding aggregate principal amount of all such Borrowings
shall at no time exceed $3,000,000 (the "COMMITMENT"). The "ENDING DATE" shall
be the earliest of (i) December 31, 1999, (ii) the closing of a public sale of
the Borrower'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 (an "INITIAL PUBLIC
OFFERING"), or (iii) any sale, transfer, exchange, pledge or other disposition
of the Borrower's Common Stock not requiring registration under the Securities
Act in excess of $20 million (a "PRIVATE EQUITY FUNDING"). 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 loan facility contemplated
by this SECTION 1.1 (the "REVOLVING CREDIT LOAN"), Borrower may borrow, repay,
and reborrow, subject to the limitations set forth above. The Revolving Credit
Loan shall be evidenced by, and shall be due and payable in accordance with,
that certain Revolving Credit 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.
<PAGE> 2
1.2. INTEREST
The outstanding principal amount of the Revolving Credit Loan
shall bear interest at the rate of eleven percent (11%) per annum.
Interest shall be due and payable as more fully set forth in
the Note.
1.3. USE OF PROCEEDS
The proceeds of the Revolving Credit Loan shall be used by
Borrower for working capital purposes in accordance with Borrower's then-current
Business Plan (as such Plan has been adopted by Borrower's Board of Directors).
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:
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, each Additional
Warrant (as hereinafter defined), and any other instruments or agreements
executed pursuant hereto or thereto (this Agreement, the Note, each Additional
Warrant, 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
-2-
<PAGE> 3
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).
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 3 hereof
and/or the taking by Lender of possession of the Collateral, 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.
-3-
<PAGE> 4
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 HeadHunters, L.L.C., a Delaware limited liability company
and predecessor to Borrower ("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 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.
-4-
<PAGE> 5
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 each Additional Warrant and as set forth on EXHIBIT D
hereto, no person has conversion rights with respect to, or any subscription
rights, calls, commitments 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 outstanding Capital Stock of Borrower will be
duly issued, fully paid and non-assessable.
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 (other than any Additional
Warrant).
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.
-5-
<PAGE> 6
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.
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
-6-
<PAGE> 7
Encumbrance upon any item of the Collateral or any part thereof, Borrower makes
arrangements acceptable to Lender to secure the payment thereof.
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, Chief Executive Officer 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
-7-
<PAGE> 8
of the officers, directors, 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.
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.
-8-
<PAGE> 9
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 any violation of 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 1.3 hereof.
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,
-9-
<PAGE> 10
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.
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
in full, when due, any five (5) payments under the Note; or (b) Borrower shall
fail to pay in full, when due, any amount due under the Note upon the maturity
thereof; or (c) 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 (d) 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 shall have been received by
Borrower from Lender; or (e) 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
-10-
<PAGE> 11
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 (f) any event
of default under any of the Loan Documents shall occur; or (g) 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 (h) 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 (i) 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 advance the Borrowings to be
terminated, and declare the entire unpaid principal amount of the Note, all
interest accrued and 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).
-11-
<PAGE> 12
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.
6.4 ISSUANCE OF ADDITIONAL WARRANTS
Borrower shall issue to Lender an additional stock purchase
warrant (an "ADDITIONAL WARRANT") within five (5) Business Days after each
occurrence of either of the following: (a) the failure by Borrower to pay in
full, when due, three (3) consecutive payments under the Note; or (b) the
failure by Borrower on two (2) occasions to pay in full, when due, two (2)
consecutive payments under the Note (the amount specified in clause (a) or (b)
that Borrower fails to pay when due, the "PAST DUE AMOUNT"). Each Additional
Warrant shall be in substantially the form of the stock purchase warrant
attached hereto as EXHIBIT B, except as set forth in the following sentence.
Pursuant to each Additional Warrant, (i) the holder thereof shall have the right
to purchase that number of shares of Borrower's Common Stock, par value $.01 per
share (the "COMMON STOCK"), which is equal to the quotient of (A) the Past Due
Amount divided by (B) $1.50, and (ii) the exercise price per share of Common
Stock for which such holder may purchase the shares issuable under such
Additional Warrant is $.01 per share; provided that for purposes of computing
the quotient referred to above in this sentence in the case of each Additional
Warrant, if any, to be issued pursuant to this Section 6.4 after the first
Additional Warrant, clause (A) of such quotient shall be deemed to read in its
entirety as follows: "(A) such portion, if any, of the Past Due Amount which
exceeds the largest previous Past Due Amount determined in accordance with the
provisions of this Section 6.4 divided by".
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 or after the closing of transactions contemplated hereby and
thereby or the occurrence of an Event of Default hereunder.
-12-
<PAGE> 13
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
Senior 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.
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
-13-
<PAGE> 14
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.
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.
-14-
<PAGE> 15
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.
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.
-15-
<PAGE> 16
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:
---------------------------------
Name:
Title:
LENDER:
ITC Service Company
By:
---------------------------------
Name:
Title:
-16-
<PAGE> 17
REVOLVING CREDIT NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. IT HAS BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY, WITHOUT A VIEW TO RESALE OR DISTRIBUTION AND MAY NOT
BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
REGULATIONS PROMULGATED THEREUNDER AND APPLICABLE STATE SECURITIES LAWS.
REVOLVING CREDIT NOTE
$3,000,000 January 28, 1999
FOR VALUE RECEIVED, HeadHunter.NET, Inc., a Georgia
corporation (the "MAKER"), promises to pay to the order of ITC Service Company,
a Georgia corporation, or assigns (the "LENDER" or the "HOLDER"), at 1239 O.G.
Skinner Drive, West Point, Georgia 31833, or at such other place as the Holder
of this Note may from time to time designate, the principal amount of Three
Million Dollars ($3,000,000), or so much thereof as may be advanced from time to
time under that certain Loan and Security Agreement, dated as of January 28,
1999, by and between the Maker and the Lender (the "LOAN AGREEMENT"), and
remains outstanding, together with accrued and unpaid interest on such advances
at the rate of eleven percent (11%) per annum as follows:
In the event the Ending Date, as determined in accordance with
the provisions of the Loan Agreement, is prior to December 31, 1999, then the
entire outstanding principal amount of this Note, together with all interest
accrued thereon, shall be due and payable in full on such Ending Date.
If, however, the Ending Date, as determined in accordance with
the provisions of the Loan Agreement, is December 31, 1999, then the amounts
payable under this Note shall be paid in accordance with the following
provisions: All accrued and unpaid interest under this Note shall be due and
payable in full on the following dates: (i) December 31, 1999; (ii) the last day
of each calendar month thereafter, commencing with January 31, 2000 and
continuing until all amounts due and payable under this Note have been paid in
full, and (iii) in the event the outstanding principal amount of this Note
becomes due and payable in full on a day which is not the last day of a calendar
month, then on such day. Reference is made to Schedule 1 to this Note. On each
date specified on such Schedule 1, the Maker shall make a
-17-
<PAGE> 18
payment to the Holder in an amount equal to the greater of (a) all accrued and
unpaid interest under this Note, and (b) the amount specified on such Schedule 1
opposite such date, provided that in the event this Note is repaid in full prior
to the last date specified on such Schedule 1, the Maker shall have no further
obligation to make the payment or payments contemplated by such Schedule 1 to be
made after the date this Note is repaid in full. In the event that the amount
paid by the Maker to the Holder on any such date exceeds all accrued and unpaid
interest under this Note as of the date such payment is made, the amount of such
payment shall be applied, first, to the payment of such accrued and unpaid
interest, and second, to the outstanding principal amount of this Note. The
entire outstanding principal amount of this Note, together with all accrued and
unpaid interest thereon, shall be due and payable in full on December 31, 2001,
provided that if an Initial Public Offering or a Private Equity Funding shall
occur on or after December 31, 1999 and before the payment in full of the
outstanding principal amount of this Note pursuant to the foregoing provisions
of this paragraph, the entire outstanding principal amount of this Note,
together with all accrued and unpaid interest thereon, shall be due and payable
in full on the closing date of such Initial Public Offering or Private Equity
Funding, as the case may be.
All payments hereunder shall be made in lawful money of the
United States of America, without offset.
All capitalized terms used herein which are not defined herein
shall have the meanings ascribed to them in the Loan Agreement.
The unpaid amount of this Note (principal and interest) may be
prepaid in whole or in part at any time or times without premium or penalty.
Each prepayment shall be applied first to the payment of all interest and other
amounts accrued hereunder on the date of any such prepayment, and the balance of
any such prepayment shall be applied to the principal amount hereof. No
prepayment shall entitle any person to be subrogated to the rights of the Holder
unless and until this Note has been paid in full.
This Note is the Note referred to in the Loan Agreement and
evidences the Revolving Credit Loan advanced or to be advanced by the Lender to
or for the benefit of the Maker as borrower under the Loan Agreement. Neither
the reference to the Loan Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Maker to pay the
principal amount hereof, together with interest accrued thereon, when due.
The occurrence of an Event of Default under the Loan Agreement
shall constitute an event of default ("EVENT OF DEFAULT") hereunder. Upon the
occurrence of any such Event of Default hereunder, the entire outstanding
principal amount hereof, and all accrued and unpaid interest thereon, and any
other amounts due under the Loan Agreement, shall be accelerated, and shall be
immediately due and payable, at the option of the Holder, without demand or
notice, and in addition thereto, and not in substitution therefor, the Holder
shall be entitled to exercise any one or more of the rights and remedies
provided by applicable law, or as provided in the Loan Agreement. Failure to
exercise said option or to pursue such
-18-
<PAGE> 19
other remedies or of the right to exercise any of the same in the event of any
subsequent Event of Default.
The Holder may, upon the occurrence of any such Event of
Default hereunder, have resort to the Collateral given as security for this Note
in any order, and may sell and dispose of such Collateral in whole or in part,
at any time or from time to time, with no requirement on the part of the Holder
of this Note to marshal assets. The Holder shall not be required to preserve any
rights in such collateral as against prior parties. In the event that the Holder
is required to give notice of any intended disposition of Collateral held as
security for this Note, ten (10) Business Days' notice given by mail to the last
known address of the Maker shall be deemed to be reasonable notice.
The Maker promises to pay all costs and expenses (including
without limitation reasonable attorneys' fees and disbursements) incurred in
connection with the collection hereof or in the protection or realization of any
collateral now or hereafter given as security for the repayment hereof, and to
perform each and every covenant or agreement to be performed by the Maker under
this Note, under the Loan Agreement, and under any other instrument evidencing
or securing the obligation represented by this Note.
Any payment on this Note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment is to be made
hereunder shall be made on the next succeeding day which is a business day in
such place, and any such extension of the time of payment shall be included in
the computation of interest hereunder.
The Maker hereby waives presentment, protest, demand, notice
of dishonor, and all other notices, and all defenses and pleas on the grounds of
any extension or extensions of the time of payments or the due dates of this
Note, in whole or in part, before or after maturity, with or without notice. No
renewal or extension of this Note, no release or surrender of any collateral
given as security for this Note, and no delay in enforcement of this Note or in
exercising any right or power hereunder, shall affect the liability of the
Maker.
No single or partial exercise by the Holder of any right
hereunder, under the Loan Agreement, or under any other agreement given as
security for this Note or pertaining hereto, shall preclude any other or further
exercise thereof or the exercise of any other rights. No delay or omission on
the part of the Holder in exercising any right hereunder shall operate as a
waiver of such right or of any other right under this Note.
Whenever used herein, the words "Maker" and "Holder" shall be
deemed to include their respective successors and assigns.
This Note shall be governed by and construed under and in
accordance with the laws of the State of Georgia (but not including the choice
of law rules thereof).
-19-
<PAGE> 20
IN WITNESS WHEREOF, the undersigned has duly executed this
Note, or has caused this Note to be duly executed on its behalf, as of the day
and year first hereinabove set forth.
HEADHUNTER.NET, INC.
By:
------------------------------
Name:
Title:
-20-
<PAGE> 21
EXHIBIT A
SCHEDULE 1
PAYMENT SCHEDULE
<TABLE>
<CAPTION>
DATE AMOUNT
- ---- ------
<S> <C>
DECEMBER 31, 1999 $164,000 (ESTIMATED FOR 1999)
JANUARY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
FEBRUARY 29, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
MARCH 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
APRIL 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
MAY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
JUNE 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
JULY 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
AUGUST 31, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
SEPTEMBER 30, 2000 $27,500 (ESTIMATED BASED ON $3 MILLION OUTSTANDING)
OCTOBER 31, 2000 $131,441
NOVEMBER 30, 2000 $166,544
DECEMBER 31, 2000 $142,353
JANUARY 31, 2001 $136,107
FEBRUARY 29, 2001 $89,165
MARCH 31, 2001 $124,735
APRIL 30, 2001 $145,893
MAY 31, 2001 $201,995
JUNE 30, 2001 $241,823
JULY 31, 2001 $267,643
AUGUST 31, 2001 $260,387
SEPTEMBER 30, 2001 $315,665
OCTOBER 31, 2001 $285,674
NOVEMBER 30, 2001 $380,505
DECEMBER 31, 2001 $383,531
</TABLE>
<PAGE> 22
EXHIBIT B
WARRANT
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 January 7, 1999, 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
Loan and Security Agreement (the "LOAN AGREEMENT"), dated as of January 7, 1999,
by and between the Company and ITC, 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 earliest of (i) December 31, 1999, (ii) the
closing of a public sale of the Borrower'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 (an "INITIAL PUBLIC OFFERING"), or (iii) any sale, transfer, exchange,
pledge or other disposition of the Borrower's Common Stock not requiring
registration under the Securities Act in excess of $20 million (a "PRIVATE
EQUITY FUNDING"), and ending on December 31, 2009 (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:
<PAGE> 23
(i) if the Company closes an Initial Public Offering before
December 31, 1999, Holder shall be entitled to purchase such number of Shares as
is equal to the quotient of (A) $3,000,000, 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 before
December 31, 1999, Holder shall be entitled to purchase such number of Shares as
is equal to the quotient of (A) $3,000,000, 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, 1999, Holder shall be entitled
to purchase such number of Shares as is equal to the quotient of (A) $3,000,000,
divided by (B) the fair market value of a share of Common Stock as of December
31, 1999, 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 in accordance with the
provisions hereof, is hereinafter referred to as the "ORIGINAL SHARE AMOUNT."
(c) If any amounts, whether principal, interest or otherwise, remain
outstanding after December 31, 1999 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,
1999.
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)
2
<PAGE> 24
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:
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
3
<PAGE> 25
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 January 7, 2000, ITC may not transfer, in whole or in
part, without the written consent of the Company (which shall not be
unreasonably delayed or withheld), 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 January 7,
2000, 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 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.
4
<PAGE> 26
(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 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,
5
<PAGE> 27
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, 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).
---------------------------------------
6
<PAGE> 28
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:
-----------------------------------
Title:
--------------------------------
ITC SERVICE COMPANY, a
Georgia corporation
By:
-----------------------------------
Title:
--------------------------------
7
<PAGE> 29
EXHIBIT C
ENCUMBRANCES
Lease on the Cannon MP 4050 copier (Serial No. F127400)
<PAGE> 30
EXHIBIT D
CAPITAL STOCK
STOCK
<TABLE>
<CAPTION>
Number of Shares
----------------
Name Title Common Class A Pref TOTAL %
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ITC Holding Company n/a 2,750,000 2,750,000 35.87%
Warren L. Bare CEO 1,710,000 50,000 1,760,000 22.96%
Bare Family Trust 225,000 225,000 2.93%
Warren Bare G. R.A. Trust 225,000 225,000 2.93%
Others (gifted by Warren Bare) 40,000 40,000 0.52%
2ND ROUND FINANCING
ITC Holding Company (conversion of $3.5 million debt) 2,333,333 2,333,333 30.43%
Officers of HeadHunter.NET and ITC Holding 333,334 333,334 4.35%
SUBTOTAL (SHARES OUTSTANDING) 2,200,000 5,466,667 7,666,667 100.00%
WARRANTS
ITC Holding Company - warrants 416,667
=======
</TABLE>
<TABLE>
<CAPTION>
GRANT VEST START EXERCISE
DATE DATE PRICE
OPTIONS ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 S Andrew, Matthew Account Executive 500 500 01/28/99 01/28/99 $1.50
2 S Bex, Jessica Account Executive 500 500 01/28/99 01/28/99 $1.50
3 M Brannan, Keith Marketing Sr Manager 3,000 3,000 08/03/98 08/03/98 $1.50
4 0 Brown, Edward Network Support 500 500 08/26/98 08/26/98 $1.50
5 S Canfield, Jim VP SALES 100,000 100,000 10/22/98 10/22/98 $1.50
6 S Cotton, Molly Account Executive 500 500 12/17/98 12/17/98 $1.50
7 S Cusumano, Cristin Account Executive 500 500 09/20/98 10/22/98 $1.50
8 S Darr, Jeremy Account Executive 500 500 07/28/98 07/28/98 $1.50
9 0 D'Avanzo, Christine Network Support 500 500 07/28/98 07/28/98 $1.50
10 S Delaney, Michael Account Executive 500 500 08/26/98 08/26/98 $1.50
11 G Dopher, Ken CFO 100,000 100,000 01/14/98 01/14/98 $0.40
12 S Edwards, Brent Account Executive 500 500 01/28/99 01/28/99 $1.50
13 S Fallis, Jennifer Account Executive 500 500 05/22/98 05/22/98 $1.40
14 T Field, Colin Senior Software Developer 5,000 5,000 05/22/98 05/22/98 $1.40
15 S Fletcher, Julia Account Executive 500 500 01/28/99 01/28/99 $1.50
16 0 Fouralker, Mark VP OPERATIONS 7,500 7,500 05/22/98 05/22/98 $1.40
0 Fouraker, Mark VP OPERATIONS 17,500 17,500 10/22/98 10/22/98 $1.50
17 S Goss, Lee Account Executive 500 500 10/22/98 10/22/98 $1.50
18 M Hackett, Judy SENIOR VP MARKETING 50,000 50,000 05/22/98 05/22/98 $1.40
19 S Hall, Mary Administrative Assist 500 500 08/06/98 08/26/98 $1.50
20 S Harper, Kevin Account Executive 500 500 01/28/99 01/28/99 $1.50
21 S Hoback, Jason Sales Team Leader 500 500 02/19/98 02/19/98 $0.40
S Hoback, Jason Sales Team Leader 2,500 2,500 12/17/98 09/24/98 $1.50
22 S Holzworth, Wendy Account Executive 500 500 03/19/98 03/19/98 $0.40
23 S Hughes, Brooks Account Executive 500 500 03/19/98 03/19/98 $0.40
24 G Keni, Vinod Controller 10,000 10,000 07/28/98 07/28/98 $1.50
25 T Lam, Jerry Senior Software Developer 5,000 5,000 12/17/98 12/17/98 $1.50
26 S McCormick, Todd Account Executive 500 500 08/26/98 08/26/98 $1.50
27 S McGinley, David Account Executive 500 500 01/28/99 01/28/99 $1.50
28 S Miller, Joshua Account Executive 500 500 01/28/99 01/28/99 $1.50
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
29 G Montgomery, Bob COO 100,000 100,000 01/07/99 01/07/99 $1.50
30 G Moore, Barbara Administrative Assist 2,500 2,500 01/14/98 01/14/98 $0.40
01/14/98 $0.40
</TABLE>
<TABLE>
<CAPTION>
GRANT VEST START
DATE DATE EXERCISE PRICE
OPTIONS ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
31 T Myers, Chad Software Developer 750 1,000 06/15/98 06/18/98 $1.40
32 S Owens, Patricia Account Executive 500 500 01/28/99 01/28/99 $1.50
33 T Patton, David Web Editor 1,000 750 06/18/98 06/18/98 $1.40
34 T Pike, Shane Software Developer 2,500 2,500 07/28/98 07/28/98 $1.50
35 G Poulin, Melanie Accountant 1,000 1,000 01/28/99 01/28/99 $1.50
36 T Presley, Eric VP TECHNOLOGY 50,000 50,000 01/14/98 01/14/98 $0.40
37 T Retchko, Jesse Software Developer 10,000 10,000 01/14/98 01/14/98 $0.40
38 0 Satterfield, Matt Customer Support 500 500 07/28/98 07/28/98 $1.50
39 S Self, Roland Account Executive 500 500 01/28/99 01/28/99 $1.50
40 S Shaw, James Account Executive 500 500 08/26/98 08/26/98 $1.50
41 M Sieck, Carter Marketing Manager 2,500 2,500 08/26/98 08/26/98 $1.50
42 S Singler, Scott Account Executive 500 500 05/22/98 05/22/98 $1.40
43 S Starkey, Richard Account Executive 500 500 07/28/98 07/28/98 $1.50
44 0 Stephens, Stacey Customer Support 500 500 02/19/98 02/19/98 $0.40
45 S Wagerman, Roger Sales Team Leader 500 500 02/19/98 02/19/98 $0.40
S Wagerman, Roger Sales Team Leader 2,500 2,500 12/17/98 09/24/98 $1.50
46 S Waters, Timothy Account Executive 500 500 01/28/99 01/28/99 $1.50
47 T Watson, Jason Software Developer 50,000 50,000 01/14/98 01/14/98 $0.40
48 S Wilkins, Tawnya Account Executive 500 500 10/22/98 10/22/98 $1.50
49 Cox, Doug DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
50 Goldstein, Burton DIRECTOR 10,000 10,000 07/15/98 07/15/98 $1.40
51 Montgomery, Bob DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
52 Scott, Bill DIRECTOR 10,000 10,000 03/19/98 03/19/98 $0.40
53 Weber, Don DIRECTOR 10,000 10,000 07/15/98 07/15/98 $1.40
SUBTOTAL (OPTIONS GRANTED) 588,250 $1.0274 weighted avg
POOL AVAILABLE 294,000
---------
TOTAL OPTIONS 882,250
---------
TOTAL SHARES (INCLUDING WARRANTS AND OPTIONS DILUTION) 8,965,584
=========
</TABLE>
2
<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.
- 2 -
<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
- 3 -
<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.
- 4 -
<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.
- 5 -
<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
- 6 -
<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
- 7 -
<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:
----------------------------------------
- 8 -
<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.
- 2 -
<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.
- 3 -
<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
- 4 -
<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
- 5 -
<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.
- 6 -
<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.
- 7 -
<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
- 8 -
<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.
- 9 -
<PAGE> 13
(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
- 10 -
<PAGE> 14
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
- 11 -
<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
- 12 -
<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:
- 13 -
<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)
- 14 -
<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
-------------------------------
- 15 -
<PAGE> 1
EXHIBIT 10.6
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
<PAGE> 2
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.
-2-
<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
-3-
<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
-4-
<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
-5-
<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
-6-
<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
-7-
<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
-8-
<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.
-9-
<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.
-10-
<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
-11-
<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.
-12-
<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
-------------------------- ------------------------
-13-
<PAGE> 1
EXHIBIT 10.7
[On HeadHunter.NET letterhead]
Friday, September 11, 1998
Jim Canfield
15 Rock Crest Drive
Cape Elizabeth, Maine 04107
Dear Jim:
We are pleased to extend an offer to you to work at HeadHunter.NET, Inc. as Vice
President of Sales. 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 discussed in your conversation with Warren, you will be a key member of our
executive team with broad strategic and tactical sales responsibilities. We
expect to grow the company rapidly over the next several years and we think you
will be an outstanding resource to help us achieve our goals.
Outlined below is a summary of your compensation package:
ANNUAL BASE SALARY
$100,000 per year paid semi-monthly.
INCENTIVE COMPENSATION
$50,000 in performance based incentive compensation, paid quarterly,
prorated based on your start date. This incentive compensation will be
primarily dependent upon achieving sales goals per our business plan in
the short term. Other factors may be added in the future based on goals
set jointly by you and the Company's executive management and/or the
Board of Director's Compensation Committee.
RELOCATION
$20,000 towards the cost of your relocation to Atlanta. Please note
that some portion of this may be taxable income to you. We will work
with you to minimize the tax impact.
INITIAL OWNERSHIP OPTION
A non-qualified stock option to purchase, on the terms and conditions
set forth in an agreement you will receive after your start date,
50,000 shares of Common stock under the HeadHunter.NET.Inc. Long Term
Incentive Plan. The strike price of your option's shares will be set at
the Board of Director's meeting following your start date. The current
ownership pool consists of 5,000,000 shares, with an additional 882,250
shares allocated for the Long Term Incentive Plan.
<PAGE> 2
BENEFITS
When eligible, you will come under the HeadHunter.NET, Inc. 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 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. As a senior executive of the company, your vacation time is
unlimited, however, the Company accrues no vacation liability for its
senior executives. 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
Your start date will be September 14, 1998.
Please review this offer and return it to me as soon as possible. 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 E. Dopher
Kenneth Dopher
Chief Financial Officer
The foregoing reflects my understanding of my employment relationship with
HeadHunter.NET, Inc.
/s/ James Canfield
Jim Canfield
<PAGE> 1
EXHIBIT 10.8
[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 10.9
[LOGO OF HEADHUNTER.NET]
Thursday, May 13, 1999
Mr. Mark Partin
2409 Glenridge Stratford Dr
Atlanta, GA 30342
Dear Mark:
We are pleased to extend you an offer to join Headhunter.NET, Inc. as the Chief
Financial Officer. 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.
You will report directly to the CEO. We expect to grow the company rapidly over
the next several years and we think you will be an outstanding resource to help
us build our organization.
Outlined below is a summary of your compensation package:
BASE SALARY
$7916.67 per month paid semi-monthly.
ANNUAL PERFORMANCE INCENTIVE BONUS
A 3+/-$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 the overall
performance of the company. The bonus is prorated based on your start
date and you must be employed a minimum of 25% of the quarter in which
you start to be eligible for that quarter's bonus.
INITIAL OWNERSHIP OPTION
You will be recommended to the Board of Directors to receive options
under the then current stock option plan and process.
BENEFITS
When eligible, you will come under the HeadHunter.NET, Inc. current
employee benefits package as outlined on the attached Current Benefits
sheet.
START DATE
Your start date will be May 10, 1999. Please bring originals with you
when you report for work of either one document from column A or one
each from columns B and C of the list enclosed.
<PAGE> 2
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/ Bob Montgomery
Bob Montgomery
CEO
The foregoing reflects my understanding of my employment relationship with
HeadHunter.NET, Inc.
/s/ Mark Partin
- ---------------------------
Mark Partin
-2-
<PAGE> 1
EXHIBIT 10.10
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.
OCTOBER 1998
AMENDED AND RESTATED
STOCK PURCHASE WARRANT
----------------------
This Warrant is issued as of October 28, 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
October 1998 Amended and Restated Loan and Security Agreement (the "LOAN
AGREEMENT"), dated as of October 28, 1998, by and between the Company and ITC,
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
is equal to the quotient of (A) 625,000, divided by (B) the per share selling
price to the public of the Common Stock in the Initial Public Offering;
<PAGE> 2
(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) 625,000, 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) 625,000,
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 in accordance with the
provisions hereof, 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.
"PRIVATE PLACEMENT" any sale, transfer, exchange, pledge or other
disposition of the Company's Common Stock not requiring registration under the
Securities Act.
2
<PAGE> 3
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:
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
3
<PAGE> 4
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 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.
4
<PAGE> 5
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 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.
5
<PAGE> 6
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, 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
6
<PAGE> 7
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).
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: J. Douglas Cox
--------------------------------------
Title: Sr. VP.
-----------------------------------
7
<PAGE> 1
EXHIBIT 10.11
INVESTMENT AGREEMENT
AMONG
ITC HOLDING COMPANY, INC.,
HEADHUNTER.NET, INC.
AND
WARREN BARE
DATED AS OF OCTOBER 30, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C> <C>
1. DEFINED TERMS...................................................................................5
2. CAPITAL CONTRIBUTIONS; LOAN COMMITMENT..........................................................5
2.1. Capital Contribution of ITC..........................................................5
2.2. Capital Contribution of HeadHunter...................................................5
2.3. Loan to LLC..........................................................................6
3. ADDITIONAL UNDERTAKINGS AND COVENANTS...........................................................6
3.1. Consents and Approvals...............................................................6
3.2. Access to Information; Confidentiality...............................................6
3.2.1. ITC Access to Information and Confidentiality Obligation..................6
3.2.2. HeadHunter and Shareholder Confidentiality Obligations....................7
3.2.3. Effect of Investigation...................................................7
3.3. Operation of Business of HeadHunter..................................................8
3.3.1. Preserve Business.........................................................8
3.3.2. Conduct Business in Ordinary Course.......................................8
3.3.3. Distribution to the Shareholder...........................................8
3.3.4. Notice of Adverse Change..................................................9
3.3.5. Books of Record and Account...............................................9
3.4. No Inconsistent Negotiations.........................................................9
3.5. News Releases........................................................................9
3.6. Subsequent Events....................................................................10
3.7. Employment of the Shareholder........................................................10
3.8. ITC Stock Options....................................................................10
4. REPRESENTATIONS AND WARRANTIES OF HEADHUNTER AND THE SHAREHOLDER................................11
4.1. Organization and Standing............................................................11
4.2. Subsidiaries.........................................................................11
4.3. Certificate or Articles of Incorporation and Bylaws..................................12
4.4. Ownership of HeadHunter..............................................................12
4.5. Directors, Officers and Employees....................................................12
4.6. Financial Statements.................................................................12
4.7. No Liabilities.......................................................................13
4.8. Accounts Receivable..................................................................13
4.9. Taxes................................................................................13
4.9.1. Filed Returns.............................................................13
4.9.2. Tax Liability.............................................................13
4.9.3. Tax Audits................................................................14
4.10. Conduct of Business; Absence of Material Adverse Change..............................14
4.11. Real Property........................................................................14
4.12. Assets...............................................................................14
4.13. Intellectual Property................................................................14
4.14. Debt Instruments.....................................................................15
4.15. Leases...............................................................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C> <C> <C>
4.16. Other Agreements.....................................................................16
4.17. Books and Records....................................................................16
4.18. Litigation; Disputes.................................................................16
4.19. Pension and Benefit Plans............................................................16
4.20. Environmental........................................................................17
4.21. Restrictions and Consents............................................................17
4.22. Authorization........................................................................17
4.23. Absence of Violation.................................................................17
4.24. Binding Obligation...................................................................18
4.25. Disclosure...........................................................................18
5. REPRESENTATIONS AND WARRANTIES OF ITC...........................................................18
5.1. Organization and Standing............................................................18
5.2. Authorization........................................................................19
5.3. Binding Obligation...................................................................19
6. RESTRICTED SECURITIES...........................................................................19
6.1. No Registration Under the Securities Act.............................................19
6.2. Acquisition for Investment...........................................................19
6.3. Evaluation of Merits and Risks of investment.........................................20
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF HEADHUNTER AND THE SHAREHOLDER...........................20
7.1. Representations, Warranties and Covenants............................................20
7.2. Legal Proceedings....................................................................20
7.3. Consents.............................................................................20
7.4. Business Plan........................................................................21
7.5. Documents at Closing.................................................................21
7.6. Formation of LLC.....................................................................21
7.7. Deliveries by LLC....................................................................21
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF ITC......................................................21
8.1. Representations, Warranties and Covenants............................................21
8.2. Absence of Material Adverse Changes..................................................22
8.3. Legal Proceedings....................................................................22
8.4. Consents.............................................................................22
8.4.1. ITC Consents..............................................................22
8.4.2. HeadHunter Consents.......................................................22
8.5. Board of Directors Approval..........................................................22
8.6. Business Plan........................................................................22
8.7. Documents at Closing.................................................................23
8.8. Formation of LLC.....................................................................23
8.9. Deliveries by LLC....................................................................23
9. CLOSING.........................................................................................23
9.1. Closing of LLC Investment............................................................23
9.2. Deliveries by HeadHunter on the Closing Date.........................................23
9.3. Deliveries by ITC on the Closing Date................................................24
9.4. Deliveries by the LLC................................................................24
9.5. Deliveries by the Shareholder........................................................24
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C> <C> <C> <C> <C>
10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION;...................................................25
10.1. Survival of Representations and Warranties...........................................25
10.2. Agreement of HeadHunter and the Shareholder to Indemnify.............................25
10.3. Agreement of ITC to Indemnify........................................................25
10.4. Conditions of Indemnification........................................................26
10.4.1. Notice....................................................................26
10.4.2. Counsel...................................................................26
10.4.3. Joint Liability...........................................................26
10.5. Specific Performance.................................................................26
10.6. Remedies Cumulative..................................................................27
11. TERMINATION AND EFFECT THEREOF..................................................................27
11.1. Termination..........................................................................27
11.2. Effect of Termination................................................................27
12. MISCELLANEOUS...................................................................................28
12.1. Additional Actions and Documents.....................................................28
12.2. No Brokers...........................................................................28
12.3. Expenses.............................................................................28
12.4. Assignment...........................................................................29
12.5. Entire Agreement; Amendment..........................................................29
12.6. Waiver...............................................................................29
12.7. Severability.........................................................................29
12.8. Governing Law........................................................................29
12.9. Notices..............................................................................30
12.10. Headings.............................................................................31
12.11. Execution in Counterparts............................................................31
12.12. Limitation on Benefits...............................................................31
12.13. Binding Effect.......................................................................31
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS SECTION REFERENCES
<S> <C> <C>
Exhibit 1 Definitions.......................................................................... 1
Exhibit 2 Loan and Security Agreement..........................................................2.3
Exhibit 3 Employment Letter....................................................................3.7
</TABLE>
-4-
<PAGE> 5
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT is entered into as of October 30, 1997, by
and among ITC Holding Company, Inc., a Delaware corporation ("ITC")
HeadHunter.NET, Inc., a Georgia corporation ("HEADHUNTER") and Warren Bare, the
sole shareholder of HeadHunter (the "SHAREHOLDER").
WHEREAS, ITC and HeadHunter have agreed to form a limited liability
company pursuant to the provisions of the Delaware Limited Liability Act (the
"DELAWARE LLC ACT") under the name "HeadHunters, L.L.C." (the "LLC") pursuant to
a Certificate of Formation (the "LLC CERTIFICATE") and a Limited Liability
Company Agreement (the "LLC AGREEMENT") to be entered into by ITC and
HeadHunter;
WHEREAS, ITC believes that it is in its best interest to acquire an
ownership interest in the LLC (an "LLC INTEREST") on the terms and conditions
set forth herein; and
WHEREAS, HeadHunter believes that it is in its best interest to
contribute to the LLC all of its assets and certain liabilities in exchange for
an LLC Interest on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. DEFINED TERMS
For all purposes of this Investment Agreement, all capitalized terms
used herein shall have the meanings specified in Exhibit 1, except as otherwise
expressly provided in this Investment Agreement.
2. CAPITAL CONTRIBUTIONS; LOAN COMMITMENT
2.1. CAPITAL CONTRIBUTION OF ITC
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, ITC agrees to
contribute to the LLC $1,100,000 in cash (the "ITC CAPITAL CONTRIBUTION") in
exchange for its LLC Interest.
2.2. CAPITAL CONTRIBUTION OF HEADHUNTER
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, HeadHunter
agrees to contribute to the LLC, in exchange for its LLC Interest, (i) all of
its Assets, including the right to use the name "HeadHunter.NET" (and all
variations thereof) and (ii) the Liabilities (collectively, the "HEADHUNTER
CAPITAL CONTRIBUTION").
-5-
<PAGE> 6
2.3. LOAN TO LLC
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, ITC agrees to
enter into the Loan and Security Agreement substantially in the form attached
hereto as Exhibit 2 (the "LOAN AND SECURITY AGREEMENT") pursuant to which ITC
shall be obligated to make available to the LLC a revolving credit facility not
to exceed a maximum outstanding aggregate principal amount of $1,000,000, for
the three (3) year period beginning on the Closing Date, on the term and
conditions set forth in the Loan and Security Agreement (the "CREDIT FACILITY"),
which the LLC may convert to a term loan in accordance with the terms and
conditions of the Loan and Security Agreement (any such term loan is referred to
herein as the "Term Loan").
3. ADDITIONAL UNDERTAKINGS AND COVENANTS
ITC, HeadHunter and the Shareholder hereby covenant and agree with each
other as follows:
3.1. CONSENTS AND APPROVALS
Each of them shall take all measures reasonably necessary or advisable
to secure such consents, authorizations and approvals of governmental
authorities and of private persons or entities with respect to the transactions
contemplated by this Investment Agreement, and to the performance of all other
obligations of such parties hereunder, as may be required by any applicable
statute or regulation of the United States or any country, state or other
jurisdiction or by any Agreement of any kind whatsoever to which it is a party
or by which it is bound.
3.2. ACCESS TO INFORMATION; CONFIDENTIALITY
3.2.1. ITC ACCESS TO INFORMATION AND CONFIDENTIALITY
OBLIGATION
HeadHunter and Shareholder shall, through the Closing Date, provide to
representatives of ITC full access to the offices, books, agreements, records
(including, without limitation, tax returns and correspondence with
accountants), officers, directors, employees, consultants and contractors of
HeadHunter and will furnish representatives of ITC such financial and operating
data and other information with respect to the business and Assets and
Liabilities of HeadHunter as ITC may reasonably request, including, without
limitation, Agreements with clients, customers, vendors, lessors, licensors and
suppliers of HeadHunter. ITC agrees to use reasonable efforts, at least as
stringent as those employed by it with respect to its own confidential
information, (i) to keep confidential all such information of HeadHunter and/or
the Shareholder that is identified by HeadHunter or the Shareholder as being of
a confidential nature, (ii) not to use such confidential information on its own
behalf, except in connection with the transactions
-6-
<PAGE> 7
contemplated hereby, or on behalf of any other person, firm or entity, and (iii)
not to disclose such confidential information to any third party (other than to
ITC's counsel, accountants and other consultants in connection with the
transactions contemplated hereby) without HeadHunter's or the Shareholder's
advance written authorization; provided however that ITC shall have no such
obligations with respect to confidential information that (A) was lawfully
obtained by it not subject to restrictions of confidentiality; (B) is a matter
of public knowledge; or (C) has been or is hereafter publicly disclosed other
than by or through ITC. In the event of a breach or threatened breach by ITC of
the provisions of this Section, HeadHunter and the Shareholder shall be entitled
to an injunction restraining ITC from disclosing, in whole or in part, such
information, in addition to any other remedy to which ITC may be entitled in law
or in equity.
3.2.2. HEADHUNTER AND SHAREHOLDER CONFIDENTIALITY
OBLIGATIONS
HeadHunter and the Shareholder each hereby acknowledges that, as a
result of the transactions contemplated by this Investment Agreement, from time
to time it may obtain knowledge of and access to confidential and valuable
business information relating to ITC and its Affiliates not generally known by
or available to the general public. HeadHunter and the Shareholder each agrees
to use reasonable efforts, at least as stringent as those employed by it with
respect to its own confidential information, (i) to keep confidential all such
information of ITC that is identified by ITC as being of a confidential nature,
(ii) not to use such confidential information on its own behalf, except in
connection with the transactions contemplated hereby, or on behalf of any other
person, firm or entity, and (iii) not to disclose such confidential information
to any third party (other than to its counsel, accountants and other consultants
in connection with the transactions contemplated hereby) without ITC's advance
written authorization; provided, however that HeadHunter and the Shareholder
shall have no such obligations with respect to confidential information that:
(A) was lawfully obtained by them not subject to restrictions of
confidentiality; (B) is a matter of public knowledge; or (C) has been or is
hereafter publicly disclosed other than by or through it. In the event of a
breach or threatened breach by HeadHunter or the Shareholder of the provisions
of this Section, ITC shall be entitled to an injunction restraining HeadHunter
or the Shareholder, as the case may be, from disclosing, in whole or in part,
such information, in addition to any other remedy to which ITC may be entitled
in law or in equity.
3.2.3. EFFECT OF INVESTIGATION
ITC's investigation of the financial and operating data, Assets and
Liabilities, and other information with respect to the business of HeadHunter
shall in no way affect the obligations of HeadHunter or the Shareholder with
respect to the agreements, representations, warranties, covenants and
indemnification provisions set forth in this Investment Agreement.
-7-
<PAGE> 8
3.3. OPERATION OF BUSINESS OF HEADHUNTER
3.3.1. PRESERVE BUSINESS
HeadHunter shall through the Closing Date: (i) preserve its business
organization and present relationships with customers, suppliers, consultants,
employees and any other persons having business relations with it; and (ii)
maintain its Assets in customary repair and condition.
3.3.2. CONDUCT BUSINESS IN ORDINARY COURSE
Except as contemplated by this Investment Agreement or as reasonably
required to carry out its obligations hereunder, HeadHunter, through the Closing
Date, shall conduct its business only in the Ordinary Course of Business and, in
addition, shall not: (i) issue any capital stock or any options, warrants or
other rights to subscribe for or purchase any of its capital stock or any
securities convertible into or exchangeable for its capital stock; (ii) declare,
set aside or pay any dividend or distribution with respect to its capital stock
to its Shareholder other than distributions made to permit the Shareholder to
pay estimated taxes with respect to the taxable income of HeadHunter; (iii)
directly or indirectly redeem, purchase or otherwise acquire any of its capital
stock; (iv) effect a split, reclassification or other change in or of any of its
capital stock; (v) amend its certificate or articles of incorporation or its
bylaws (except for such changes and amendments in the certificate or articles of
incorporation of HeadHunter as may be required by or pursuant to this Investment
Agreement); (vi) grant any increase in the compensation payable or to become
payable by HeadHunter to officers or employees of HeadHunter, or enter into any
bonus, insurance, pension or other benefit plan, payment or arrangement for or
with any of such officers or employees other than in the Ordinary Course of
Business; (vii) borrow or agree to borrow any funds, or directly or indirectly
guarantee or agree to guarantee the obligations of others; (viii) enter into any
Agreement which may have a material effect on its business and operations; (ix)
place, or allow to be placed, an Encumbrance on any of its Assets; (x) cancel
any indebtedness owing to HeadHunter or any Claims which HeadHunter may possess,
or waive any rights of substantial value; (xi) sell, assign or transfer any
Intellectual Property; (xii) or otherwise dispose of any interest in any Asset
(other than in the Ordinary Course of Business); (xiii) violate any Law; (xiv)
commit any act or omit to do any act, or engage in any activity or transaction
or incur any obligation (by conduct or otherwise), which (individually or in the
aggregate) reasonably could be expected to have a material adverse effect on its
business or Assets; or (xv) make any loan or advance to any stockholder, officer
or director of HeadHunter or to any other person, firm or corporation.
3.3.3. DISTRIBUTION TO THE SHAREHOLDER
Notwithstanding SECTION 3.3.2., HeadHunter may borrow and distribute or
loan to the Shareholder up to $100,000 prior to the Closing Date. In the event
that ITC makes a loan to HeadHunter to fund all or any portion of such
distribution or loan prior to the
-8-
<PAGE> 9
Closing, the parties shall cause the LLC to assume the obligation to repay such
loan and to repay ITC's loan, together with all accrued but unpaid interest, at
the closing.
3.3.4. NOTICE OF ADVERSE CHANGE
HeadHunter and Shareholder shall notify ITC promptly of any adverse
change in the business, operations, prospects, condition (financial or
otherwise), Assets or liabilities of HeadHunter occurring at any time through
the Closing Date.
3.3.5. BOOKS OF RECORD AND ACCOUNT
HeadHunter shall keep proper books of record and account in which true
and complete entries will be made of all transactions.
3.4. NO INCONSISTENT NEGOTIATIONS
Subject to fiduciary obligations under law as advised by counsel in writing,
through the Closing Date, neither HeadHunter nor the Shareholder shall take any
of the following actions, or permit any agent of HeadHunter, directly or
indirectly, to take any of the following actions:
(i) take any action to solicit, initiate or encourage the
submission of a Proposal; or
(ii) participate in any negotiations regarding, or furnish to any
other person any non-public information with respect to, or
otherwise cooperate in any way with, or assist or participate
in, facilitate, or encourage, any effort or attempt by any
other person to do or seek any of the foregoing.
HeadHunter and the Shareholder shall notify ITC promptly if any Proposal, or any
inquiry or contact with any person with respect thereto, is made and shall, in
any such notice to ITC, indicate in reasonable detail the identity of the
offeror and the terms and conditions of the Proposal, including the proposed
financing for such Proposal. HeadHunter shall respond to any such Proposal only
to the extent required by fiduciary obligations under law, as advised by its
counsel in writing.
3.5. NEWS RELEASES
Except as may be otherwise required for compliance with securities
laws, neither ITC nor HeadHunter shall issue or approve any news release or
other public announcement concerning the transactions contemplated by this
Investment Agreement without the prior approval of ITC and HeadHunter.
-9-
<PAGE> 10
3.6. SUBSEQUENT EVENTS
Head-Hunter and the Shareholder shall notify ITC promptly in writing of
the occurrence of any event, or the failure of any event to occur, prior to the
Closing that results in an omission from, or breach of, any of the covenants,
representations or warranties made by HeadHunter or the Shareholder in this
Investment Agreement, the Disclosure Schedule or any other Document furnished in
connection with or pursuant to this Investment Agreement, but such notification
shall not excuse breaches of representations, warranties, covenants or
agreements disclosed in such notification.
3.7. EMPLOYMENT OF THE SHAREHOLDER
ITC and HeadHunter shall cause the LLC to employ the Shareholder, and
the Shareholder shall agree to serve, as the President and Chief Executive
Officer of the LLC pursuant to the terms of an Employment Letter substantially
in the form attached hereto as Exhibit 3 to be entered into by the LLC and the
Shareholder at the Closing.
3.8. ITC STOCK OPTIONS
As soon as practicable following the Closing, ITC will grant the
Shareholder options to purchase 5,000 shares of ITC's Common Stock (the "Option
Shares") at the fair market value of such shares on the date of grant, as
determined in good faith by ITC's Board of Directors. Shareholder acknowledges
that the options will not constitute qualified incentive stock options within
the meaning of Section 422 of the Code. The options will be evidenced by a
written option agreement containing general terms and conditions that are
consistent with the general terms and conditions of ITC's non-incentive stock
option agreements. The term of such options shall be ten (10) years from the
date of grant. The options shall be vest and become exercisable as follows:
(i) if at any time up to and including the third anniversary of
the Closing Date the LLC pays in full all amounts owed to LLC
under the Credit Facility and the Credit Facility is canceled
(either by the terms of such Credit Facility or by the LLC
providing ITC with written notice that it is canceling the
Credit Facility), options for 100% of the Option Shares shall
be exercisable at any time after the date of such repayment
and cancellation;
(ii) in the event ITC elects to convert the amount of indebtedness
outstanding under the Credit Facility on the third anniversary
of the Closing Date into an additional interest in the LLC in
accordance with the terms and conditions of the Loan and
Security Agreement, options for 100% of the Option Shares
shall be exercisable at any time after such conversion; or
(iii) if any amount of indebtedness remains outstanding under the
Credit Facility as of the third anniversary of the Closing
Date and ITC does not elect to convert such amount into an
additional interest in the LLC, the options
-10-
<PAGE> 11
shall be exercisable as of the third anniversary of the
Closing Date and as of each anniversary thereafter for that
number of Option Shares determined by multiplying the total
number of Option Shares (i.e., 5,000) by a fraction, the
numerator of which is equal to $1,000,000 less the principal
amount of the LLC indebtedness to ITC outstanding under the
Credit Facility or the Term Loan as of such anniversary, and
the denominator of which is equal to $1,000,000. For example,
if on the third anniversary of the Closing Date $500,000
remains outstanding under the Credit Facility and is to be
converted to the Term Loan, options for 50% of the Option
Shares would then be exercisable. If on the next anniversary
of the Closing Date the principal amount of indebtedness
outstanding under the Term Loan is reduced to $250,000,
options for 75% of the Option Shares (to the extent not
previously exercised) would then be exercisable.
4. REPRESENTATIONS AND WARRANTIES OF HEADHUNTER AND THE SHAREHOLDER
Except as specifically set forth in the Disclosure Schedule (with a
specific reference in the Disclosure Schedule to the Section of this Investment
Agreement to which each such disclosure applies), each of HeadHunter and the
Shareholder jointly and severally represents and warrants to ITC as follows:
4.1. ORGANIZATION AND STANDING
HeadHunter is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, and has the full and
unrestricted corporate power and authority to own, operate and lease its Assets,
to carry on its business as currently conducted, to execute and deliver this
Investment Agreement and to carry out the transactions contemplated hereby.
HeadHunter is duly qualified to conduct business as a foreign corporation and is
in good standing in the states, countries and territories listed on the
Disclosure Schedule. HeadHunter is not qualified to conduct business in any
other jurisdiction, and neither the nature of the business conducted by
HeadHunter nor the character of the Assets owned, leased or otherwise held by it
make any such qualification necessary. To the best of HeadHunter's and the
Shareholder's knowledge after reasonable inquiry, there is no state, country or
territory wherein the absence of licensing or qualification as a foreign
corporation would have a material adverse effect upon the business of HeadHunter
as currently conducted.
4.2. SUBSIDIARIES
HeadHunter has no Subsidiaries and no equity investment or other
interest in, nor has HeadHunter made advances or loans to, any corporation,
association, partnership, joint venture or other entity.
-11-
<PAGE> 12
4.3. CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
HeadHunter has furnished to ITC a true and complete copy of the
certificate or articles of incorporation of HeadHunter, as currently in effect,
and a true and complete copy of the bylaws of HeadHunter, as currently in
effect, which are attached as exhibits to, and are part of, the Disclosure
Schedule.
4.4. OWNERSHIP OF HEADHUNTER
As of the Closing Date, the Shareholder owns all of the issued and
outstanding shares of stock of HeadHunter and there are no outstanding
securities convertible into or exchangeable for, and no outstanding options,
rights (preemptive or otherwise), or warrants to purchase or to subscribe for,
any shares of stock or other securities of HeadHunter. There are no outstanding
agreements affecting or relating to the voting, issuance, purchase, redemption,
repurchase or transfer of shares of stock or any other securities of HeadHunter.
4.5. DIRECTORS, OFFICERS AND EMPLOYEES
The Disclosure Schedule lists all current directors, officers and
employees of HeadHunter, showing each such person's name, positions, and annual
remuneration.
4.6. FINANCIAL STATEMENTS
HeadHunter has prepared and Furnished to ITC and there are included as
exhibits that are part of the Disclosure Schedule, the balance sheets of
HeadHunter as of the end of the fiscal year ending in each of 1995 and 1996 and
the statements of income, shareholders' equity and changes in financial position
for each of such fiscal years. HeadHunter also has prepared and furnished to
ITC, and there are included as exhibits that are part of the Disclosure
Schedule, the unaudited balance sheets of HeadHunter as of the end of the fiscal
quarters ended March 31, 1997, June 30, 1997, September 30, 1997, and the
unaudited statements of income and shareholders' equity for the periods then
ended. All of the financial statements, including, without limitation, the notes
thereto, referred to in this Section or furnished to ITC after the date hereof
pursuant to this Investment Agreement: (a) are in accordance with the books and
records of HeadHunter, (b) present fairly the financial position of HeadHunter
as of the respective dates and the results of operations and changes in
financial position for the respective periods indicated, and (c) have been
prepared on a basis consistent with prior accounting periods except as specified
in the Disclosure Schedule. The Disclosure Schedule sets forth all changes in
accounting methods (for financial accounting purposes) at any time made, agreed
to, requested or required with respect to HeadHunter.
-12-
<PAGE> 13
4.7. NO LIABILITIES
Except as reflected in the financial statements furnished pursuant to
this Investment Agreement or as described on the Disclosure Schedule, to the
best of HeadHunter's and the Shareholder's knowledge, after reasonable inquiry,
there exist no liabilities (whether contingent or absolute, matured or
unmatured) of HeadHunter. Except as described in the Disclosure Schedule,
HeadHunter has not incurred any liabilities (whether contingent or absolute,
matured or unmatured) other than in the Ordinary Course of Business.
4.8. ACCOUNTS RECEIVABLE
The accounts receivable of Head-Hunter shown on the balance sheets
furnished pursuant to SECTION 4.6, or thereafter acquired by it, have been
collected or in the best judgment of HeadHunter and the Shareholder are
collectible in amounts not significantly less than the amounts thereof carried
on the books of HeadHunter, except to the extent of the allowance for doubtful
accounts shown on such, balance sheets.
4.9. TAXES
4.9.1. FILED RETURNS
HeadHunter has (or, in the case of returns becoming due after the date
hereof and on or before the Closing Date, will have prior to the Closing Date)
duly filed all HeadHunter Tax Returns required to be filed by HeadHunter on or
before the Closing Date with respect to all applicable Taxes to the best of
HeadHunter's and the Shareholder's knowledge, after reasonable inquiry. No
penalties or other charges of a material amount are or will become due with
respect to any of the HeadHunter Tax Returns as the result of the late filing
thereof. All of the HeadHunter Tax Returns are (or, in the case of returns
becoming due after the date hereof and on or before the Closing Date, will be)
true and complete in all material respects to the best of HeadHunter's and the
Shareholder's knowledge, after reasonable inquiry. HeadHunter has paid all Taxes
due or claimed to be due by any Taxing authority in connection with any of the
HeadHunter Tax Returns (without regard to whether or not such Taxes are shown as
due on such HeadHunter Tax Returns).
4.9.2. TAX LIABILITY
Other than as set forth in the Disclosure Schedule, to the best of
HeadHunter's and the Shareholder's knowledge, after reasonable inquiry,
HeadHunter, either in its own right or as a transferee, does not have, and on
the Closing Date will not have, any liability for Taxes payable for or with
respect to any periods prior to and including the Closing Date materially in
excess of the amounts actually paid prior to the Closing Date or reserved for in
financial statements furnished to ITC pursuant to SECTION 4.6.
-13-
<PAGE> 14
4.9.3. TAX AUDITS
Other than as set forth in the Disclosure Schedule, there is no action,
suit, proceeding, audit, investigation or claim pending or, to the knowledge of
HeadHunter, threatened in respect of any Taxes for which HeadHunter is or may
become liable, nor has any deficiency or claim for any such Taxes been proposed,
asserted or, to the knowledge of HeadHunter, threatened.
4.10. CONDUCT OF BUSINESS; ABSENCE OF MATERIAL ADVERSE CHANGE
Other than as set forth in the Disclosure Schedule, there has been no
material adverse change, and no change except in the Ordinary Course of
Business, in the business, operations, prospects, condition (financial or
otherwise), Assets or Liabilities of HeadHunter since December 31, 1996. Except
as set forth in the Disclosure Schedule, HeadHunter has conducted its business
diligently and substantially in the manner heretofore conducted and only in the
Ordinary Course of Business.
4.11. REAL PROPERTY
HeadHunter owns no real property.
4.12. ASSETS
HeadHunter has good, valid and marketable title to all Assets owned by
it, including, without limitation, all Assets reflected in the most recent
balance sheet furnished pursuant to SECTION 4.6 and all Assets acquired by
HeadHunter since the date of that balance sheet (except for Assets which have
been sold or otherwise disposed of in the Ordinary Course of Business), free and
clear of all Encumbrances to the best of HeadHunter's and the Shareholder's
knowledge, after reasonable inquiry. All personal property of HeadHunter is in
good operating condition and repair and is suitable and adequate for the uses
for which it is intended or is being used.
4.13. INTELLECTUAL PROPERTY
The Disclosure Schedule lists all franchises, license, trademarks,
service marks, trade names, copyrights, patents and applications therefor owned
or licensed by or registered in the name of HeadHunter. Except as set forth in
the Disclosure Schedule, to the best of HeadHunter's and the Shareholder's
knowledge, after reasonable inquiry, HeadHunter owns all of the Intellectual
Property listed in the Disclosure Schedule purported to be owned by it, pays no
royalty to anyone with respect to any Intellectual Property, and has the right
to bring action for the infringement of such Intellectual Property. HeadHunter
owns or possesses adequate rights to use all Intellectual Property necessary to
the conduct of the present business of HeadHunter. Except as set forth in the
Disclosure Schedule, HeadHunter and the Shareholder have no knowledge and have
not received any notice to the effect, that any product HeadHunter sells or that
any service
-14-
<PAGE> 15
HeadHunter renders, or that the marketing or use by HeadHunter or another of any
such product or service, may or is claimed to infringe any Intellectual Property
or legally protectable right of another person.
4.14. DEBT INSTRUMENTS
The Disclosure Schedule lists and briefly describes the material terms,
provisions and conditions of all mortgages, indentures, notes, guarantees and
other Agreements for or relating to borrowed money (including, without
limitation, conditional sales agreements and capital leases) to which HeadHunter
is a party or which have been assumed by HeadHunter or to which any Assets of
HeadHunter are subject. To the best of HeadHunter's and the Shareholder's
knowledge, after reasonable inquiry, HeadHunter has performed all the
obligations required to be performed by it to date and is not in default in any
material respect under any of the foregoing, and there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default.
4.15. LEASES
The Disclosure Schedule lists and briefly describes all leases and
other Agreements under which HeadHunter is lessee or lessor of any Asset, or
holds, manages or operates any Asset owned by any third party, or under which
any Asset owned by HeadHunter is held, operated or managed by a third party.
HeadHunter is the owner and holder of all leasehold estates purported to be
granted by the Documents described in the Disclosure Schedule to it, free and
dear of all Encumbrances. To the best of HeadHunter's and the Shareholder's
knowledge, after reasonable inquiry, each such lease and other Agreement is in
full force and effect and constitutes a legal, valid and binding obligation of,
and is legally enforceable against, the respective parties thereto and grants
the leasehold estate it purports to grant free and clear of all Encumbrances to
the extent described in such leases. To the best of HeadHunter's and the
Shareholder's knowledge, after reasonable inquiry, HeadHunter has obtained any
governmental approvals reasonably necessary with respect thereto, and has made
all reasonably necessary filings or registrations therefor that it is required
to make, and there have been no threatened cancellations thereof and are no
outstanding disputes thereunder. HeadHunter has in all material respects
performed all obligations thereunder reasonably necessary to be performed by it
to date. To the best of HeadHunter's and the Shareholder's knowledge, after
reasonable inquiry, no party is in default in any material respect under any of
the foregoing, and there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default. To the best of HeadHunter's and the
Shareholder's knowledge, after reasonable inquiry, all of the Assets subject to
such leases are in good operating condition and repair.
-15-
<PAGE> 16
4.16. OTHER AGREEMENTS
The Disclosure Schedule lists and briefly describes all significant
Agreements to which HeadHunter is a party or by which HeadHunter is bound at the
date hereof. To the best of HeadHunter's and the Shareholder's knowledge, after
reasonable inquiry, each such Agreement is in full force and effect and
constitutes a legal, valid and binding obligation of, and is legally enforceable
against, the respective parties thereto. To the best of HeadHunter's and the
Shareholder's knowledge, after reasonable inquiry, all reasonably necessary
governmental approvals with respect thereto have been obtained, all reasonably
necessary filings or registrations therefor have been made, and there have been
no threatened cancellations thereof and are no outstanding disputes thereunder.
HeadHunter has in all material respects performed all the obligations thereunder
reasonably necessary to be performed by it to date. To the best of HeadHunter's
and the Shareholder's knowledge, after reasonable inquiry, no party is in
default in any material respect under any of the Agreements described in the
Disclosure Schedule, and there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default.
4.17. BOOKS AND RECORDS
The books of account, stock records, minute books and other records of
HeadHunter are true and complete and have been maintained in accordance with
good business practices.
4.18. LITIGATION; DISPUTES
There are no actions, suits, claims, arbitrations, proceedings or
investigations pending or, to the best of HeadHunter's and Shareholder's
knowledge after reasonable inquiry, threatened or reasonably anticipated
against, affecting or involving HeadHunter or its business or Assets, or the
transactions contemplated by this Agreement, at law or in equity or admiralty,
or before or by any court, arbitrator or governmental authority, domestic or
foreign. HeadHunter is not operating under, subsequent or in default with
respect to any order, award, writ, injunction, decree or judgment of any court,
arbitrator or governmental authority. HeadHunter is not currently involved in
and does not reasonably anticipate any dispute with any of its current or former
employees, agents, brokers, distributors, vendors, customers, business
consultants, franchisees, franchisors, representatives or independent
contractors (or any current or former employees of any of the foregoing persons
or entities) affecting the business or Assets of HeadHunter.
4.19. PENSION AND BENEFIT PLANS
Other than as set forth in the Disclosure Schedule, HeadHunter (i) does
not maintain and never has maintained any Plan or Other Arrangement, (ii) is not
and never has been a party to any Plan or Other Arrangement, and (iii) has no
obligations under any Plan or Other Arrangement.
-16-
<PAGE> 17
4.20. ENVIRONMENTAL
HeadHunter has complied and is in compliance with, all Environmental
Laws.
4.21. RESTRICTIONS AND CONSENTS
There are no Agreements, Laws or other restrictions of any kind to
which HeadHunter is party or subject that would prevent or restrict the
execution, delivery or performance of this Investment Agreement or result in any
penalty, forfeiture, Agreement termination, or restriction on business
operations of the LLC, ITC or HeadHunter as a result of the execution, delivery
or performance of this Investment Agreement. The Disclosure Schedule lists all
such Agreements and Laws that reasonably could be interpreted or expected to
require the consent or acquiescence of any person or entity not party to this
Investment Agreement with respect to any aspect of the execution, delivery or
performance of this Investment Agreement by HeadHunter and the Shareholder.
4.22. AUTHORIZATION
The execution, delivery and performance by HeadHunter and the
Shareholder of this Investment Agreement and all other Documents contemplated
hereby, the fulfillment of and compliance with the respective terms and
provisions hereof and thereof, and the consummation by HeadHunter and the
Shareholder of the transactions contemplated hereby and thereby have been duly
authorized by HeadHunter's Board of Directors (which authorization has not been
modified or rescinded and is in full force and effect), and do not and will not:
(a) require any consent or approval which has not been obtained; (b) conflict
with, or violate any provision of, any Law applicable to HeadHunter or the
Shareholder, or any provision of the certificate or articles of incorporation or
bylaws of HeadHunter; (c) conflict with, or result in any breach of, or
constitute a default under any Agreement to which HeadHunter or Shareholder is a
party or by which HeadHunter, the Shareholder, or any of the Assets may be
bound; or (d) result in or require the creation or imposition of or result in
the acceleration of any indebtedness, or of any Encumbrance of any nature upon,
or with respect to, HeadHunter or any of the Assets now owned or hereafter
acquired by HeadHunter. No other corporate action is necessary for HeadHunter to
enter into this Investment Agreement and all other Documents contemplated hereby
and to consummate the transactions contemplated hereby and thereby.
4.23. ABSENCE OF VIOLATION
HeadHunter is not in violation of or default under, nor has it
breached, any term or provision of its certificate or articles of incorporation
or bylaws or any Agreement or restriction to which it is a party or by which it
is bound or any Asset is affected. To the best of HeadHunter's and the
Shareholder's knowledge after reasonable inquiry, HeadHunter has complied and is
in full compliance with all Laws. Neither HeadHunter nor any of its officers,
directors, employees or agents (or stockholders, distributors,
-17-
<PAGE> 18
representatives or other persons acting on the express, implied or apparent
authority of HeadHunter) have paid, given or received or have offered or
promised to pay, give or receive, any bribe or other unlawful, questionable or
unusual payment of money or other thing of value, any extraordinary discount, or
any other unlawful or unusual inducement, to or from any person, business
association or governmental official or entity in the United States or elsewhere
in connection with or in furtherance of the business of HeadHunter (including,
without limitation, any offer, payment or promise to pay money or other thing of
value (i) to any foreign official or political party (or official thereof) for
the purposes of influencing any act, decision or omission in order to assist
HeadHunter in obtaining business for or with, or directing business to, any
person, or (ii) to any person, while knowing that all or a portion of such money
or other thing of value will be offered, given or promised to any such official
or party for such purposes). The business of HeadHunter is not in any manner
dependent upon the making or receipt of such payments, discounts or other
inducements.
4.24. BINDING OBLIGATION
This Investment Agreement constitutes a valid and binding obligation of
HeadHunter and the Shareholder, enforceable in accordance with its terms. Each
Document to be executed by HeadHunter and the Shareholder pursuant hereto, when
executed and delivered in accordance with the provisions hereof, shall be a
valid and binding obligation of HeadHunter and the Shareholder, enforceable in
accordance with its terms.
4.25. DISCLOSURE
All facts of importance to the business, operations, prospects,
condition (financial or otherwise), Assets or liabilities of HeadHunter have
been truthfully and completely disclosed to ITC in this Agreement. No
representation or warranty by HeadHunter or the Shareholder in this Agreement,
and no Document furnished or to be furnished to ITC pursuant to this Agreement,
or in connection herewith or with the transactions contemplated hereby, contains
or will contain any untrue or misleading statement or omits or win omit any fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading in any material respect.
5. REPRESENTATIONS AND WARRANTIES OF ITC
ITC hereby represents and warrants to HeadHunter and the Shareholder as
follows:
5.1. ORGANIZATION AND STANDING
ITC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the full and
unrestricted corporate power and
-18-
<PAGE> 19
authority to carry on its business as currently conducted, to enter into this
Investment Agreement and to carry out the transactions contemplated hereby.
5.2. AUTHORIZATION
The execution, delivery and performance by ITC of this Investment
Agreement and all other Documents contemplated hereby, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof, and
the consummation by ITC of the transactions contemplated hereby and thereby have
been duly authorized by its Board of Directors (which authorization has not been
modified or rescinded and is in full force and effect), and do not and win not:
(a) conflict with, or violate any provision of, any term or provision of, any
law having applicability to ITC, or any provision of the certificate or articles
of incorporation or bylaws of ITC or (b) conflict with, or result in any breach
of, or constitute a default under, any Agreement to which ITC is a party or by
which ITC is bound. No other corporate action is necessary for ITC to enter into
this Investment Agreement and all other Documents contemplated hereby and to
consummate the transactions contemplated hereby and thereby.
5.3. BINDING OBLIGATION
This Investment Agreement constitutes a valid and binding obligation of
ITC, enforceable in accordance with its terms. Each Document to be executed by
ITC pursuant hereto, when executed and delivered in accordance with the
provisions hereof, shall be a valid and binding obligation of ITC, enforceable
in accordance with its terms.
6. RESTRICTED SECURITIES
ITC, HeadHunter, and the Shareholder hereby mutually represent, warrant
and covenant to each other as follows:
6.1. NO REGISTRATION UNDER THE SECURITIES ACT
Each party understands that the LLC Interests to be acquired by ITC and
HeadHunter pursuant to this Investment Agreement have not been registered under
the Securities Act, in reliance upon exemptions contained in the Securities Act
or interpretations thereof, and cannot be offered for sale, sold or otherwise
transferred unless such LLC Interests being acquired hereunder subsequently are
so registered or qualify for exemption from registration under the Securities
Act.
6.2. ACQUISITION FOR INVESTMENT
ITC and HeadHunter are acquiring the LLC Interests solely for their own
respective accounts, for investment and not with a view toward resale or other
distribution within the meaning of the Securities Act. ITC and HeadHunter will
not offer for sale, sell
-19-
<PAGE> 20
or otherwise transfer by their LLC Interests without either registration or
exemption from registration under the Securities Act.
6.3. EVALUATION OF MERITS AND RISKS OF INVESTMENT
ITC and HeadHunter, as the case may be, has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the LLC Interests it is acquiring. ITC
and HeadHunter, as the case may be, understands and is able to bear any economic
risks associated with such investment (including, without limitation, the
necessity of holding such LLC Interests for an indefinite period of time,
inasmuch as such LLC Interests have not been registered under the Securities
Act).
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF HEADHUNTER AND THE SHAREHOLDER
The obligations of HeadHunter and the Shareholder under this Investment
Agreement are subject to the fulfillment, at or prior to the Closing, of each of
the following conditions, and failure to satisfy any such condition shall excuse
and discharge all obligations of HeadHunter and the Shareholder to carry out the
provisions of this Agreement, unless such failure is agreed to in writing by
HeadHunter and the Shareholder:
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties made by ITC in this Investment
Agreement or in any Document furnished by ITC pursuant to this Investment
Agreement shall be true and complete when made and on and as of the Closing Date
as though such representations and warranties were made on and as of such date,
except for any changes expressly permitted by this Agreement, and ITC shall have
performed and complied with all Agreements and conditions required by this
Investment Agreement to be performed or complied with by ITC prior to the
Closing Date, and HeadHunter shall have received a certificate from ITC to such
effect signed by a duly authorized officer thereof.
7.2. LEGAL PROCEEDINGS
No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which is reasonably expected to restrain, prohibit or
invalidate the transactions contemplated by this Agreement, other than an action
or proceeding instituted or threatened by HeadHunter or the Shareholder.
7.3. CONSENTS
HeadHunter shall have received all consents, authorizations and
approvals of governmental and private parties that are required to be obtained
in order for it to
-20-
<PAGE> 21
consummate the transactions contemplated hereby, and all such consents,
authorizations and approvals shall be in full force and effect on the Closing
Date.
7.4. BUSINESS PLAN
HeadHunter and ITC shall have developed a mutually acceptable five (5)
year business plan for the LLC.
7.5. DOCUMENTS AT CLOSING
All Documents required to be furnished by ITC to HeadHunter or the
Shareholder prior to or at the Closing shall have been so furnished.
7.6. FORMATION OF LLC
The LLC Certificate shall have been filed with the Office of the
Secretary of State of the State of Delaware.
7.7. DELIVERIES BY LLC
All Documents required to be furnished by the LLC to HeadHunter or the
Shareholder prior to or at the Closing shall have been so furnished.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF ITC
The obligations of ITC under this Investment Agreement are subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of ITC to carry out the provisions of this Agreement, unless
such failure is agreed to in writing by ITC:
8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties made by HeadHunter and the
Shareholder in this Investment Agreement and the statements contained in the
Disclosure Schedule and Exhibits attached hereto or in any Document furnished by
HeadHunter or the Shareholder pursuant to this Investment Agreement shall be
true and complete when made, and on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except for any
changes expressly permitted by this Agreement, and HeadHunter and the
Shareholder shall have performed and complied with all Agreements and conditions
required by this Investment Agreement to be performed or complied with by it
prior to the Closing Date, and ITC shall have received a certificate from
HeadHunter to such effect signed by a duly authorized officer thereof.
-21-
<PAGE> 22
8.2. ABSENCE OF MATERIAL ADVERSE CHANGES
There shall have been no material adverse changes in the business,
operations, prospects, condition (financial or otherwise), Assets or liabilities
of HeadHunter (regardless of whether or not such events or changes are
inconsistent with the representations and warranties given herein by
HeadHunter), except changes contemplated by this Investment Agreement.
8.3. LEGAL PROCEEDINGS
No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently settled, dismissed or
otherwise terminated) which is reasonably expected to restrain, prohibit or
invalidate the transactions contemplated by this Investment Agreement, other
than an action or proceeding instituted or threatened by ITC.
8.4. CONSENTS
8.4.1. ITC CONSENTS
ITC shall have received all consents, authorizations and approvals of
governmental and private parties that are required to be obtained in order for
it to consummate the transactions contemplated hereby shall be in full force and
effect on the Closing Date.
8.4.2. HEADHUNTER CONSENTS
HeadHunter shall have received all consents, authorizations and
approvals of governmental and private parties that are required to be obtained
in order for it to consummate the transactions contemplated hereby, and all such
consents, authorizations and approvals shall be in full force and effect on the
Closing Date.
8.5. BOARD OF DIRECTORS APPROVAL
The Board of Directors of ITC shall have approved the execution and
delivery of this Agreement and the other Documents to be executed and delivered
by ITC pursuant hereto and the consummation of the transactions contemplated
hereby and thereby.
8.6. BUSINESS PLAN
HeadHunter and ITC shall have developed a mutually acceptable five(5)
year business plan for the LLC.
-22-
<PAGE> 23
8.7. DOCUMENTS AT CLOSING
All Documents required to be furnished by HeadHunter or the Shareholder
to ITC prior to or at the Closing shall have been so furnished.
8.8. FORMATION OF LLC
The LLC Certificate shall have been filed with the Office of the
Secretary of State of the State of Delaware.
8.9. DELIVERIES BY LLC
All Documents (including, without limitation, a key man insurance
policy on the life of the Shareholder in the amount of at least $2,000,000 in a
form reasonably satisfactory to ITC (the "KEY MAN LIFE INSURANCE POLICY"))
required to be furnished by the LLC to ITC prior to or at the Closing shall have
been so furnished.
9. CLOSING
9.1. CLOSING OF LLC INVESTMENT
Subject to the terms and conditions of this Investment Agreement, the
Closing shall take place on the Closing Date.
9.2. DELIVERIES BY HEADHUNTER ON THE CLOSING DATE
At the Closing, HeadHunter shall deliver or shall cause to be delivered
to ITC the following:
(i) a certified copy of the resolutions adopted by the Board of
Directors of HeadHunter authorizing the execution and delivery of this Agreement
and the other Documents to be executed and delivered by it pursuant to this
Agreement and the consummation of the transactions contemplated hereby and
thereby;
(ii) executed copies of the LLC Agreement;
(iii) the Key Man Life Insurance Policy;
(iv) copies of all consents required pursuant to SECTION 8.4.2;
(v) executed copy of the officer's certificate required pursuant
to SECTION 8.1; and
(vi) such other Documents as ITC may reasonably request.
-23-
<PAGE> 24
At the Closing, HeadHunter shall deliver to the LLC the HeadHunter
Capital Contribution.
9.3. DELIVERIES BY ITC ON THE CLOSING DATE
At the Closing, ITC shall deliver to HeadHunter the following:
(i) a certified copy of the resolutions adopted by the Board of
Directors of ITC authorizing the execution and delivery of this Agreement and
the other Documents to be executed and delivered by it pursuant to this
Agreement and the consummation of the transactions contemplated by this hereby
and thereby;
(ii) executed copy of the LLC Agreement;
(iii) executed copy of the Loan and Security Agreement;
(iv) executed copy of the officer's certificate required pursuant
to SECTION 7.1; and
(v) such other Documents as HeadHunter may reasonably request.
At the Closing, ITC shall deliver to the LLC the ITC Capital Contribution.
9.4. DELIVERIES BY THE LLC
At the Closing, the parties shall cause the LLC to deliver the
following.
(i) the Employment Letter to the Shareholder;
(ii) the Loan and Security Agreement and the Promissory Note to
ITC; and
(iii) to any party hereto, such other Documents as such party
reasonably may request.
9.5. DELIVERIES BY THE SHAREHOLDER
At the Closing, the Shareholder shall execute and deliver to the LLC
the Employment Letter.
-24-
<PAGE> 25
10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties by any party to this Investment
Agreement herein or pursuant hereto also shall be deemed made on and as of the
Closing Date as though such representations and warranties were made on and as
of such date, and all such representations and warranties shall survive and
shall be unaffected by (and shall not be deemed waived by) any investigation,
audit or inspection at any time made by or on behalf of any party hereto.
10.2. AGREEMENT OF HEADHUNTER AND THE SHAREHOLDER TO INDEMNIFY
Subject to the conditions and provisions of this ARTICLE 10, HeadHunter
and the Shareholder jointly and severally agree to indemnify, defend and hold
harmless the ITC Indemnified Persons from and against and in any respect of all
Claims asserted against, resulting to, imposed upon or incurred by the ITC
Indemnified Persons (whether such Claims are by, against or relate to
HeadHunter, the Shareholder or any other party, including a governmental
entity), directly or indirectly, by reason of or resulting from any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or other Agreements, given or made by HeadHunter or the
Shareholder in this Investment Agreement or in the Disclosure Schedule or
Exhibits attached hereto or in any Document furnished by or on behalf of
HeadHunter or the Shareholder pursuant to this Investment Agreement.
Notwithstanding the foregoing, (i) HeadHunter and the Shareholder shall have no
liability for Claims made more than two (2) years following the Closing Date,
and (ii) the liability of HeadHunter and the Shareholder for Claims hereunder
shall not exceed, in the aggregate, One Million Dollars ($1,000,000.00).
10.3. AGREEMENT OF ITC TO INDEMNIFY
Subject to the conditions and provisions of this ARTICLE 10, ITC hereby
agrees to indemnify, defend and hold harmless the HeadHunter Indemnified Persons
from and against and in respect of all Claims asserted against, resulting to,
imposed upon or incurred by the HeadHunter Indemnified Persons (whether such
Claims are by, against or relate to ITC or any other party, including, without
limitation, a governmental entity), directly or indirectly, by reason of or
resulting from any misrepresentation or breach of any representation or
warranty, or noncompliance with any conditions or other Agreements, given or
made by ITC in this Investment Agreement or in the Exhibits or in any Document
furnished by or on behalf of the ITC pursuant to this Investment Agreement.
Notwithstanding the foregoing, (i) ITC shall have no liability for Claims made
more than two (2) years following the Closing Date, and (ii) the liability of
ITC for Claims hereunder shall not exceed, in the aggregate, One Million Dollars
($1,000,000.00).
-25-
<PAGE> 26
10.4. CONDITIONS OF INDEMNIFICATION
The obligations and liabilities of HeadHunter, the Shareholder and ITC
hereunder with respect to their respective indemnities pursuant to this ARTICLE
10, resulting from any Claim shall be subject to the following terms and
conditions:
10.4.1. NOTICE
The indemnified party shall give prompt written notice to the
indemnifying party of any Claim which is asserted against, resulting to, imposed
upon or incurred by such indemnified party and which may give rise to liability
of the indemnifying party pursuant to this Article 10, stating (to the extent
known or reasonably anticipated) the nature and basis of such Claim and the
amount thereof.
10.4.2. COUNSEL
The indemnified party may engage counsel or representatives of its own
choosing with respect to any such Claim, such representation (including the
compromise or settlement of any Claim) to be undertaken on behalf of and for the
account and risk of the indemnifying party. In the event the indemnified party
elects not to undertake such defense by its own representatives, the indemnified
party shall give prompt written notice of such election to the indemnifying
party, and the indemnifying party will undertake the defense thereof by counsel
or other representatives designated by it whom the indemnified party determines
in writing to be satisfactory for such purposes. The consent of the indemnified
party to the indemnifying party's choice of counsel or other representative
shall not be unreasonably withheld.
10.4.3. JOINT LIABILITY
In the event that any Claim shall arise out of a transaction or cover
any period or periods wherein HeadHunter or the Shareholder, on the one hand,
and ITC, on the other hand, shall each be liable hereunder for part of the
liability or obligation arising therefrom, then the parties shall, each choosing
its or his own counsel and bearing its or his own expense, defend such Claim,
and no settlement or compromise of such Claim may be made without the joint
consent or approval of HeadHunter, the Shareholder and ITC (which consent shall
not be unreasonably withheld), except where the respective liabilities and
obligations of HeadHunter, the Shareholder and ITC are dearly allocable or
attributable on the basis of objective facts.
10.5. SPECIFIC PERFORMANCE
In addition to any other remedies which a party hereto may have at law
or in equity, HeadHunter, the Shareholder and ITC each hereby acknowledges that
the LLC Interests and the LLC are unique, and that the harm to a party resulting
from breaches by the other of its obligations cannot be adequately compensated
by damages. Accordingly,
-26-
<PAGE> 27
HeadHunter, the Shareholder and ITC agree that each party shall have the right
to have all obligations, undertakings, Agreements, covenants and other
provisions of this Investment Agreement specifically performed by the other and
that each party shall have the right to obtain an order or decree of such
specific performance in any of the courts of the United States of America or of
any state or other political subdivision thereof.
10.6. REMEDIES CUMULATIVE
The remedies provided herein shall be cumulative and shall not preclude
the assertion by HeadHunter, the Shareholder or ITC of any other rights or the
seeking of any other remedies against the other, or their respective successors
or assigns.
11. TERMINATION AND EFFECT THEREOF
11.1. TERMINATION
This Investment Agreement may be terminated at any time before the
Closing Date under any one or more of the following circumstances:
(i) by the mutual consent of the parties hereto;
(ii) by ITC, by written notice of termination delivered to
HeadHunter and the Shareholder, if any of the conditions set
forth in ARTICLE 8 have not been fulfilled by the Closing
Date;
(iii) by HeadHunter or the Shareholder, by written notice of
termination delivered to ITC, if any of the conditions set
forth in ARTICLE 7 have not been fulfilled by the Closing
Date;
(iv) by ITC upon ITC's determination, at any time prior to the
Closing Date, in its sole discretion based on its
investigation and review of the business, operations,
prospects, condition (financial or otherwise), assets or
liabilities of HeadHunter that it is not in ITC's best
interest to proceed with the transactions contemplated by this
Investment Agreement; and
(v) by ITC, the Shareholder or HeadHunter, by written notice of
termination to the other parties hereto, if the Closing has
not occurred by December 31, 1997.
11.2. EFFECT OF TERMINATION
In the event this Investment Agreement is terminated as provided in
this ARTICLE 11, this Investment Agreement shall forthwith become wholly void
and of no effect, and the parties shall be released from all future obligations
hereunder; provided however that the obligations of ITC, the Shareholder and
HeadHunter as to confidentiality provided in
-27-
<PAGE> 28
SECTION 3.2, and the provisions of SECTION 12.3 relating to the payment of
expenses, shall not be extinguished but shall survive such termination. The
parties hereto shall have any and all remedies to enforce such obligations
provided at law or in equity (including, without limitation, specific
performance).
12. MISCELLANEOUS
12.1. ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to be taken
such further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further Documents, and will obtain such consents, as
may be necessary or as may be reasonably requested in order to fully effectuate
the purposes, terms and conditions of this Investment Agreement.
12.2. NO BROKERS
Each of the parties hereto represents and warrants to the other parties
(and to each of them) that such party has not engaged any broker, finder or
agent in connection with the transactions contemplated by this Investment
Agreement and has not incurred (and will not incur) any unpaid liability to any
broker, finder or agent for any brokerage fees, finders' fees or commissions,
with respect to the transactions contemplated by this Investment Agreement. Each
party agrees to indemnify, defend and hold harmless each of the other parties
from and against any and all claims asserted against such parties for any such
fees or commissions by any persons purporting to act or to have acted for or on
behalf of the indemnifying party.
12.3. EXPENSES
Each party hereto shall pay its own expenses incident to this
Investment Agreement and the transactions contemplated hereunder, including all
legal and accounting fees and disbursements. Notwithstanding the foregoing, the
parties agree to cause the LLC (i) to reimburse ITC up to $20,000 for fees and
expenses of Hogan & Hartson L.L.P. in connection with the formation and
organization of the LLC and the preparation of this Agreement, the Loan
Agreement, and the other legal documents contemplated hereby or thereby, (ii) to
reimburse HeadHunter up to $20,000 for fees and expenses incurred by HeadHunter
in connection with the formation and organization of the LLC and the preparation
of this Agreement, the Loan Agreement, and the other documents contemplated
hereby or thereby, and (iii) to bear the cost of all filings made in order to
obtain any regulatory approvals, or comply with any regulatory requirements, in
connection with the formation and organization of the LLC.
-28-
<PAGE> 29
12.4. ASSIGNMENT
No party hereto shall assign its or his rights and obligations under
this Investment Agreement, in whole or in part, whether by operation of law or
otherwise, without the prior written consent of the other parties hereto, and
any such assignment contrary to the terms hereof shall be null and void and of
no force and effect.
12.5. ENTIRE AGREEMENT; AMENDMENT
This Investment Agreement, including the Disclosure Schedule, the
Exhibits hereto and the other Documents referred to herein or furnished pursuant
hereto, constitutes the entire Agreement among the parties hereto with respect
to the transactions contemplated herein, and supersede all prior oral or written
Agreements, commitments or understandings with respect to the matters provided
for herein. No amendment, modification or discharge of this Investment Agreement
shall be valid or binding unless set forth in writing and duly executed and
delivered by the party against whom enforcement of the amendment, modification,
or discharge is sought.
12.6. WAIVER
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Investment Agreement or under any other
Documents furnished in connection with or pursuant to this Investment 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.
12.7. SEVERABILITY
If any part of any provision of this Investment Agreement or any other
agreement or document given pursuant to or in connection with this Investment
Agreement shall be invalid or unenforceable in any respect, such part shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining parts of such provision or the remaining
provisions of this Investment Agreement.
12.8. GOVERNING LAW
This Investment Agreement, 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).
-29-
<PAGE> 30
12.9. NOTICES
All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by any party to any other party
pursuant to this Investment Agreement, shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:
(i) If to ITC:
Mr. William H. Scott, III
ITC Holding Company, Inc.
1239 O.G. Skinner Drive
West Point, Georgia 31833
FACSIMILE: 706/643-5067
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: 703/619-9720
(ii) If to HeadHunter or the Shareholder:
Warren Bare
HeadHunter.NET, Inc.
1430 Boundary Boulevard
Suwanee, Georgia 30174
FACSIMILE: 770/495-6363
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed, telecopied or telexed in the manner described above, or which
shall be delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
-30-
<PAGE> 31
12.10. HEADINGS
Article and Section headings contained in this Investment Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Investment Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
12.11. EXECUTION IN COUNTERPARTS
To facilitate execution, this Investment Agreement way be executed in
as many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that 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 that 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 Investment
Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
12.12. LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this Investment
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns, except that the
agreements set forth in Article 10 also shall be for the benefit of, and
enforceable by, ITC Indemnified Persons, HeadHunter Indemnified Persons and
their respective successors, heirs, executors, administrators, legal
representatives or permitted assigns.
12.13. BINDING EFFECT
Subject to any provisions hereof restricting assignment, this
Investment Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and assigns.
-31-
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have duly executed this
Investment Agreement, or have caused this Investment Agreement to be duly
executed on their behalf, as of the day and year first above written.
ITC HOLDING COMPANY, INC.
By: /s/ Kimberley E. Thompson
------------------------------------------
Name: Kimberley E. Thompson
Title: Senior Vice President, General Counsel and
Secretary
HEADHUNTER.NET, INC.
By: /s/ Warren Bare
------------------------------------------
Warren Bare
President
/s/ Warren Bare
------------------------------------------
Warren Bare
-32-
<PAGE> 1
EXHIBIT 10.12
FORM
OF
NON-EMPLOYEE DIRECTOR
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into effective as of the ____ day of
____, 1998 (the "Grant Date") by and between HEADHUNTER.NET, INC. (the
"Company"), a Georgia corporation, and ________________("Grantee").
BACKGROUND
A. The Company maintains the 1998 Long-Term Incentive Plan (the
"Plan"), which permits the Company to grant incentive awards consisting of
Options, Stock Appreciation Rights, Restricted Stock Awards, Performance Share
Awards, Dividend Equivalent Awards and other Stock-Based Awards ("Awards") to
certain officers, employee-directors and other employees of the Company.
However, until such time, if any, as the Common Stock of the Company shall be
traded on a national securities exchange or on the Nasdaq National Market,
non-employee directors of the Company are not eligible to receive Awards under
the Plan.
B. Grantee is a non-employee director and is not at the present
time eligible to receive an Award under the Plan. Although granted outside of
the Plan, the option represented by this Agreement is intended to be generally
consistent with the terms and conditions of the Plan. Therefore, for purposes of
reference only, and not to imply that the option granted hereby is governed by
or issued under the Plan, capitalized terms used herein and not defined in
context are defined in Section 6.11 hereof or in the Plan.
C. The Company and Grantee wish to confirm herein the terms,
conditions, and restrictions of the option.
D. For and in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
agree:
ARTICLE 1
GRANT AND EXERCISE OF OPTION
1.1 Grant of Option. Subject to the terms, restrictions,
limitations, and conditions stated herein, the Company hereby grants to Grantee
a non-qualified option (the "Option") to purchase all or any part of Ten
Thousand (10,000) shares of the Company's Common Stock (the "Option Shares").
This Option is intended to be a non-qualified stock option.
1.2 Exercise of Option. The Option may be exercised during the
Option Period (as defined in Section 1.4) only to the extent of the number of
Option Shares that are then vested ("Vested Shares") as determined pursuant to
the vesting schedule attached hereto as Schedule I. The Option shall be
exercised by written notice directed to the
<PAGE> 2
Secretary of the Company at the principal executive offices of the Company, in
substantially the form attached hereto as Exhibit A, or such other form as the
Committee may approve. Such written notice shall be accompanied by full payment
in cash, shares of Stock previously acquired by the Grantee, or any combination
thereof, for the number of shares specified in such written notice; provided,
however, that if shares of Stock are used to pay the exercise price, such shares
must have been held by the Grantee for at least six months. The Fair Market
Value of the surrendered Stock as of the date of the exercise shall be
determined in valuing Stock used in payment of the exercise price. To the extent
permitted under Regulation T of the Federal Reserve Board, and subject to
applicable securities laws, the Option may be exercised through a broker in a
so-called "cashless exercise" whereby the broker sells the Option shares and
delivers cash sales proceeds to the Company in payment of the exercise price.
Subject to the terms of this Option Agreement, the Option may be
exercised at any time and without regard to any other option held by the Grantee
to purchase stock of the Company.
1.3 Option Exercise Price. The price for each share of Stock for
which the Option is exercised is ___________________ ($_____) (the "Option
Exercise Price").
1.4 Term and Termination of Option. Except as otherwise provided
herein, the period in which the Option may be exercised as to any Vested Shares
(the "Option Period") shall commence on the date such shares become Vested
Shares and terminate at 5:00 p.m. Eastern Time on the date of the first to occur
of the following events:
(a) the 10th anniversary of the Grant Date;
(b) if Grantee ceases to be a director of the Company for
any reason other than as provided in paragraph (c) or (d) below, the
Option shall lapse, unless it is previously exercised, ninety (90) days
after Grantee's Termination of Directorship (as defined in Section
6.11); provided, however, that if Grantee's directorship is terminated
by the Company for Cause or by Grantee without the consent of the
Company, the Option shall (to the extent not previously exercised)
lapse immediately;
(c) if Grantee ceases to be a director of the Company by
reason of his Disability, the Option shall lapse, unless it is
previously exercised, one year after Grantee's Termination of
Directorship; or
(d) if Grantee dies while serving as a director, or
during the 90-day period described in paragraph (b) or during the
one-year period described in paragraph (c) and before the Option
otherwise lapses, the Option shall lapse one year after the date of the
Grantee's death. Upon Grantee's death, any exercisable Options may be
exercised by Grantee's legal representative or representatives, by
-2-
<PAGE> 3
the person or persons entitled to do so under Grantee's last will and
testament, or, if Grantee shall fail to make testamentary disposition
of such Option or shall die intestate, by the person or persons
entitled to receive such Option under the applicable laws of descent
and distribution.
1.5 No Rights as Shareholder. Grantee, or, if applicable, any
transferee of Grantee, shall have no rights as a shareholder of the Company with
respect to any Option Shares until the issuance of a stock certificate for such
shares.
1.6 Changes in Capitalization. In the event a stock dividend is
declared upon the Stock, the number of shares of Stock subject to the Option
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 the Option 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 the Option. 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 Option will expire after a
designated period of time to the extent not then exercised, (ii) that the Option
will be settled in cash rather than Stock, (iii) that the Option 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.
1.7 Accelerated Vesting.
(a) Upon the occurrence of a Change of Control (as
defined in Section 6.11), the Option shall become fully exercisable and
all restrictions on the Option 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 of Control transaction that
(i) would otherwise qualify for such accounting treatment, and (ii) is
contingent upon qualifying for such accounting treatment.
(b) Other Events. In the event of the occurrence of any
circumstance, transaction or event not constituting a Change of Control
but which the Board of Directors of the Company 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 the Option to be fully exercisable, and/or all
restrictions on the Option to have lapsed, in each case, as of such
date as
-3-
<PAGE> 4
the Committee may, in its sole discretion, declare, which may be on or
before the consummation of such transaction or event. Additionally,
regardless of whether an event has occurred as described in this
Section 1.7, the Committee may in its sole discretion at any time
determine that all or a portion of the Option shall become fully or
partially exercisable, and/or that all or a part of the restrictions on
all or a portion of the Option shall lapse, in each case, as of such
date as the Committee may, in its sole discretion, declare.
(c) Acceleration upon Death or Disability.
Notwithstanding any other provision in this Agreement to the contrary,
upon Grantee's death or Disability during his service as a director,
the Option shall become fully exercisable and all restrictions on the
Option shall lapse. The Option shall thereafter continue or lapse in
accordance with the other provisions of this Agreement.
(d) Effect of Acceleration. If the Option is accelerated
pursuant to Section 1.7 of this Agreement, the Committee may, in its
sole discretion, provide (i) that the Option will expire after a
designated period of time after such acceleration to the extent not
then exercised, (ii) that the Option will be settled in cash rather
than Stock, (iii) that the Option 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.
ARTICLE 2
LIMITS ON OPTION
2.1 Limits on Transfer. No right or interest of Grantee in the
Option 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 Grantee to any other party other than the
Company or a Parent or Subsidiary. The Option shall not be assignable or
transferable by Grantee other than by will or the laws of descent and
distribution; 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) is otherwise appropriate and desirable,
taking into account any factors deemed relevant, including without limitation,
applicable state or federal tax or securities laws.
2.2 Beneficiaries. Notwithstanding Section 2.1, Grantee may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Grantee and to receive any distribution with respect to the Option
upon Grantee's death. A beneficiary, legal guardian, legal representative, or
other person claiming any rights under this Agreement is subject to all terms
and conditions of this Agreement applicable to the Grantee, except to the extent
this Agreement otherwise provides, and any additional restrictions deemed
necessary or appropriate by the Committee. If no
-4-
<PAGE> 5
beneficiary has been designated or survives the Grantee, payment shall be made
to the Grantee's estate. Subject to the foregoing, a beneficiary designation may
be changed or revoked by Grantee at any time provided the change or revocation
is filed with the Committee.
ARTICLE 3
REPURCHASE
3.1 Repurchase. The provisions of this Article 3 shall apply only
until such time, if any, as the Stock shall be traded on a national securities
exchange or on the Nasdaq National Market. At any time subsequent to Grantee's
Termination of Directorship, the Company may repurchase, and the Grantee (and
any transferee of Option Shares acquired pursuant to the Option granted
hereunder) shall be obligated to sell, all shares of Option Shares acquired
pursuant to the exercise the Option hereunder for a price equal to the Fair
Market Value of the Option Shares on the date of such repurchase. To exercise
its right to repurchase Option Shares hereunder, the Company shall give written
notice to the Grantee of (i) its election to repurchase the Option Shares, (ii)
the Fair Market Value of the Option Shares 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 Shares under this Article 3, at the option of the Company, the
Company may pay the purchase price to the Grantee (or transferee of the Option
Shares) 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.
3.2 Delivery of Certificate for Option Shares. At any closing of a
purchase by the Company of Option Shares pursuant to this Article 3, a
certificate representing the Option Shares purchased by the Company, duly
endorsed for transfer to the Company, shall be delivered by Grantee (or
transferee of the Option Shares) to the Company at the closing, and upon receipt
of the certificate, the Company shall pay the consideration for the Option
Shares in accordance with Section 3.1.
ARTICLE 4
LEGENDS
4.1 Legends. Each certificate representing the Option Shares
purchased upon exercise of this Option shall be endorsed with the following
legend and Grantee shall not make any transfer of the Option Shares without
first complying with the restrictions on transfer described in such legend:
-5-
<PAGE> 6
TRANSFER IS RESTRICTED
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF
REPURCHASE AND OTHER RESTRICTIONS ON TRANSFER SET FORTH IN A NON-QUALIFIED STOCK
OPTION AGREEMENT DATED JULY 15, 1998, A COPY OF WHICH IS AVAILABLE FROM THE
COMPANY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION UNDER SUCH ACT
COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR (3) THE ISSUER RECEIVES AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT.
THE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON ONE OR MORE EXEMPTIONS
FROM REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH LAWS OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS.
Grantee agrees that the Company may also endorse any other legends
required by applicable federal or state securities laws.
The Company shall not be required (a) to transfer on its books any
Option Shares that have been sold or transferred in violation of the provisions
of this Agreement (including the foregoing legends), or (b) to treat the owner
of the Option Shares, or otherwise to accord voting or dividend rights to, any
transferee to whom the Option Shares have been transferred in contravention of
this Agreement (or such legends).
ARTICLE 5
WITHHOLDING
5.1 Withholding. The Company, Parent or any Subsidiary shall have the
authority and the right to deduct or withhold, or require Grantee the remit to
the Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Grantee's FICA obligation) required by law to be withheld with
respect to any taxable event arising as a result of the Option. With respect to
withholding required upon any taxable event under the Option, the Committee may,
at the time the Option is granted or thereafter, require that any such
withholding requirement be satisfied, in whole or in part, by withholding Option
Shares 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.
-6-
<PAGE> 7
ARTICLE 6
GENERAL PROVISIONS
6.1 Governing Laws; Regulations. To the extent not governed by
federal law, this Agreement shall be construed in accordance with and governed
by the laws of the State of Georgia. The obligation of the Company to perform
under this Agreement 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 Option Shares. The Option Shares 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.
6.2 Successors. This Agreement shall be binding upon and inure to
the benefit of the heirs, legal representatives, successors, and permitted
assigns of the parties.
6.3 Notice. Notices and communications under this Agreement must
be in writing and either personally delivered or sent by registered or certified
United States mail, return receipt requested, postage prepaid. Notice to the
Company must be addressed to:
HeadHunter.NET, Inc.
6410 Atlantic Blvd.
Suite 160
Norcross, Georgia 30071
Attn: Mr. Ken Dopher
or any other address designated by the Company in a written notice to Grantee.
Notices to Grantee will be directed to the address of Grantee then currently on
file with the Company, or at any other address given by Grantee in a written
notice to the Company.
6.4 Severability. In the event that any one or more of the
provisions or portion thereof contained in this Agreement shall for any reason
be held to be invalid, illegal, or unenforceable in any respect, the same shall
not invalidate or otherwise affect any other provisions of this Agreement, and
this Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
6.5 Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties with respect to the subject matter
hereof. This Agreement may
-7-
<PAGE> 8
be executed in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument.
6.6 Violation. Except as provided herein, any transfer, pledge,
sale, assignment, or hypothecation of the Option or any portion thereof or of
any Option Shares issued upon exercise hereof shall be a violation of the terms
of this Agreement and shall be void and without effect.
6.7 Headings. Paragraph headings used herein are for convenience
of reference only and shall not be considered in construing this Agreement.
6.8 Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.
6.9 No Rights to Continued Directorship. The grant of the Option
hereunder shall not be construed as giving Grantee the right to continue to
serve as a director of the Company.
6.10 Fractional Shares. No fractional shares of Stock shall be
issued and the Committee shall determine, in its sole discretion, whether cash
shall be given in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up.
6.11 Certain Definitions. The capitalized terms listed below are
used herein with the meaning thereafter ascribed:
(a) "Change of Control" means and includes each of the
following:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange 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 (i), the following acquisitions
shall not constitute a Change of Control: (A) any acquisition
by a Person who is on the Grant Date the beneficial owner of
25% or more of the Outstanding Company Voting Securities, (B)
any acquisition directly from the Company, including without
limitation a public offering of securities, (C) any
acquisition by the Company, (D) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation
-8-
<PAGE> 9
controlled by the Company, or (E) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this
definition; or
(ii) Individuals who, as of (and including) the
Grant 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 Grant 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 of
Directors of the Company; or
(iii) Consummation of a reorganization, merger or
consolidation to which the Company is a party or 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, (A) 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 outstanding voting securities
entitled to vote generally in the election of directors of the
corporation 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 (B) 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 such corporation resulting from such Business
Combination except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority
of the members of the board of directors of the corporation
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 (ii) of
this
-9-
<PAGE> 10
definition) at the time of the execution of the initial
agreement, or of the action of the Board of Directors of the
Company, providing for such Business Combination.
(b) "Committee" means the Committee designated by the
Board of Directors of the Company to administer the Plan. The Committee
shall also administer the Option granted hereby and, in such
connection, shall have all the authority granted to the Committee under
the Plan as if the Option had been granted thereunder. Notwithstanding
anything to the contrary contained herein: (i) until the Board of
Directors shall appoint the members of the Committee, the Option shall
be administered by the Board of Directors, and (ii) the Board of
Directors may, in its sole discretion, at any time and from time to
time, resolve to administer the Option. In either of the foregoing
events, unless otherwise provided herein, the term Committee as used
herein shall be deemed to mean the Board of Directors.
(c) "Disability" means any illness or other physical or
mental condition of Grantee that renders Grantee 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 Grantee's condition.
(d) "Fair Market Value," on any given 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.
(e) "Parent" means a corporation which owns or
beneficially owns a majority of the outstanding voting stock or voting
power of the Company.
-10-
<PAGE> 11
(f) "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 Section 1.6.
(g) "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.
(h) "Termination of Directorship" means the termination
of Grantee's service as a director of the Company, regardless of the
fact that severance or similar payments are made to Grantee, for any
reason, including, but not by way of limitation, a termination by
resignation, discharge, death, Disability, or retirement. The Committee
shall, in its absolute discretion, determine the effect of all matters
and questions relating to Termination of Directorship, including, but
not by way of limitation, the question of whether a leave of absence
constitutes a Termination of Directorship, or whether a Termination of
Directorship is for Cause.
(i) "1933 Act" means the Securities Act of 1933, as
amended from time to time.
(j) "1934 Act" means the Securities Exchange Act of 1934,
as amended from time to time.
(signatures on following page)
-11-
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
on the day and year first set forth above.
HEADHUNTER.NET, INC.
By:
----------------------------------
Title:
GRANTEE:
--------------------------------------
-12-
<PAGE> 13
EXHIBIT A
TO
HEADHUNTER.NET, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Notice of Exercise
Name
--------------------------------------
Address
-----------------------------------
-------------------------------------------
Date
--------------------------------------
HeadHunter.NET, Inc.
6410 Atlantic Boulevard
Suite 160
Norcross, Georgia 30071
Re: Exercise of Stock Option
Gentlemen:
I hereby give notice of my election to exercise options granted to me
to purchase ________ shares of common stock (the "Common Stock") of
HeadHunter.NET, Inc. (the "Company") under that certain Non-Qualified Stock
Option Agreement dated July 15, 1998 (the "Agreement"). The purchase shall take
place as of ___________ (the "Exercise Date").
On or before the Exercise Date, I will present you with a certified
check (or bank cashier's check) for $__________ for the full purchase price
payable to the order of __________________________.
I hereby represent, warrant, covenant, and agree with the Company as
follows:
The shares of the Common Stock being acquired by me will be
acquired for my own account without the participation of any other
person, with the intent of holding the Common Stock for investment and
without the intent of participating, directly or indirectly, in a
distribution of the Common Stock and not with a view to, or for resale
in connection with, any distribution of the Common Stock, nor am I
aware of the existence of any distribution of the Common Stock;
I am not acquiring the Common Stock based upon any
representation, oral or written, by any person with respect to the
future value of, or income from, the Common Stock but rather upon an
independent examination and judgment as to the prospects of the
Company;
Page 1
<PAGE> 14
The Common Stock was not offered to me by means of publicly
disseminated advertisements or sales literature, nor am I aware of any
offers made to other persons by such means;
I am able to bear the economic risks of the investment in the
Common Stock including the risk of a complete loss of my investment
therein;
I understand and agree that the Common Stock will be issued
and sold to me without registration under any state law relating to the
registration of securities for sale, and will be issued and sold in
reliance on the exemptions from registration under the Securities Act
of 1933 (the "1933 Act"), provided by Sections 3(b) and/or 4(2) thereof
and the rules and regulations promulgated thereunder;
The Common Stock cannot be offered for sale, sold or
transferred by me other than pursuant to: (A) an effective registration
under the 1933 Act or in a transaction, otherwise in compliance with
the 1933 Act; and (B) evidence satisfactory to the Company of
compliance with the applicable securities laws of other jurisdictions.
The Company shall be entitled to rely upon an opinion of counsel
satisfactory to it with respect to compliance with the above laws;
The Company will be under no obligation to register the Common
Stock or comply with any exemption available for sale of the Common
Stock without registration or filing, and the information or conditions
necessary to permit routine sale of securities of the Company under
Rule 144 of the 1933 Act are not now available and no assurance has
been given that it or they will become available. The Company is under
no obligation to act in any manner so as to make Rule 144 available
with respect to the Common Stock;
I have and have had complete access to and the opportunity to
review and make copies of all material documents related to the
business of the Company, including, but not limited to, contracts,
financial statements, tax returns, leases, deeds and other books and
records. I have examined such of these documents as I wished and am
familiar with the business and affairs of the Company. I realize that
purchase of the Common Stock is a speculative investment and that any
possible profit therefrom is uncertain;
I have had the opportunity to ask questions of and receive
answers from the Company and any person acting on its behalf and to
obtain all material informal reasonably available with respect to the
Company and its affairs. I have received all information and data with
respect to the Company which I have requested and which I have deemed
relevant in connection with the evaluation of the merits and risks of
investment in the Company;
Page 2
<PAGE> 15
I have such knowledge and experience in financial and business
matters that I am capable of evaluating the merits and risks of the
purchase of the Common Stock hereunder and I am able to bear the
economic risk of such purchase; and
The agreements, representations, warranties, and covenants
made by me herein extend to and apply to all of the Common Stock of the
Company issued to me pursuant to this Option. Acceptance by me of the
certificate representing such Common Stock shall constitute a
confirmation by me that all such agreements, representations,
warranties, and covenants made herein shall be true and correct at that
time.
I understand that the certificates representing the shares being
purchased by me in accordance with this notice shall bear a legend referring to
the foregoing covenants, representations and warranties and restrictions on
transfer, and I agree that a legend to that effect may be placed on any
certificate which may be issued to me as a substitute for the certificates being
acquired by me in accordance with this notice.
Very truly yours,
---------------------------------
AGREED TO AND ACCEPTED:
HEADHUNTER.NET, INC.
By:
----------------------------
Title:
-------------------------
Number of Shares
Exercised:
--------------------
Number of Shares
Remaining: Date:
--------------------- ----------------------------
Page 3
<PAGE> 1
EXHIBIT 10.14
Lease Agreement by and between
AMB PROPERTY, L.P., A DELAWARE LIMITED PARTNERSHIP
AND
HEADHUNTERS, L.L.C.
September 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. BASIC PROVISIONS....................................................................................1
1.1 Parties.....................................................................................1
1.2 Premises....................................................................................1
1.3 Term........................................................................................1
1.4 Base Rent...................................................................................1
1.5 Tenant's Share of Operating Expenses........................................................1
1.6 Tenant's Estimated Monthly Rent Payment.....................................................1
1.7 Security Deposit............................................................................1
1.8 Permitted Use...............................................................................2
1.9 Guarantor...................................................................................2
1.10 Addenda and Exhibits........................................................................2
1.11 Address for Rent Payments...................................................................2
2. PREMISES, PARKING AND COMMON AREAS..................................................................2
2.1 Letting.....................................................................................2
2.2 Common Areas -Definition....................................................................2
2.3 Common Areas -Tenant's Rights...............................................................2
2.4 Common Areas -Rules and Regulations.........................................................2
2.5 Common Area Changes.........................................................................2
3. TERM ..........................................................................................3
3.1 Term........................................................................................3
3.2 Delay in Possession.........................................................................3
3.3 Commencement Date Certificate...............................................................3
4. RENT ..........................................................................................3
4.1 Base Rent...................................................................................3
4.2 Operating Expenses..........................................................................4
5. Security Deposit....................................................................................5
6. USE ..........................................................................................5
6.1 Permitted Use...............................................................................5
6.2 Hazardous Substances........................................................................5
6.3 Tenant's Compliance with Requirements.......................................................6
6.4 Inspection; Compliance with Law.............................................................7
7. MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS................................................7
7.1 Tenant's Obligations........................................................................7
7.2 Landlord's Obligations......................................................................7
7.3 Alterations.................................................................................7
7.4 Surrender/Restoration.......................................................................8
8. INSURANCE; INDEMNITY................................................................................8
8.1 Payment of Premiums.........................................................................8
8.2 Tenant's Insurance..........................................................................8
8.3 Landlord's Insurance........................................................................8
8.4 Waiver of Subrogation.......................................................................9
8.5 Indemnity...................................................................................9
8.6 Exemption of Landlord from Liability........................................................9
9. DAMAGE OR DESTRUCTION...............................................................................9
9.1 Termination Right...........................................................................9
9.2 Damage Caused by Tenant....................................................................10
10. REAL PROPERTY TAXES................................................................................10
10.1 Payment of Real Property Taxes.............................................................10
10.2 Real Property Tax Definition...............................................................10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
10.3 Additional Improvements....................................................................10
10.4 Joint Assessment...........................................................................10
10.5 Tenant's Property Taxes....................................................................10
11. UTILITIES..........................................................................................11
12. ASSIGNMENT AND SUBLETTING..........................................................................11
12.1 Landlord's Consent Required................................................................11
12.2 Rent Adjustment............................................................................11
13. DEFAULT; REMEDIES..................................................................................11
13.1 Default....................................................................................11
13.2 Remedies...................................................................................12
13.3 Late Charge................................................................................12
14. CONDEMNATION.......................................................................................12
15. ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS......................................................13
15.1 Estoppel Certificate.......................................................................13
15.2 Financial Statement........................................................................13
16. ADDITIONAL COVENANTS AND PROVISIONS................................................................13
16.1 Severability...............................................................................13
16.2 Interest on Past-Due Obligations...........................................................13
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
16.3 Time of Essence............................................................................13
16.4 Landlord Liability.........................................................................13
16.5 No Prior or Other Agreements...............................................................13
16.6 Notice Requirements........................................................................13
16.7 Date of Notice.............................................................................14
16.8 Waivers....................................................................................14
16.9 Holdover...................................................................................14
16.10 Cumulative Remedies........................................................................14
16.11 Binding Effect; Choice of Law..............................................................14
16.12 Landlord...................................................................................14
16.13 Attorneys' Fees and Other Costs............................................................15
16.14 Landlord's Access: Showing Premises; Repairs...............................................15
16.15 Signs......................................................................................15
16.16 Termination: Merger........................................................................15
16.17 Quiet Possession...........................................................................15
16.18 Subordination: Attornment; Non-Disturbance.................................................15
16.19 Rules and Regulations......................................................................16
16.20 Security Measures..........................................................................16
16.21 Reservations...............................................................................16
16.22 Conflict...................................................................................17
16.23 Offer......................................................................................17
16.24 Amendments.................................................................................17
16.25 Multiple Parties...........................................................................17
16.26 Authority..................................................................................17
SIGNATURES..............................................................................................11
EXHIBIT A Diagram of Premises
EXHIBIT B Remedies of Addendum
</TABLE>
<PAGE> 5
GLOSSARY
The following terms in the Lease are defined in the paragraphs opposite
the terms.
<TABLE>
<CAPTION>
TERM DEFINED IN PARAGRAPH
---- --------------------
<S> <C>
Additional Rent 4.1
Applicable Requirements 6.3
Assign 12.1
Base Rent 1.4
Basic Provisions 1.1
Building 1.2
Building Operating Expenses 4.2(b)
Code 12.1
Commencement Date 1.3
Commencement Date Certified 3.3
Common Areas 2.2
Common Area Operating Expenses 4.2(b)
Condemnation 14
Default 13.1
Expiration Date 1.3
HVAC 4.2(a)
Hazardous Substance 6.2
Indemnity 8.5
Industrial Center 1.2
Landlord 1.1
Landlord Entities 6.2(c)
Lease 1.1
Lenders 6.4
Mortgage 16.18
Operating Expenses 4.2
Party/Parties 1.1
Permitted Use 1.8
Premises 1.2
Prevailing Party 16.13
Real Property Taxes 10.2
Rent 4.1
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
Reportable Use 6.2
Requesting Party 15
Responding Party 15
Rules and Regulations 2.4
Security Deposit 1.7,5
Taxes 10.2
Tenant 1.1
Tenant Acts 9.2
Tenant's Share 1.5
Term 1.3
Use 6.1
</TABLE>
<PAGE> 7
AMB PROPERTY CORPORATION
INDUSTRIAL MULTI-TENANT LEASE
1. BASIC PROVISIONS ("Basic Provisions").
1.1 Parties: This Lease ("Lease") dated September 9, 1998, is made
by and between AMB PROPERTY, L.P., A DELAWARE LIMITED PARTNERSHIP, ("Landlord")
AND HEADHUNTER.NET, INC., a Georgia corporation ("Tenant") (collectively the
"Parties," or individually a "Party")
1.2 Premises: A portion, outlined on Exhibit A which is
approximately 6,915 square feet and attached hereto ("Premises"), of the
building ("Building") located at 6410 Atlantic Boulevard, Suites 155 and 150, in
the City of Norcross State of GA. The Building is located in the industrial
center commonly known as Peachtree Northeast Business Park (the "Industrial
Center"). Tenant shall have non-exclusive rights to the Common Areas (as defined
in Paragraph 2.3 below), but shall not have any rights to the roof, exterior
walls or utility raceways of the Building or to any other buildings in the
Industrial Center. The Premises, the Building, the Common Areas, the land upon
which they are located and all other buildings and improvements thereon are
herein collectively referred to as the "Industrial Center."
1.3 Term: 0 years and 5 months ("Term") commencing September 1,
1998 ("Commencement Date") and ending January 31, 1999 ("Expiration Date").
1.4 Base Rent: $5,186.25 per month ("Base Rent"). $0 payable on
execution of this Lease for period 0.
1.5 Tenant's Share of Operating Expenses ("Tenant's Share"):
<TABLE>
<S> <C> <C>
(a) Industrial Park 0%
--
(b) Building 13%
--
</TABLE>
1.6 Tenant's Estimated Monthly Rent Payment: Following is the
estimated monthly Rent payment to Landlord pursuant to the provisions of this
Lease. This estimate is made at the inception of the Lease and is subject to
adjustment pursuant to the provisions of this Lease:
<TABLE>
<S> <C> <C> <C>
(a) Base Rent (Paragraph 4.1) $ 5,186.25
----------
(b) Operating Expenses (Paragraph 4.2;
excluding Real Property Taxes, and
Landlord Insurance) $ 288.13
----------
(d) Landlord Insurance (Paragraph 8.3) $
----------
(e) Real Property Taxes (Paragraph 10) $
----------
Estimated Monthly Payment $5,474.38
---------
</TABLE>
1.7 Security Deposit: $5,186.25 ("Security Deposit").
-1-
<PAGE> 8
1.8 Permitted Use ("Permitted Use"): Office activities pursuant to
the operation of an internet job posting business.
1.9 Guarantor: N/A
1.10 Addenda and Exhibits: Attached hereto are the following
Addenda and Exhibits, all of which constitute a part of this Lease:
(a) Addenda:
(b) Exhibits: Exhibit A: Diagram of Premises.
Exhibit B: Landlord Remedies.
1.11 Address for Rent Payments: All amounts payable by Tenant to
Landlord shall until further notice from Landlord be paid to AMB Property
Corporation at the following address:
Trammell Crow Company
6000 Poplar Avenue, Suite 300
Memphis, TN 38119
2. PREMISES, PARKING AND COMMON AREAS.
2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby
leases from LANDLORD the Premises upon all of the terms, covenants and
conditions set forth in this Lease. Any statement of square footage set forth in
this Lease or that may have been used in calculating Base Rent and/or Operating
Expenses is an approximation which Landlord and Tenant agree is reasonable and
the Base Rent and Tenant's Share based thereon is not subject to revision
whether or not the actual square footage is more or less.
2.2 Common Areas - Definition. "Common Areas" are all areas and
facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are
provided and designated by the Landlord from time to time for the general
non-exclusive use of Landlord, Tenant and other tenants of the Industrial Center
and their respective employees, suppliers, shippers, tenants, contractors and
invitees.
2.3 Common Areas - Tenant's Rights. Landlord hereby grants to
Tenant, for the benefit of Tenant and its employees, suppliers, shippers,
contractors, customers and invitees, during the term of this Lease, the
non-exclusive right to use, in common with others entitled to such use, the
Common Areas as they exist from time to time, subject to any rights, powers, and
privileges reserved by Landlord under the terms hereof or under the terms of any
rules and regulations or covenants, conditions and restrictions governing the
use of the Industrial Center.
2.4 Common Areas - Rules and Regulations. Landlord shall have the
exclusive control and management of the Common Areas and shall have the right,
from time to time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 16.19.
2.5 Common Area Changes. Landlord shall have the right, in
Landlord's sole discretion, from time to time:
(a) To make changes to the Common Areas, including,
without limitation, changes in the locations, size, shape and number of
driveways, entrances, parking spaces, parking
-2-
<PAGE> 9
areas, loading and unloading areas, ingress, egress, direction of traffic,
landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the
Common Areas;
(e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Industrial Center, or any
portion thereof, and
(f) To do and perform such other acts and make such
other changes in, to or with respect to the Common Areas and Industrial Center
as Landlord may, in the exercise of sound business judgment, deem to be
appropriate.
3. TERM.
3.1 Term. The Commencement Date, Expiration Date and Term of this
Lease are as specified in Paragraph 1.3.
3.2 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall commence on the earlier of (i) the date Tenant takes possession of the
Premises to Tenant or (ii) 10 days following notice to Tenant that Landlord is
prepared to tender possession of the Premises to Tenant. If possession of the
Premises is not delivered to Tenant within 60 days after the Commencement Date
and such delay is not due to Tenant's acts, failure to act or omissions Tenant
may by notice in writing to Landlord within 10 days after the end of said 60 day
period cancel this Lease and the parties shall be discharged from all
obligations hereunder. If such written notice of Tenant is not received by
Landlord within said 10 day period, Tenant's right to cancel this Lease shall
terminate.
3.3 Commencement Date Certificate. At the request of Landlord,
Tenant shall execute and deliver to Landlord a completed certificate
("Commencement Date Certificate") in the form attached hereto as Exhibit B.
4. RENT.
4.1 Base Rent. Tenant shall pay to Landlord Base Rent and other
monetary obligations of Tenant to Landlord under the terms of this Lease (such
other monetary obligations are herein referred to as "Additional Rent") in
lawful money of the United States, without offset or deduction, in advance on or
before the first day of each month. Base Rent and Additional Rent for any period
during the term hereof which is for less than one full month shall be prorated
based upon the actual number of days of the month involved. Payment of Base Rent
and Additional Rent shall be made to Landlord at its address stated herein or to
such other persons or at such other addresses as Landlord may from time to time
designate in writing to Tenant. Base Rent and Additional Rent are collectively
referred to as "Rent". All monetary obligations of Tenant to Landlord under the
terms of this Lease are deemed to be rent.
-3-
<PAGE> 10
4.2 Operating Expenses. Tenant shall pay to Landlord on the first
day of each month during the term hereof, in addition to the Base Rent, Tenant's
Share of all Operating Expenses in accordance with the following provisions:
(a) "Operating Expenses" are all costs incurred by
Landlord relating to the ownership and operation of the Industrial Center,
Building and Premises including, but not limited to, the following:
(i) The operation, repair, maintenance and
replacement in neat, clean, good order and condition of the Common Areas,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, drainage systems, lighting facilities, fences and gates,
exterior signs and tenant directories.
(ii) Water, gas, electricity, telephone and other
utilities servicing the Common Areas.
(iii) Trash disposal, janitorial services, snow
removal, property management and security services.
(iv) Reserves set aside for maintenance, repair
and replacement of the Common Areas and Building.
(v) Real Property Taxes over the 1998 Base Year.
(vi) Premiums for the insurance policies over the
1998 Base Year maintained by Landlord under Paragraph 8 hereof.
(vii) Environmental monitoring and insurance
programs.
(viii) Monthly amortization of capital improvements
to the Common Areas and the Building. The monthly amortization of any given
capital improvement shall be the sum of the (i) quotient obtained by dividing
the cost of the capital improvement by Landlord's estimate of the number of
months of useful life of such improvement plus (ii) an amount equal to the cost
of the capital improvement times 1/12 of the lesser of 12% or the maximum annual
interest rate permitted by law.
(ix) Maintenance of the Building including, but
not limited to, painting, caulking and repair and replacement of Building
components, including, but not limited to, roof, elevators and fire detection
and sprinkler systems.
(xi) If Tenant fails to maintain the Premises,
any expense incurred by Landlord for such maintenance.
(b) Tenant's Share of Operating Expenses that are not
specifically attributed to the Premises or Building ("Common Area Operating
Expenses") shall be that percentage shown in Paragraph 1.5(a). Tenant's Share of
Operating Expenses that are attributable to the Building ("Building Operating
Expenses") shall be that percentage shown in Paragraph 1.5(b). Landlord in its
sole discretion shall determine which Operating Expenses are Common Area
Operating Expenses, Building Operating Expenses or expenses to be entirely borne
by Tenant.
(c) The inclusion of the improvements, facilities and
services set forth in Subparagraph 4.2(a) shall not be deemed to impose any
obligation upon Landlord to either have said improvements or facilities or to
provide those services.
(d) Tenant shall pay monthly in advance on the same day as the
Base Rent is due Tenant's Share of estimated Operating Expenses in the amount
set forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days
after the expiration of each calendar year a reasonably detailed statement
showing Tenant's Share of the actual Operating Expenses incurred
-4-
<PAGE> 11
during the preceding year. If Tenant's estimated payments under this Paragraph
4(d) during the preceding year exceed Tenant's Share as indicated on said
statement, Tenant shall be credited the amount of such overpayment against
Tenant's Share of Operating Expenses next becoming due. If Tenant's estimated
payments under this Paragraph 4.2(d) during said preceding year were less than
Tenant's Share as indicated on said statement, Tenant shall pay to Landlord the
amount of the deficiency within 10 days after delivery by Landlord to tenant of
said statement. At any time Landlord may adjust the amount of the estimated
Tenant's Share of Operating Expenses to reflect Landlord's estimate of such
expenses for the year.
5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon Tenant's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Tenant's faithful performance of Tenants obligations under this Lease. If Tenant
fails to pay Base Rent or Additional Rent or otherwise defaults under this Lease
(as defined in Paragraph 13.1), Landlord may use the Security Deposit for the
payment of any amount due Landlord or to reimburse or compensate Landlord for
any liability, cost, expense, loss or damage (including attorney's fees) which
Landlord may suffer or incur by reason thereof. Tenant shall on demand pay
Landlord the amount so used or applied so as to restore the Security Deposit to
the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Landlord shall, at the expiration or earlier termination of the term hereof and
after Tenant has vacated the Premises, return to Tenant that portion of the
Security Deposit not used or applied by Landlord. No part of the Security
Deposit shall be considered to be held in trust, to bear interest, or to be
prepayment for any monies to be paid by Tenant under this Lease.
6. USE.
6.1 Permitted Use. Tenant shall use and occupy the Premises only
for the Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any
nuisance, permit the emission of any objectionable noise or odor, suffer any
waste, make any use of the Premises which is contrary to any law or ordinance or
which will invalidate or increase the premiums for any of Landlord's insurance.
Tenant shall not service, maintain or repair vehicles on the Premises, Building
or Common Areas. Tenant shall not store foods, pallets, drums or any other
materials outside the Premises.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect,
either by itself or in combination with other materials expected to be on the
Premises, is either: (i) potentially injurious to the public health, safety or
welfare, the environment, or the Premises; (ii) regulated or monitored by any
governmental authority; or (iii) a basis for potential liability of Landlord to
any governmental agency or third party under any applicable statute or common
law theory. Hazardous Substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by-products
thereof Tenant shall not engage in any activity in or about the Premises which
constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances
without the express prior written consent of Landlord and compliance in a timely
manner (at Tenant's sole cost and expense) with all Applicable Requirements (as
defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or
use of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or
-5-
<PAGE> 12
with respect to which a report, notice, registration or business plan is
required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Requirements require that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Tenant may, without Landlord's prior consent, but upon notice to Landlord and in
compliance with all Applicable Requirements, use any ordinary and customary
materials reasonably required to be used by Tenant in the normal course of the
Permitted Use, so long as such use is not a Reportable Use and does not expose
the Premises, or neighboring properties to any meaningful risk of contamination
or damage or expose Landlord to any liability therefor. In addition, Landlord
may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Tenant upon Tenant's giving
Landlord such additional assurances as Landlord, in its reasonable discretion,
deems necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Landlord's option, removal on or before
Lease expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit.
(b) Duty to Inform Landlord. If Tenant knows, or has
reasonable cause to believe, that a Hazardous Substance is located in, under or
about the Premises or the Building, Tenant shall immediately give Landlord
written notice thereof, together with a copy of any statement, report, notice,
registration, application, permit, business plan, license, claim, action, or
proceeding given to, or received from, any governmental authority or private
party concerning the presence, spill, release, discharge of, or exposure to,
such Hazardous Substance. Tenant shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises
(including, without limitation, through the plumbing or sanitary sewer system).
(c) Indemnification. Tenant shall indemnify, protect,
defend and hold Landlord, Landlord's affiliates, Lenders, and the officers,
directors, shareholders, partners, employees, managers, independent contractors,
attorneys and agents of the foregoing ("Landlord Entities") and the Premises,
harmless from and against any and all damages, liabilities, judgments, costs,
claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Tenant or by any of Tenant's employees, agents,
contractors or invitees. Tenant's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Tenant, and the cost
of investigation (including consultants' and attorneys' fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved. Tenant's obligations under this Paragraph 6.2(c)
shall survive the expiration or earlier termination of this Lease.
6.3 Tenant's Compliance with Requirements. Tenant shall, at
Tenant's sole cost and expense, fully, diligently and in a timely manner, comply
with all "Applicable Requirements," which term is used in this Lease to mean all
laws, rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Landlord's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
-6-
<PAGE> 13
installation, maintenance, removal, transportation, storage, spill or release of
any Hazardous Substance), now in effect or which may hereafter come into effect.
Tenant shall, within 5 days after receipt of Landlord's written request, provide
Landlord with copies of all documents and information evidencing Tenant's
compliance with any Applicable Requirements and shall immediately upon receipt,
notify Landlord in writing (with copies of any documents involved) of any
threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving failure by Tenant or the Premises to comply with any
Applicable Requirements.
6.4 Inspection; Compliance with Law. In addition to Landlord's
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times, for the purpose of inspecting the condition of the Premises and for
verifying compliance by Tenant with this Lease and all Applicable Requirements.
Landlord shall be entitled to employ experts and/or consultants in connection
therewith to advise Landlord with respect to Tenant's installation, operation,
use, monitoring, maintenance, or removal of any Hazardous Substance on or from
the Premises. The cost and expenses of any such inspections shall be paid by the
party requesting same unless a violation of Applicable Requirements exists or is
imminent or the inspection is requested or ordered by a governmental authority.
In such case, Tenant shall upon request reimburse Landlord or Landlord's Lender,
as the case may be, for the costs and expenses of such inspections.
7. MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS.
7.1 Tenant's Obligations. Subject to the provisions of Paragraph
7.2 (Landlord's Obligations), Paragraph 9 (Damage or Destruction) and Paragraph
14 (Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonable or readily accessible to Tenant and
whether or not the need for such repairs occurs as a result of Tenant's use, any
prior use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, boilers, fired or unfired pressure
vessels, fire hose connectors if within the Premises, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights, but excluding any items which are the responsibility of
Landlord pursuant to Paragraph 7.2 below. Tenant's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.
7.2 Landlord's Obligations. Subject to the provisions of Paragraph
6 (Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or
Destruction) and Paragraph 14 (Condemnation), Landlord at its expense and not
subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order,
condition and repair the foundations and exterior walls of the Building and
utility systems outside the Building. Landlord, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
Building roof and Common Areas.
7.3 Alterations. Tenant shall not make nor cause to be made any
alterations, installations in, on, under or about the Premises.
-7-
<PAGE> 14
7.4 Surrender/Restoration. Tenant shall surrender the Premises by
the end of the last day of the Lease term or any earlier termination date, clean
and free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures and floor bolts, patch
all floors and cause all lights to be in good operating condition.
8. INSURANCE; INDEMNITY.
8.1 Payment of Premiums. The cost of the premiums for the
insurance policies maintained by Landlord under this Paragraph 8 shall be a
Common Area Operating Expenses pursuant to Paragraph 4.2 hereof. Premiums for
policy periods commencing prior to, and extending beyond, the term of this Lease
shall be prorated to coincide with the corresponding Commencement Date of
Expiration Date.
8.2 Tenant's Insurance.
(i) At its sole cost and expense, Tenant shall maintain
in full force and effect during the Term of the lease the following insurance
coverages insuring against claims which may arise from or in connection with the
Tenant's operation and use of the leased premises.
(a) Commercial General Liability with minimum
limits of $1,000,000 per occurrence; $3,000,000 general aggregate for bodily
injury, personal injury and property damage. If required by Landlord, liquor
liability coverage will be included.
(b) Workers' Compensation insurance with
statutory limits and Employers Liability with a $ 1,000,000 per accident limit
for bodily injury or disease.
(c) Automobile Liability covering all owned,
non-owned and hired vehicles with a $1,000,000 per accident limit for bodily
injury and property damage.
(d) Property insurance against all risks of loss
to any tenant improvements or betterments and business personal property on a
full replacement cost basis with no coinsurance penalty provision; and Business
Interruption Insurance with a limit of liability representing loss of at least
approximately six months of income.
(ii) Tenant shall deliver to AMB certificates of all
insurance reflecting evidence of required coverages prior to initial occupancy;
and annually thereafter.
(iii) If, in the opinion of Landlord's insurance advisor,
the amount of scope of such coverage is deemed inadequate at any time during the
Term, Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate.
(iv) All insurance required under Paragraph 8.2 (i) shall
be primary and non-contributory (ii) shall provide for severability of
interests, (iii) shall be issued by insurers, licensed to do business in the
state in which the Premises are located and which are rated A:VII or better by
Best's Key Rating Guide, (iv) shall be endorsed to include Landlord and such
other persons or entities as Landlord may from time to time designate, as
additional insureds (Commercial General Liability only), and (v) shall be
endorsed to provide at least 30-days prior notification of cancellation or
material change in coverage to said additional insureds.
8.3 Landlord's Insurance. Landlord may, but shall not be obligated
to, maintain all risk, including earthquake and flood, insurance covering the
buildings within the Industrial Center. Commercial General Liability and such
other insurance in such amounts and covering such other liability or hazards as
deemed appropriate by Landlord. The amount and scope of coverage of Landlord's
insurance shall be determined by Landlord from time to time in its sole
discretion and shall be subject to such deductible amounts as Landlord may
elect. Landlord shall have the right
-8-
<PAGE> 15
to reduce or terminate any insurance or coverage. Premiums for any such
insurance shall be a Common Area Operating Expense.
8.4 Waiver of Subrogation. To the extent permitted by law and
without affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to property insurance actually carried, or required to be carried
hereunder, to the extent of the proceeds realized from such insurance coverage.
8.5 Indemnity. Tenant shall protect, indemnify and hold the
Landlord Entities harmless from and against any and all loss, claims, liability
or costs (including court costs and attorney's fees) incurred by reason of:
(i) any damage to any property (including but not limited
to property of any Landlord Entity) or death or injury to any person occurring
in or about the Premises, the Building or the Industrial Center to the extent
that such injury or damage shall be caused by or arise from any actual or
alleged act, neglect, fault or omission by or of Tenant, its agents, servants,
employees, invitees, or visitors;
(ii) the conduct or management of any work or anything
whatsoever done by the Tenant on or about the Premises or from transactions of
the Tenant concerning the Premises;
(iii) Tenant's failure to comply with any and all
governmental laws, ordinances and regulations applicable to the condition or use
of the Premises or its occupancy; or
(iv) any breach or default of the part of Tenant in the
performance of any covenant or agreement on the part of the Tenant to be
performed pursuant to this Lease. The provisions of this Paragraph 8.5 shall
survive the termination of this Lease with respect to any claims or liability
accruing prior to such termination.
8.6 Exemption of Landlord from Liability. Except to the extent
caused by the gross negligence or willful misconduct of Landlord, Landlord
Entities shall not be liable for and Tenant waives any claims against Landlord
Entities for injury or damage to the person or the property of Tenant, Tenant's
employees, contractors, invitees, customers or any other person in or about the
Premises, Building or Industrial Center from any cause whatsoever, including,
but not limited to, damage or injury which is caused by or results from (i)
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures or (ii) from the condition of
the Premises, other portions of the Building or Industrial Center. Landlord
shall not be liable for any damages arising from any act or neglect of any other
tenant of Landlord nor from the failure by Landlord to enforce the provisions of
any other lease in the Industrial Center. Notwithstanding Landlord's negligence
or breach of this Lease, Landlord shall under no circumstances be liable for
injury to Tenant's business, for any loss of income or profit therefrom or any
indirect, consequential or punitive damages.
9. DAMAGE OR DESTRUCTION.
9.1 Termination Right. Tenant shall give Landlord immediate
written notice of any damage to the Premises. Subject to the provisions of
Paragraph 9.2, if the Premises or the Building shall be damaged to such an
extent that there is substantial interference for a period exceeding 90
consecutive days with the conduct by Tenant of its business at the Premises,
Tenant, at any time prior to commencement of repair of the Premises and
following 10 days written notice to Landlord, may terminate this Lease effective
30 days after delivery of such notice to Landlord. Such termination shall not
excuse the performance by Tenant of those covenants which under the
-9-
<PAGE> 16
terms hereof survive termination. Rent shall be abated in proportion to the
degree of interference during the period that there is such substantial
interference with the conduct of Tenant's business at the Premises. Abatement of
rent and Tenant's right of termination pursuant to this provision shall be
Tenant's sole remedy for failure of Landlord to keep in good order, condition
and repair the foundations and exterior walls of the Building, Building roof,
utility systems outside the Building, the Common Areas and HVAC.
9.2 Damage Caused by Tenant. Tenant's termination rights under
Paragraph 9.1 shall not apply if the damage to the Premises or Building is the
result of any act or omission of Tenant or of any of Tenant's agents, employees,
customers, invitees or contractors ("Tenant Acts"). Any damage resulting from a
Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at
Tenant's expense repair any damage caused by Tenant Acts. Tenant shall continue
to pay all rent and other sums due hereunder and shall be liable to Landlord for
all damages that Landlord may sustain resulting from a Tenant Act.
10. REAL PROPERTY TAXES.
10.1 Payment of Real Property Taxes. Landlord shall pay the Real
Property Taxes due and payable during the term of this Lease and, except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Operating Expenses in accordance with the provisions of Paragraph
4.2.
10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" is any form of tax or assessment, general, special, ordinary or
extraordinary, imposed or levied upon (a) the Industrial Center, (b) any
interest of Landlord in the Industrial Center, (c) Landlord's right to rent or
other income from the Industrial Center, and/or (d) Landlord's business of
leasing the Premises. Real Property Taxes include (i) any license fee,
commercial rental tax, excise tax, improvement bond or bonds, levy or tax; (ii)
any tax or charge which replaces or is in addition to any of such
above-described "Real Property Taxes" and (iii) any fees, expenses or costs
(including attorney's fees, expert fees and the like) incurred by Landlord in
protesting or contesting any assessments levied or any tax rate. The term "Real
Property Taxes" shall also include any increase resulting from a change in the
ownership of the Industrial Center or Building, the execution of this Lease or
any modification, amendment or transfer thereof. Real Property Taxes for tax
years commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date of Expiration
Date.
10.3 Additional Improvements. Operating Expenses shall not include
Real Property Taxes attributable to improvements placed upon the Industrial
Center by other tenants or by Landlord for the exclusive enjoyment of such other
tenants. Notwithstanding Paragraph 10.1 hereof, Tenant shall, however, pay to
Landlord at the time Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed by reason of
improvements placed upon the Premises by Tenant or at Tenant's request.
10.4 Joint Assessment. If the Building is not separately assessed,
Real Property Taxes allocated to the Building shall be an equitable proportion
of the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed.
10.5 Tenant's Property Taxes. Tenant shall pay prior to delinquency
all taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.
-10-
<PAGE> 17
11. UTILITIES. Tenant shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.
12. ASSIGNMENT AND SUBLETTING.
12.1 Landlord's Consent Required.
(a) Tenant shall not assign, transfer, mortgage or
otherwise transfer or encumber (collectively, "assign") or sublet all or any
part of Tenant's interest in this Lease or in the Premises without Landlord's
prior written consent which consent shall not be unreasonably withheld. Relevant
criteria in determining reasonability of consent include, but are not limited
to, credit history of a proposed assignee or sublessee, references from prior
landlords, any change or intensification of use of the Premises or the Common
Areas and any limitations imposed by the Internal Revenue Code and the
Regulations promulgated thereunder relating to Real Estate Investment Trusts.
Assignment or sublet shall not release Tenant from its obligations hereunder.
Tenant shall not (i) sublet or assign or enter into other arrangements such that
the amounts to be paid by the sublessee or assignee thereunder would be based,
in whole or in part, on the income or profits derived by the business activities
of the sublessee or assignee; (ii) sublet the Premises or assign this Lease to
any person in which Landlord owns an interest, directly or indirectly (by
applying constructive ownership rules set forth in Section 856(d)(5) of the
Internal Revenue Code (the "Code"); or (iii) sublet the Premises or assign this
Lease in any other manner which could cause any portion of the amounts received
by Landlord pursuant to this Lease or any sublease to fail to qualify as "rents
from real property" within the meaning of Section 856(d) of the Code, or which
could cause any other income received by Landlord to fail to qualify as income
described in Section 856(c)(2) of the Code. The requirements of this Section
12.1 shall apply to any further subleasing by any subtenant.
(b) A change in the control of Tenant shall constitute an
assignment requiring Landlord's consent. The transfer, on a cumulative basis, of
25% or more of the voting or management control of Tenant shall constitute a
change in control for this purpose.
12.2 Rent Adjustment. If, as of the effective date of any permitted
assignment or subletting the then remaining term of this Lease is less than
three (3) years, Landlord may, as a condition to its consent: (i) require that
the amount and adjustment schedule of the rent payable under this Lease be
adjusted to what is then the market value and/or adjustment schedule for
property similar to the Premises as then constituted, as determined by Landlord;
or (ii) terminate the Lease as of the date of assignment or subletting subject
to the performance by Tenant of those covenants which under the terms hereof
survive termination.
13. DEFAULT; REMEDIES.
13.1 Default. The occurrence of any one of the following events
shall constitute an event of default on the part of Tenant ("Default"):
(a) The abandonment of the Premises by Tenant;
(b) Failure to pay any installment of Base Rent,
Additional Rent or any other monies due and payable hereunder, said failure
continuing for a period of 3 days after the same is due;
(c) A general assignment by Tenant or any guarantor for
the benefit of creditors;
(d) The filing of a voluntary petition in bankruptcy by
Tenant or any guarantor, the filing of a voluntary petition for an arrangement,
the filing of a petition, voluntary or
-11-
<PAGE> 18
involuntary, for reorganization, or the filing of an involuntary petition by
Tenant's creditors or guarantors;
(e) Receivership, attachment, of other judicial seizure
of the Premises or all or substantially all of Tenant's assets on the Premises;
(f) Failure of Tenant to maintain insurance as required
by Paragraph 8.2;
(g) Any breach by Tenant of its covenants under Paragraph
6.2;
(h) Failure in the performance of any of Tenant's
covenants, agreements or obligations hereunder (except those failures specified
as events of Default in other Paragraphs of this Paragraph 13.1 which shall be
governed by such other Paragraphs), which failure continues for 10 days after
written notice thereof from Landlord to Tenant provided that, if Tenant has
exercised reasonable diligence to cure such failure and such failure cannot be
cured within such 10 day period despite reasonable diligence, Tenant shall not
be in default under this subparagraph unless Tenant fails thereafter diligently
and continuously to prosecute the cure to completion;
(i) Any transfer of a substantial portion of the assets
of Tenant, or any incurrence of a material obligation by Tenant, unless such
transfer or obligation is undertaken or incurred in the ordinary course of
Tenants business or in good faith for equivalent consideration, or with
Landlord's consent; and
(j) The default of any guarantors of Tenant's obligations
hereunder under any guaranty of this Lease, or the attempted repudiation or
revocation of any such guaranty.
13.2 Remedies. In the event of any Default by Tenant, Landlord
shall have the remedies set forth in the Addendum attached hereto entitled
"Landlord's Remedies in Event of Tenant Default".
13.3 Late Charge. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment of rent or
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within 10 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to 5% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's Default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.
14. CONDEMNATION. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the
Premises, or more than 25% of the portion of the Common Areas designated for
Tenant's parking, is taken by condemnation, Tenant may, at Tenant's option, to
be exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning authority takes such possession. If Tenant does
not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the portion of the Premises remaining,
except that the Base Rent shall
-12-
<PAGE> 19
be reduced in the same proportion as the rentable floor area of the Premises
taken bears to the total rentable floor area of the Premises. No reduction of
Base Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Landlord, provided, however, that Tenant shall be
entitled to any compensation, separately awarded to Tenant for Tenant's
relocation expenses and/or loss of Tenants trade fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Landlord shall to
the extent of its net severance damages in the condemnation matter, repair any
damage to the Premises caused by such condemnation authority. Tenant shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS.
15.1 Estoppel Certificate. Each party (herein referred to as
"Responding Party") shall within 10 days after written notice from the other
Party (the "Requesting Party") execute, acknowledge and deliver to the
Requesting Party, to the extent it can truthfully do so, an estoppel certificate
in the form attached hereto, plus such additional information, confirmation a/or
statements as be reasonably requested by the Requesting Party.
15.2 Financial Statement. If Landlord desires to finance,
refinance, or sell the Building, Industrial Center or any part thereof, Tenant
and all Guarantors shall deliver to any potential lender or purchaser designated
by Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
16. ADDITIONAL COVENANTS AND PROVISIONS.
16.1 Severability. The invalidity of any provision of this Lease,
as determined by a court of competent jurisdiction, shall not affect the
validity of any other provision hereof.
16.2 Interest on Past-Due Obligations. Any monetary payment due
Landlord hereunder not received by Landlord within 10 days following the date on
which it was due shall bear interest from the date due at 12% per annum, but not
exceeding the maximum rate allowed by law in addition to the late charge
provided for in Paragraph 13.3.
16.3 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.
16.4 Landlord Liability. Tenant, its successors and assigns, shall
not assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under this Lease. In no event whatsoever
shall Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.
16.5 No Prior or Other Agreements. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
supersedes all oral, written prior or contemporaneous agreements or
understandings.
16.6 Notice Requirements. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by regular, certified or registered
mail or U.S. Postal Service Express Mail, with postage
-13-
<PAGE> 20
prepaid, or by facsimile transmission during normal business hours, and shall be
deemed sufficiently given if served in a manner specified in the Paragraph 16.6.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Tenant's taking possessing of the Premises, the Premises shall
constitute Tenants address for the purpose of mailing or delivering notices to
Tenant. A copy of all notices required or permitted to be given to Landlord
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Landlord may from time to time hereafter designate by written
notice to Tenant.
16.7 Date of Notice. Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon. If sent by regular mail, the notice shall be deemed given 48 hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given 24 hours after delivery of
the same to the United States Postal Service or courier. If any notice is
transmitted by facsimile transmission or similar means, the same shall be deemed
served or delivered upon telephone or facsimile confirmation of receipt of the
transmission thereof, provided a copy is also delivered via hand or overnight
delivery or certified mail. If notice is received on a Saturday or a Sunday or a
legal holiday, it shall be deemed received on the next business day.
16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default by Tenant of the same or any other term, covenant or
condition hereof.
16.9 Holdover. Tenant has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. If Tenant holds over with the consent of Landlord: (i) the Base Rent
payable shall be increased to 175% of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination; (ii) Tenant's
right to possession shall terminate on 30 days notice from Landlord and (iii)
all other terms and conditions of this Lease shall continue to apply. Nothing
contained herein shall be construed as a consent by Landlord to any holding over
by Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration or earlier termination of this Lease in accordance with the
provisions of this Lease.
16.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or in equity.
16.11 Binding Effect: Choice of Law. This Lease shall be binding
upon the Parties, their personal representatives, successors and assigns and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the county in which the Premises are located.
16.12 Landlord. The covenants and obligations contained in this
Lease on the part of Landlord are binding on Landlord, its successors and
assigns, only during and in respect of their respective period of ownership of
such interest in the Industrial Center. In the event of any transfer or
transfers of such title to the Industrial Center, Landlord (and in case of any
subsequent transfers or conveyances, the then grantor) shall be concurrently
freed and relieved from and after
-14-
<PAGE> 21
the date of such transfer or conveyance, without any further instrument or
agreement, of all liability with respect to the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed.
16.13 Attorneys' Fees and Other Costs. If any Party brings an action
or proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting breach. Tenant shall reimburse
Landlord on demand for all reasonable legal, engineering and other professional
services expenses incurred by Landlord in connection with all requests by Tenant
for consent or approval hereunder.
16.14 Landlord's Access, Showing Premises; Repairs. Landlord and
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.
16.15 Signs. Tenant shall not place any signs at or upon the
exterior of the Premises or the Building, except that Tenant may, with
Landlord's prior written consent, install (but not on the roof) such signs as
are reasonably required to advertise Tenant's own business so long as such signs
are in a location designated by Landlord and comply with sign ordinances and the
signage criteria established for the Industrial Center by Landlord.
16.16 Termination: Merger. Unless specifically stated otherwise in
writing by Landlord, the voluntary or other surrender of this Lease by Tenant,
the mutual termination or cancellation hereof, or a termination hereof by
Landlord for Default by Tenant, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, Landlord shall, in the event
of any such surrender, termination or cancellation, have the option to continue
any one or all of any existing subtenancies. Landlord's failure within 10 days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Landlord's
election to have such event constitute the termination of such interest.
16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and
Additional Rent for the Premises and the performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof subject to all of the provisions of this Lease.
16.18 Subordination; Attornment; Non-Disturbance.
(a) Subordination. This Lease shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or mortgage (collectively, "Mortgage") now or hereafter placed by Landlord upon
the real property of which the Premises are a part, to any and all advances made
on the security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Tenant agrees that any person holding any
-15-
<PAGE> 22
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously in writing been furnished Tenant, notice of a default by
Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 90 days) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The
provisions of a Mortgage relating to the disposition of condemnation and
insurance proceeds shall prevail over any contrary provisions contained in this
Lease.
(b) Attornment. Subject to the non-disturbance provisions
of subparagraph C of this Paragraph 16.18, Tenant agrees to attorn to a Lender
or any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.
(c) Non-Disturbance. With respect to Mortgage entered
into by Landlord after the execution of this Lease, Tenant's subordination of
this Lease shall be subject to receiving assurance (a "non-disturbance
agreement") from the Mortgage holder that Tenant's possession and this Lease
will not be disturbed so long as Tenant is not in default and attorns to the
record owner of the Premises.
(d) Self-Executing. The agreements contained in this
Paragraph 16.18 shall be effective without the execution of any further
documents; provided, however, that upon written request from Landlord or a
Lender in connection with a sale, financing or refinancing of Premises, Tenant
and Landlord shall execute such further writings as may be reasonably required
to separately document any such subordination or non-subordination, attornment
and/or nondisturbance agreement as is provided for herein. Landlord is hereby
irrevocably vested with full power to subordinate this Lease to a Mortgage.
16.19 Rules and Regulations. Tenant agrees that it will abide by,
and to cause its employees, suppliers, shippers, customers, tenants, contractors
and invitees to abode by all reasonable rules and regulations ("Rules and
Regulations") which Landlord may make from time to time for the management,
safety, care, and cleanliness of the Common Areas, the parking and unloading of
vehicles and the preservation of good order, as well as for the convenience of
other occupants or tenants of the Building and the Industrial Center and their
invitees. Landlord shall not be responsible to Tenant for the non-compliance
with said Rules and Regulations by other tenants of the Industrial Center.
16.20 Security Measures. Tenant acknowledges that the rental payable
to Landlord hereunder does not include the cost of guard service or other
security measures. Landlord has no obligations to provide same. Tenant assumes
all responsibility for the protection of the Premises, Tenant, its agents and
invitees and their property from the acts of third parties.
16.21 Reservations. Landlord reserves the right to grant such
easements that Landlord deems necessary and to cause the recordation of parcel
maps, so long as such easements and maps do not reasonably interfere with the
use of the Premises by Tenant. Tenant agrees to sign any documents reasonable
requested by Landlord to effectuate any such easements or maps.
-16-
<PAGE> 23
16.22 Conflict. Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
16.23 Offer. Preparation of this Lease by either Landlord or Tenant
or Landlord's agent or Tenant's agent and submission of same to Tenant or
Landlord shall not be deemed an offer to lease. This Lease is not intended to be
binding until executed and delivered by all Parties hereto.
16.24 Amendments. This Lease may be modified only in writing, signed
by the parties in interest at the time of the modification.
16.25 Multiple Parties. Except as otherwise expressly provided
herein, if more than one person or entity is named herein as Tenant, the
obligations of such persons shall be the joint and several responsibility of all
persons or entities named herein as such Tenant.
16.26 Authority. Each person signing on behalf of Landlord or Tenant
warrants and represents that she or he is authorized to execute and deliver this
Lease and to make it a binding obligation of Landlord or Tenant.
The parties hereto have executed this Lease at the place and
on the dates specified above their respective signatures.
WITNESS AMB PROPERTY LIMITED PARTNERSHIP,
a Delaware limited partnership, as successor
in interest to Connecticut Mutual Life
- ------------------------------- Insurance Company
By: AMB Property Corporation,
a Maryland corporation, its G.P.
By:
---------------------------------
Kent Greenawalt
Its: Vice President
--------------------------------
WITNESS HEADHUNTER.NET, INC.
By: /s/ Kenneth E. Dopher
- ------------------------------- ------------------------------------------
Its: CFO
-----------------------------------------
If during the Term of this Lease, Landlord surveys the size of Premises for the
purpose of determining whether the actual square footage differs from the square
footages stated herein, Base Rent shall be appropriately adjusted assuming a
$9.00 per square foot rental rate.
-17-
<PAGE> 24
EXHIBIT A
SITE PLAN
PEACHTREE NORTHEAST BUSINESS PARK
BUILDING 6410
-18-
<PAGE> 25
EXHIBIT B
LANDLORD'S REMEDIES ADDENDUM IN THE EVENT OF TENANT DEFAULT
(STATE OF GEORGIA)
(a) In the event of any Default by Tenant, Landlord may, at
Landlord's option, without any demand or notice whatsoever (except as expressly
required in Paragraph 13 of the Lease):
(i) Terminate this Lease by giving Tenant notice of
termination, in which event this Lease shall expire and terminate on the date
specified in such notice of termination and all rights of Tenant under this
Lease and in and to the Premises shall terminate. Tenant shall remain liable for
all obligations under this Lease arising up to the date of such termination, and
Tenant shall surrender the Premises to Landlord on the date specified in such
notice; or
(ii) Terminate this Lease as provided in subparagraph (a)
(i) above and recover from Tenant all damages Landlord may incur by reason of
Tenant's default, including, without limitation, an amount which, at the date
of such termination, is calculated as follows: (1) the value of the excess, if
any, of (A) the Base Rent, Additional Rent and all other sums which would have
been payable hereunder by Tenant for the period commencing with the day
following the date of such termination and ending with the Expiration Date had
this Lease not been terminated (the "Remaining Term"), over (B) the aggregate
reasonable rental value of the Premises for the Remaining Term (which excess,
if any shall be discounted to present value at the "Treasury Yield" as defined
below for the Remaining Term); plus (2) the costs of recovering possession of
the Premises and all other expenses incurred by Landlord due to Tenant's
default, including, without limitation, reasonable attorney's fees; plus (3)
the unpaid Base Rent and Additional Rent earned as of the date of termination
plus any interest and late fees due hereunder, plus other sums of money and
damages owing on the date of termination by Tenant to Landlord under this Lease
or in connection with the Premises. The amount as calculated above shall be
deemed immediately due and payable. The payment of the amount calculated is
subparagraph (ii) (1) shall not be deemed a penalty but shall merely constitute
payment of liquidated damages, it being understood and acknowledged by Landlord
and Tenant that actual damages to Landlord are extremely difficult, if not
impossible, to ascertain. "Treasury Yield" shall mean the rate of return in
percent per annum of Treasury Constant Maturities for the length of time
specified as published in document H.15(519) (presently published by the Board
of Governors of the U.S. Federal Reserve System titled "Federal Reserve
Statistical Release") for the calendar week immediately preceding the calendar
week in which the termination occurs. If the rate of return of Treasury
Constant Maturities for the calendar week in question is not published on or
before the business day preceding the date of the Treasury Yield in question is
to become effective, then the Treasury Yield shall be based upon the rate of
return of Treasury Constant Maturities for the length of time specified for the
most recent calendar week for which such publication has occurred. If no rate
of return for Treasury Constant Maturities is published for the specific length
of time specified, the Treasury Yield for such length of time shall be the
weighted average of the rates of return of Treasury Constant Maturities most
nearly corresponding to the length of the applicable period
-19-
<PAGE> 26
specified. If the publishing of the rate of return of Treasury Constant
Maturities is ever discontinued, then the Treasury Yield shall be based upon
the index which is published by the Board of Governors of the U.S. Federal
Reserve System in replacement thereof or, if no such replacement index is
published, the index which, in Landlord's reasonable determination, most nearly
corresponds to the rate of return of Treasury Constant Maturities. In
determining the aggregate reasonable rental value pursuant to subparagraph
(ii)(1)(B) above, the parties hereby agree that, at the time Landlord seeks to
enforce this remedy, all relevant factors should be considered, including, but
not limited to, (a) the length of time remaining in the Term, (b) the then
current market conditions in the general area in which the Building is located,
(c) the likelihood of reletting the Premises for a period of time equal to the
remainder of the Term, (d) the net effective rental rates then being obtained
by landlords for similar type space of similar size in similar type buildings
in the general area in which the Building is located , (e) the vacancy levels
in the general area in which the Building is located, (f) current levels of new
construction that will be completed during the remainder of the Term and how
this construction will likely affect vacancy rates and rental rates and (g)
inflation; or
(iii) Without terminating this Lease, declare immediately
due and payable the sum of the following: (1) the present value (calculated
using the "Treasury Yield") of all Base Rent and Additional Rent due and coming
due under this Lease for the entire Remaining Term (as if by the terms of this
Lease they were payable in advance), plus (2) the cost of recovering and
reletting the Premises and all other expenses incurred by Landlord in
connection with Tenant's default, plus (3) any unpaid Base Rent, Additional
Rent and other rentals, charges, assessments and other sums owing by Tenant to
Landlord under this Lease or in connection with the Premises as of the date
this provision is invoked by Landlord, plus (4) interest on all such amounts
from the date due at the Interest Rate, and Landlord may immediately proceed to
distrain, collect, or bring action for such sum, or may file a proof of claim
in any bankruptcy or insolvency proceedings to enforce payment thereof;
provided, however, that such payment shall not be deemed a penalty or
liquidated damages, but shall merely constitute payment in advance of all Base
Rent and Additional Rent payable hereunder throughout the Term, and provided
further, however, that upon Landlord receiving such payment, Tenant shall be
entitled to receive from Landlord all rents received by Landlord from other
assignees, tenants and subtenants on account of said Premises during the
remainder of the Term (provided that the monies to which Tenant shall so become
entitled shall in no event exceed the entire amount actually paid by Tenant to
Landlord pursuant to this subparagraph (iii)), less all costs, expenses and
attorneys' fees of Landlord incurred but not yet reimbursed by Tenant in
connection with recovering and reletting the Premises; or
(iv) Without terminating this Lease, in its own name but
as agent for Tenant, enter into and upon and take possession of the Premises or
any part thereof. Any property remaining in the Premises may be removed and
stored in a warehouse or elsewhere at the cost of, and for the account of,
Tenant without Landlord being deemed guilty of trespass or becoming liable for
any loss or damage which may be occasioned thereby unless caused by Landlord's
negligence. Thereafter, Landlord may, but shall not be obligated to, lease to a
third party the Premises or any portion thereof as the agent of Tenant upon
such terms and conditions as Landlord may deem necessary or desirable in order
to relet the Premises. The remainder of any rentals received by Landlord from
such reletting, after the payment of any indebtedness due
-20-
<PAGE> 27
hereunder from Tenant to Landlord, and the payment of any costs and expenses of
such reletting, shall be held by Landlord to the extent of and for application
in payment of future rent owed by Tenant, if any, as the same may become due
and payable hereunder. If such rentals received from such reletting shall at
any time or from time to time be less than sufficient to pay to Landlord the
entire sums then due from Tenant hereunder, Tenant shall pay any such
deficiency to Landlord. Notwithstanding any such reletting without termination,
Landlord may at any time thereafter elect to terminate this Lease for any such
previous default provided same has not been cured: or
(v) Without terminating this Lease, and with or without
notice to Tenant, enter into and upon the Premises and, without being liable
for prosecution or any claim for damages therefor, maintain the Premises and
repair or replace any damage thereto or do anything or make any payment for
which Tenant is responsible hereunder. Tenant shall reimburse Landlord
immediately upon demand for any expenses which Landlord incurs in thus
effecting Tenant's compliance under this Lease and Landlord shall not be liable
to Tenant for any damages with respect thereto; or
(vi) Without liability to Tenant or any other party and
without constituting a constructive or actual eviction, suspend or discontinue
furnishing or rendering to Tenant any property, material, labor, utilities or
other service, wherever Landlord is obligated to furnish or render the same so
long as a Default exists under this Lease; or
(vii) With or without terminating this Lease, allow the
Premises to remain unoccupied and collect rent from Tenant as it comes due; or
(viii) Pursue such other remedies as are available at law or
equity.
(c) If this Lease shall terminate as a result of or while there
exists a Default hereunder, any funds of Tenant held by Landlord may be applied
by Landlord to any damages payable by Tenant (whether provided for herein or by
law) as a result of such termination or default.
(d) Neither the commencement of any action or proceeding, nor the
settlement thereof, nor entry of Judgment thereon shall bar Landlord from
bringing subsequent actions or proceedings from time to time, nor shall the
failure to include in any action or proceeding any sum or sums then due be a bar
to the maintenance of any subsequent actions or proceedings for the recovery of
such sum or sums so omitted.
(e) No agreement to accept a surrender of the Premises and no act
or omission by Landlord or Landlord's agents during the Term shall constitute
an acceptance or surrender of the Premises unless made in writing and signed by
Landlord. No re-entry or taking possession of the Premises by Landlord shall
constitute an election by Landlord to terminate this Lease unless a written
notice of such intention is given to Tenant. No provision of this lease shall
be deemed to have been waived by either party unless such waiver is in writing
and signed by the party making such waiver. Landlord's acceptance of Base Rent
or Additional Rent in full or in part following a Default hereunder shall not
be construed as a waiver of such Default. No custom or practice which may grow
up between the parties in connection with the terms of this Lease shall be
-21-
<PAGE> 28
construed to waive or lessen either party's right to insist upon strict
performance of the terms of this Lease, without a written notice thereof to the
other party,
(f) If a Default shall occur, Tenant shall pay to Landlord, on
demand, all expenses incurred by Landlord as a result thereof, including
reasonable attorneys' fees, court costs and expenses actually incurred.
-22-
<PAGE> 29
FIRST LEASE EXTENSION AND MODIFICATION AGREEMENT
THIS FIRST LEASE EXTENSION AND MODIFICATION AGREEMENT made and entered
into this 27th day of January, 1999, by and between AMB Property, L.P., a
Delaware limited partnership, as successors in interest to Peachtree Jack
Limited Partnership (hereinafter referred to as "Landlord") and HEADHUNTERS.NET,
INC., a Georgia Corporation, (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, by Lease Agreement dated September 9, 1998, and made a part
hereof as Exhibit "A", Landlord leased to Tenant certain premises (The
"Premises") comprised of approximately 6,915 square feet situated at 6410
Atlantic Boulevard, Suites 155 & 150, Norcross, Georgia, 30071, and
NOW, THEREFORE, in consideration of the mutual promises given one to
the other, the parties hereto intending to be legally bound, do hereby covenant
and agree as follows:
1. Said Lease Agreement is hereby extended for an additional term
of twelve (12) months commencing February 1, 1999 and ending January 31, 2000.
2. Tenant agrees to pay Base Monthly Rental according to the
following schedule:
<TABLE>
<CAPTION>
MONTH MONTHLY BASE RENTAL
<S> <C>
02/01/99 - 01/31/00 $5,186.00
</TABLE>
All payments are due and payable on or before the first day of each month in
advance.
3. Tenant agrees to accept the Premises in its current "as-is"
condition.
4. Except as herein modified and extended, all terms and
conditions of the Lease Agreement, dated May 21, 1998, attached hereto as
Exhibit "A" and made part hereof, shall remain in full force and effect.
5. The word "Landlord" herein shall be construed to include the
said Landlord, its successors and assigns and the word "Tenant" shall be
construed to include the said Tenant, its successors and assigns.
6. This Agreement shall be binding upon and inure to the benefit
of the parties, their respective heirs, successors and assigns.
IN WITNESS HEREOF, the said parties have executed this First Lease
Extension and Modification Agreement in quadruplicate the day and year first
written above.
<TABLE>
<S> <C>
WITNESS: AMB PROPERTY UNITED PARTNERSHIP,
a Delaware limited partnership
- -----------------------------
</TABLE>
<PAGE> 30
<TABLE>
<S> <C>
By: AMB Property Corporation,
a Maryland corporation, its G.P.
By: /s/ Kent Greenawalt
------------------------------------
Kent Greenawalt
Its: Vice President
------------------------------------
WITNESS: HEADHUNTERS.NET, INC., a Georgia
Corporation
By: /s/ Kenneth E. Dopher
-------------------------------------
Title: CFO
----------------------------------
</TABLE>
<PAGE> 31
SECOND LEASE EXTENSION AND MODIFICATION AGREEMENT
THIS SECOND LEASE EXTENSION AND MODIFICATION AGREEMENT made and entered
into this 22nd day of March, 1999, by and between AMB Property, L.P., a Delaware
limited partnership, (hereinafter referred to as "Landlord") and
HEADHUNTERS.NET, INC., a Georgia Corporation, (hereinafter referred to as
"Tenant").
WITNESSETH:
WHEREAS, by Lease Agreement dated September 9, 1998 and First Lease
Extension and Modification Agreement dated January 27, 1999, and made a part
hereof as Exhibit "B", Landlord leased to Tenant certain premises comprised of
approximately 6,915 square feet situated at 6410 Atlantic Boulevard, Suites 155
& 150, Norcross, Georgia, 30071, and
WHEREAS, Tenant desires to lease from Landlord and Landlord desires to
lease to Tenant an additional 2,966 square feet of space (The "Expansion
Premises") as shown on Exhibit "A", situated at 6410 Atlantic Boulevard, Suite
135, Norcross, Georgia 30071. This brings the total space under lease to 9,881
square feet (The "Premises").
NOW, THEREFORE, in consideration of the mutual promises given one to
the other, the parties hereto intending to be legally bound, do hereby covenant
and agree as follows:
1. Said Lease Agreement is for the term of ten (10) months
commencing April 1, 1999 and ending January 31, 2000.
2. Tenant agrees to pay Base Monthly Rental according to the
following schedule:
<TABLE>
<CAPTION>
MONTH MONTHLY BASE RENTAL
<S> <C>
04/01/99 - 01/31/00 $7,411.00
</TABLE>
All payments are due and payable on or before the first day of each month in
advance.
3. Tenant agrees to accept the Premises in its Current "as-is"
condition. Tenant may construct improvements as provided for in the attached
Addendum entitled "Tenant's Right to Construct Improvements."
4. Except as herein modified and extended, all terms and
conditions of the Lease Agreement dated May 21, 1998 and First Lease Extension
and Modification Agreement dated January 27, 1999 attached hereto as Exhibit
"B" and made part hereof, shall remain in full force and effect.
5. The word "Landlord" herein shall be construed to include the
said Landlord, its successors and assigns and the word "Tenant" shall be
construed to include tile said Tenant, its successors and assigns.
<PAGE> 32
6. This Agreement shall be binding upon and inure to the benefit
of the parties, their respective heirs, successors and assigns.
IN WITNESS HEREOF, the said parties have executed this Second Lease
Extension and Modification Agreement in quadruplicate the day and year first
written above.
<TABLE>
<S> <C>
WITNESS: AMB PROPERTY UNITED PARTNERSHIP,
a Delaware limited partnership
- -------------------------------
By: AMB Property Corporation,
a Maryland corporation, its G.P.
By: /s/ Kent Greenawalt
-----------------------------------
Kent Greenawalt
Its: Vice President
----------------------------------
WITNESS: HEADHUNTERS.NET, INC., a Georgia
Corporation
By: /s/ Kenneth E. Dopher
-----------------------------------
Title: CFO
--------------------------------
</TABLE>
<PAGE> 33
ADDENDUM
TENANT'S RIGHT TO CONSTRUCT IMPROVEMENTS
This Tenant Improvement Addendum is a part of the Lease dated March 22, 1999 by
and between AMB PROPERTY, L.P. ("Landlord") and HEADHUNTERS.NET, INC., a
Georgia Corporation ("Tenant") for the premises commonly known as 6420 Atlantic
Boulevard, Suites 135 and 150.
Tenant may construct at its sole cost and expense the improvements
("Alterations") described on Attachment I attached hereto. Prior to
commencement of construction, Tenant shall obtain and deliver to Landlord any
building permit required by applicable law and a copy of the executed
construction contract(s). Tenant shall reimburse Landlord within 10 days after
the rendition of a bill for all of Landlord's actual out-of-pocket costs
incurred in connection with the Alterations, including, without limitation, all
management, engineering, construction fees and outside consulting incurred by
or on behalf of Landlord for the review and approval of Tenant's plans and
specifications and for the monitoring of construction of the Alterations.
Tenant shall require its contractor to maintain insurance in the amounts and in
the forms described in Attachment 2. The Alterations shall be constructed by
licensed contractors approved by Landlord and in accordance with rules, such as
hours of construction, imposed by Landlord. The Alterations shall be completed
lien free, in accordance with the plans and specifications described in
Attachment 1, in a good, workmanlike and prompt manner, with new materials of
first-class quality and comply with all applicable local, state and federal
regulations. The completed Alterations shall be the property of Landlord and
shall, subject to the provisions of the next sentence, be surrendered with the
Premises upon the expiration or sooner termination of this Lease. However,
Tenant shall at Tenant's sole cost and expense remove, prior to the expiration
or sooner termination of this Lease, the Alterations which are designated by
Landlord to be removed and following such removal repair and restore the
Premises in a good and workmanlike manner to their original condition,
reasonable wear and tear excepted.
Tenant shall pay when due all claims for labor or materials furnished or
alleged to have been furnished to or for Tenant at or for use on the Premises.
Tenant shall give Landlord not less than 10 days notice prior to the
commencement of any work in, on or about the Premises, and Landlord shall have
the right to post notices of non-responsibility in or on the Premises as
provided by the appropriate Georgia Statutes, and detailed within Paragraph 7.3
of this Lease.
Tenant agrees to indemnify, protect and defend Landlord and hold Landlord
harmless against any loss, liability or damage resulting from construction of
the Alterations.
ATTACHMENTS
Attachment 1: Description of Alterations and Plans and Specifications
Attachment 2: Insurance Requirements
<PAGE> 1
EXHIBIT 10.16
February 24, 1998
Mr. Warren Bare
Headhunter.net
6410 Atlantic Blvd
Norcross, Georgia 30071
Dear Warren:
The purpose of this letter is to outline our mutual agreement
concerning your future plans of employment by HeadHunter.NET, Inc.
("HEADHUNTER"). We agree as follows:
1. We hereby confirm our previous acceptance of your resignation as Chief
Executive Officer of HeadHunter. From March 1, 1999 through March 1,
2001, HeadHunter will employ you as a consultant (but as an active
employee) at an annual salary of $75,000, plus you will be entitled to
participate in HeadHunter's health insurance program to the same extent
as any full-time HeadHunter employee. In connection with such
employment, you will be reasonably available (at the request of the
President or the Board of Directors) to HeadHunter's management for
consultation on technical and strategic decisions. Specifically, you
will be available to work in the HeadHunter office one day per week
(currently, on Tuesdays), plus you will be available to work an
additional 16 hours per month on HeadHunter projects.
2. If, during the course of such employment, you wish to discontinue such
consulting services and HeadHunter agrees to your request, your annual
salary will be reduced to $50,000 (and you may continue to participate
in HeadHunter's health insurance program).
3. In consideration for this continued employment, you will enter into a
mutually acceptable confidentiality and non-solicitation agreement (the
"CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT") in substantially the
form attached to this letter. (It is understood that the above-outlined
continuation of salary and benefits are contingent upon your abiding by
the terms set forth in this agreement and in the Confidentiality and
Non-solicitation Agreement.)
4. By signing this agreement and accepting these terms, you waive,
release, and hold harmless HeadHunter from any claims, suits, or
liabilities arising from or by reason of your previous employment by
HeadHunter or this change of status, and you agree to refrain from
suing HeadHunter (or its directors, stockholders, officers, or agents)
with respect to such matters.
5. These employment and compensation arrangements are separate from, and
do not preclude, other employment you may from time to time accept,
provided that such employment is approved in advance by HeadHunter.
HeadHunter will not reasonably deny or delay any such request for
approval.
<PAGE> 2
Please indicate your agreement with the above by your signature below.
Sincerely,
HeadHunter.NET, Inc.
/s/ Robert M. Montgomery
Robert M. Montgomery
President
Accepted and Agreed: /s/ Warren Bare
------------------------------------
Warren Bare
-2-
<PAGE> 1
Exhibit 10.17
[HEADHUNTER.NET LETTERHEAD]
April 15, 1999
Kenneth E. Dopher
719 Shadow Trace Path
Lilburn, GA 30047
This letter will serve as your legally enforceable agreement with
HeadHunter.NET regarding the termination of your employment when signed and
returned by you.
The following items detail the conditions of your termination of employment:
1. Your last day worked will be May 31, 1999 and this will be deemed
the effective date of your termination.
2. You will receive severance pay at your current salary through August
31, 1999. Paychecks during this time will be mailed to your home.
3. You will also be paid $1,000 per month through January 31, 2000 (or
work as a consultant) that cover in full satisfaction of any and all
claims you may have for any bonus pay or incentive compensation
relating to your employment with HeadHunter.NET. A paycheck for this
payment will be mailed to your home on bimonthly, when it is
earned and payable.
4. Options will continue in force with vesting through January 31,
2000.
5. Insurance and 401k benefits will end August 31, 1999.
6. Headhunter will incur up to $1500.00 for Continuing Ed completed by
8/30/99.
You acknowledge that these payments are in addition to amounts that would
otherwise be due to you as a result of your employment. We are offering this
program conditional upon your signing the waiver that follows. Please read it
carefully, consider it, and take time to review it. In addition, we advise you
to consult with an attorney before signing the agreement.
In return for the items listed above you agree to the following release:
I hereby waive, release, and hold harmless HeadHunter.NET and its
directors, officers, stockholders, and other affiliates from any
claims, suits, or liabilities arising from or by reason of my
employment or separation of employment from HeadHunter.NET including,
but not limited to, any claims at common law, any
<PAGE> 2
charges filed with the Equal Employment Opportunity Commission or claims
arising under any other state or federal statute. I further agree to
refrain from suing HeadHunter.NET and its directors, officers,
stockholders, and other affiliates with respect to such matters.
I further agree that payments herein do not constitute an admission by
HeadHunter.NET that it at any time violated any law relating to my
employment or any law against discrimination. Payment is made solely to
avoid time and expense of protracted administrative action.
I represent and agree that I have returned all property of HeadHunter.NET
to HeadHunter.NET, including all equipment, computer disks, documents,
credit cards and keys.
I also agree to abide by the provisions of the Confidentiality Agreement
which I have previously signed. I acknowledge that I understand this
agreement and that I have signed it voluntarily. This agreement and the
Confidentiality Agreement constitute all of the agreements and
understandings between us with respect to these matters.
If you agree with the above, sign two copies of this letter in the space
provided and return both copies.
The terms of this agreement are to be kept confidential between the parties
involved.
Sincerely,
/s/ Robert Montgomery
- --------------------------
HeadHunter.NET, Inc.
Agreed: /s/ Ken Dopher Date: 4/15/99
------------------- -------------------
(Name)
<PAGE> 1
EXHIBIT 10.18
FORM OF
HEADHUNTER.NET, INC.
SUBSCRIPTION AGREEMENT
If and when accepted by HeadHunter.Net, Inc. (the "COMPANY"),
this Subscription Agreement will be a binding subscription by the undersigned
person (the "INVESTOR") to purchase the number of shares of the ____________
stock of the Company (the "SHARES") set forth on the signature page hereof. Each
part of this Subscription Agreement must be completed by the Investor and, by
execution hereof, the Investor acknowledges that the Company is relying upon the
accuracy and completeness hereof in complying with its obligations under
applicable securities laws.
-------------------
THE CAPITAL STOCK REFERRED TO HEREIN HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS, AND CANNOT
BE RESOLD UNLESS SUBSEQUENTLY REGISTERED UNDER THE ACT AND SUCH LAWS OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
--------------------
THIS SUBSCRIPTION AGREEMENT, is made and entered into by and
between the Company and the Investor with respect to the Investor's purchase of
the Shares.
In consideration of the mutual representations and warranties
set forth herein and the Company's agreement to sell to the Investor the number
of Shares set forth below, upon the terms and conditions set forth herein, the
Investor and the Company agrees and represent as follows:
1. SUBSCRIPTION
1.1. PURCHASE OF SHARES
The Investor hereby subscribes to purchase the number of
Shares set forth below at a price of $_______ per Share. Simultaneously with the
execution of this Subscription Agreement, the Investor is paying to the Company
the amount set forth on the signature page below. Except as otherwise provided
by law, the Investor may revoke this subscription only if, prior to the date of
its acceptance by the Company and the same of the Shares, the Investor notifies
the Company of such revocation in writing.
1.2 ACCEPTANCE AND IRREVOCABILITY OF SUBSCRIPTION; BINDING OBLIGATION
The Investor understand and acknowledges that:
(a) This subscription may be accepted or rejected in whole or
in part by the Company in its sole and absolute discretion, and, in the event
that the Investor's subscription is
<PAGE> 2
not accepted, the Investor's subscription payment shall be returned promptly to
the Investor and this Agreement shall be terminated for all purposes.
(b) Except as otherwise provided by law, this subscription is
irrevocable and this Subscription Agreement constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms, except
that the Investor shall have no obligations hereunder in the event that this
subscription is for any reason or the offering of the Shares is for any reason
canceled or terminated.
1.3. UNREGISTERED ISSUANCE OF SHARES; RESTRICTED SECURITIES
The Investor understands and acknowledges that:
(a) No federal or state agency has made any finding or
determination as to the fairness of this offering for investment, not any
recommendation or endorsement of the Shares.
(b) Since the Shares have not been registered under the
Securities Act of 1933, as amended, (the "ACT") or applicable state securities
laws, the economic risk of the investment must be borne indefinitely by the
Investor, and the Shares cannot be sold by the Investor unless subsequently
registered under the Act and such laws or unless an exemption from such
registration is available. There is no assurance that the Shares will ever be so
registered in the future. The Company is not obligated to file a notification
under Regulation A of the Act or a registration statement under the Act with
respect to the Shares. Rule 144, adopted under the Act, governing the possible
disposition of the Shares, is not currently available, there is no assurance
that Rule 144 will be available in the future, and the Company has not
covenanted with the Investor to take any action necessary to make Rule 144
available for a limited resale of the Shares. There is no assurance that there
will be any market for resale of the Shares.
(c) The certificates representing the Shares will bear a
legend indication the restriction on transfers to which the Shares are subject,
and any transfer agent employed or utilized by the Company shall be instructed
not to effect transfer of the Shares without prior written authorization from
the Company (or if the Company serves as its own transfer agent, a notation will
be made in the Company's records indicating the transfer restrictions to which
the Shares are subject).
(d) The Company is relying upon the Investor's representations
that the Investor meets the criteria for investment set forth below and upon the
information and representations concerning the Investor in this Agreement. The
Investor affirms that all such information is accurate and complete and may be
relied upon in determining whether the Investor is qualified to participate in
this offering and otherwise for purposes of determining the availability of an
exemption from registration for the offer and sale of the Shares.
1.4. STOCKHOLDERS' AGREEMENT
Upon acceptance of his subscription by the Company, the
Investor will be required to execute the Stockholders' Agreement among the
Company and its stockholders (the "STOCKHOLDER' AGREEMENT") prior to his receipt
of the certificates representing the shares purchased pursuant hereto. The
Investor hereby represents and warrants that he has read and understands the
Stockholders' Agreement, including the provisions that impose significant
restrictions on the transfer, pledge or other disposition of the Shares.
-2-
<PAGE> 3
2. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and agrees that:
2.1. ORGANIZATION AND STANDING
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and has the full and
unrestricted corporate power and corporate authority to execute and deliver this
Agreement and to carry out the transactions contemplated hereby. The Company is
qualified and in good standing as a foreign corporation in every jurisdiction
where the nature of its business or the character of its properties makes such
qualification necessary. The Company has the full and unrestricted corporate
power and corporate authority to own, operate and lease its properties and to
carry on its business.
2.2. AUTHORIZATION
The execution, delivery and performance of this Agreement by
the Company, the fulfillment of and the compliance with the respective terms and
provisions hereof and the due consummation of the transaction contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Company (none of which actions have been modified or
rescinded, and all of which actions are in full force and effect).
2.3. BINDING OBLIGATION
When executed by the Company, the Subscription Agreement
(including these representations and warranties) will constitute a valid and
binding obligation of the Company, enforceable in accordance with its terms.
2.4. TITLE TO STOCK
Upon acceptance by the Company of this Subscription Agreement,
payment of the purchase price and delivery by the Company to the Investor of
certificates for the Shares, the Shares will be duly authorized, validly issued
and outstanding, fully paid and nonassessable, and the Investor will acquire
good, valid and marketable title thereto, free and clear of all mortgages,
liens, pledges, charges, claims, security interests, agreements, encumbrances
and equities whatsoever, except as provided in the Stockholders' Agreement
entered into among the Company and its stockholders.
2.5. LITIGATION
There are no claims, actions, suits, proceedings or
investigation pending or threatened or reasonably anticipated against or
affecting the Company or any of its assets or business or this Subscription
Agreement, at law or in equity, by or before any court, arbitrator or
governmental authority, domestic or foreign, except those that should not have a
material adverse effect on the Company and except for pending or anticipated
federal, state, and local regulatory proceedings involving or affecting the
Company.
2.6. CONSENTS
The Company is not subject to any law, ordinance, regulation,
rule, order, judgment, injunction, decree, charter, bylaw, contract, commitment,
lease, agreement, instrument or other restriction or any kind that would prevent
the Company's consummation of this Subscription Agreement or any of the
transactions contemplated hereby without the consent of any third party, that
would require the consent of
-3-
<PAGE> 4
any third party to the consummation of this Subscription Agreement or any of the
transactions contemplated hereby, or that would result in any penalty,
forfeiture or other termination as a result of such consummation (except, in
each case, to the extent that consents and/or waivers have been obtained).
2.7. ABSENCE OF VIOLATION
Neither the execution or delivery of this Subscription
Agreement nor the consummation of the transactions contemplated hereby
constitutes a violation or default under or conflicts with, or will result in
the creation of any encumbrance of any of the assets owned by the Company under,
any term or provision of the Articles of Incorporation or Bylaws of the Company,
or any material contract, commitment, lease, instrument, or agreement to which
the Company is a party or by which the Company is bound.
3. INVESTOR REPRESENTATIONS AND WARRANTIES
The Investor hereby represents, warrants and agrees that:
3.1. INVESTMENT INTENT
The Investor is acquiring the Shares for his own account as
principal, for investment, and not with a view to resale or distribution. The
Investor agrees not to sell, hypothecate or otherwise dispose of the Shares
unless such Shares have been registered under the Act and applicable state
securities laws or an exemption from registration requirements of the Act and
such laws is available.
3.2. QUALIFICATION OF INVESTOR
(a) The Investor is an executive officer or director of the
Company. The Investor's overall commitment to investments that are not readily
marketable is reasonable in relation to his net worth, and his acquisition of
the Shares will not cause such overall commitment to become excessive. The
Investor has adequate net worth and means of providing for his current needs and
personal contingencies to sustain a complete loss of his investment in the
Company, and he has no need for liquidity in his investment in the Shares. The
Investor is capable of understanding and has evaluated the merits and risks of
investing in the Company. The Investor is aware that his right to transfer the
Shares is restricted by the Stockholders' Agreement, the Act, and applicable
state securities laws, and of the absence of a market for the Shares. The
Investor has substantial experience in making investment decisions of this type.
If needed, the Investor has discussed with his professional legal, tax and/or
financial advisors the suitability of an Investment in the Company for his
particular tax and financial situation.
(b) All information that the Investor has provided to the
Company concerning himself and his financial position is correct and complete as
of the date set forth below, and if there should be any material change in such
information prior to sale of the Shares to the Investor, he will immediately
provide such changed information to the Company.
3.3. RECEIPT AND REVIEW OF CERTAIN INFORMATION
The Investor has had the opportunity to ask questions of the
officers of the Company concerning the Company, the terms and conditions of the
offering, and an investment in the Shares. The Company has made available to him
and/or his attorney, accountant, or investor representative all documents that
he or they have requested relating thereto and has
-4-
<PAGE> 5
provided answers to all of such questions. In evaluating the suitability of an
investment in the Shares, the Investor has not relied upon any representations
or other information (whether oral or written) other than as contained in any
documents or written answers to questions so furnished to him by the Company.
The Investor also understands and acknowledges that the Company cannot provide
assurances with respect to any projections or predictions as to the future
business or financial performance of the Company.
3.4. RISK ASSOCIATED WITH INVESTMENT IN THE SHARES
THE INVESTOR RECOGNIZES THAT AN INVESTMENT IN THE COMPANY
INVOLVES A HIGH DEGREE OF RISK, AND HE HAS TAKEN FULL COGNIZANCE OF AND
UNDERSTANDS ALL OF THE RISK FACTORS RELATED TO THE PURCHASE OF THE SHARES.
3.5. ACCURACY OF INVESTOR'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
The representations, warranties, and statements of the
Investor set forth in this Agreement (including, without limitation, in Appendix
A hereto) are true and accurate as of the date hereof and shall be true and
accurate as of the date of the acceptance hereof by the Company and the sale of
the Shares to the Investor. If in any respect such representations, warranties,
and agreements shall not be true and accurate at any time prior thereto, the
Investor promptly shall give written notice of such fact to the Company
specifying which representations, warranties, and agreements are not true and
accurate and the reasons thereof.
4. INDEMNIFICATION
The Investor agrees to indemnify the Company and each officer
and director of the Company against any and all liability, costs, and expenses
arising out of or resulting from any misrepresentation, breach of warranty or
breach of covenant by the Investor contained herein or with respect to any
offer, sale, distribution, or other disposition of the Shares or any
solicitation of any offer to buy, purchase, or otherwise acquire the Shares
acquired by the Investors hereunder.
5. MISCELLANEOUS
5.1. PRONOUNS
All pronouns and any variations thereof used herein shall be
deemed to refer to the masculine, feminine, neuter or plural as the identity of
the person or persons may require.
5.2. NOTICES
Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered (including delivery by an express or overnight delivery service), when
received by facsimile transmission or when sent by registered mail, return
receipt requested, addressed, if to the Investor, at the address appearing on
the signature page hereof, and if to the Company, at the address of its
principal offices in Atlanta, Georgia, or to such other address as may be
furnished from time to time by notice given in accordance with this Section.
5.3. WAIVER
Failure of the Company to exercise any right or remedy under
this Subscription Agreement, or delay by the Company in exercising same, will
not operate as a waiver thereof.
-5-
<PAGE> 6
No waiver by the Company will be effective unless and until it is in writing and
signed by the Company.
5.4. GOVERNING LAW
This Subscription Agreement shall be enforced, governed and
construed in accordance with the laws of the State of Georgia (but not including
the choice-of-law rules thereof). This Subscription Agreement and the rights,
powers and duties set forth herein shall be binding upon the Investor, his
heirs, estate, legal representatives, successors and assigns, and shall inure to
the benefit of the Company, its successors and assigns. In the event that any
provision of this Subscription Agreement is invalid or unenforceable under any
application statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provisions hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability or any other provision hereof.
IN WITNESS WHEREOF, the Investor has executed this Agreement
as of the date set forth below.
Dated , 1999
--------- --------------------------------------------
Signature of Investor
The foregoing Subscription is accepted as of _______ ___, 1999.
HEADHUNTER.NET, INC.
By
------------------------------------------
Name:
Title:
-6-
<PAGE> 7
APPENDIX A
ADDITIONAL INFORMATION TO BE COMPLETED BY INVESTOR:
(Please print or type)
NUMBER OF SHARES SUBSCRIBED FOR: __________ Shares
TOTAL PRICE OF SHARES SUBSCRIBED FOR: $ _________
INVESTOR'S RESIDENCE ADDRESS: ___________________________
___________________________
___________________________
Telephone: ___________________________
INVESTOR'S BUSINESS ADDRESS: ___________________________
___________________________
___________________________
Telephone: ___________________________
LIST THE STATE IN WHICH INVESTOR CURRENTLY:
Votes: ___________________________
Files state income tax returns: ___________________________
Maintains a driver's license: ___________________________
INVESTOR'S TAXPAYER ID/SOCIAL SECURITY NUMBER: _______________________
EMPLOYER AND POSITION:
(Identify current employer and position, and also list previous employers and
positions since January 1, 1993.)
________________________________________________________________
________________________________________________________________
________________________________________________________________
SEND CORRESPONDENCE TO INVESTOR'S: Home: _____________ Office: ___________
-7-
<PAGE> 8
INVESTOR'S UNDERGRADUATE AND ANY POSTGRADUATE EDUCATION AND DEGREES:
Year
School Degree Received
________________________________________________________________
________________________________________________________________
________________________________________________________________
ADDITIONAL QUESTIONS AND INFORMATION:
1. Have you, or has any partnership of which you were a general partner,
even been subject to bankruptcy, reorganization, or debt restructuring?
Yes ___ No ___. If yes, please describe.
________________________________________________________________
2. Are you involved in any litigation which if any adverse decisions
occurred would adversely affect your financial condition? Yes ___
No ___. If yes, please describe.
________________________________________________________________
3. Have you even been refused a letter of credit or a surety contract
which supported your payments under any debt obligations within the
last two years? Yes ___ No ___. If yes, please describe.
________________________________________________________________
4. Please describe the nature of any securities in which you have
previously invested (e.g., marketable or restricted stock, bonds or
debentures, limited partnership interests, etc.):
________________________________________________________________
________________________________________________________________
5. Please indicate in the space provided below any additional information
which you think may be helpful in enabling the Company to determine
whether your knowledge and experience in financial and business matters
is sufficient to enable you to evaluate the merits and risks of this
investment.
________________________________________________________________
________________________________________________________________
________________________________________________________________
-8-
<PAGE> 9
Schedule to Exhibit 10.18
The following table sets forth the officer or director who entered into a
subscription agreement substantially similar to Exhibit 10.18, and the number of
shares, class of stock and per share purchase price set forth in such person's
agreement:
<TABLE>
<CAPTION>
Name Number of Shares Class of Stock Price Per Share
---- ---------------- -------------- ---------------
<S> <C> <C> <C>
James Canfield 100,000 Class A Preferred $1.50
Kenneth Dopher 7,500 Class A Preferred $1.50
Mark Fouraker 10,000 Class A Preferred $1.50
Burton Goldstein 16,667 Class A Preferred $1.50
Judith Hackett 10,000 Class A Preferred $1.50
Mike Misikoff 20,000 Common $2.00
Bob Montgomery 100,000 Class A Preferred $1.50
Bob Montgomery 100,000 Common $2.00
Mark Partin 20,000 Common $2.00
Eric Presley 7,000 Class A Preferred $1.50
Don Weber 20,000 Class A Preferred $1.50
</TABLE>
<PAGE> 1
EXHIBIT 10.19
FORM OF
LOAN AND SECURITY AGREEMENT
BETWEEN
HEADHUNTER.NET, INC.
AND
___________________________________________
DATED AS OF ______________________, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
1. THE NOTE 1
2. PLEDGE AND SECURITY AGREEMENT .................................................................1
2.1. Grant of Security Interest ...........................................................1
2.2. Security for Obligations .............................................................2
2.3. Delivery of Collateral ...............................................................2
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EMPLOYEE .....................................2
3.1. Execution of Agreement; Absence of Violation .........................................2
3.2. Binding Obligation ...................................................................2
3.3. Collateral ...........................................................................2
3.4. Further Assurances ...................................................................3
3.5. Voting Rights, Dividends, Etc.........................................................3
3.6. Transfers and Other Liens ............................................................3
3.7. HeadHunter Appointed Attorney-in-Fact ................................................3
4. HeadHunter AS COLLATERAL AGENT ................................................................4
5. EVENTS OF DEFAULT, REMEDIES AND INDEMNITIES ...................................................4
5.1. Events of Default.....................................................................4
5.2. Remedies .............................................................................4
5.3. Indemnity and Expenses of HeadHunter .................................................5
6. GENERAL 5
6.1. Continuing Security Interest .........................................................5
6.2. Termination ..........................................................................5
6.3. Expenses .............................................................................6
6.4. Entire Agreement .....................................................................6
6.5. Amendments ...........................................................................6
6.6. Waivers ..............................................................................6
6.7. Assignment ...........................................................................6
6.8. Notices ..............................................................................6
6.9. Governing Law; Disputes ..............................................................7
6.10. Counterparts; Facsimiles .............................................................7
6.11. Captions; Articles and Sections ......................................................7
6.12. Severability .........................................................................7
</TABLE>
i
<PAGE> 3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of _______, 1999, between
HeadHunter.NET, Inc., a Georgia corporation ("HEADHUNTER"), and _______, an
employee of HeadHunter (the "EMPLOYEE").
PRELIMINARY STATEMENTS:
(1) Simultaneously herewith, the Employee is purchasing from
HeadHunter _______ shares of ___________ stock of HeadHunter (the "SHARES") for
an aggregate purchase price of _______ Dollars ($________) the "PURCHASE
PRICE"). The Employee is paying _______ Dollars ($_______) of such purchase
price in cash. The remainder of the purchase price shall be payable by the
Employee pursuant to the terms of a promissory note being issued by the Employee
to HeadHunter dated as of the date hereof (the "Note").
(2) It is a condition precedent to HeadHunter's accepting the
Note in connection with its sale of the Shares to the Employee that the Employee
shall have granted the security interest and made the pledge and assignment
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce HeadHunter to accept the Note, the parties hereto hereby agree as
follows:
1. THE NOTE
The Employee is issuing to HeadHunter the Note in the form of Exhibit A
hereto to evidence its promise to pay _______ Dollars ($_________) as provided
in the Note.
2. PLEDGE AND SECURITY AGREEMENT
2.1. GRANT OF SECURITY INTEREST
The Employee hereby assigns and pledges to HeadHunter, and
hereby grants to HeadHunter a security interest in, the following (collectively,
the "Collateral"):
(a) all of the Shares; and
(b) all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Shares, and all proceeds
(including cash proceeds) of any and all of the Collateral (including,
to the extent not otherwise included, all payments under insurance
(whether or not HeadHunter is the loss payee thereof), or any
1
<PAGE> 4
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the Collateral).
2.2. SECURITY FOR OBLIGATIONS
This Agreement secures the payment of all obligations of the
Employee now or hereafter existing under this Agreement and/or the Note, whether
for principal, fees, expenses or otherwise (all such obligations being the
"SECURED OBLIGATIONS"). Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Employee to HeadHunter under this Agreement
or the Note but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy or similar proceeding involving the Employee.
2.3. DELIVERY OF COLLATERAL
The Employee shall deliver all certificates or instruments
representing or evidencing Collateral to HeadHunter to be held by HeadHunter
pursuant hereto. Such certificates or instruments shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to HeadHunter. HeadHunter shall have the right, in its discretion
upon the occurrence of an Event of Default, to transfer to or to register in its
name any or all of the Collateral, subject to the provisions of this Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE EMPLOYEE
The Employee hereby represents, warrants, and covenants to
HeadHunter as follows:
3.1. EXECUTION OF AGREEMENT; ABSENCE OF VIOLATION
The Employee has duly executed and delivered this Agreement.
The Employee's execution, delivery and performance of this Agreement and the
Note, the fulfillment of and compliance with the respective terms and provisions
hereof and thereof, and the consummation by the Employee of the transactions
contemplated hereby and thereby do not and will not: (a) conflict with, or
violate any term or provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination, or award (collectively, "Law")
having applicability to the Employee or any of his assets; (b) conflict with, or
result in any material breach of, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, any material
agreement to which the Employee is a party or by which the Employee or any of
his assets are bound; or (c) result in or require the creation or imposition of
or result in the acceleration of any indebtedness, or of any conditional sale
agreement, default of title, encroachment, encumbrance, hypothecation,
infringement, lien, pledge, reservation, restriction, security
2
<PAGE> 5
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 (collectively, "LIEN") of any nature upon, or
with respect to, the Employee or any of his assets.
3.2. BINDING OBLIGATION
Each of this Agreement and the Note constitute a valid and
binding obligation of the Employee, as applicable, enforceable against the
Employee in accordance with its terms.
3.3. COLLATERAL
The Employee is the legal and beneficial owner of the Shares
that he is assigning and pledging to HeadHunter pursuant to this Agreement, free
and clear of any Lien, except for the security interest created by this
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of HeadHunter relating to
this Agreement. This Agreement and the pledge of the Collateral pursuant hereto
create a valid and perfected first priority security interest in the Collateral,
securing the payment of the Secured Obligations, and any filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
3.4. FURTHER ASSURANCES
The Employee agrees that, from time to time, he will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that HeadHunter may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted hereby or to enable HeadHunter to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
3.5. VOTING RIGHTS, DIVIDENDS, ETC.
(a) So long as no Event of Default (as defined in Section 5.1)
shall have occurred and be continuing, the Employee shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof that he has pledged pursuant to this Agreement
for any purpose not inconsistent with the terms of this Agreement.
(b) Any and all dividends and other distributions (whether
paid or payable in cash or otherwise) in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Collateral, shall be promptly delivered to HeadHunter
(together with the certificates representing such shares) to hold as Collateral
and shall, if received by the Employee, be received in trust for
3
<PAGE> 6
the benefit of HeadHunter, be segregated from the other property or funds of the
Employee and be forthwith delivered to HeadHunter as Collateral in the same form
as so received (with any necessary endorsement); and
(c) Upon notice to the Employee by HeadHunter following the
occurrence and during the continuance of an Event of Default, all rights of the
Employee to exercise or refrain from exercising the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant hereto shall
cease, and all such rights shall thereupon become vested in HeadHunter, which
shall thereupon have the sole night to exercise or refrain from exercising such
voting and other consensual rights.
3.6. TRANSFERS AND OTHER LIENS
The Employee shall not (1) sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to, any
of the Collateral, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral except for the pledge, assignment and security
interest created by this Agreement.
3.7. HEADHUNTER APPOINTED ATTORNEY-IN-FACT
The Employee hereby irrevocably appoints HeadHunter as the
Employee's attorney-in-fact, with full authority in the place and stead of the
Employee and in the name of the Employee or otherwise, from time to time in
HeadHunter's reasonable discretion to take any action and to execute any
instrument that HeadHunter may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to file any claims or
take any action or institute any proceedings that HeadHunter may deem necessary
or desirable for the collection of any of the Collateral or otherwise to enforce
compliance with the terms and conditions of any rights of HeadHunter with
respect to any of the Collateral.
4. HEADHUNTER AS COLLATERAL AGENT
The powers conferred on HeadHunter hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
HeadHunter shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to conversions, exchanges, tenders or other matters relative
to any Collateral, whether or not HeadHunter has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral. HeadHunter
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which HeadHunter accords its own property.
4
<PAGE> 7
5. EVENTS OF DEFAULT, REMEDIES AND INDEMNITIES
5.1. EVENTS OF DEFAULT
The Events of Default specified in the Note shall also be
Events of Default under this Agreement ("EVENTS OF DEFAULT").
5.2. REMEDIES
(a) If any Event of Default shall have occurred and be
continuing, and in addition to any rights and remedies HeadHunter may have
pursuant to the Note, HeadHunter may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the
Uniform Commercial Code in effect in Georgia at such time (the "UNIFORM
COMMERCIAL CODE") (whether or not the Uniform Commercial Code ,applies to the
affected Collateral) and also may require the Employee to, and the Employee
hereby agrees that he will at his expense and upon request of HeadHunter
forthwith, assemble all or part of the Collateral as directed by HeadHunter and
make it available to HeadHunter at a place to be designated by HeadHunter that
is reasonably convenient to both parties and without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of HeadHunter's offices or elsewhere, or cash, on credit
or for future delivery, and upon such other terms as HeadHunter may deem
commercially reasonable. The Employee agrees that, to the extent notice of sale
shall be required by Law, at least ten days' notice to the Employee of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. HeadHunter shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
HeadHunter may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by HeadHunter in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in HeadHunter's discretion, be held by HeadHunter as collateral
for, and/or then or at any time thereafter applied in whole or in part by
HeadHunter for the benefit of HeadHunter against, all or any part of the Secured
Obligations in such order as HeadHunter shall elect. Any surplus of such cash or
cash proceeds held by HeadHunter and remaining after payment in full of all the
Secured Obligations shall be paid over to the Employee or to whomsoever may be
lawfully entitled to receive such surplus.
5.3. INDEMNITY AND EXPENSES OF HEADHUNTER
The Employee agrees to indemnify and hold harmless HeadHunter,
any other holder of the Note and each of their affiliated companies, officers,
directors, employees, and agents (each, an "INDEMNIFIED PARTY") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable
5
<PAGE> 8
fees and expenses of counsel) that are incurred by any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation or
proceeding or preparation of a defense in connection therewith) the Note, this
Agreement, or any of the transactions contemplated herein, except to the extent
such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's default in the performance of its obligations
under this Agreement or the Note. In the case of an investigation, litigation or
other proceeding to which this indemnity applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Employee or an Indemnified Party and whether or not the transactions
contemplated hereby are consummated. The Employee agrees not to assert any claim
against any Indemnified Party, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Note, this Agreement, or any of the transactions contemplated herein.
6. GENERAL
6.1. CONTINUING SECURITY INTEREST
Subject to Section 6.2 hereof, this Agreement shall create a
continuing security interest in the Collateral and shall remain in full force
and effect until the payment in full in cash of the Secured Obligations, shall
be binding upon the Employee and his successors and permitted assigns, and shall
inure, together with the rights and remedies of HeadHunter hereunder, to the
benefit of HeadHunter and its successors, transferees and assigns. Without
limiting the generality of the foregoing, HeadHunter may, upon written notice to
the Employee, assign or otherwise transfer all or any portion of its rights and
obligations under the Note to any other person or entity, and such other person
or entity shall thereupon become vested with all the benefits in respect thereof
granted to HeadHunter herein or otherwise.
6.2. TERMINATION
Upon payment in full of the outstanding principal amount of
the Note and any fees or expenses payable with respect thereto, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Employee. HeadHunter shall deliver to the
Employee the certificates representing the Shares and all other Collateral and
will execute and deliver to the Employee such documents as the Employee shall
reasonably request to evidence such release.
6.3. EXPENSES
Each of the parties hereto shall bear and pay all direct costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel.
6
<PAGE> 9
6.4. ENTIRE AGREEMENT
Except as otherwise expressly provided herein, this Agreement
and the Note constitute the entire agreement among the parties hereto 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 or
entity, other than the parties hereto or their respective successors, any
nights, remedies, obligations, or liabilities under or by reason of this
Agreement.
6.5. AMENDMENTS
This Agreement may be amended, in whole or in part, by the
written consent of the parties hereto.
6.6. WAIVERS
The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the night of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
6.7. ASSIGNMENT
Except as expressly contemplated hereby, 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 the other parties hereto, except that HeadHunter
may assign this Agreement and the Note to any person or entity controlled by,
controlling, or under common control with HeadHunter upon written notice of such
assignment to the Employee. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by such
parties and their respective successors and assigns.
6.8. 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:
7
<PAGE> 10
HeadHunter:
HeadHunter.NET, Inc.
6410 Atlantic Boulevard, Suite 160
Norcross, Georgia 30071
Attention: Ken Dopher
Chief Financial Officer
The Employee:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
6.9. GOVERNING LAW; DISPUTES
This Agreement shall be governed by and construed in
accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
6.10. COUNTERPARTS; FACSIMILES
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. The execution and delivery of this
Agreement by any party by facsimile shall constitute effective execution and
delivery thereof.
6.11. CAPTIONS; ARTICLES AND SECTIONS
The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement. Unless otherwise indicated,
all references to particular Articles or Sections shall mean and refer to the
referenced Articles and Sections of this Agreement.
6.12. SEVERABILITY
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
8
<PAGE> 11
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement or has caused this Agreement to be executed on its behalf by its
duly authorized officers as of the day and year first above written.
HEADHUNTER.NET, INC.
--------------------------------------------
By: Ken Dopher
Its: Chief Financial Officer
THE EMPLOYEE:
--------------------------------------------
Name of Employee:
9
<PAGE> 12
EXHIBIT A
Atlanta, Georgia
PROMISSORY NOTE
U.S. $ , 1999
-------------------- --------------------
FOR VALUE RECEIVED,_____________________________(the
"EMPLOYEE"), an employee of HeadHunter.NET, Inc., HEREBY PROMISES TO PAY to the
order of HeadHunter.NET, Inc. or its assigns ("HEADHUNTER"), as set forth below,
the principal sum of ___________________ Dollars ($__________) (or so much
thereof as shall not have been prepaid).
The principal amount of this Note all be payable in biweekly
installments of _________________________ Dollars ($____________), which the
Employee hereby authorizes HeadHunter to deduct from the Employee's biweekly
compensation from HeadHunter, with any unpaid balance of this Note becoming due
and payable in full on December 31, 1999. No interest shall be payable on the
principal of this Note. All payments hereunder shall be made in lawful money of
the United States of America, without offset, at the principal place of business
of HeadHunter or at such other place as HeadHunter shall have designated to the
Employee in writing.
This Note is issued in connection with the Employee's purchase
of ___________ stock from HeadHunter. The obligations of the Employee under this
Note shall be secured by the Collateral as provided in the Loan and Security
Agreement between HeadHunter and the Employee dated as of the date hereof (the
"LOAN AND SECURITY AGREEMENT").
The unpaid principal amount of this Note may be prepaid in
whole or in part at any time or times without premium or penalty. Each
prepayment shall be applied first to the payment of all interest and other
amounts accrued hereunder on the date of any such prepayment, and the balance of
any such prepayment shall be applied to the principal amount hereof.
The occurrence of any one or more of the following shall
constitute an event of default ("EVENT OF DEFAULT") hereunder:
(1) failure to pay, when due, the principal, any interest, or
any other sum payable hereunder (whether upon maturity hereof, upon any
installment payment date, upon acceleration or required prepayment, or
otherwise);
(2) any representation or warranty made by the Employee under
or in connection with this Note or the Loan and Security Agreement
shall prove to have been incorrect in any material respect when made,
or the Employee shall fall to
1
<PAGE> 13
perform any other term, covenant or agreement contained in this Note or
the Loan and Security Agreement on his/her part to be performed or
observed if such failure shall remain unremedied for 30 days after the
earlier of the date on which (1) the Employee becomes aware of such
failure or (ii) written notice thereof shall have been given to the
Employee by HeadHunter;
(3) the termination, for whatever reason, of the Employee's
employment with HeadHunter;
(4) the failure of the Employee generally to pay his/her debts
as such debts become due, the admission by the Employee in writing of
his/her inability to pay his/her debts as such debts become due, or the
making by the Employee of any general assignment for the benefit of
creditors; and
(5) the commencement by or against the Employee of any case,
proceeding, or other action seeking reorganization, arrangement,
adjustment, or composition of the Employee's debts under any law
relating to bankruptcy, insolvency, or relief of debtors.
Upon the occurrence of any such Event of Default hereunder,
the entire principal amount hereof shall be accelerated, and shall be
immediately due and payable, at the option of HeadHunter in the case of clauses
1, 2 and 3 above, without demand or notice, and in addition thereto, and not in
substitution therefor, HeadHunter shall be entitled to exercise any one or more
of the rights and remedies exercisable by HeadHunter upon an Event of Default
under the Loan and Security Agreement or provided by applicable law. Failure to
exercise said option or to pursue such other remedies shall not constitute a
waiver of such option or such other remedies or of the right to exercise any of
the same in the event of any subsequent Event of Default hereunder.
HeadHunter may, upon the occurrence of any such Event of
Default hereunder, have resort to the Collateral given as security for this Note
in any order, and may sell and dispose of such Collateral in whole or in part,
at any time or from time to time, with no requirement on the part of HeadHunter
to marshal assets. HeadHunter shall not be required to preserve any rights in
such Collateral as against prior parties.
The Employee promises to pay all costs and expenses (including
without limitation attorneys' fees and disbursements) incurred in connection
with the collection hereof or in the protection or realization of any collateral
now or hereafter given as security for the repayment hereof (including without
limitation the Collateral provided under the Loan and Security Agreement), and
to perform each and every covenant or agreement to be performed by the Employee
under the Loan and Security Agreement and this Note and any other instrument
evidencing or securing the obligation represented by this Note.
2
<PAGE> 14
Any payment on this Note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment is to be made
hereunder shall be made on the next succeeding day which is a business day in
such place, and any such extension of the time of payment shall be included in
the computation of interest hereunder.
To the extent permitted by applicable law, each Obligor (which
term shall include the Employee and all makers, sureties, guarantors, endorsers,
and other persons assuming obligations pursuant to this Note) under this Note
hereby waives presentment, protest, demand, notice of dishonor, and all other
notices, and all defenses and pleas on the grounds of any extension or
extensions of the time of payments or the due dates of this Note, in whole or in
part, before or after maturity, with or without notice. No renewal or extension
of this Note, no release or surrender of any collateral given as security for
this Note, no release of any Obligor, and no delay in enforcement of this Note
or in exercising any right or power hereunder, shall affect the liability of any
Obligor. The pleading of any statute of limitations as a defense to any demand
against any Obligor is expressly waived.
No single or partial exercise by HeadHunter of any night
hereunder, under the Loan and Security Agreement, or under any other agreement
given as security for this Note or pertaining hereto, shall preclude any other
or further exercise thereof or the exercise of any other rights. No delay or
omission on the part of HeadHunter in exercising any right hereunder shall
operate as a waiver of such right or of any other right under this Note.
Whenever used herein, the words "HeadHunter" and "Employee"
shall be deemed to include their respective successors and any permitted
assigns.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Georgia (excluding the choice of law provisions
thereof).
THE EMPLOYEE:
--------------------------------------------
3
<PAGE> 15
Schedule to Exhibit 10.19
The following table sets forth the officer who entered into a loan and
security agreement substantially similar to Exhibit 10.19 and the amount of
the loan to such officer:
<TABLE>
<CAPTION>
Name Amount of Loan
- ---- --------------
<S> <C>
James R. Canfield $15,000
Kenneth E. Dopher $11,250
Judith G. Hackett $15,000
Eric Presley 7,500
</TABLE>
<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
ARTHUR
ANDERSEN
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
June 16, 1999
<PAGE> 1
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, Burton B.
Goldstein, Jr., a Georgia resident, does hereby constitute and appoint Kimberley
E. Thompson and Mark W. Partin, 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 (1)
the registration statement on Form S-1 to be filed with the Securities and
Exchange Commission in connection with the initial public offering by
HeadHunter.NET, Inc. of its common stock, and (2) any and all amendments
thereto, including post-effective amendments, to such registration statement,
and (3) 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. The undersigned hereby grants
unto such 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
hereby ratifies and confirms all that such attorneys or any one of them shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of this 4th day of June, 1999.
/s/ Burton B. Goldstein, Jr.
---------------------------------
Burton B. Goldstein, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 254,937 165,923
<SECURITIES> 0 0
<RECEIVABLES> 334,001 478,863
<ALLOWANCES> 37,346 75,524
<INVENTORY> 0 0
<CURRENT-ASSETS> 746,701 933,633
<PP&E> 529,097 629,581
<DEPRECIATION> 81,772 119,970
<TOTAL-ASSETS> 2,225,180 2,190,906
<CURRENT-LIABILITIES> 4,193,123 1,272,445
<BONDS> 0 0
0 0
28,000 54,045
<COMMON> 22,000 22,000
<OTHER-SE> (2,017,943) 842,416
<TOTAL-LIABILITY-AND-EQUITY> 2,225,180 2,190,906
<SALES> 1,099,868 828,027
<TOTAL-REVENUES> 1,099,868 828,027
<CGS> 86,963 25,433
<TOTAL-COSTS> 4,639,660 4,675,193
<OTHER-EXPENSES> 442,407 9,433
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (4,345,868) (3,882,022)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (4,345,868) (3,882,022)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (4,345,868) (3,882,022)
<EPS-BASIC> (1.98) (1.76)
<EPS-DILUTED> (1.55) (1.34)
</TABLE>
