HOTJOBS COM LTD, S-1/A, 1999-08-05

HOTJOBS COM LTD
S-1/A, 1999-08-05
BUSINESS SERVICES, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1999

REGISTRATION NO. 333-80367
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 4 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

------------------------

HOTJOBS.COM, LTD.

(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7361 13-3931821
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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24 WEST 40TH STREET, 14(TH) FLOOR
NEW YORK, NEW YORK 10018
(212) 302-0060
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------

MR. RICHARD S. JOHNSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HOTJOBS.COM, LTD.
24 WEST 40TH STREET, 14(TH) FLOOR
NEW YORK, NEW YORK 10018
(212) 302-0060
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
------------------------------

Copies to:

<TABLE>
<S> <C>
ALEXANDER D. LYNCH, ESQ. ANDREW M. TUCKER, ESQ.
BROBECK, PHLEGER & HARRISON LLP SHAW PITTMAN
1633 BROADWAY, 47TH FLOOR 1676 INTERNATIONAL DRIVE
NEW YORK, NY 10019 MCLEAN, VA 22102
(212) 581-1600 (703) 790-7900
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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 an 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>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
<S> <C> <C>
Common Stock, par value $.01 per share.......................... $76,475,000 $1,518
</TABLE>

(1) Includes shares that the Underwriters have the option to purchase from the
Company solely to cover over-allotments, if any. Estimated pursuant to Rule
457(o) under the Securities Act of 1933, as amended, solely for the purpose
of computing the amount of the registration fee.

(2) We previously paid $19,742 of the aggregate $21,760 fee required for this
offering.

------------------------------

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 SECTION 8(A), MAY
DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>

SUBJECT TO COMPLETION
AUGUST 5, 1999

[LOGO]
4,750,000 SHARES
COMMON STOCK

This is HotJobs.com's initial public offering. We are offering 4,750,000
shares of common stock.

We expect the public offering price to be between $12.00 and $14.00 per share.
We expect that the common stock will be quoted on the Nasdaq National Market
under the symbol "HOTJ."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROPSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PROCEEDS,
BEFORE
PRICE TO UNDERWRITING EXPENSES,
PUBLIC DISCOUNT TO HOTJOBS
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>

The underwriters may also purchase from HotJobs.com up to an additional
712,500 shares of common stock within 30 days from the date of this prospectus
to cover over-allotments.

DEUTSCHE BANC ALEX. BROWN

BANCBOSTON ROBERTSON STEPHENS

SG COWEN

E*OFFERING

THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU
SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE RISKS OF PURCHASING
OUR COMMON STOCK DISCUSSED UNDER "RISK FACTORS." REFERENCES IN THIS PROSPECTUS
TO "WE," "OUR" AND "US" REFER TO HOTJOBS.COM, LTD.

HOTJOBS.COM, LTD.

OUR BUSINESS

We are a leading Internet-based recruiting solutions company. Our suite of
services leverages the Internet to provide a direct exchange of information
between job seekers and employers. We developed these services based on our
experience in the recruiting industry and our in-depth understanding of the
needs of job seekers and employers. By solving many of the problems associated
with traditional recruiting methods, we allow employers to more effectively
manage their recruiting processes to save time and money. More than 2,700
recruiters from over 1,650 member employers subscribe to our online employment
exchange, WWW.HOTJOBS.COM. We have added over 175 new memberships per month
since February 1999. Our member employers include: Amazon.com, Inc., America
Online, Inc., eBay Inc., The Home Depot, Inc., International Business Machines
Corporation, Merck & Co., Inc., Microsoft Corporation, Nike, Inc. and The Walt
Disney Company.

The majority of our revenues are recurring and are primarily derived from
employer memberships to our online employment exchange, WWW.HOTJOBS.COM. Our
employment exchange allows member employers to access our database of over
450,000 job seekers and provides member employers with the tools to post, track
and manage job openings in a real-time environment. We allow job seekers to
identify, research, apply to and evaluate job opportunities, while enabling them
to prevent unwanted access to their resumes. Headhunters are prohibited from
using our employment exchange, ensuring direct contact between job seekers and
member employers.

We also provide employers with additional recruiting solutions such as our
proprietary Softshoe recruiting software, our WorkWorld job fairs and online
advertising and consulting services. Softshoe is a private label job board and
applicant tracking system that enables companies to define, manage and analyze
their recruiting practices and share relevant recruiting information across
their organizations. Our Softshoe customers include: Coors Brewing Company,
DoubleClick, Inc., Ford Motor Company, Humana Inc., Lucent Technologies, Inc.
and Tricon Global Restaurants Inc. Our WorkWorld job fairs integrate with
WWW.HOTJOBS.COM, enabling job seekers and employers to interact online in
addition to providing direct physical interaction at the job fair.

Revenues from our services have grown rapidly, primarily driven by increased
employer memberships to our WWW.HOTJOBS.COM employment exchange. Our revenues
increased from approximately $397,000 for the period ended December 31, 1997, to
approximately $3.5 million for the fiscal year ended December 31, 1998. Our
revenues for the three months ended March 31, 1999 were approximately $2.6
million.

OUR MARKET OPPORTUNITY

According to industry sources, businesses in the U.S. spent in excess of $13
billion in 1997 to hire new employees by advertising job openings in newspapers
and by hiring headhunters. We believe that factors such as the increasing labor
shortage and employee turnover are forcing

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employers to increase spending for recruiting efforts in order to maintain and
grow their workforce. Prior to the advent of the Internet, companies relied on
traditional recruiting methods including newspaper advertisements and
headhunters. The emergence of the Internet has created an opportunity to connect
job seekers and employers more efficiently and cost effectively when compared to
traditional recruiting methods. We believe that most of the advantages offered
by Internet technology have not been fully applied to the recruiting market. We
believe that an opportunity exists for HotJobs.com to become the leader in
online recruiting solutions.

OUR SOLUTION

We believe that traditional recruiting methods are expensive and relatively
slow, and that our solution is more comprehensive and efficient than other
online recruiting services. Our solution:

- offers job seekers, free of charge, detailed and current information on a
large and growing list of employers and job openings and value-added tools
to help job seekers plan, execute, monitor and control their job searches;

- ensures privacy by allowing job seekers to restrict employers from
reviewing their resumes;

- excludes headhunters to ensure a direct exchange of information between
job seekers and employers;

- combines our WWW.HOTJOBS.COM employment exchange, Softshoe recruiting
software and WorkWorld job fairs to enable employers to reach job seekers
through multiple channels; and

- offers employers workflow management tools to streamline the recruiting
process.

OUR STRATEGY

Our objective is to become the leading provider of online recruiting
services worldwide. Key elements of our strategy include:

- build global brand awareness;

- accelerate new subscriber growth;

- continue to enhance site functionality and features;

- expand our relationship with employers;

- provide additional career channels in specific fields;

- expand international operations; and

- pursue strategic acquisitions.

CORPORATE INFORMATION

We were incorporated in Delaware on February 20, 1997 as Hot Jobs, Inc. We
changed our name to HotJobs.com, Ltd. on September 23, 1998. Our principal
executive offices are located at 24 West 40th Street, 14th Floor, New York, New
York 10018. Our telephone number at that location is (212) 302-0060 and our
website address is WWW.HOTJOBS.COM. INFORMATION CONTAINED ON OUR WEBSITE DOES
NOT CONSTITUTE PART OF THIS PROSPECTUS.

2
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THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us.......... 4,750,000 shares

Common stock to be outstanding after
the offering...................... 28,304,019 shares

Use of proceeds..................... For general corporate purposes, including increasing
our sales and marketing efforts; developing our
infrastructure, products and services; obtaining
additional office space; hiring additional personnel;
and possible acquisitions. See "Use of Proceeds."

Proposed Nasdaq National Market
symbol............................ HOTJ
</TABLE>

The foregoing information is based on the shares outstanding as of July 15,
1999. The total number of shares that we assume will be outstanding after the
offering:

- includes 3,934,019 shares of common stock to be issued upon conversion of
our Series A Preferred Stock upon closing of this offering at a conversion
price of approximately $4.12 per share;

- excludes 4,500,000 shares reserved for future grants under our 1999 Stock
Option/Stock Issuance Plan;

- excludes 250,000 shares reserved for future issuances under our Employee
Stock Purchase Plan; and

- excludes 4,314,200 shares of common stock issuable at a weighted average
exercise price of approximately $0.62 per share upon exercise of stock
options outstanding at July 15, 1999, 3,492,000 of which are exercisable
upon completion of this offering.

See "Capitalization" for information with respect to our capitalization as
of March 31, 1999, our pro forma financial information and our pro forma
financial information as adjusted to reflect our capitalization after this
offering.

UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS:

- REFLECTS THE COMPLETION OF A 2,000-FOR-ONE STOCK SPLIT ON APRIL 9, 1999;

- REFLECTS THE AUTOMATIC CONVERSION OF ALL OUTSTANDING SHARES OF OUR SERIES
A PREFERRED STOCK INTO 3,934,019 SHARES OF OUR COMMON STOCK UPON THE
CLOSING OF THIS OFFERING;

- EXCEPT FOR THE FINANCIAL STATEMENTS, ASSUMES THE COMPLETION OF A
24-FOR-ONE STOCK SPLIT IN CONNECTION WITH THIS OFFERING; AND

- ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.

Softshoe-Registered Trademark- is a registered trademark of HotJobs.com,
Ltd. Each trademark, trade name or service mark of any other company appearing
in this prospectus belongs to its holder.

3
<PAGE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table sets forth certain summary financial data for
HotJobs.com. You should read this information together with the financial
statements and the notes to those statements appearing elsewhere in this
prospectus and the information under "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 20,
1997 (INCEPTION) THREE MONTHS ENDED
TO YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, -------------------------------
1997 1998 1998 1999
---------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Revenues:
Service fees................................ $ 361 $ 3,038 $ 347 $ 1,960
Software license fees....................... 23 225 45 78
Job fair fees............................... -- -- -- 216
Other....................................... 13 249 5 395
---------------- -------------- --------------- --------------
Total revenues.......................... 397 3,512 397 2,649
Cost of revenues............................. 12 505 77 588
---------------- -------------- --------------- --------------
Gross profit............................ 385 3,007 320 2,061
Operating expenses:
Product development......................... 174 474 90 157
Sales and marketing......................... 431 3,085 524 3,229
General and administrative.................. 725 1,642 274 823
---------------- -------------- --------------- --------------
Total operating expenses................ 1,330 5,201 888 4,209
---------------- -------------- --------------- --------------
Loss from operations.................. (945) (2,194) (568) (2,148)
Net interest expense......................... -- 63 7 68
---------------- -------------- --------------- --------------
Net loss.............................. $ (945) $ (2,257) $ (575) $ (2,216)
---------------- -------------- --------------- --------------
---------------- -------------- --------------- --------------
Basic and diluted net loss per common
share....................................... $ (0.04) $ (0.11) $ (0.03) $ (0.11)
---------------- -------------- --------------- --------------
---------------- -------------- --------------- --------------
Weighted average shares outstanding used in
basic and diluted net loss per common share
calculation(1).............................. 21,300,000 21,044,184 21,300,000 20,820,000
---------------- -------------- --------------- --------------
---------------- -------------- --------------- --------------
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1999
------------------------------------
PRO FORMA
PRO AS
ACTUAL FORMA(2) ADJUSTED(3)
--------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 258 $ 16,458 $ 72,365
Working capital (deficit).............................. (6,082) 10,118 66,025
Total assets........................................... 4,125 20,325 76,232
Obligations under capital leases, excluding current
installments......................................... 317 317 317
Total stockholders' equity (deficit)................... (5,098) 11,102 67,009
</TABLE>

- ------------------------
(1) Assumes the completion of a 24-for-one stock split in connection with this
offering.

(2) Pro forma information gives effect to our issuance of 1,620,000 shares of
Series A Preferred Stock effective May 10, 1999, for cash proceeds of $16.2
million and the recording of a beneficial conversion feature of $16.2
million as additional paid-in capital.

(3) Pro forma as adjusted information gives effect to the automatic conversion
of all of the outstanding Series A Preferred Stock into 3,934,019 shares of
common stock upon consummation of this offering and our sale of 4,750,000
shares to be sold in this offering assuming an initial public offering price
of $13.00 per share, less the underwriters' discounts and commissions and
estimated expenses of the offering.

4
<PAGE>
RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER WITH
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE YOU DECIDE TO BUY OUR
COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN THIS CASE,
THE MARKET PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART
OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.

RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS MODEL

WE HAVE A LIMITED OPERATING HISTORY SO IT WILL BE DIFFICULT FOR YOU TO EVALUATE
AN INVESTMENT IN OUR COMPANY.

We were incorporated and began generating revenues in February 1997.
Accordingly, we have only a limited operating history for you to evaluate an
investment in our company. As a new company, we face risks and uncertainties
relating to our ability to successfully implement our strategy. You must
consider the risks, expenses and uncertainties that an early stage company like
ours faces. If we cannot address these risks and uncertainties or are unable to
execute our strategy, our company may not be successful, which could reduce the
value of your investment.

WE HAVE NOT BEEN PROFITABLE, AND WE EXPECT OUR LOSSES TO CONTINUE.

We have never been profitable. If our revenues grow at a slower rate than we
anticipate, or if our spending levels exceed our expectations or cannot be
adjusted to reflect slower revenue growth, we may not generate sufficient
revenues to achieve or sustain profitability. In this case, the value of your
investment could be reduced. For the year ended December 31, 1998, we incurred
net losses from operations of approximately $2.2 million. For the quarter ended
March 31, 1999, we incurred net losses from operations of approximately $2.1
million. As of March 31, 1999, we had an accumulated deficit of approximately
$5.4 million. We expect to continue to lose money in the foreseeable future
because we anticipate incurring significant expenses in connection with building
awareness of HotJobs.com and improving our products and services. We forecast
our future expense levels based on our operating plans and our estimates of
future revenues. We may find it necessary to accelerate expenditures relating to
our sales and marketing efforts or otherwise increase our financial commitment
to creating and maintaining brand awareness among potential job seekers and
employers.

YOU SHOULD NOT RELY ON OUR QUARTERLY OPERATING RESULTS AS AN INDICATION OF OUR
FUTURE RESULTS BECAUSE THEY ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
FLUCTUATIONS IN OUR OPERATING RESULTS OR THE FAILURE OF OUR OPERATING RESULTS TO
MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS MAY NEGATIVELY
IMPACT OUR STOCK PRICE.

Our quarterly operating results may fluctuate significantly in the future
due to a variety of factors that could affect our revenues or our expenses in
any particular quarter. Fluctuations in our quarterly operating results could
cause our stock price to decline.

You should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. Factors that may affect our
quarterly results include:

- mismatches between resource allocation and consumer demand due to
difficulties in predicting consumer demand in a new market;

- the demand for and acceptance of our website, products, product
enhancements and services;

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- the timing, amount and mix of subscription, license and service payments;

- changes in general economic conditions, such as recessions, that could
affect recruiting efforts generally and online recruiting efforts in
particular;

- the magnitude and timing of marketing initiatives;

- the maintenance and development of our strategic relationships;

- the introduction, development, timing, competitive pricing and market
acceptance of our products and services and those of our competitors;

- the attraction and retention of key personnel;

- our ability to manage our anticipated growth and expansion;

- our ability to attract qualified job seekers; and

- technical difficulties or system downtime affecting the Internet generally
or the operation of our products and services specifically.

As a result of the factors listed above and because the online recruiting
market is new and it is difficult to predict customer demand, it is possible
that in some future periods our results of operations may be below the
expectations of public market analysts and investors. This could cause our stock
price to decline. In addition, we plan to significantly increase our operating
expenses to expand our sales and marketing, administration, consulting and
training, maintenance and technical support and research and development groups.
If revenues fall below our expectations in any quarter and we are unable to
quickly reduce our spending in response, our operating results would be lower
than expected and our stock price may fall.

OUR BUSINESS MODEL IS UNPROVEN AND MAY NOT BE ADAPTABLE TO A CHANGING MARKET.

If we are not able to anticipate changes in the online recruiting market or
if our business model is not successful, we may not be able to expand our
business or to successfully compete with other companies, which could reduce the
value of your investment. Our current business model depends on recurring
revenue from employers using our website and hosting fees associated with our
application software. Our revenue model and profit potential are unproven. If
current employers decide to discontinue our service and we are unable to replace
them with new employers, our revenues could decrease. It is possible that we
will be required to further adapt our business model in response to additional
changes in the online recruiting market or if our current business model is not
successful.

WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT FUNDS TO GROW OUR BUSINESS AND ANY
ADDITIONAL FINANCING MAY BE ON TERMS ADVERSE TO YOUR INTERESTS.

We may need additional financing to continue to grow our business. If
additional financing is not available when required or is not available on
acceptable terms, we may be unable to fund our expansion, successfully promote
our brand name, develop or enhance our products and services, take advantage of
business opportunities or respond to competitive pressures, any of which could
reduce the value of your investment. If we are able to raise additional funds
and we do so by issuing equity securities, you may experience significant
dilution of your ownership interest and holders of these securities may have
rights senior to those of the holders of our common stock. If we obtain
additional financing by issuing debt securities, the terms of these securities
could restrict or prevent us from paying dividends and could limit our
flexibility in making business decisions. In this case, the value of your
investment could be reduced.

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We currently anticipate that the net proceeds from this offering, together
with available funds, will be sufficient to meet our anticipated needs for at
least the next 12 months. Because we expect to generate losses for the
foreseeable future, income from our operations may not be sufficient to meet our
needs after that period. We expect to raise additional funds in the future in
order to fund our anticipated growth, more aggressive marketing programs or the
acquisition of complementary businesses, technologies and services. Obtaining
additional financing will be subject to a number of factors including:

- market and economic conditions;

- our financial condition and operating performance; and

- investor sentiment.

These factors may make the timing, amount, terms and conditions of
additional financing unattractive for us.

RISKS RELATED TO OUR MARKETS AND STRATEGY

THE INTERNET IS NOT A PROVEN RECRUITING MEDIUM.

If we are unable to compete with traditional recruiting and job seeking
methods, our revenues and the value of your investment could be reduced. The
future of our business is dependent on the acceptance by job seekers and
employers of the Internet as an effective job seeking and recruiting tool. Of
the 6 million businesses in the U.S., Forrester Research, Inc. estimates that
only 15,000 businesses currently recruit online. The online recruiting market is
new and rapidly evolving, and we do not yet know how effective online recruiting
is compared to traditional recruiting methods. The adoption of online recruiting
and job seeking, particularly among those that have historically relied upon
traditional recruiting methods, requires the acceptance of a new way of
conducting business, exchanging information, advertising and applying for jobs.
Many of our potential employer customers have little or no experience using the
Internet as a recruiting tool, and only select segments of the job seeking
population have experience using the Internet to look for jobs. As a result, we
cannot be sure that we will be able to effectively compete with traditional
recruiting and job seeking methods.

WE WILL ONLY BE ABLE TO EXECUTE OUR BUSINESS MODEL IF USE OF THE INTERNET GROWS.

If Internet usage does not continue to grow, we may not be able to meet our
business objectives, which could decrease the value of your investment. Internet
usage may be inhibited by any of the following factors:

- the Internet infrastructure may not be able to support the demands placed
on it, or its performance and reliability may decline as usage grows;

- websites may not be able to provide adequate security and authentication
of confidential information contained in transmissions over the Internet;
and

- the Internet industry may not be able to adequately respond to privacy
concerns of potential users.

WE MAY NOT BE ABLE TO DEVELOP AWARENESS OF OUR BRAND NAME.

If we fail to successfully promote and maintain our HotJobs.com brand name,
incur significant expenses in promoting our brand and fail to generate a
corresponding increase in revenue as a result of our branding efforts, or
encounter legal obstacles which prevent our continued use of our brand name, our
revenues and the value of your investment could be

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<PAGE>

materially adversely affected. We believe that continuing to build awareness of
our brand name is critical to achieving widespread acceptance of our business.
Brand recognition is a key differentiating factor among providers of online
recruiting services, and we believe it could become more important as
competition in the online recruiting market increases. In order to maintain and
build brand awareness, we must succeed in our marketing efforts, provide high
quality services and increase the number of high quality job seekers using
WWW.HOTJOBS.COM. Failure to successfully maintain and build awareness of our
brand could reduce our revenues and the value of your investment.

WE MAY NOT BE ABLE TO SUCCESSFULLY INTRODUCE NEW OR ENHANCED PRODUCTS AND
SERVICES.

The failure of any new or enhanced products and services to achieve market
acceptance and generate revenue could result in a material adverse effect on our
revenues and the value of your investment. We expect to introduce enhanced
products and services in order to generate additional revenues, attract and
retain more employers, attract more job seekers to our website and respond to
competition. Any new or enhanced product or service we introduce that is not
favorably received could damage our reputation and the perception of our brand
name.

WE WILL NOT BE ABLE TO ATTRACT JOB SEEKERS OR EMPLOYERS IF WE DO NOT
CONTINUALLY ENHANCE AND DEVELOP THE CONTENT AND FEATURES OF OUR PRODUCTS AND
SERVICES. To remain competitive, we must continually improve the
responsiveness, functionality and features of our products and services and
develop other products and services that are attractive to job seekers and
employers. We may not succeed in developing or introducing features, functions,
products or services that job seekers and employers find attractive. This could
reduce the number of job seekers and employers using WWW.HOTJOBS.COM and
materially adversely affect our revenues and the value of your investment.

WE MAY LOSE BUSINESS IF WE FAIL TO KEEP PACE WITH RAPIDLY CHANGING
TECHNOLOGIES AND CUSTOMER NEEDS. If we are unable to timely and successfully
develop and introduce new products and enhancements to existing products in
response to our industry's changing technological requirements, our revenues and
the value of your investment could be materially adversely affected. Our success
is dependent on our ability to develop new and enhanced software, services and
related products to meet rapidly evolving technological requirements for online
recruiting software and solutions. Our current technology may not meet the
future technical requirements of employers. Trends that could have a critical
impact on our success include:

- rapidly changing technology in online recruiting;

- evolving industry standards, including both formal and DE FACTO standards
relating to online recruiting;

- developments and changes relating to the Internet;

- competing products and services that offer increased functionality; and

- changes in employer and job seeker requirements.

OUR BUSINESS AND GROWTH WILL SUFFER IF WE ARE UNABLE TO HIRE AND RETAIN HIGHLY
SKILLED PERSONNEL.

If we are unable to hire and retain skilled personnel, our growth may be
restricted, the quality of our products and services reduced and our revenues
and the value of your investment reduced. Our future success depends on our
ability to attract, train, motivate and retain highly skilled employees.
Competition for highly skilled employees is intense, particularly in the
Internet

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<PAGE>

industry. We may be unable to retain our skilled employees or attract,
assimilate and retain other highly skilled employees in the future. We have from
time to time in the past experienced, and we may experience in the future,
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications.

WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE OUR EXPANDING OPERATIONS.

If we are not able to expand our operations in an efficient manner, our
expenses could grow disproportionately to revenues or our revenues could decline
or grow more slowly than expected, either of which could have a material adverse
effect on the value of your investment. We have recently experienced a period of
rapid growth. In order to execute our business plan, we must continue to grow
significantly. We had 15 employees in January 1998. As of June 30, 1999, the
number had increased to 107. We expect that the number of our employees will
continue to increase for the foreseeable future. This growth has placed, and our
anticipated future growth combined with the requirements we will face as a
public company, will continue to place, a significant strain on our management,
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls and reporting systems and procedures. We will
also need to continue to expand and maintain close coordination among our
technical, accounting, finance and sales and marketing organizations. If we do
not succeed in these efforts, it could reduce our revenues and the value of your
investment.

INTENSE COMPETITION MAY RENDER OUR SERVICES AND PRODUCTS UNCOMPETITIVE OR
OBSOLETE.

Due to competition, we may experience reduced margins on our products and
services, loss of market share or less use of WWW.HOTJOBS.COM by job seekers and
employers. If we are not able to compete effectively with current or future
competitors as a result of these and other factors, our revenues could be
materially adversely affected.

The market for online recruiting solutions is intensely competitive and
highly fragmented. We compete with companies, including recruiting search firms,
that offer a single database job board solution, such as Monster.com, as well as
newspapers, magazines and other traditional media companies that provide online
job search services, such as CareerPath.com. We also compete with large Internet
information hubs, or portals, such as Excite@Home. We may experience competition
from potential customers to the extent that they develop their own online
recruiting offerings internally. In addition, we compete with traditional
recruiting services, such as headhunters, for a share of employers' total
recruiting budgets. We expect to face additional competition as other
established and emerging companies, including print media companies and
headhunters with established brands, enter the online recruiting market.

Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources and larger customer bases than we do. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative
relationships to expand their businesses or to offer more comprehensive
solutions.

LOSS OF ANY OF OUR KEY MANAGEMENT PERSONNEL COULD NEGATIVELY IMPACT OUR
BUSINESS.

The loss or departure of any of our officers or key employees could
materially adversely affect our ability to implement our business plan and could
lower our revenues. Our future

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success depends to a significant extent on the continued service and
coordination of our management team, particularly Richard S. Johnson, our
President and Chief Executive Officer. We do not maintain key person insurance
for any member of our management team. In addition, certain members of our
management team have joined us within the last year. These individuals have not
previously worked together and are becoming integrated into our management team.
If our key management personnel are not able to work together effectively or
successfully, our business could be materially adversely affected.

WE MAY NOT BE SUCCESSFUL IN OUR PLAN FOR INTERNATIONAL EXPANSION.

We may not be able to successfully execute our business plan in foreign
markets. If revenue from international ventures is not adequate to cover our
investment in those ventures, our total revenues and the value of your
investment could be materially adversely affected.

We believe that our employers are increasingly attempting to fill positions
in international markets and that job seekers are increasingly seeking positions
in international markets. We believe that expansion into international markets
through a combination of internal business expansion, strategic alliances and
potential acquisitions will increase the number of job seekers who post their
resumes on WWW.HOTJOBS.COM and will increase the number and variety of jobs
available to our job seekers. Our future international operations might not
succeed for a number of reasons including:

- difficulties in staffing and managing foreign operations;

- competition from local recruiting services;

- operational issues such as longer customer payment cycles and greater
difficulties in collecting accounts receivable;

- seasonal reductions in business activity;

- language and cultural differences;

- legal uncertainties inherent in transnational operations such as export
and import regulations, tariffs and other trade barriers;

- taxation issues;

- unexpected changes in trading policies, regulatory requirements and
exchange rates;

- issues relating to uncertainties of laws and enforcement relating to the
protection of intellectual property; and

- general political and economic trends.

WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF OR INVESTMENTS IN OTHER
COMPANIES.

If we make an acquisition of a company, we could have difficulty
assimilating the acquired company's operations and personnel, which could
increase our expenses and reduce the value of your investment. If we make other
types of acquisitions, we could have difficulty in assimilating any acquired
products, services, personnel and technologies into our operations. These
difficulties could disrupt our ongoing business, distract our management and
employees, increase our expenses and charges and materially adversely affect our
revenues and the value of your investment. Though we have no present
understanding or agreement relating to any acquisition of or investment in
another company or its business, our business strategy includes the pursuit of
acquisitions. In executing this strategy, we may incur expenses without being
able

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to identify suitable acquisition candidates, which could reduce our
profitability and value of your investment.

RISKS RELATED TO THE INTERNET AND OUR TECHNOLOGY INFRASTRUCTURE

WE MAY EXPERIENCE REDUCED VISITOR TRAFFIC, REDUCED REVENUE AND HARM TO OUR
REPUTATION IN THE EVENT OF UNEXPECTED NETWORK INTERRUPTIONS CAUSED BY SYSTEM
FAILURES.

Any system failure, including network, software or hardware failure, that
causes an interruption in the delivery of our products and services or a
decrease in responsiveness of our services could result in reduced visitor
traffic, reduced revenue and could materially adversely affect our reputation
and brand. Our servers and software must be able to accommodate a high volume of
traffic. We have experienced system interruptions in the past, and we believe
that these interruptions will continue to occur from time to time in the future.
We believe that visitor traffic is also dependent on the timing and magnitude of
our advertising. We have experienced monthly fluctuations in visitor traffic,
including short term reductions. Any substantial increase in demands on our
servers will require us to expand and adapt our network infrastructure. If we
are unable to add additional software and hardware to accommodate increased
demand, we could experience unanticipated system disruptions and slower response
times. Any catastrophic failure at our co-location facility could prevent us
from serving our web traffic for up to several days, and any failure of our
Internet service provider may adversely affect our network's performance. Our
clients may become dissatisfied by any system failure that interrupts our
ability to provide our products and services to them or results in slower
response times. We do not maintain business interruption insurance and our other
insurance may not adequately compensate us for any losses that may occur due to
any failures in our system or interruptions in our service.

BREACHES OF OUR NETWORK SECURITY COULD BE COSTLY.

Because we host all of the HotJobs.com-related data for our customers, we
may be liable to any of those customers that experience losses due to our
security failures. As a result, we may be required to expend capital and
resources to protect against or to alleviate security breaches, which could
reduce our profitability and the value of your investment. A significant barrier
to confidential communications over the Internet has been the need for security.
We may incur significant costs to protect against the threat of security
breaches or to alleviate problems caused by these breaches. If unauthorized
persons penetrate our network security, they could misappropriate proprietary
information or cause interruptions in our services. Misappropriation of our
proprietary information or interruptions of our services could result in reduced
visitor traffic. Reduced visitor traffic may result in fewer job seekers posting
their resumes to our WWW.HOTJOBS.COM employment exchange which, in turn, may
discourage employers from subscribing to the employment exchange. We generate a
substantial portion of our revenue from these subscription fees.

COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS WHICH
COULD REDUCE DEMAND FOR OUR SERVICE AND DAMAGE OUR REPUTATION.

Computer viruses may cause our systems to incur delays or other service
interruptions and could reduce our revenues and the value of your investment. In
June 1999, we detected a virus on a file server which supports our office
equipment. 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 reduce the value of your investment.

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WE MAY NOT BE ABLE TO ACCESS THIRD PARTY TECHNOLOGY UPON WHICH WE DEPEND.

If we lose the ability to access third party technology which we use, are
unable to gain access to additional products or are unable to integrate new
technology with our existing systems, we could experience delays in our
development and introduction of new services and related products or
enhancements until equivalent or replacement technology can be accessed, if
available, or developed internally, if feasible. If we experience these delays,
our revenues could be reduced and the value of your investment could be
materially adversely affected. We license technology that is incorporated into
our services and related products from third parties including Oracle
Corporation for database technology and Thunderstone Software-EPI, Inc. for
full-text indexing. In light of the rapidly evolving nature of Internet
technology, we may increasingly need to rely on technology from other vendors.
Technology from our current or other vendors may not continue to be available to
us on commercially reasonable terms, or at all.

WE COULD LOSE SUBSTANTIAL REVENUES OR INCUR SIGNIFICANT COSTS DUE TO YEAR 2000
ISSUES.

Any failure of our systems to be year 2000 compliant could reduce our
revenues and the value of your investment. Significant uncertainties exist in
the software industry concerning the potential effects associated with the
failure of computer systems and software to be year 2000 compliant. Computer
systems and software must accept four digit entries to distinguish 21st century
dates from 20th century dates. As a result, many software and computer systems
may need to be upgraded in order to be year 2000 compliant or risk system
failure or miscalculations causing disruptions of normal business activities.

OUR PRODUCTS AND SERVICES MAY NOT BE YEAR 2000 COMPLIANT. Year 2000
problems could materially adversely affect our current products and services and
the WWW.HOTJOBS.COM website, resulting in lower revenues and reducing the value
of your investment. We have completed an assessment of the year 2000 readiness
of our products and services. We believe that all of the products and services
we currently offer were year 2000 compliant at the time of installation or
launch. We have conducted tests internally to validate the compliance of these
products. We cannot be certain, however, that these tests have detected all
potential year 2000 problems. To address potential disruptions, we maintain
off-site backup data for our databases, and we are developing a redundant,
outsourced data center to protect against the failure of the WWW.HOTJOBS.COM
website and its associated hardware. However, these precautions may not be
sufficient to prevent a failure of our products and systems. Any business
disruption due to a failure of our products or systems to be year 2000 compliant
could have a material adverse effect on our revenues and the value of your
investment.

OUR INTERNAL COMPUTER SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT. Any business
disruption caused by the failure of our internal systems to be year 2000
compliant could have a material adverse effect on our revenues and the value of
your investment. We have reviewed year 2000 compliance statements made by the
vendors of our software systems, such as accounting and database management
systems, and we have completed an assessment of the year 2000 readiness of our
internal systems. Based on this review and assessment, we currently believe that
our internal software systems are year 2000 compliant. We cannot be certain,
however, that we are aware of all potential year 2000 problems. The failure of
our internal systems could disrupt our business. To address these potential
disruptions, we maintain off-site backup data for our internal systems and
databases. However, these precautions may not be sufficient to prevent a failure
of our internal systems.

OUR EMPLOYERS' AND JOB SEEKERS' SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT. If
either employers or job seekers experience sustained difficulty in accessing our
products and services

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due to year 2000 complications, our revenues could be materially adversely
affected. It is possible that our employers will experience problems with their
Internet sites or internal computer systems due to software that is not year
2000 compliant, which could lead to disruptions in their ability to use the
services of WWW.HOTJOBS.COM. If employers are not able to use our services for a
period of time, they may cease using our services. Also, if a substantial number
of employers are unable to use our services for a long period of time, the
quality and quantity of jobs available at WWW.HOTJOBS.COM may decrease, which
could discourage qualified job seekers from using our services. Similarly, if a
substantial percentage of job seekers are unable to access our services due to
failures in their computer systems, recruiters may find our services less
valuable and reduce or discontinue their use of our products.

YEAR 2000 CONCERNS MAY ADVERSELY AFFECT THE PURCHASING PATTERNS OF
EMPLOYERS. If purchasing patterns of employers are adversely affected due to
year 2000 concerns, our revenues and the value of your investment could be
reduced. Due to year 2000 concerns, many employers that are customers or
potential customers may choose to devote resources to year 2000 compliance
efforts that might otherwise be used to begin or expand online recruiting
efforts. In addition, employers may elect to spend a greater portion of their
recruiting budgets on traditional recruiting methods rather than risk disruption
in their recruiting in the event of technical difficulties related to year 2000
problems.

YEAR 2000 PROBLEMS COULD DECREASE USE OF THE INTERNET. Increasing usage of
the Internet is necessary for us to achieve our business objectives. Any
disruptions caused by year 2000 problems could decrease Internet usage
generally, which could cause a reduction in our revenues.

WE COULD BE SUBJECT TO YEAR 2000-RELATED LITIGATION. If we are the subject
of any claims related to or are liable for losses resulting from year
2000-related systems failures, the value of your investment could be materially
adversely affected. The failure of our currently supported products and services
to be fully year 2000 compliant could result in claims by or liability to
employers or, possibly, job seekers. We host all of the HotJobs.com-related data
for all of our customers. As a result, any year 2000-related failure of our
systems could destroy a large amount of proprietary data that our customers rely
on for their recruiting efforts.

RISKS RELATED TO LEGAL UNCERTAINTY

WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS AND LEGAL
UNCERTAINTIES AFFECTING THE INTERNET WHICH COULD ADVERSELY AFFECT OUR BUSINESS.

Legal uncertainties and new regulations could increase our costs of doing
business, prevent us from delivering our products and services over the Internet
or slow the growth of the Internet, any of which could increase our expenses or
reduce our revenues and materially adversely affect the value of your
investment. To date, governmental regulations have not materially restricted use
of the Internet in our markets. However, the legal and regulatory environment
that pertains to the Internet is uncertain and may change. In addition to new
laws and regulations being adopted, existing laws may be applied to the
Internet. New and existing laws may cover issues which include:

- user privacy;

- civil rights and employment claims;

- consumer protection;

- libel and defamation;

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- copyright, trademark and patent infringement;

- pricing controls;

- characteristics and quality of products and services;

- sales and other taxes; and

- other claims based on the nature and content of Internet materials.

In addition, any imposition of state sales and use taxes imposed on the
products and services sold over the Internet may decrease demand for products
and services that we sell over the Internet. The U.S. Congress has passed
legislation which limits for three years the ability of states to impose any new
taxes on Internet-based transactions. Failure by Congress to renew this
legislation and the subsequent imposition of state taxes on Internet-based
transactions could adversely affect our future operating results which could
result in a decline in our stock price.

WE MAY BE UNABLE TO OBTAIN A U.S. TRADEMARK REGISTRATION FOR OUR BRAND OR TO
PROTECT OUR OTHER PROPRIETARY INTELLECTUAL PROPERTY RIGHTS.

FAILURE TO OBTAIN FEDERAL TRADEMARK REGISTRATION FOR WWW.HOTJOBS.COM COULD
DISRUPT OUR PROMOTION OF THE HOTJOBS.COM BRAND. If we are unable to secure the
rights to use the www.hotjobs.com mark and related derivative marks, a key
element of our strategy of promoting "HotJobs.com" as a global brand could be
disrupted and, as a result, the value of your investment could be reduced. Our
success depends to a significant degree upon the protection of our proprietary
technology, including our Softshoe software and our "HotJobs.com" brand name. To
date, we have not been successful in our efforts to secure a federal
registration for "www.hotjobs.com." In addition, in May 1998, another pending
trademark applicant, who has since abandoned its application, made claims
regarding prior use and ownership of "hotjobs" as a trademark. Adverse outcomes
to these or similar claims or any related litigation, should it occur, could
result in us being limited or prohibited from further using the
"www.hotjobs.com" mark and related derivative marks in the future. See
"Business--Intellectual Property."

FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD PERMIT OTHERS TO
APPROPRIATE OUR PROPRIETARY TECHNOLOGY. The unauthorized reproduction or other
misappropriation of our proprietary technology could enable third parties to
benefit from our technology and brand name without paying us for them. If this
were to occur, our revenues and the value of your investment could be materially
adversely affected. The steps we have taken to protect our proprietary rights
may not be adequate to deter misappropriation of proprietary information. We may
not be able to detect unauthorized use of our proprietary information or take
appropriate steps to enforce our intellectual property rights. In addition, the
validity, enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of other
countries in which we may market our services in the future are uncertain and
may afford little or no effective protection of our intellectual property. If we
resort to legal proceedings to enforce our intellectual property rights, the
proceedings could be burdensome and expensive. The proceedings also could
involve a high degree of risk.

DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE TIME
CONSUMING AND EXPENSIVE, AND WE MAY BE LIABLE FOR INFRINGING ON THE INTELLECTUAL
PROPERTY RIGHTS OF OTHERS. IF WE ARE NOT SUCCESSFUL IN DEFENDING AGAINST THESE
CLAIMS, WE COULD BE SUBJECT TO SIGNIFICANT DAMAGES AND THE DISRUPTION OF OUR
BUSINESS.

Successful intellectual property infringement claims against us could result
in monetary liability or a material disruption in the conduct of our business.
We cannot be certain that our products, content and brand names do not or will
not infringe valid patents, copyrights or other

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intellectual property rights held by third parties. We expect that infringement
claims in our markets will increase in number as more participants enter the
markets. We may be subject to legal proceedings and claims from time to time
relating to the intellectual property of others in the ordinary course of our
business. We may incur substantial expenses in defending against these third
party infringement claims, regardless of their merit.

WE MAY BE LIABLE AS A RESULT OF INFORMATION RETRIEVED FROM OR TRANSMITTED OVER
THE INTERNET.

We may be sued for defamation, civil rights infringement, negligence,
copyright or trademark infringement, personal injury, product liability or other
legal claims relating to information that is published or made available on
WWW.HOTJOBS.COM and the other sites linked to it. These types of claims have
been brought, sometimes successfully, against online services in the past. We
could also be sued for the content that is accessible from WWW.HOTJOBS.COM and
through links to other Internet sites or through content and materials that may
be posted by members in chat rooms or on bulletin boards. We also offer email
services, which may subject us to potential risks, such as liabilities or claims
resulting from unsolicited email or spamming, lost or misdirected messages,
security breaches, illegal or fraudulent use of email or interruptions or delays
in email service. Our insurance does not specifically provide for coverage of
these types of claims and therefore 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 liable. If any of these
events occur, our revenues and the value of your investment could be materially
adversely affected.

RISKS RELATED TO THIS OFFERING, OUR STOCK PRICE AND CORPORATE CONTROL

WE MAY USE THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH YOU MAY NOT AGREE.

If management uses the proceeds of this offering for purposes which do not
result in increasing our revenues, the value of your investment could be
reduced. Our management will have broad discretion with respect to the
expenditure of the net proceeds of this offering, including discretion to use
the proceeds in ways with which stockholders may disagree. To date, management
is unable to provide an estimated range of the amounts of proceeds to be used
for any of the purposes described in "Use of Proceeds." Investors will be
relying on the judgment of our management regarding the application of the
proceeds of this offering.

OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS, AND
INVESTORS IN OUR STOCK MAY NOT BE ABLE TO RESELL THEIR SHARES AT OR ABOVE THE
OFFERING PRICE.

In the event of fluctuations in the market price of our common stock, you
may be unable to resell your shares at or above the offering price. We cannot
predict the extent to which investors' interest in us will lead to the
development of a trading market in our common stock or how liquid the market
might become. If you purchase shares of our common stock in this offering, you
will pay a price that was not established in a competitive market, but was
negotiated between us and the underwriters. The price of the common stock that
will prevail in the market after the offering may be higher or lower than the
price you paid. The stock market in general and the market prices of shares in
newly public technology companies, particularly those such as ours that offer
Internet-based products and services, have been extremely volatile and have
experienced fluctuations that have often been unrelated or disproportionate to
the operating performance of such companies. The market price of our common
stock could be highly volatile and subject to wide fluctuations in response to
many factors, some of which are largely beyond our control. These factors
include:

- quarterly variations in our results of operations;

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- adverse business developments;

- changes in financial estimates by securities analysts;

- investor perception of us and online recruiting services in general;

- announcements by our competitors of new products and services; and

- general economic conditions both in the U.S. and in foreign countries.

Our stock price may also experience fluctuations due to $7.2 million of
deferred compensation which we expect to amortize over the next four years and a
$16.2 million beneficial conversion feature which we expect to amortize in the
second and in the third quarters of 1999. Assuming an initial public offering
price of $13.00 per share and no exercise of currently outstanding options, we
currently expect that amortizing the beneficial conversion feature will increase
our net loss per common share by $0.03 in the second quarter of 1999 and by
$0.60 in the third quarter of 1999. For a more complete description of the
deferred compensation and beneficial conversion feature, see "Management's
Discussion and Analysis of Results of Operations--Deferred Compensation" and
"Management's Discussion and Analysis of Results of Operations--Beneficial
Conversion Feature." In the event that our stock price is lowered due to a
negative perception of the deferred compensation or the beneficial conversion
feature, the value of your investment would be reduced.

IF OUR STOCK PRICE IS VOLATILE, WE MAY BECOME SUBJECT TO SECURITIES LITIGATION
WHICH IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.

Litigation brought against us could result in substantial costs to us in
defending against the lawsuit and a diversion of management's attention that
could reduce the value of your investment. Securities class action litigation
has often been brought against companies that experience volatility in the
market price of their securities. If our stock price is volatile, we could be
subject to securities litigation and incur higher expenses than expected, which
could reduce the value of your investment.

FUTURE SALES OF OUR COMMON STOCK AFTER THIS OFFERING MAY NEGATIVELY AFFECT OUR
STOCK PRICE.

The market price of our common stock could decline as a result of sales of a
large number of shares of our common stock in the market following the offering,
or the perception that such sales could occur. Following this offering, we will
have a large number of shares of common stock outstanding and available for
resale beginning at various points in time in the future. These sales also might
make it more difficult for us to sell equity securities in the future at a time
and at a price that we deem appropriate. The shares of our common stock
currently outstanding will become eligible for sale without registration
pursuant to Rule 144 under the Securities Act, subject to certain conditions of
Rule 144. Certain holders of our common stock also have certain demand and
piggyback registration rights enabling them to register their shares under the
Securities Act for sale. In connection with this offering, our senior officers
and directors and certain of our common and preferred stockholders and
optionholders, who hold or will hold a total of 26,204,904 shares of common
stock after the offering, have agreed, subject to certain exceptions, not to
sell their shares for 180 days after the date of this prospectus without the
consent of Deutsche Bank Securities Inc.

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IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE OUR COMPANY WHICH COULD DEPRESS
OUR STOCK PRICE.

Delaware corporate law, our amended and restated certificate of
incorporation and bylaws, which will become effective upon the closing of this
offering, and our Stock Award Plan and 1999 Stock Option/Stock Issuance Plan
contain provisions that could have the effect of delaying, deferring or
preventing a change in control of HotJobs.com or our management that
stockholders may consider favorable or beneficial, which could reduce the value
of your investment. These provisions could discourage proxy contests and make it
more difficult for you and other stockholders to elect directors and take other
corporate actions. These provisions could also limit the price that investors
might be willing to pay in the future for shares of our common stock. These
provisions include:

- authorization to issue "blank check" preferred stock, which is preferred
stock that can be created and issued by the board of directors without
prior stockholder approval, with rights senior to those of common stock;

- a staggered board of directors, so that it would take three successive
annual meetings to replace all directors;

- prohibition of stockholder action by written consent;

- advance notice requirements for the submission by stockholders of
nominations for election to the board of directors and for proposing
matters that can be acted upon by stockholders at a meeting;

- immediate vesting of options issued under the Stock Award Plan and the
1999 Stock Option/Stock Issuance Plan in connection with a change of
control; and

- the payment of a cash distribution for surrendered options with limited
stock appreciation rights upon the successful completion of a hostile
tender offer for more than 50% of our outstanding voting stock.

See "Description of Capital Stock--Anti-Takeover Effects of Delaware Law and
our Amended and Restated Certificate of Incorporation and Bylaws" for a more
complete description of these provisions.

OUR EXECUTIVE OFFICERS, DIRECTORS AND EXISTING STOCKHOLDERS, WHOSE INTERESTS MAY
DIFFER FROM OTHER STOCKHOLDERS, WILL HAVE THE ABILITY TO EXERCISE SIGNIFICANT
CONTROL OVER US.

Our executive officers and directors and entities affiliated with them will,
in the aggregate, beneficially own approximately 55.1% of our common stock
following this offering. These stockholders will be able to exercise significant
influence over all matters requiring approval by our stockholders, including the
election of directors and the approval of significant corporate transactions,
including a change of control of HotJobs.com. The interests of these
stockholders may differ from the interests of our other stockholders.

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION OF THE VALUE OF YOUR
INVESTMENT.

Investors purchasing shares in this offering will incur immediate and
substantial dilution in their investments. The initial public offering price per
share will exceed our net tangible book value per share. See "Dilution" for a
calculation of the extent to which your investment will be diluted. To the
extent outstanding options to purchase common stock are exercised, your
investment will be further diluted.

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FORWARD-LOOKING STATEMENTS

Many statements made in this prospectus under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere are
forward-looking statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including those
discussed under "Risk Factors."

The forward-looking statements made in this prospectus are based on events
through the date on which the statements are made.

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 effect on our business
and the market price of our common stock.

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USE OF PROCEEDS

The net proceeds from the sale of the 4,750,000 shares of common stock,
assuming an initial public offering price of $13.00 per share, less underwriting
discounts and estimated offering expenses, are estimated to be approximately
$55.9 million, or $64.5 million if the underwriters' overallotment option is
exercised in full.

We intend to use the net proceeds of this offering, and we are currently
using the proceeds from the May 1999 sale of our Series A Preferred Stock, for
general corporate purposes, including:

- increasing our sales and marketing efforts;

- developing our infrastructure, products and services, all of which we have
yet to identify;

- obtaining additional office space; and

- hiring additional personnel.

In addition, we may use a portion of the net proceeds to acquire or invest
in complementary businesses, technologies, services or products; however, we
have no commitments or agreements, and we are not involved in any negotiations
with respect to any such transaction.

As of the date of this prospectus, we can neither specify the particular
uses for the net proceeds to be received upon completion of the offering, nor
provide an estimated range of the amounts of proceeds to be used for any of the
purposes described above. Accordingly, management will have significant
flexibility in applying the net proceeds of this offering.

Pending any use, we will invest the net proceeds of this offering in
short-term, investment grade, interest-bearing securities.

DIVIDEND POLICY

We have not declared or paid any cash dividends on our common stock or
preferred stock since inception and do not expect to pay any cash dividends for
the foreseeable future. We currently intend to retain future earnings, if any,
to finance the expansion of our business. The payment of dividends will be at
the discretion of our board of directors and will depend upon factors such as
future earnings, capital requirements, our financial condition and general
business conditions.

19
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999:

(1) on an actual basis;

(2) on a pro forma basis to reflect:

- the filing of an amendment to our certificate of incorporation to
provide for authorized capital stock of 100,000,000 shares of common
stock and 10,000,000 shares of preferred stock;

- the issuance of 1,620,000 shares of Series A Preferred Stock in
consideration for cash proceeds of $16.2 million and the recording of a
beneficial conversion feature of $16.2 million as additional paid-in
capital; and

(3) on a pro forma as adjusted basis to reflect:

- the automatic conversion of all outstanding shares of Series A
Preferred Stock into 3,934,019 shares of common stock upon the closing
of this offering;

- our sale of 4,750,000 shares to be sold in this offering at an assumed
initial public offering price of $13.00 per share, less the
underwriters' discounts and commissions; and

- the estimated expenses of this offering.

The table excludes:

- 250,000 shares reserved for future issuance under our Employee Stock
Purchase Plan;

- 4,500,000 shares reserved for future grants under our 1999 Stock
Option/Stock Issuance Plan; and

- 3,564,000 shares of common stock issuable at a weighted average exercise
price of approximately $0.04 per share upon exercise of stock options
outstanding at March 31, 1999, 3,384,000 of which are exercisable upon
completion of this offering.

<TABLE>
<CAPTION>
MARCH 31, 1999
(IN THOUSANDS)
-------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
--------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Obligations under capital leases, excluding current installments.......... $ 317 $ 317 $ 317
Series A redeemable convertible preferred stock, par value $0.01 per
share; 1,620,000 shares authorized; no shares issued and outstanding
actual; 1,620,000 shares issued and outstanding pro forma and no shares
issued and outstanding pro forma as adjusted............................ -- -- --

Stockholders' equity (deficit):
Preferred stock, $0.01 par value per share; 2,000,000 shares authorized
actual and 10,000,000 shares authorized pro forma and pro forma as
adjusted; no shares issued and outstanding actual, pro forma and pro
forma as adjusted..................................................... -- -- --
Common stock, $0.01 par value, 2,000,000 shares authorized actual and
100,000,000 shares authorized pro forma and pro forma as adjusted;
20,820,000 shares (post-splits) issued and outstanding actual;
20,820,000 shares issued and outstanding pro forma; 29,504,019 shares
issued and outstanding pro forma as adjusted.......................... 208 208 295
Additional paid-in capital................................................ 112 16,312 72,132
Accumulated deficit....................................................... (5,418) (5,418) (5,418)
--------- ----------- -------------
Total stockholders' equity (deficit).................................... (5,098) 11,102 67,009
--------- ----------- -------------
Total capitalization.................................................. $ (4,781) $ 11,419 $ 67,326
--------- ----------- -------------
--------- ----------- -------------
</TABLE>

20
<PAGE>
DILUTION

Our pro forma net tangible book value at March 31, 1999 was $11.1 million,
or approximately $0.45 per share, as adjusted to give effect to our pro forma
capitalization and the automatic conversion of all of the outstanding Series A
Preferred Stock into our common stock upon consummation of this offering. Pro
forma net tangible book value per share represents the amount of our total pro
forma tangible assets reduced by the amount of our pro forma total liabilities
and divided by the pro forma number of shares of common stock outstanding.
Assuming the sale by us of the 4,750,000 shares offered hereby at an assumed
initial public offering price of $13.00 per share, the automatic conversion of
all of the outstanding Series A Preferred Stock into our common stock and the
exercise of 3,384,000 stock options which will become exercisable within the
next sixty days, and after deducting the underwriting discounts and commissions
and estimated offering expenses, our pro forma net tangible book value at March
31, 1999 would have been $67.2 million, or approximately $2.04 per share. This
represents an immediate increase in pro forma net tangible book value of
approximately $1.59 per share to existing stockholders and an immediate dilution
in pro forma net tangible book value of approximately $10.96 per share to new
investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....................... $ 13.00
Pro forma net tangible book value per share at March 31, 1999....... $ 0.45
Increase in pro forma net tangible book value attributable to new
investors......................................................... $ 1.59
---------
Adjusted pro forma net tangible book value per share after this
offering............................................................ $ 2.04
---------
Dilution per share to new investors................................... $ 10.96
---------
---------
</TABLE>

The following table summarizes, on a pro forma as adjusted basis at March
31, 1999, after giving effect to this offering, the differences between existing
stockholders and investors in this offering with respect to the number of shares
of common stock purchased from us, the total consideration paid with respect to
us and the average price paid per share:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------------- --------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Existing stockholders......................... 24,754,019 75.3% $ 16,200,004 20.7% $ 0.65
Options exercisable upon completion of this
offering.................................... 3,384,000 10.3 148,625 0.2 0.04
New investors................................. 4,750,000 14.4 61,750,000 79.1 13.00
------------- ----- -------------- -----
Total....................................... 32,888,019 100.0% $ 78,098,629 100.0% $ 2.37
------------- ----- -------------- -----
------------- ----- -------------- -----
</TABLE>

The foregoing table and calculation assumes the exercise of 3,384,000
outstanding stock options which will become exercisable within the next sixty
days. At March 31, 1999, there were 3,564,000 shares of common stock issuable
upon exercise of outstanding options at a weighted average exercise price of
approximately $0.04 per share.

21
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following selected financial data should be read in conjunction with the
financial statements and the notes to those statements appearing elsewhere in
this prospectus and "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The statement of operations data for the period from
February 20, 1997 (inception) through December 31, 1997 and for the year ended
December 31, 1998, are derived from our audited financial statements included
elsewhere in this prospectus. The statement of operations data for each of the
three-month periods ended March 31, 1998 and 1999, and the balance sheet data at
March 31, 1999, are derived from unaudited interim financial statements of
HotJobs.com included elsewhere in this prospectus. The unaudited financial
statements have been prepared on substantially the same basis as the audited
financial statements and, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of operations for such periods. Historical results
are not necessarily indicative of the results to be expected in the future, and
results of interim periods are not necessarily indicative of results for the
entire year.

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 20,
1997 (INCEPTION) THREE MONTHS ENDED
TO YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, ----------------------------
1997 1998 1998 1999
---------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Service fees................................... $ 361 $ 3,038 $ 347 $ 1,960
Software license fees.......................... 23 225 45 78
Job fair fees.................................. -- -- -- 216
Other.......................................... 13 249 5 395
---------------- ------------- ------------- -------------
Total revenues............................... 397 3,512 397 2,649
Cost of revenues................................ 12 505 77 588
---------------- ------------- ------------- -------------
Gross profit................................. 385 3,007 320 2,061
Operating expenses:
Product development............................ 174 474 90 157
Sales and marketing............................ 431 3,085 524 3,229
General and administrative..................... 725 1,642 274 823
---------------- ------------- ------------- -------------
Total operating expenses..................... 1,330 5,201 888 4,209
---------------- ------------- ------------- -------------
Loss from operations....................... (945) (2,194) (568) (2,148)
Net interest expense............................ -- 63 7 68
---------------- ------------- ------------- -------------
Net loss................................... $ (945) $(2,257) $ (575) $(2,216)
---------------- ------------- ------------- -------------
---------------- ------------- ------------- -------------
Basic and diluted net loss per common share..... $(0.04) $ (0.11) $(0.03) $ (0.11)
---------------- ------------- ------------- -------------
---------------- ------------- ------------- -------------
Weighted average shares outstanding used in
basic and diluted net loss per common share
calculation (1)................................ 21,300,000 21,044,184 21,300,000 20,820,000
---------------- ------------- ------------- -------------
---------------- ------------- ------------- -------------
</TABLE>

22
<PAGE>

- ------------------------

(1) Assumes the completion of a 24-for-one stock split in connection with this
offering.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO, THE FINANCIAL STATEMENTS AND THE NOTES TO THOSE
STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION AND ANALYSIS
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF FACTORS INCLUDING, BUT NOT LIMITED TO,
THOSE DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We are a leading provider of comprehensive recruiting solutions that
leverage the Internet to exchange information more efficiently between job
seekers and employers. The majority of our revenues are recurring and are
derived primarily from employer memberships to our WWW.HOTJOBS.COM employment
exchange. We also provide additional recruiting solutions to employers such as
our proprietary Softshoe recruiting software, our WorkWorld job fairs, online
advertising and consulting services.

Founded in February 1997, we began operations with seven employees and we
had grown to 107 employees as of June 30, 1999. Our early operating activities
related primarily to the development of the necessary technological
infrastructure for the operation of WWW.HOTJOBS.COM. In February 1997, we
commercially launched our WWW.HOTJOBS.COM employment exchange. In September
1997, we began selling our Softshoe software. During 1998, we experienced
significant increases in our revenue from sales of memberships to our employment
exchange and license and hosting fees for our Softshoe software. In early 1999,
we introduced our WorkWorld job fairs and expanded our marketing programs to
increase awareness of the HotJobs.com brand. In May 1999, we raised $16.2
million in a private placement of our convertible preferred stock.

We classify our revenues as follows:

- Service fee revenue, consisting of subscription fees paid by employers for
memberships to our WWW.HOTJOBS.COM employment exchange and software
hosting fees paid by customers of our software. We sell memberships to
each employer on a per recruiter basis and bill the employer monthly,
quarterly, semi-annually or annually. Membership entitles each recruiter
to post a specific number of jobs on WWW.HOTJOBS.COM simultaneously.
Software hosting fees consist of recurring monthly fees to maintain an
employer's Softshoe database as well as the hosting of a miscellaneous
proprietary software product.

- Software license revenue, consists of license fees paid by our Softshoe
customers as well as license fees relating to a miscellaneous proprietary
software product.

- Job fair revenue, consisting of fees from employers that rent booths at
our WorkWorld job fairs.

- Other revenue, consisting of fees derived from single-ad job postings on
WWW.HOTJOBS.COM, banner advertising, which we sell on a monthly and
extended-term basis, and other Softshoe-related services, including system
customization and resume scanning services, which we bill on a monthly and
extended-term basis.

24
<PAGE>
We recognize revenue as follows:

- SERVICE FEE REVENUE. We provide subscriptions for membership to our
employment exchange for a minimum term of three months and a maximum term
of 24 months. We recognize subscription revenue over the subscription
term. We provide hosting services to Softshoe customers on a monthly
basis, and we recognize hosting revenue in the month we provide the
service. These hosting fees are contracted separately from the software
license.

- SOFTWARE LICENSE REVENUE. We recognize software license revenue ratably
over the four year estimated useful life of the software, in accordance
with Statements of Position 97-2 and 98-9 issued by the American Institute
of Certified Public Accountants.

- JOB FAIR REVENUE. We recognize job fair revenue in the month in which the
job fair takes place.

- OTHER REVENUE. We recognize revenue related to these services over the
period of delivery of service. Other revenue also includes barter revenue,
which consists of fees generated from exchanges of services with other
vendors. We recognize barter revenue over the period that we receive the
benefit.

We classify our cost of revenue and operating expenses as follows:

- COST OF REVENUE. Cost of revenue consists of compensation associated with
network operations staff, technology support contract fees, Internet
access, job fair expenses, resume scanning services, barter expenses and
depreciation expense.

- PRODUCT DEVELOPMENT EXPENSE. Product development expense consists
primarily of costs associated with the compensation of product development
personnel. Our product development expenses constitute all of our research
and development expenditures.

- SALES AND MARKETING EXPENSE. Sales and marketing expense consists
primarily of advertising and promotional expenses, public relations
expenses, conference expenses, printing fees, sales and marketing
compensation, including base salary and sales commissions, and
telemarketing communications expenses. Sales commissions have remained
relatively constant as a percentage of revenues, and we expect this to
continue. However, the timing and magnitude of marketing initiatives have
caused, and will continue to cause, fluctuations in sales and marketing
expense as a percentage of revenues.

- GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
consists primarily of compensation for administrative and executive staff,
fees for professional services, bad debt expense and general office
expense.

25
<PAGE>
The following table sets forth, as a percentage of total revenues, the
results of our operations for the period ended December 31, 1997, the year ended
December 31, 1998 and the three months ended March 31, 1998 and 1999.

<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS ENDED
FEBRUARY 20,
1997 (INCEPTION) YEAR ENDED MARCH 31,
TO DECEMBER 31, DECEMBER 31, ----------------------
1997 1998 1998 1999
------------------- ----------------- --------- -----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Service fees............................................... 91% 87% 87% 74%
Software license fees...................................... 6 6 12 3
Job fair fees.............................................. -- -- -- 8
Other...................................................... 3 7 1 15
--- --- --- ---
Total revenues........................................... 100 100 100 100
Cost of revenues............................................. 3 14 19 22
--- --- --- ---
Gross profit............................................. 97 86 81 78

Operating expenses:
Product development........................................ 44 13 23 6
Sales and marketing........................................ 109 88 132 122
General and administrative................................. 183 47 69 31
--- --- --- ---
Total operating expenses................................. 336 148 224 159
--- --- --- ---
Loss from operations................................... (239) (62) (143) (81)
Net interest expense......................................... -- 2 2 3
--- --- --- ---
Net loss............................................... (239)% (64 )% (145)% (84 )%
--- --- --- ---
--- --- --- ---
</TABLE>

We have incurred substantial losses in every fiscal period since our
inception. For the year ended December 31, 1998, we incurred net losses of
approximately $2.3 million. For the quarter ended March 31, 1999, we incurred
net losses of approximately $2.2 million. As of December 31, 1998, and March 31,
1999, we had accumulated deficits of approximately $3.2 million and $5.4
million, respectively. Our net losses and resulting accumulated deficit are
primarily due to the costs we incurred to develop our online employment exchange
and software products in advance of substantial revenue and to expand our sales
and marketing programs.

We intend to devote significant resources to advertising and brand marketing
programs designed to attract new employers to subscribe to WWW.HOTJOBS.COM. As
of June 30, 1999, we spent approximately $3.5 million of the $16.2 million we
raised in May 1999 on our advertising and brand marketing programs. We
anticipate increasing advertising spending in specific periods in the future.
This will result in sales and marketing expenses increasing as a percentage of
total revenues in these periods. As of June 1, 1999, we had commitments of
approximately $10.9 million for various advertising campaigns over the next
three years. These obligations will be paid out of the $16.2 million raised in
our Series A Preferred Stock private placement and from cash receipts from
operations. These commitments include broadcasting, print, online and outdoor
advertising. We expect growth in the number of member employers of
WWW.HOTJOBS.COM to result in substantial growth in subscription fees, both in
terms of dollar amount and as a percentage of total revenue. Our strategy
contemplates that revenue from employer memberships will likely be the single
largest source of revenue for us in the immediate future.

As a result of our expansion plans and our expectation that operating
expenses will increase significantly in the next several years, especially in
the areas of sales and marketing and brand promotion, we expect to incur
additional losses from operations for the foreseeable future. To

26
<PAGE>
the extent that (1) increases in our operating expenses precede and are not
subsequently followed by commensurate increases in revenue, or (2) we are unable
to adjust operating expense levels accordingly, our operating losses may exceed
our expectations for those periods. We cannot be sure that we will ever achieve
or sustain profitability.

DEFERRED COMPENSATION

Assuming an initial public offering price of $13.00 per share, we will
record deferred compensation of $7.2 million in the first six months of 1999,
representing the difference between the exercise price of stock options granted
and the fair value for accounting purposes of the underlying common stock at the
date of the grant. The $7.2 million deferred compensation cost will be amortized
over the vesting period of the options. We currently expect to amortize the
following amounts of deferred compensation as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD ENDING:
- -------------------------------------------------------------------------------
<S> <C>
Six months ended June 30, 1999................................................. $165,000
Nine months ended September 30, 1999........................................... $1.5
million
Year ended December 31, 1999................................................... $1.9
million
Year ended December 31, 2000................................................... $1.7
million
Year ended December 31, 2001................................................... $1.7
million
Year ended December 31, 2002................................................... $1.4
million
Year ended December 31, 2003................................................... $506,000
</TABLE>

BENEFICIAL CONVERSION FEATURE

As of May 10, 1999, due to our sale of 1,620,000 shares of Series A
Preferred Stock with a conversion price that was below the expected initial
public offering price of our common stock, we recorded a beneficial conversion
feature of $16.2 million. We will amortize the value of the beneficial
conversion feature over the four-year period from the date of issuance of the
preferred stock to the date on which the preferred stock is first convertible
into common stock, assuming no acceleration of the date of conversion. Upon
completion of this offering, all of the preferred stock will automatically
convert into common stock and all of the as yet unamortized value of the
beneficial conversion feature will be immediately recognized as a dividend to
preferred stockholders. Assuming an initial public offering price of $13.00 per
share and no exercise of currently outstanding options, we currently expect to
amortize an aggregate of approximately $570,000 of the beneficial conversion
feature in the second quarter of 1999 and an aggregate of approximately
$15,630,000 of the beneficial conversion feature in the third quarter of 1999,
which will increase our net loss per common share by $0.03 in the second quarter
of 1999 and by $0.60 in the third quarter of 1999. Because all of the preferred
stock will automatically convert upon the completion of this offering, we do not
expect to amortize any of the beneficial conversion feature after the third
quarter of 1999.

QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998

REVENUES

Our total revenues increased to $2.6 million for the quarter ended March 31,
1999, from $397,000 for the quarter ended March 31, 1998. The increase in our
total revenues was primarily due to an increase in service fees.

SERVICE FEES. Service fee revenue increased to $2.0 million for the quarter
ended March 31, 1999, from $347,000 for the quarter ended March 31, 1998.
This increase resulted primarily from an increase in the number of employers
subscribing to WWW.HOTJOBS.COM

27
<PAGE>
and, to a lesser extent, an increase in the hosting fees generated by a
larger number of licensees of our Softshoe software.

SOFTWARE LICENSE FEES. Software license revenue increased 73%, to $78,000
for the quarter ended March 31, 1999, from $45,000 for the quarter ended
March 31, 1998. This increase was due primarily to additional licenses of
Softshoe software since the end of the first quarter of 1998.

JOB FAIR FEES. Job fair revenue increased to $216,000 for the quarter ended
March 31, 1999, from $0 for the quarter ended March 31, 1998. We held our
first job fair in February 1999.

OTHER FEES. Other revenue increased to $395,000 for the quarter ended March
31, 1999, from $5,000 for the quarter ended March 31, 1998. This increase
primarily relates to a barter transaction for advertising and the inception
of single-ad job postings and banner advertising.

COST OF REVENUES

Our cost of revenues increased to $588,000 for the quarter ended March 31,
1999, from $77,000 for the quarter ended March 31, 1998. As a percentage of
revenue, cost of revenues increased to 22% for the quarter ended March 31, 1999,
from 19% for the quarter ended March 31, 1998. This increase resulted primarily
from costs associated with the launch of our WorkWorld job fairs as well as an
increase in our network operations staff.

OPERATING EXPENSES

PRODUCT DEVELOPMENT EXPENSE. Product development expense increased 74%, to
$157,000 for the quarter ended March 31, 1999, from $90,000 for the quarter
ended March 31, 1998. This increase resulted primarily from increased
salaries and related expenses associated with hiring additional technology
personnel required to enhance the content and features of our products and
services.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased to $3.2
million for the quarter ended March 31, 1999, from $524,000 for the quarter
ended March 31, 1998. The increase in sales and marketing expense was
primarily due to the expansion of the HotJobs.com marketing campaign,
including approximately $2.0 million for a television advertisement during
the Super Bowl in January 1999. In addition, sales and marketing expense
increased due to the hiring of additional sales and marketing personnel.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased to $823,000 for the quarter ended March 31, 1999, from $274,000
for the quarter ended March 31, 1998. General and administrative expense
increased primarily due to increased salaries and related expenses
associated with hiring additional administrative personnel.

NET INTEREST EXPENSE

Net interest expense increased to $68,000 for the quarter ended March 31,
1999, from $7,000 for the quarter ended March 31, 1998. This increase resulted
from increased borrowings, as well as increased capital expenditures under
capital leases.

28
<PAGE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO PERIOD ENDED DECEMBER 31, 1997

REVENUES

Our total revenues increased to $3.5 million for the year ended December 31,
1998, from $397,000 for the period ended December 31, 1997. The increase in our
total revenues was primarily due to an increase in service fees and other fees
associated with the sale of miscellaneous proprietary software.

SERVICE FEES. Service fee revenue increased to $3.0 million for the year
ended December 31, 1998, from $361,000 for the period ended December 31,
1997. This increase resulted primarily from an increase in the number of
employers subscribing to WWW.HOTJOBS.COM and, to a lesser extent, an
increase in the hosting fees generated from a larger number of licensees of
our Softshoe software.

SOFTWARE LICENSE FEES. Software license revenue increased to $225,000 for
the year ended December 31, 1998, from $23,000 for the period ended December
31, 1997. This increase was due to an increase in the number of customers
who purchased licenses for our Softshoe software.

JOB FAIR FEES. We held our first WorkWorld job fair in 1999. Therefore, we
did not generate any job fair revenue in either 1998 or 1997.

OTHER FEES. Other revenue increased to $249,000 for the year ended December
31, 1998, from $13,000 for the period ended December 31, 1997. The increase
is primarily due to the sale of a miscellaneous proprietary software product
and an increase in fees related to customizing Softshoe applications.

COST OF REVENUES

Our cost of revenues increased to $505,000 for the year ended December 31,
1998, from $12,000 for the period ended December 31, 1997. As a percentage of
revenue, cost of revenues increased to 14% for the year ended December 31, 1998,
from 3% for the period ended December 31, 1997. This increase resulted primarily
from an increase in our network operations staff as well as an increase in
depreciation expense.

OPERATING EXPENSES

PRODUCT DEVELOPMENT EXPENSE. Product development expense increased to
$474,000 for the year ended December 31, 1998, from $174,000 for the period
ended December 31, 1997. This increase resulted primarily from increased
salaries and related expenses associated with hiring additional technology
personnel required to enhance the content and features of our products and
services.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased to $3.1
million for the year ended December 31, 1998, from $431,000 for the period
ended December 31, 1997, and decreased as a percentage of revenue to 88% for
the year ended December 31, 1998 from 108% for the period ended December 31,
1997. The increase in sales and marketing expense was primarily due to costs
associated with advertising and increases in sales compensation and
commissions related to an increase in the number of our sales and marketing
personnel.

GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased to $1.6 million for the year ended December 31, 1998, from
$725,000 for the period ended December 31, 1997. General and administrative
expense increased primarily due to increased salaries and related expenses
associated with hiring additional personnel.

29
<PAGE>
NET INTEREST EXPENSE

Net interest expense increased to $63,000 for the year ended December 31,
1998, from $0 for the period ended December 31, 1997. This increase resulted
from increased borrowings, as well as increased capital expenditures under
capital leases.

TAXES

At December 31, 1998, we had a net operating loss carryforward of $3.1
million. This carryforward is available to offset future taxable income and
expires at various dates through 2018. We have recorded a valuation allowance of
an equal amount to fully offset the deferred tax benefit. The valuation
allowance increased approximately $551,000 for the year ended December 31, 1998.

UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth a summary of our quarterly results for 1998
and the first quarter of 1999. This information was derived from unaudited
interim financial statements that, in the opinion of management, have been
prepared on a basis consistent with the financial statements contained elsewhere
in this prospectus and include all adjustments, consisting of only normal
recurring adjustments, necessary for a fair statement of such information when
read in conjunction with the financial statements and notes thereto. The results
of operations for any quarter are not necessarily indicative of the results of
operations for any future period.

Our revenue has increased in each consecutive quarter since inception as a
result of increased market acceptance of our employment exchange service and
Softshoe software product. Product development expense has steadily decreased as
a percentage of revenue due to a faster increase in revenue relative to product
development expense. Sales and marketing expense increased between the fourth
quarter of 1998 and the first quarter of 1999, primarily as a result of
increased advertising expenditures. Sales commissions have remained relatively
constant as a percentage of revenues, and we expect this to continue. However,
the timing and magnitude of marketing initiatives have caused, and will continue
to cause, fluctuations in sales and marketing expense as a percentage of
revenues. General and administrative expense has increased in every quarter
since inception due to an increase in personnel, facilities and increased
spending on internal operational and financial infrastructure.

In light of the evolving nature of our business and limited operating
history, we believe that period to period comparisons of our historical
operating results may not be meaningful and should not be relied upon as
indications of future performance. Although we have experienced

30
<PAGE>
sequential quarterly revenue growth since inception, our historical revenue
growth rates are not necessarily indicative of future revenue growth rates.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MARCH 31, JUNE 30, SEPT 30, DEC 31, MARCH 31,
1998 1998 1998 1998 1999
----------- ----------- ----------- --------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Service fees........................................... $ 347 $ 627 $ 914 $ 1,150 $ 1,960
Software license fees.................................. 45 51 59 70 78
Job fair fees.......................................... -- -- -- -- 216
Other.................................................. 5 15 169 60 395
----------- ----------- ----- --------- -----------
Total revenues..................................... 397 693 1,142 1,280 2,649
Cost of revenues......................................... 77 89 139 200 588
----------- ----------- ----- --------- -----------
Gross profit....................................... 320 604 1,003 1,080 2,061

Operating expenses:
Product development.................................... 90 112 140 133 157
Sales and marketing.................................... 524 629 754 1,177 3,229
General and administrative............................. 274 280 375 713 823
----------- ----------- ----- --------- -----------
Total operating expenses........................... 888 1,021 1,269 2,023 4,209
----------- ----------- ----- --------- -----------
Loss from operations............................. (568) (417) (266) (943) (2,148)
Net interest expense..................................... 7 6 15 35 68
----------- ----------- ----- --------- -----------
Net loss......................................... $ (575) $ (423) $ (281) $ (978) $ (2,216)
----------- ----------- ----- --------- -----------
----------- ----------- ----- --------- -----------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------
MARCH 31, JUNE 30, SEPT 30, DEC 31, MARCH 31,
1998 1998 1998 1998 1999
----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF TOTAL REVENUES:
Revenues:
Service fees........................................... 88% 91% 80% 90% 74%
Software license fees.................................. 11 7 5 5 3
Job fair fees.......................................... -- -- -- -- 8
Other.................................................. 1 2 15 5 15
----------- ----------- ----- --------- -----------
Total revenues..................................... 100 100 100 100 100
Cost of revenues......................................... 19 13 12 16 22
----------- ----------- ----- --------- -----------
Gross profit....................................... 81 87 88 84 78

Operating expenses:
Product development.................................. 23 16 12 10 6
Sales and marketing.................................. 132 91 66 92 122
General and administrative........................... 69 40 33 56 31
----------- ----------- ----- --------- -----------
Total operating expenses........................... 224 147 111 158 159
----------- ----------- ----- --------- -----------
Loss from operations............................. (143) (60) (23) (74) (81)
Net interest expense..................................... 2 1 1 3 3
----------- ----------- ----- --------- -----------
Net loss......................................... (145)% (61 )% (24 )% (77)% (84 )%
----------- ----------- ----- --------- -----------
----------- ----------- ----- --------- -----------
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our activities primarily through funding
from OTEC, Inc., as well as proceeds from our line of credit and cash from
operations. As of December 31, 1998, OTEC owned approximately 23% of the voting
stock of HotJobs.com. Richard S. Johnson, our Chief Executive Officer and
President, formerly served as President of OTEC and currently is a director and
one of its two stockholders. See "Related Party Transactions--Transactions
Involving OTEC." During 1998, OTEC provided us with approximately $3.8 million
to fund our operations. In addition, effective May 10, 1999, we raised $16.2
million from the sale of our Series A Preferred Stock in a private placement. In
June 1999, we used a portion of these proceeds to repay OTEC in full.

Net cash used in operating activities was $2.1 million during 1998 and
$431,000 for the quarter ended March 31, 1999. Net cash used in operating
activities resulted primarily from our net operating losses, adjusted for
certain non-cash items, and a higher level of accounts receivable due to
increased revenues and deferred revenue. Deferred revenue accounts for a
significant percentage of our accounts receivable due to our deferring from
revenues amounts that are invoiced, until the period in which we provide the
services. Our net operating losses were partially offset by increases in
accounts payable and accrued expenses.

Net cash used in investing activities was $497,000 during 1998 and $128,000
for the quarter ended March 31, 1999. We used net cash in investing activities
primarily for equipment purchases and leasehold improvements. During 1998 and
the quarter ended March 31, 1999, we acquired additional equipment under capital
leases with a value of $201,000 and $378,000, respectively.

Net cash provided by financing activities was $2.8 million during 1998 and
$651,000 for the quarter ended March 31, 1999. Net cash was provided by
financing activities primarily from

32
<PAGE>
borrowings under our line of credit and OTEC's line of credit. In May 1999, we
received $16.2 million in cash proceeds from a private placement of our
convertible preferred stock.

As of March 31, 1999, we had a cash balance of $258,000 and our principal
obligations consisted of borrowings of $180,000 under our $500,000 line of
credit and advances from OTEC of approximately $4.4 million, the latter of which
was repaid in full by June 1999 from the proceeds of our May 1999 private
placement. In addition, we had approximately $502,000 of obligations under
capital leases. As of May 31, 1999, we had $180,000 outstanding under our line
of credit.

We believe that the net proceeds of this offering, together with our
existing cash and cash equivalents, will be sufficient to meet our anticipated
cash requirements for working capital and capital expenditures for the next 12
months. Our capital requirements will depend on a number of factors, including
market acceptance of our products and services, the amount of our resources we
devote to WWW.HOTJOBS.COM and expansion of our operations and the amount of our
resources we devote to promoting awareness of the HotJobs.com brand. Consistent
with our growth, we have experienced a substantial increase in our sales and
marketing expenses, capital expenditures and operating lease arrangements since
inception, and we anticipate that these increases will continue for the
foreseeable future. In addition, we will continue to evaluate possible
investments in businesses, products and technologies, the consummation of any of
which would increase our capital expenditures.

Although we currently believe that we have sufficient capital resources to
meet our anticipated working capital and capital expenditure requirements beyond
the next 12 months, unanticipated events and opportunities may require us to
sell additional equity or debt securities, increase our current line of credit
or establish new credit facilities to raise capital in order to meet our capital
requirements. If we sell additional equity or convertible debt securities, the
sale could dilute the ownership of our existing stockholders. If we issue debt
securities, increase our credit facility or establish a new credit facility, our
fixed obligations could increase and result in operating covenants that would
restrict our operations. We cannot be sure that any such financing will be
available in amounts or on terms acceptable to us.

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products are coded to
accept or recognize only two-digit entries in the date code field. These systems
and software products will need to accept four-digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and
software used by many companies and governmental agencies may need to be
upgraded to comply with such year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.

STATE OF READINESS. We have made a preliminary assessment of the year 2000
readiness of our information technology ("IT") systems, including the hardware
and software that enable us to provide and deliver our products and services.
Our year 2000 readiness plan consists of:

- quality assurance testing of our internally developed proprietary
software;

- contacting third-party vendors and licensors of material software and
services that are both directly and indirectly related to the delivery of
our products and services;

- assessing our repair and replacement requirements; and

- creating contingency plans in the event of year 2000 failures.

We performed a year 2000 simulation on our software during the second
quarter of 1999 to test system readiness, and found no anomalous behavior in our
systems. We have been

33
<PAGE>
informed by all 12 of our material software component vendors and our Internet
service provider that the products we use are currently year 2000 compliant. We
purchased all of our software and hardware within the past two years, and
therefore we do not have legacy systems that have been historically identified
to have year 2000 issues. We have applied all known vendor patches for relevant
software to come to compliance with vendor defined year 2000 standards. Although
we will complete a test of all of our systems, we have not hired any third
parties to verify our vendors' compliance.

We are currently assessing our non-IT systems and will seek assurance of
year 2000 compliance from providers of material non-IT systems. Until testing is
complete and we contact these vendors and providers, we will not be able to
completely evaluate whether our IT systems or non-IT systems will need to be
revised or replaced.

PRODUCTS. Under most of our Softshoe license agreements, we warrant that
our Softshoe software is free from programming defects arising from year 2000
issues. Our obligation is to remedy the defect or replace the product. We
believe our Softshoe product is free of year 2000 defects.

COSTS. To date we have not incurred any material costs in identifying or
evaluating year 2000 compliance issues. Based on our assessment to date, we do
not anticipate that costs associated with remediating our non-compliant IT
systems or non-IT systems will be material. We expect that our existing
employees or consultants will perform any significant work pertaining to year
2000 compliance.

RISKS. We are not currently aware of any year 2000 compliance problems
relating to our technology or our IT or non-IT systems that would have a
material adverse effect on our business, results of operations or financial
condition. However, we may discover year 2000 compliance problems in our
technology that will require substantial revisions. In addition, we may need to
revise or replace third party software, hardware or services incorporated into
our material IT and non-IT systems, all of which could be time consuming and
expensive. If we fail to fix our technology or to fix or replace third party
software, hardware or services on a timely basis, the result could be lost
revenues, increased operating costs, the loss of customers and other business
interruptions, any of which could have a material adverse effect on our
business, results of operations and financial condition. Moreover, the failure
to adequately address year 2000 compliance issues in our technology and our IT
and non-IT systems could result in claims of mismanagement, misrepresentation or
breach of contract and related litigation, which could be costly and
time-consuming to defend. In addition, we cannot assure you that governmental
agencies, utility companies, Internet access companies, third party service
providers and others outside our control will be year 2000 compliant. The
failure by such entities to be year 2000 compliant could result in a systemic
failure beyond our control, such as a prolonged Internet, telecommunications or
electrical failure, which could also prevent us from delivering our products and
services to our customers, decrease the use of the Internet or prevent users
from accessing the websites of companies with whom we have entered into business
alliances, which could have a material adverse effect on our business, results
of operations and financial condition.

CONTINGENCY PLAN. As discussed above, we are engaged in an ongoing year
2000 assessment and are developing contingency plans in case of year 2000
disruptions. We will take into account the results of our year 2000 simulation
testing and the responses received from third party vendors and service
providers in determining the nature and extent of any contingency plans. We
believe that we will complete our system tests and contingency plan by September
15, 1999.

34
<PAGE>
WORST CASE SCENARIO. Based on our assessment completed to date, we believe
that the reasonably likely worst case scenario with respect to year 2000 issues
could be:

- portions of WWW.HOTJOBS.COM may be down while programmers fix our systems
or the systems of ISPs or other third parties;

- temporary data loss could occur while back-up copies of data are retrieved
from tape;

- lengthy outages could occur while programmers work to repair or restore
corrupted or missing database files; and

- our internal corporate, billing and accounting system may be down while
programmers fix our system.

Although these events could have an adverse effect on our business in the
short term, we do not believe that year 2000 issues will materially and
adversely affect our business, results of operations or financial condition over
the long term. While we will have system engineers on-site over the year 2000
date change, we can give no assurance that all expectations will be realized.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, which supersedes SFAS No. 14,
Financial Reporting for Segments of a Business Enterprise. This statement
changes the way that public business enterprises report segment information,
including financial and descriptive information about their selected segment
information. Under SFAS No. 131, operating segments are defined as revenue-
producing components of the enterprise which are generally used internally for
evaluating segment performance. SFAS No. 131 became effective for HotJobs.com
fiscal year ending December 31, 1997, and we have determined that under the
guidelines of SFAS No. 131 we did not have any separately reportable business
segments as of December 31, 1998.

In February 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. SOP 98-1 establishes the accounting for
costs of software products developed or purchased for internal use, including
when such costs should be capitalized. We do not expect SOP 98-1, which is
effective January 1, 1999, to have a material effect on our financial condition
or results of operations.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all fiscal quarters of fiscal years beginning June 15, 2000. This statement is
not expected to affect us because we currently do not engage or plan to engage
in derivative instruments or hedging activities.

35
<PAGE>
BUSINESS

GENERAL

The majority of our revenues are recurring and are primarily derived from
employer memberships to our online employment exchange, WWW.HOTJOBS.COM.
Headhunters are prohibited from using our employment exchange, ensuring direct
contact between job seekers and member employers. We also provide employers with
additional recruiting solutions such as our proprietary Softshoe recruiting
software, our WorkWorld job fairs and online advertising and consulting
services.

INDUSTRY BACKGROUND

RECRUITING MARKET

We believe that companies cannot be competitive without implementing
successful recruiting practices. According to industry sources, businesses in
the U.S. spent in excess of $13 billion in 1997 to hire new employees by
advertising job openings in newspapers and by hiring headhunters.

We believe that several factors are causing an increase in spending on
recruiting efforts:

INCREASED LABOR SHORTAGE. We believe that demographic trends such as the
aging of the Baby Boomers and decreasing birth rates, together with the
continued growth in the U.S. economy, are combining to cause a tight labor
market. For example, according to a 1998 recruiting survey prepared by
Interbiznet.com, over 60% of the recruiters surveyed experienced labor
shortages. As a result, the recruiting process now focuses less on selecting
qualified employees from a ready pool of candidates and more on managing a
scarce resource.

INCREASED EMPLOYEE TURNOVER. We believe that employees currently change
jobs more often than they have in the past and that even satisfied employees are
increasingly investigating job opportunities. According to the U.S. Bureau of
Labor Statistics, the average person entering the workforce today will work for
between eight and ten different employers. This makes it more difficult for
employers to retain qualified, experienced individuals and increases the number
of hirings that must occur each year in order to maintain or grow an employer's
workforce.

INCREASED URGENCY TO REDUCE TIME TO HIRE. Forrester Research, Inc.
estimates that unemployment among "knowledge workers" is less than 1% relative
to overall unemployment of 4.3%. Because of the shortage in highly skilled job
seekers, qualified candidates must be hired quickly or they may be lost to
competitors. The ability to quickly hire qualified employees may have a
significant influence on the future success of a company.

36
<PAGE>
Prior to the advent of the Internet, companies traditionally relied on a
combination of five recruiting methods. These five methods include newspaper
classifieds and other print advertisements, traditional job fairs, on-campus
recruiting, internal referral programs and headhunters. The key limitations of
each of these methods include:

NEWSPAPER CLASSIFIEDS AND OTHER PRINT ADVERTISEMENTS

- multiple intermediaries including media buyers and media placement agents
are typically involved before an advertisement is placed;

- several weeks to several months may pass from the time a job is advertised
to the time the recruiter can respond to resumes in which he or she is
interested; and

- it is typically cost prohibitive to provide a full description of either
the employer or the job opportunity and to advertise jobs nationally.

TRADITIONAL JOB FAIRS

- employers have limited time to meet with job seekers whom they have not
pre-screened; and

- job seekers often must visit each company's booth prior to determining the
specific jobs that are available.

ON-CAMPUS RECRUITING

- the number of candidates requesting interviews typically exceeds the
employers' available time slots; and

- employers must visit multiple campuses and have limited time to meet with
all qualified candidates.

INTERNAL REFERRAL PROGRAMS

- incentive programs may divert an employee's attention away from performing
his or her job, thereby reducing productivity; and

- referring employees may be more concerned about the quantity than the
quality of referrals.

HEADHUNTERS

- placement fees are costly and employers only have access to limited
applicant pools; and

- job seekers generally receive limited information about the specific
companies and positions for which they apply and do not have direct
contact with the employer.

ONLINE RECRUITING MARKET

The emergence of the Internet has created an opportunity to connect job
seekers with employers more efficiently and cost effectively when compared to
traditional recruiting methods. Online recruiting can automate the recruiting
process, providing more informative and responsive real-time interaction between
job seekers and employers, and has the potential to lower the cost and time to
hire. Job seekers are empowered with access to an aggregation of information
about employment opportunities worldwide not previously available to them in one
place. We believe that a significant online recruiting marketplace will emerge
as more job seekers and employers embrace the advantages the Internet brings to
the recruiting process. In

37
<PAGE>
addition, Internet-based solutions may replace more expensive client/server
recruiting software and change the way companies manage and distribute
information about job seekers throughout their organizations.

International Data Corporation estimates that the total number of individual
Internet users worldwide will grow from approximately 69 million in 1997 to 320
million in 2002. As Internet usage becomes more widespread, companies from a
broad range of industries are expected to conduct an increasing percentage of
their recruiting over the Internet. Of the 6 million businesses in the U.S.,
Forrester estimates that only 15,000 businesses currently recruit online, but
this figure is estimated to increase to 124,000 by 2003. Forrester forecasts
that by 2003, most large companies, 60% of medium-sized companies and 20% of
small companies will use the Internet for recruiting purposes.

MARKET OPPORTUNITY

We believe that most of the advantages offered by Internet technology have
not been fully applied to the recruiting market. While online job boards have
improved the aggregation of job postings and job seekers, they have not
fundamentally improved workflow throughout the recruiting process. Additionally,
few web-based commercial software applications are available to help employers
manage their internal recruiting processes. We also believe that most employers
are in the early stages of understanding how to use the Internet to increase
their competitiveness in recruiting.

We believe that many of the current online recruiting offerings suffer from
the following limitations:

- LACK OF PRIVACY. Most online recruiting solutions do not allow job seekers
to restrict access to their resumes. We believe that many experienced
professionals will not post their resumes on a job board if there is a
chance that they may be detected by their current employers.

- HEADHUNTER POSTINGS. Many of the current online recruiting offerings give
headhunters complete access to their sites, resulting in a high cost
intermediary between employers and job seekers. In addition, employers
have to compete with headhunters for the job seekers they are looking to
hire. Job seekers do not know whether the jobs to which they are applying
are from actual employers or are merely ads placed by headhunters looking
for applicants for whom they can charge a fee.

- LACK OF SCREENING PROCESS. Many of the current online job boards offer no
or only limited testing and screening capabilities. Many sites stress the
size of their resume database and the number of people who visit the site
each month. This focus on quantity rather than quality results in the
recruiter receiving an excessive amount of unwanted resumes.

- LACK OF FUNCTIONALITY. Many online job boards serve only to attract
candidates without providing employers with the tools they need to manage
the recruiting process within their organizations. Additionally, these job
boards generally lack the ability to help employers compile and analyze
job seeker data.

- UNFAVORABLE PRICING MODEL. Most recruiting websites charge companies to
list openings for a fixed period of time on a price-per-ad basis. We
believe that this is inefficient for companies with ongoing recruiting
needs. Jobs that have been filled remain posted, attracting unwanted
applicants, while unfilled jobs need to be posted again and again until a
person is hired.

38
<PAGE>
Because our recruiting solution does not suffer from these limitations, we
believe that an opportunity exists for HotJobs.com to become the leader in
online recruiting solutions.

THE HOTJOBS.COM SOLUTION

We provide comprehensive online recruiting solutions for employers and job
seekers. Our solutions include our online employment exchange, WWW.HOTJOBS.COM,
our browser-based proprietary recruiting software, Softshoe, and our WorkWorld
job fairs. Additionally, we provide strategic consulting and development
services focused on improving the efficiency and effectiveness of the recruiting
process for employers. As companies increasingly utilize the Internet to improve
their recruiting processes, we believe that our solution enables our customers
to leverage the lower cost and real-time communication enabled by the Internet
while retaining many of the positive attributes of traditional recruiting
methods.

BENEFITS TO JOB SEEKERS

Our WWW.HOTJOBS.COM employment exchange empowers job seekers to find
employment opportunities posted directly by employers at no cost to the job
seeker. Key features of our solution for job seekers include:

- DIRECT ACCESS TO A LARGE AND GROWING LIST OF EMPLOYERS. Our
WWW.HOTJOBS.COM site offers job seekers direct access to job postings from
over 1,650 member employers. Unlike most online recruiting services, we
exclude headhunters from our site to ensure direct contact between our job
seekers and member employers. Job seekers can search for and apply to
specific job openings or submit their resumes to our resume database,
providing our member employers with access to their resumes unless blocked
by the job seeker.

- PRIVACY. Through the use of the HotBlock feature, job seekers can prevent
the viewing of their resumes. With this feature, job seekers can eliminate
unwanted solicitations and avoid detection by their current employers.

- PERSONALIZATION. We enable job seekers to set up their own career home
page, My HotJobs, free of charge and provide them with tools to manage
their job searches. We also provide job seekers with the ability to set up
personal job search agents, enabling them to create customized and
automated searches based on their specifications, such as job type or
geographic preference. This service also provides job seekers with email
notification during a specified period of time of any new jobs added to
the system which match the job seeker's specifications.

- DETAILED, CURRENT INFORMATION. We provide in-depth company and job
descriptions, enabling job seekers to apply for those jobs for which they
are most qualified and minimizing the need for additional research.
Additionally, each job posting includes a date stamp, giving the job
seeker information about the age of a particular job posting.

- JOB SEARCH TOOLS. We provide job seekers with the ability to store job
search information, including a "shopping cart" to store multiple job
search results as well as cover letter storage related to specific job
inquiries. Additionally, job seekers can keep track of currently active
jobs for which they have applied and can analyze the effectiveness of
their job searches by tracking the number of times their resumes appear in
an employer's search and are subsequently viewed.

- CAREER RESOURCES. We provide job seekers with career resources, including
a bookstore, original editorial content and job seeker message boards.

39
<PAGE>
BENEFITS TO EMPLOYERS

We provide employers with a comprehensive Internet-based recruiting solution
focused on reducing the cost and time to hire a new employee. This comprehensive
solution includes WWW.HOTJOBS.COM, our online employment exchange, our Softshoe
recruiting software, our WorkWorld job fairs and related advertising and
consulting services. We developed our solution to provide employers with access
to a high quality pool of job seekers and the tools necessary to manage the
workflow involved in the recruiting process. Key features of our solution for
employers include:

- FLEXIBLE PRICING MODEL. We offer employers a fully automated,
cost-efficient means to recruit job seekers online. Our pricing model
allows employers to choose between different levels of service to meet
their needs. Depending upon the employer's requirements, employers may
choose to pay periodic subscription fees to become a member of our online
employment exchange based on the number of the employer's recruiters that
have access to the exchange, to utilize our online software on a
subscription fee basis or to purchase customized consulting services.

- DIRECT ACCESS TO A LARGE NUMBER OF JOB SEEKERS. Through our employment
exchange, we offer member employers access to our growing job seeker
database which currently contains more than 450,000 resumes. We do not
allow headhunters to search our resume database or to place job
advertisements on our job board. By limiting access only to member
employers, we provide direct access to our pool of job seekers and
eliminate competition for candidates from headhunters.

- REAL-TIME JOB POSTING, TRACKING AND MANAGEMENT TOOLS. We provide member
employers the ability to post, track and manage job openings in a
real-time environment. Our solution enables a member employer to remove a
posting once a position has been filled and replace it with a new posting.
We believe that this reduces unnecessary expenditures of time and money
experienced in traditional recruiting methods.

- REDUCE UNWANTED RESUMES. Because we do not charge on a per-word basis, our
solution allows employers to provide in-depth job descriptions, allowing
candidates to self-select jobs for which they are qualified. Additionally,
employers can pre-screen applicants using online testing and remove a job
posting as soon as it is filled. We believe these functions minimize the
receipt by employers of unqualified or untimely resumes.

- VALUE ADDED RECRUITING MANAGEMENT SOFTWARE. In addition to our online
employment exchange, we provide our proprietary browser-based recruiting
software to help employers better manage the entire recruiting process.
Softshoe provides private label job board and applicant tracking
capabilities, enabling employers to coordinate online and traditional
recruiting methods and to share information throughout their entire
organization. This enables improved coordination and communication among
recruiters, hiring managers and executive management.

- DISTRIBUTION OF JOB POSTINGS. Through our relationships with third-party
websites, we are able to offer our member employers the ability to place
their HotJobs.com job postings onto high-traffic third party web sites
including Yahoo!, Alta Vista, Usenet and America's Job Bank at no
additional cost. We have also entered into arrangements with theglobe.com,
Inc., E*Trade Group Inc., About.com, Inc. and TechRepublic, Inc. providing
direct access to WWW.HOTJOBS.COM from their sites.

40
<PAGE>
THE HOTJOBS.COM STRATEGY

Our objective is to become the leading global provider of online recruiting
services. Key elements of our strategy include:

- BUILD GLOBAL BRAND AWARENESS. We believe that it is essential to establish
a strong global brand. We utilize an aggressive marketing program
involving print, radio, outdoor, online and television marketing to
promote HotJobs.com. For example, in January 1999, we aired a television
commercial during the Super Bowl which resulted in a 117% increase in
traffic to our site in the following month. We intend to expand our use of
public relations, strategic alliances and other marketing programs
designed to promote our global brand and build loyalty among our member
employers and job seekers.

- ACCELERATE NEW SUBSCRIBER GROWTH. We intend to accelerate the growth of
our subscriber base by rapidly expanding the size of our sales force and
locating it in select markets throughout the U.S. Generally, we have found
that we are more successful in obtaining member employers in markets in
which we have a local presence, providing us with a better understanding
of a market's particular recruiting needs.

- CONTINUE TO ENHANCE SITE FUNCTIONALITY AND FEATURES. We intend to provide
the best available tools to empower job seekers and employers to more
effectively manage their job seeking and recruiting processes. We are
developing product and service enhancements aimed at both member employers
and job seekers to continue to improve our user interface, searching
capabilities, workflow and collaboration, data visualization,
navigability, reporting and forecasting. In addition, we intend to enhance
content for job seekers. We believe that these enhancements will increase
interest in and traffic to our website.

- EXPAND OUR RELATIONSHIP WITH MEMBER EMPLOYERS. We focus significant sales
efforts on expanding our relationship with member employers by offering
additional products and services. These efforts include the sale of
additional subscriptions to WWW.HOTJOBS.COM, Softshoe recruiting software,
participation in our WorkWorld job fairs and online advertising and
consulting services.

- PROVIDE ADDITIONAL CAREER CHANNELS IN SPECIFIC FIELDS. We intend to
increase the appeal and ease of use of WWW.HOTJOBS.COM for job seekers by
offering career channels in specific fields such as healthcare, legal
services and biotechnology.

- EXPAND INTERNATIONAL OPERATIONS. We intend to expand our international
operations to attract new job seekers and member employers in new markets
and to allow us to better serve our global member employers. We plan to
accomplish this by opening facilities, making acquisitions and effecting
strategic alliances, investments or licensing arrangements that enhance
our appeal to unique communities of job seekers. By opening international
offices, we believe we will be better positioned to acquire new job
seekers and member employers in those countries. The Company recently
entered into a lease for office space in Sydney, Australia, and is
currently recruiting a local sales force. The Company launched its
Australian operations at the Internet World Show in Sydney, Australia
which began on August 2, 1999.

- PURSUE STRATEGIC ACQUISITIONS. From time to time, we evaluate acquisition
and investment opportunities in complementary businesses, products and
technologies. We explore opportunities that may accelerate our growth; add
new content, advertisers, member employers and job seekers; develop new
technologies; and penetrate new markets. Presently, we do not have any
commitments or understandings for acquisitions or investments and we are
not presently engaged in negotiations.

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<PAGE>
PRODUCTS AND SERVICES

WWW.HOTJOBS.COM

Our WWW.HOTJOBS.COM employment exchange creates a direct link between member
employers and job seekers. We empower both job seekers and member employers by
providing them with the tools and functionality they need to plan, execute,
monitor and control their employment searches.

Key features for job seekers and member employers are outlined below:

<TABLE>
<CAPTION>
JOB SEEKER FEATURES MEMBER EMPLOYER FEATURES
---------------------------------------------- ----------------------------------------------
<S> <C> <C>

PRICING - Free of charge - Recurring subscription fee

REACH - Searchable database with access to more than - Ability to search over 450,000 resumes
1,650 member employers
- Recorded over 2.0 million visits in June
1999

- Ability to post job listings to third party
sites, including Yahoo!, AltaVista, Usenet
and America's Job Bank, at no additional
cost

DIRECT EXCHANGE - Direct access to member employers; no - No headhunters may post jobs or search our
headhunter listings permitted resume database

CUSTOMIZATION - Personal Job Search Agent - Allows for a detailed job description and a
- Personal career home page full company profile
- Test module feature allows pre-screening of
candidates

REAL-TIME - Up-to-date job postings - Ability to remove job postings at any time
- Date stamping of all job postings - Date stamping of resumes
- Immediate receipt of resume submissions

PRIVACY - Ability to restrict access to their resume - Search and review job seeker resumes
anonymously

TRACKING AND - Automatic email notification confirming - Ability to respond directly to job seekers
MONITORING application receipt - Storage and management of job listings and
- Online "shopping cart" to store jobs resumes
- Ability to store resumes and cover letters - Ability to coordinate job postings for
- Archive job applications member employers with multiple accounts
- Multiple recruiters within an enterprise can
share notes on an applicant
</TABLE>

42
<PAGE>
<TABLE>
<CAPTION>
JOB SEEKER FEATURES MEMBER EMPLOYER FEATURES
---------------------------------------------- ----------------------------------------------
<S> <C> <C>
STATISTICS - Number of times resume has come up in a - Number of times a job posting comes up in a
search and subsequently been viewed and how search, is viewed and applied to by job
many jobs to which the job seeker has seekers
applied
COMMUNITY - Career resources, bookstore, original
editorial content and job seeker message
boards
</TABLE>

SOFTSHOE

Introduced in September 1997, our Softshoe recruiting software permits
employers to manage their enterprise-wide recruiting process by leveraging the
cost-efficiencies associated with the Internet. Softshoe provides employers with
the ability to create a private label, publicly-viewed job board and an internal
employee-only job board, to schedule and track the results of interviews and
other recruiting events and to prepare detailed analyses of the company's
recruiting efforts. Softshoe provides a browser-based interface that allows
multiple participants within an employer's organization to coordinate their
efforts in the recruiting process. These participants include recruiters,
administrators, executives and hiring managers, each of whom is able to access
different levels of information relevant to their involvement in the recruiting
process.

Softshoe provides extensive online reports that allow users to analyze
processes and statistical data to establish and refine strategic recruiting
initiatives. Examples of these reports include time to hire, number of hires,
source of applicants and equal opportunity employment data.

WORKWORLD AND OTHER SERVICES

We conduct a series of job fairs known as WorkWorld. Like WWW.HOTJOBS.COM,
these job fairs do not allow headhunters to participate. Unlike the traditional
job fair model which leaves recruiters with thousands of paper resumes to sort
through, our fairs are fully integrated into the WWW.HOTJOBS.COM system, placing
all job seekers' information online. Job seekers can log onto WorkWorld.com to
view a schedule of upcoming events and a list of participating employers and to
apply directly to available jobs. Recruiters can then schedule appointments with
candidates prior to the actual event. WorkWorld job fairs also serve to provide
a physical forum for our account executives to meet directly with employers.

We also offer consulting services to assist employers with automating the
recruiting and job advertising processes in areas including recruiting process
re-engineering and web page design, online advertising and customization.

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<PAGE>
CUSTOMERS

As of June 30, 1999, our customer base included over 1,650 employers in
industries such as technology, financial services, health care, professional
services, retail and telecommunications. Some of our member employers include:

Amazon.com, Inc.
CNN
The Walt Disney Company
Merck & Co. Inc.
Nike, Inc.
The Home Depot, Inc.

America Online, Inc.
International Business
Machines Corporation
City of Palo Alto
E*Trade Group Inc.
Yankee Group

Central Intelligence Agency
eBay Inc.
Microsoft Corporation
Procter & Gamble
Union Carbide Corporation
Young & Rubicam

As of June 30, 1999, the following clients have purchased Softshoe to manage
their recruiting systems:

Coors Brewing Company
DoubleClick, Inc.
Ford Motor Company
Humana Inc.

Lucent Technologies
Tricon Global
Restaurants, Inc.

Wang Government Services
Division

For the period from February 20, 1997 to December 31, 1997 and the year
ended December 31, 1998, there was no customer that accounted for more than 10%
of our revenues.

SALES AND MARKETING

As of June 30, 1999, our direct sales force consisted of 44 account
executives located in New York, San Francisco, Boston and Chicago. We obtain new
corporate members primarily through telemarketing directly to employers as well
as leads generated from online inquiries and referrals. In addition, we solicit
employers through participation in human resource industry trade shows and
similar events. To encourage our account executives to maintain and build our
relationship with our member employers, we pay them a monthly commission that is
a fixed percentage of all periodic fees paid by the accounts with whom they have
established a relationship. This also creates an opportunity for account
executives to sell other components of our online recruiting solution such as
our Softshoe recruiting software, participation in our WorkWorld job fairs and
related advertising and promotional opportunities.

We utilize an aggressive marketing program involving print, radio, outdoor,
online and television advertising to promote WWW.HOTJOBS.COM as a leading
employment exchange. We also support a consistent direct marketing and
educational campaign to our member companies regarding online recruiting
developments and practices. We plan to continue to use key marketing events,
coupled with public relations efforts, to promote awareness of the HotJobs.com
brand.

In addition, we have developed co-promotional events and marketing campaigns
for both WWW.HOTJOBS.COM and WorkWorld. Some examples of these include: Jane
Magazine Fall College Tour and Experienceonline.com college career center tour.
Our July '99 WorkWorld job fair will be produced in conjunction with the
Internet World Summer '99 trade show conference.

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<PAGE>
BUSINESS ALLIANCES

We have entered into the following alliances to expand our distribution
network, providing added value to our member employers, and increasing
recognition of the HotJobs.com brand:

THEGLOBE.COM, INC. We have entered into a co-branding agreement with
theglobe.com, Inc., an online network that fuses together lifestyle and
entertainment content and commerce with personal interaction. This alliance will
fully integrate HotJobs.com's employment opportunities within Careers,
theglobe.com's new sub-theme area. Users of theglobe.com will be able to create
resumes through theglobe.com's home page builder and post them at HotJobs.com's
co-branded service.

E*TRADE GROUP INC. We have entered into a co-branding agreement with
E*Trade Group Inc., a leading provider of online investing services. Under this
agreement, visitors to the "Community" page on www.etrade.com will have access
to "Hot Jobs of the Week," a feature of HotJobs.com that highlights certain job
opportunities. The agreement also calls for online and offline marketing
components, including banners and direct mail.

ABOUT.COM, INC. We have entered into a co-branding agreement and an
advertising agreement with About.com. Under the co-branding agreement, we will
build, maintain and host targeted, co-branded job listings sites which users of
About.com will be able to access from certain channels such as Business/Careers.
Under the advertising agreement, About.com has agreed to deliver advertising
impressions to us through such avenues as home page-links and banner ads.

TECHREPUBLIC, INC. We have entered into a co-branded job board and content
licensing agreement with TechRepublic. Under this agreement, we will design a
co-branded job board for TechRepublic which will include the basic functionality
of WWW.HOTJOBS.COM. The agreement provides that we will be the exclusive online
recruiting solutions provider for TechRepublic, and we will provide links to
TechRepublic content on our Website.

HotJobs.com enters into relationships that allow us to acquire editorial
content and/or web services that are relevant to our job seeker audience. These
include salary calculators, relocation services, company biographies and other
pertinent information.

Parties with whom we have entered into alliances may not perform their
obligations as agreed. Our business alliances generally do not establish minimum
performance requirements but instead rely on voluntary efforts. In addition,
most of our alliance agreements may be terminated by either party with little
notice.

TECHNOLOGY

We developed our technology to serve a large volume of web traffic in an
efficient, scalable and fault-tolerant manner. The system updates its data
files, providing useful search and statistical results to the user. We designed
the system to scale easily to support geometric growth without the need to
re-architect, or acquire hardware/software systems at a geometric rate.

We currently support our production servers in-house, but have signed
contracts to co-locate at Level(3), an Internet service provider. Level(3)'s
facility includes features such as:

- protection against a power loss;

- multiple pathways for data to be passed to the Internet;

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<PAGE>
- arrangements with other ISPs to exchange data in order to allow a packet
of data to travel the shortest and least congested pathway;

- fire suppression; and

- physical space that allows us to grow without being limited by
"environmental" factors while simultaneously providing sufficient
bandwidth capacities.

As we expand our leased application hosting, we intend to increase our use
of the services provided by Level(3) or another co-location provider. Our
contract with Level(3) began on April 15, 1999 and has a one-year term with
month-to-month renewals thereafter. We pay monthly fees of $9,000 under the
agreement. Level(3) can discontinue service under certain circumstances,
including failure by us to pay our bills.

Our software is written using open standards, such as ANSI C, C++, ECMA-262
Script, and HTML, and interfaces with products from Oracle, Netscape
Communications, Inc. and Thunderstone. Our template-based page generation using
our proprietary tagging language allows for rapid deployment of user interface
changes without the necessity to recompile code. This also allows us to develop
co-branded sites rapidly without re-engineering.

We have standardized our hardware platform on Sun Microsystems servers,
Cisco routers, Foundry Networks switches and Boxhill disk arrays. Our network
topology is designed to sustain multiple failures by various components without
down-time.

COMPETITION

The market for online recruiting solutions is intensely competitive and
highly fragmented. We compete with companies, including recruiting search firms,
that offer a single database "job board" solution, such as Monster.com, as well
as newspapers, magazines and other traditional media companies that provide
online job search services, such as CareerPath.com. We also compete with large
Internet information hubs, or portals, such as Excite@Home. We may experience
competition from potential customers to the extent that they develop their own
online recruiting offerings internally. In addition, we compete with traditional
recruiting services, such as headhunters, for a share of employers' total
recruiting budgets. We expect to face additional competition as other
established and emerging companies, including print media companies and
headhunters with established brands, enter the online recruiting market.

Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources and larger client bases than we do. In addition, current and potential
competitors may make strategic acquisitions or establish cooperative
relationships to expand their businesses or to offer more comprehensive
solutions.

We believe that there will be rapid business consolidation in the online
recruiting industry. Accordingly, new competitors may emerge and rapidly acquire
significant market share. In addition, new technologies will likely increase the
competitive pressures that we face. The development of competing technologies by
market participants or the emergence of new industry standards may adversely
affect our competitive position. Competition could result in reduced margins on
our products and services, loss of market share or less use of WWW.HOTJOBS.COM
by job seekers and employers. If we are not able to compete effectively with
current or future competitors as a result of these and other factors, our
business could be materially adversely affected.

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<PAGE>
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 the 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 (the "EU") 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 entities such as HotJobs.com that plan to
engage in data collection from users in EU 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 "HotJobs.com" as a trademark, third parties have and may
continue to bring claims for infringement against us for the use of this
trademark. In the event those claims are successful, we would lose the ability
to use the HotJobs.com domain name. 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 New
York City, the governments of other states and foreign countries might attempt
to regulate our business activities. In addition, because our service is
available over the 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 depends to a significant degree upon the protection of our
proprietary technology, including Softshoe recruiting software and the
HotJobs.com brand name. The unauthorized reproduction or other misappropriation
of our proprietary technology could enable third parties to benefit from our
technology without paying us for it. If this were to occur, our business could
be materially adversely affected. We rely upon a combination of patents,
copyright, trade secret and trademark laws and non-disclosure and other
contractual arrangements to protect our intellectual property rights. The steps
we have taken to protect our proprietary rights, however, may not be adequate to
deter misappropriation of proprietary information.

We may not be able to detect unauthorized use of our proprietary information
or take appropriate steps to enforce our intellectual property rights. In
addition, the validity, enforceability and scope of protection of intellectual
property in Internet-related industries is

47
<PAGE>
uncertain and still evolving. The laws of other countries in which we may market
our services in the future are uncertain and may afford little or no effective
protection of our intellectual property.

We filed with the U.S. Patent and Trademark Office to register the trademark
"www.hotjobs.com" for "providing a Web site in the field of employment
opportunities and career placement which offers the exchange of information."
The PTO initially refused registration, citing a prior existing U.S. trademark
registration. Additionally, the PTO also informed us that, if we overcome its
objection relating to the existing trademark and our application proceeds, it
may refuse to register our mark because of a likelihood of confusion with two
other prior pending trademark applications. We have entered into a written
consent agreement with the prior registrant in which the registrant consents to
our use and registration of our mark on grounds that there is no likelihood of
confusion between the two marks. In addition, one of the two pending trademark
applications cited against us has since been abandoned, removing that as a
potential block to our registration. Despite the consent agreement, we cannot
guarantee that we will be successful in overcoming the PTO's refusal to register
our mark because of the prior registration. In addition, we cannot assure you
that that we can overcome the PTO's potential refusal to register our mark
because of the other prior pending application, and thus we may be prevented
from securing a federal registration for "www.hotjobs.com." In addition, in May
1998, the trademark applicant who has since abandoned its application made
claims regarding prior use and ownership of "hotjobs" as a trademark. We
investigated these claims and have not found any verifiable basis for these
claims. We responded to that effect on June 1, 1998 and have not received any
further correspondence. Adverse outcomes to these claims or any related
litigation, should it occur, could result in us being limited or prohibited from
further using the "www.hotjobs.com" mark and related derivative marks in the
future. We are not able at this time to evaluate the likelihood of any
subsequent actions related to those claims or an unfavorable outcome in the
event such claims are reasserted, or to estimate the amount or range of any
related potential loss.

We currently hold a trademark registration in the United States for
Softshoe. Effective trademark protection may not be available in all countries
in which we intend to conduct business. Policing unauthorized use of our marks
is also difficult and expensive. In addition, it is possible that our
competitors will adopt product or service names similar to ours, impeding our
ability to build brand identity and possibly leading to customer confusion.

EMPLOYEES

As of June 30, 1999, we had 107 employees, of whom 71 worked in sales,
marketing, client services, and business development, 18 in product development
and 18 were involved in finance, administration, and corporate operations. From
time to time, we employ independent contractors and consultants to support
research and development, marketing and sales, and business development. None of
our employees are represented under collective bargaining agreements. We
consider our relations with our employees to be good.

FACILITIES

Our principal executive offices are currently located in approximately 9,900
square feet of office space in New York, New York under a lease that expires in
March 2004, but can be terminated by either party with 90 days notice after July
31, 1999. In March 1999, we leased approximately 1,280 square feet of office
space in San Francisco, California under a five-year lease expiring in 2004. We
intend to expand our sales, marketing and technology operations and therefore
may require additional facilities in the future.

LEGAL PROCEEDINGS

There are no material legal proceedings pending or, to our knowledge,
threatened against us.

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<PAGE>
MANAGEMENT

The following table sets forth, as of March 31, 1999, the name, age and
position within HotJobs.com of each of our directors and executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Richard S. Johnson..................... 38 President, Chief Executive Officer and Chairman of the Board of
Directors
Stephen W. Ellis....................... 48 Chief Financial Officer and Director
Dimitri J. Boylan...................... 38 Chief Operating Officer, Secretary and Director
George J. Nassef, Jr................... 34 Chief Information Officer
Philip Guarascio....................... 58 Director
John A. Hawkins........................ 38 Director
John G. Murray......................... 36 Director
Kevin P. Ryan.......................... 35 Director
</TABLE>

RICHARD S. JOHNSON founded HotJobs.com in February 1997 and has served as
our President, Chief Executive Officer and Chairman of the board of directors
since inception. From 1988 to 1997, Mr. Johnson served as President of OTEC,
Inc., a New York-based recruiting firm focusing on IT professionals. Mr. Johnson
co-founded OTEC in 1988 and remains one of its directors and principal
stockholders. Mr. Johnson received his bachelor's degree from Bucknell
University. Mr. Johnson is a member of the Society of Human Resource Management
and of New York's New Media Association.

STEPHEN W. ELLIS has served as our Chief Financial Officer since April 1999,
and as a director since May 1999. From March 1998 through December 1998, Mr.
Ellis served as the Chief Financial Officer for Biztravel.com, an Internet-based
travel services company. Prior to that, from March 1997 through February 1998,
Mr. Ellis was the Chief Financial Officer for Metromedia Fiber Network (NASDAQ:
MFNX), a facilities-based fiber optic/telecom services company. Mr. Ellis also
served as an executive officer of Data Broadcasting Corporation (NASDAQ: DBCC),
a financial market-data company, first as Chief Financial Officer from 1992 to
1995 and then as Executive Vice President, Finance through March 1997. Mr. Ellis
holds a bachelor's degree from the Massachusetts Institute of Technology and a
Master of Business Administration from the Stanford University Graduate School
of Business. Mr. Ellis is a Certified Public Accountant. He also is on the board
of directors of the following private companies: FSA Capital, Inc., TreeSource,
Inc. and US Medical Network, LLC.

DIMITRI J. BOYLAN has served as our Chief Operating Officer since March
1998, and as our Vice President of Sales and Marketing from February 1997 until
March 1998. Mr. Boylan has also served as a director since May 1999. From
October 1990 until October 1997, Mr. Boylan served as the managing director of
recruiting for OTEC. Mr. Boylan earned a master's degree from the University of
Illinois and a bachelor's degree from the University of Pennsylvania.

GEORGE J. NASSEF, JR. has served as our Chief Information Officer since June
1999. From December 1998 to June 1999, Mr. Nassef was president of his own
consulting business related to Internet technologies. From February 1997 until
December 1998, Mr. Nassef served as Chief Information Officer of Biztravel.com,
an Internet-based travel services company. From January 1996 until February
1997, Mr. Nassef held positions with The SABRE Group, most recently as Managing
Director of Platform Technologies. From August 1987 until January 1996, Mr.
Nassef held systems engineering positions with American Airlines' Data
Processing Division. Mr. Nassef holds a bachelor's degree from Texas A&M
University.

PHILIP GUARASCIO has served as a director since August 2, 1999. Mr.
Guarascio has been a Vice President of General Motors Corporation since July
1994, where he is primarily responsible

49
<PAGE>
for worldwide advertising resource management, managing consolidated media
placement efforts and working with General Motors' North American Operations
vehicle divisions to increase marketing effectiveness and efficiency. Mr.
Guarascio also manages corporate image advertising activities and oversees GM
Credit Card operations and GM's Enterprise Customer System. Prior to this
current position, from July 1992 to July 1994, Mr. Guarascio served as General
Manager of Marketing and Advertising for General Motors' North American
Operations. Mr. Guarascio joined General Motors in 1985 after 21 years with the
New York advertising agency, D'Arcy, Masius, Benton & Bowles (formerly Benton &
Bowles, Inc.). Mr. Guarascio currently serves on the board of directors of
Snyder Communications, Inc. (NYSE: SNC), and is a member of its audit and
compensation committees. Mr. Guarascio is Chairman Emeritus of the Advertising
Council and serves on the Executive Committee of that organization. He also
serves on the boards of the Association of National Advertisers, the Women's
Sports Foundation, the Ellis Island Restoration Commission and the American Film
Institute.

JOHN A. HAWKINS has served as a director since May 1999. In 1995, Mr.
Hawkins co-founded Generation Partners L.P., a private equity fund. From 1987
until 1995, Mr. Hawkins was a General Partner of Burr, Egan, Deleage & Co., a
$700 million venture capital firm. Mr. Hawkins specializes in information
technology investments including data communications and telecommunications,
software and the Internet. Mr. Hawkins graduated with a bachelor's degree from
Harvard College and received his Master of Business Administration from the
Harvard Graduate School of Business. Mr. Hawkins currently serves on the boards
of P-COM, Inc. (NASDAQ: PCMS), PixTech (NASDAQ: PIXT), Enso Audio Imaging
Corporation, Dover Pacific Computing, Inc., High End Systems, Inc. and
Linguateq, Inc.

JOHN G. MURRAY has served as a director since May 1999. Since June 1998, Mr.
Murray has been a Managing Director of Deutsche Bank Securities Inc., formerly
BT Alex. Brown Incorporated, specializing in the venture capital service sector.
From January 1994 to June 1998, Mr. Murray served as a principal of BancBoston
Robertson Stephens, specializing in the venture capital service sector. Mr.
Murray received his bachelor's degree from St. Lawrence University and his
Master of Business Administration from The Wharton School of Finance.

KEVIN P. RYAN has served as a director since June 1999. Mr. Ryan has served
as Chief Operating Officer of DoubleClick, Inc. (NASDAQ: DCLK) since April 1998
and as President since July 1997. From June 1996 to April 1998, Mr. Ryan served
as DoubleClick's Chief Financial Officer. From January 1994 to June 1996, Mr.
Ryan served as Senior Vice President, Business and Finance for United Media, a
licensing and syndication company representing comics, columnists and wire
services to over 2,000 newspapers around the world. From April 1991 to December
1993, Mr. Ryan served as Senior Manager, Finance for Euro Disney, and from
August 1985 to September 1989, Mr. Ryan was an investment banker for Prudential
Investment Corporation in both the United States and the United Kingdom. Mr.
Ryan received his bachelor's degree from Yale University and his Master of
Business Administration from INSEAD.

CLASSES OF DIRECTORS

In accordance with the terms of our amended and restated certificate of
incorporation, our board of directors has been divided into three classes,
denominated as Class I, Class II and Class III. Members of each class hold
office for staggered three-year terms. At each annual meeting of our
stockholders commencing in 2000, the successors to the directors whose terms
expire at that meeting will be elected to serve until the third annual meeting
after their election or until their successors have been elected and qualified.
Messrs. Ryan and Murray are Class I directors whose terms expire at the 2000
annual meeting of stockholders. Messrs. Ellis and Hawkins are Class II directors
whose terms expire at the 2001 annual meeting of stockholders. Messrs. Johnson,
Boylan and Guarascio are Class III directors whose terms expire at the 2002

50
<PAGE>
annual meeting of stockholders. With respect to each class, a director's term
will be subject to the election and qualification of their successors, or their
earlier death, resignation or removal. These provisions, when taken in
conjunction with other provisions of our amended and restated certificate of
incorporation authorizing the board of directors to fill vacant directorships,
may delay a stockholder from removing incumbent directors and simultaneously
gaining control of the board of directors by filling the vacancies with its own
nominees.

BOARD COMMITTEES

Our Compensation Committee is responsible for reviewing and recommending to
the Board the compensation arrangements provided to the management of
HotJobs.com and administers our stock option plans. The members of the
Compensation Committee are Messrs. Ellis, Murray and Hawkins.

Our Audit Committee reviews our annual audit and meets with our independent
auditors to review our internal controls and financial management practices. The
members of the Audit Committee are Messrs. Ellis, Hawkins and Ryan.

DIRECTOR COMPENSATION

We do not currently compensate our directors for attending board of director
or committee meetings, but we reimburse directors for their reasonable travel
expenses incurred in connection with attending these meetings. At the time of
his election to the board, we granted Mr. Ryan options to purchase 20,000 shares
of our common stock at an exercise price of approximately $3.38. Upon completion
of this offering, we expect to grant Messrs. Guarascio, Hawkins and Murray
options to purchase 20,000 shares of our common stock at the initial public
offering price under our 1999 Stock Option/Stock Issuance Plan. Beginning with
our annual meeting of stockholders in 2000, each of our non-employee directors
will receive an annual grant of options to purchase 5,000 shares of common stock
so long as he or she has served on the board for at least 6 months.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended December 31, 1998, the Compensation Committee
of the board of directors consisted of Richard S. Johnson. No interlocking
relationship exists or has existed between Mr. Johnson or any other member of
our board of directors and any members of the board of directors or compensation
committee of any other company.

EMPLOYMENT AGREEMENTS

Richard S. Johnson, Stephen W. Ellis, Dimitri J. Boylan and George J.
Nassef, Jr. each has an employment agreement with us.

TERM. The agreement of each of Messrs. Johnson, Ellis and Boylan became
effective on May 6, 1999 and expires on May 5, 2002 and will automatically renew
for additional one-year terms after that date unless HotJobs.com gives the
executive written notice of its desire not to renew the agreement at least six
months prior to the expiration of the initial or any additional term. Mr.
Nassef's employment agreement became effective on June 18, 1999 and shall
continue until terminated by him or by us.

SALARY. The annual salary for each of these executives is as follows: Mr.
Johnson, $200,000; Mr. Ellis, $175,000; Mr. Boylan, $175,000; and Mr. Nassef,
$175,000. Also, each of these executives is entitled to an annual bonus
determined by the Compensation Committee of the board of directors. The annual
salary of each of Messrs. Johnson, Ellis and Boylan will increase by a minimum
of 10% each year.

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<PAGE>
STOCK OPTION GRANTS. Mr. Ellis received stock options to purchase 360,000
shares of our common stock, 15,000 of which vest monthly beginning on June 5,
1999 and ending on May 6, 2000 and an additional 90,000 of which vest on each of
May 6, 2001 and May 6, 2002. On the closing of this offering, however, 180,000
of these shares will vest automatically and the remaining shares will vest on
May 6, 2001 and 2002 as stated above. Mr. Nassef received stock options to
purchase 180,000 shares of our common stock, 4,992 of which vest monthly from
July 18, 1999 through April 18, 2000; 5,040 of which vest on May 18, 2000 and
June 18, 2000; and an additional 60,000 of which vest on each of June 18, 2001
and 2002. On the closing of this offering, however, 90,000 of these shares will
vest automatically; 30,000 shares will vest on June 18, 2001 and 60,000 shares
will vest on June 18, 2002.

TERMINATION OF AGREEMENTS. We can terminate these employment agreements
with or without cause by delivering written notice to the executive. Each
executive may terminate his employment agreement with or without good reason by
delivering written notice to us. Upon termination of the agreements of each of
Messrs. Johnson, Ellis and Boylan by us without cause or by the executive for
good reason, the executive is entitled to the greater of his annual salary for
the remainder of the term of the agreement or one year of salary and all options
become immediately exercisable. Upon termination of Mr. Nassef's employment
agreement by us without cause or by Mr. Nassef for good reason, Mr. Nassef is
entitled to six months of salary.

NONCOMPETITION AND CONFIDENTIALITY. Each of the executives with an
employment agreement has agreed not to compete with us, solicit our suppliers or
employees or reveal our confidential information during the term of his
employment agreement and for two years thereafter. In addition, each executive
is bound by a proprietary inventions agreement which prohibits the executive
from, among other things, disseminating or using confidential information about
our business or clients in any way that would be adverse to us.

EXECUTIVE COMPENSATION

The following table sets forth summary information concerning all
compensation we paid our Chief Executive Officer during the year ended December
31, 1998. We did not pay any other executive officer over $100,000 in 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
------------------------ SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) OPTIONS(#) COMPENSATION
- -------------------------------------------------- ----------- ----------- ------------------ --------------
<S> <C> <C> <C> <C>
Richard S. Johnson
President and Chief Executive Officer........... $ 182,000 -- -- --
</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR/OPTION EXERCISES AND HOLDINGS

Mr. Johnson did not own any options or stock appreciation rights in 1997 or
1998. In 1999, we granted Mr. Johnson options to purchase 240,000 shares of our
common stock at an exercise price of approximately $0.05 and options to purchase
120,000 shares of our common stock at an exercise price of approximately $3.38.

1999 STOCK OPTION/STOCK ISSUANCE PLAN

The 1999 Stock Option/Stock Issuance Plan is intended to serve as our equity
incentive program in the future. The 1999 Stock Option/Stock Issuance Plan
became effective upon its adoption by our board of directors and approval by our
stockholders on June 30, 1999. We have authorized 4,500,000 shares of common
stock for issuance under the 1999 Stock Option/Stock

52
<PAGE>
Issuance Plan. We have not granted any options under this plan to date; however,
upon completion of this offering we expect to grant Messrs. Guarascio, Hawkins
and Murray options to purchase 20,000 shares of our common stock under the plan.
In no event may any one participant in the 1999 Stock Option/Stock Issuance Plan
receive option grants or direct stock issuances for more than 1,000,000 shares
in the aggregate per calendar year.

The 1999 Stock Option/Stock Issuance Plan has three separate programs:

- the discretionary option grant program under which eligible individuals in
our employ or service (including officers, non-employee board members and
consultants) may be granted options to purchase shares of our common
stock;

- the stock issuance program under which such individuals may be issued
shares of common stock directly, through the purchase of such shares or as
a bonus tied to the performance of services; and

- the automatic option grant program under which option grants will
automatically be made at periodic intervals to eligible non-employee board
members.

The discretionary option grant and stock issuance programs will be
administered by our Compensation Committee. This committee will determine which
eligible individuals are to receive option grants or stock issuances, the time
or times when such option grants or stock issuances are to be made, the number
of shares subject to each such grant or issuance, the exercise or purchase price
for each such grant or issuance, the status of any granted option as either an
incentive stock option or a non-statutory stock option under the federal tax
laws, the vesting schedule to be in effect for the option grant or stock
issuance and the maximum term for which any granted option is to remain
outstanding. Neither the Compensation Committee nor the board will exercise any
administrative discretion with respect to option grants made under the automatic
option grant program for the non-employee board members.

The exercise price for the options may be paid in cash or in shares of our
common stock valued at fair market value on the exercise date. The option may
also be exercised through a same-day sale program without any cash outlay by the
optionee. In addition, the Compensation Committee may allow a participant to pay
the option exercise price or direct issue price (and any associated withholding
taxes incurred in connection with the acquisition of shares) with a
full-recourse, interest-bearing promissory note.

In the event that we are acquired, whether by merger or asset sale or
board-approved sale by the stockholders of more than 50% of our voting stock,
each outstanding option under the discretionary option grant program which is
not to be assumed by the successor corporation or otherwise continued will
automatically accelerate in full, and all unvested shares under the
discretionary option grant and stock issuance programs will immediately vest,
except to the extent the repurchase rights with respect to those shares are to
be assigned to the successor corporation or otherwise continued in effect. The
Compensation Committee may grant options under the discretionary option grant
program which will accelerate in the acquisition even if the options are assumed
or which will accelerate if the optionee's service is subsequently terminated.
The Compensation Committee may also grant options and issue shares which
accelerate in connection with a hostile change in control effected through a
successful tender offer for more than 50% of our outstanding voting stock or by
proxy contest for the election of board members or the options and shares may
accelerate upon a subsequent termination of the individual's service.

Stock appreciation rights may be issued under the discretionary option grant
program which will provide the holders with the election to surrender their
outstanding options for an appreciation distribution from us equal to the fair
market value of the vested shares subject to the surrendered option less the
aggregate exercise price payable for such shares. Such

53
<PAGE>
appreciation distribution may be made in cash, in shares of our common stock or
in a combination of cash and shares of our common stock.

The Compensation Committee has the authority to cancel outstanding options
under the discretionary option grant in return for the grant of new options for
the same or different number of option shares with an exercise price per share
based upon the fair market value of the common stock on the new grant date.

Limited stock appreciation rights will automatically be included as part of
each grant made under the automatic option grant program and may be granted to
one or more officers as part of their option grants under the discretionary
option grant program. Options with such a limited stock appreciation right may
be surrendered to us upon the successful completion of a hostile tender offer
for more than 50% of our outstanding voting stock. In return for the surrendered
option, the optionee will be entitled to a cash distribution from us in an
amount per surrendered option share equal to the highest price per share of
common stock paid in connection with the tender offer less the exercise price
payable for such share.

Under the automatic option grant program, each individual who first joins
the board after the effective date of this offering as a non-employee board
member who is not affiliated with a significant stockholder of HotJobs.com will
automatically be granted an option for 20,000 shares of our common stock at the
time of his or her commencement of board service. In addition, on the date of
each annual stockholders meeting, beginning with the 2000 meeting, each
nonemployee director who is to continue to serve as a non-employee board member
will receive an option grant to purchase 5,000 shares of our common stock,
provided he or she has served on the board for at least 6 months. However, each
outstanding option will immediately vest upon an acquisition or change in
control or the death or disability of the optionee while serving as a board
member.

The board may amend or modify the 1999 Stock Option/Stock Issuance Plan at
any time, subject to any required stockholder approval. The 1999 Stock
Option/Stock Issuance Plan will terminate no later than June 30, 2009.

STOCK AWARD PLAN

Our Stock Award Plan has served as our equity incentive program to date. The
Stock Award Plan became effective upon its adoption by our board of directors
and approval by our stockholders on April 1, 1998. Since June 30, 1999, we no
longer grant options under our Stock Award Plan.

We have granted under our Stock Award Plan options to purchase 4,314,200
shares at a weighted average exercise price of approximately $0.62, of which
3,492,000 will be exercisable upon completion of this offering and the remainder
vest over a period of three or four years. The options that are not immediately
exercisable upon the consummation of this offering accelerate upon a change of
control. A change of control shall be deemed to occur upon any person or entity
purchasing more than 50% of our common stock, a merger or consolidation in which
our common stock is exchanged for less than 50% of the voting stock of the
surviving corporation, or the sale of greater than 50% of our total assets. The
remaining terms of the Stock Award Plan are consistent with and substantially
similar to the terms of the 1999 Stock Option/Stock Issuance Plan set forth
above.

EMPLOYEE STOCK PURCHASE PLAN

The Employee Stock Purchase Plan will become effective immediately upon the
execution of the underwriting agreement for this offering. The plan is designed
to allow our eligible employees to purchase shares of our common stock, at
semi-annual intervals, through periodic

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<PAGE>
payroll deductions. A total of 250,000 shares of common stock will be available
for issuance under the plan.

The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period will begin
on the day the underwriting agreement is executed in connection with this
offering and will end on the last business day in July 2001. The next offering
period will begin on the first business day in August 2001, and subsequent
offering periods will be set by our Compensation Committee.

Individuals who are eligible employees on the start date of any offering
period may enter the plan on that start date or on any subsequent semi-annual
entry date (generally February 1 or August 1 each year). Individuals who become
eligible employees after the start date of the offering period may join the plan
on any subsequent semi-annual entry date within that period.

A participant may contribute up to 15% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on each semi-annual purchase date
(the last business day in January and July each year). The purchase price per
share will be 85% of the lower of the fair market value of our common stock on
the participant's entry date into the offering period or the fair market value
on the semi-annual purchase date. The first purchase date will occur on the last
business day in January 2000. In no event, however, may any participant purchase
more than 1,400 shares, nor may all participants in the aggregate purchase more
than 62,500 shares on any one semi-annual purchase date. Should the fair market
value of the common stock on any semi-annual purchase date be less than the fair
market value on the first day of the offering period, then the current offering
period will automatically end and a new offering period will begin, based on the
lower fair market value.

The board may at any time amend or modify the plan. The plan will terminate
no later than the last business day in July 2009.

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<PAGE>
RELATED PARTY TRANSACTIONS

SERIES A PRIVATE PLACEMENT

Effective May 10, 1999, we sold 1,620,000 shares of our Series A Preferred
Stock at a price of $10.00 per share. Upon consummation of this offering, all of
the Series A Preferred Stock will automatically convert into an aggregate of
3,934,019 shares of common stock. The purchasers of Series A Preferred Stock
included the following directors, executive officers and holders of 5% or more
of our common stock on a fully-converted basis:

- FSA Capital, Inc. purchased 42,189 shares of Series A Preferred Stock for
$421,890. Stephen W. Ellis, our Chief Financial Officer and a director, is
a director of FSA Capital, Inc.

- Generation Capital Partners L.P. and affiliated investment entities
("Generation Partners") purchased in the aggregate 1,054,714 shares of
Series A Preferred Stock for $10,547,140. Generation Partners owns more
than 5% of our stock. John A. Hawkins, one of our directors, is a Managing
Partner of an affiliate of Generation Partners.

- John G. Murray, one of our directors, purchased 18,750 shares of Series A
Preferred Stock for $187,500. In connection with the Series A Preferred
Stock financing, GreenAcre Ventures LLC, of which Mr. Murray is a managing
member, purchased 170,592 shares of our common stock from two of our
employees.

- Kevin P. Ryan, one of our directors, purchased 21,094 shares of Series A
Preferred Stock for $210,940.

In connection with our private placement, we entered into a stockholders'
agreement with the investors in our Series A Preferred Stock and our current
stockholders. In accordance with this agreement, John A. Hawkins, a designee of
Generation Partners, and John G. Murray, a designee of the holders of our Series
A Preferred Stock, have been elected to our board. In addition, the investors in
our Series A Preferred Stock have registration rights applicable to the common
stock issuable upon conversion of the Series A Preferred Stock. See "Description
of Capital Stock--Registration Rights." Other than the registration rights, all
other rights under this agreement terminate upon the closing of this offering.

REDEMPTION OF SECURITIES

On April 2, 1999, we redeemed shares of our common stock for an aggregate
price of $61,000, equal to approximately $0.05 per share, from the following
executive officer and employees in the following amounts:

<TABLE>
<CAPTION>
NAME POSITION AMOUNT
- --------------------------------------- ------------------------------------------------------------- ---------
<S> <C> <C>
Richard S. Johnson..................... Chairman, Chief Executive Officer and President $ 12,200
Allen Murabayashi...................... Director of Technology $ 24,400
Thomas Chin............................ Senior Programmer $ 24,400
</TABLE>

DOUBLECLICK LICENSE

In April 1999, we entered into a Softshoe Standard License Agreement with
DoubleClick, Inc. Pursuant to that agreement, DoubleClick, Inc. paid us a
one-time purchase price of $26,000 for the Softshoe Select License and currently
makes monthly payments of $3,500 for our comprehensive hosting and maintenance
program. The agreement may be terminated by either party at any time and is of
an indefinite term. Kevin P. Ryan, one of our directors, is the President and
Chief Operating Officer of DoubleClick, Inc.

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<PAGE>
TRANSACTIONS INVOLVING OTEC

Richard S. Johnson is the former President and is currently a director and
one of two shareholders of OTEC. As of December 31, 1998, OTEC owned
approximately 23% of our outstanding voting stock.

Until May 1999, OTEC served as our principal source of financing. During
1997 and 1998, OTEC paid various expenses on our behalf. These expenses
primarily consisted of rents, salaries, computer expenses and other
administrative expenses. These expenses totaled approximately $741,600 and
approximately $1.2 million for 1997 and 1998, respectively. These amounts were
repaid with the proceeds of the Series A Preferred Stock financing.

OTEC paid compensation expenses for Richard S. Johnson of $137,500 and
$182,000 for the period ended December 31, 1997 and for the year ended December
31, 1998, respectively. These amounts do not need to be repaid.

OTEC also provided cash advances of approximately $2.6 million to us in 1998
of which approximately $2.2 million bore interest at rates ranging from 8.75% to
9.5% per annum. We repaid these cash advances in May and June 1999.

OTEC and two of its affiliates maintain a line of credit with The Dime
Savings Bank of New York ("Dime") in the principal amount of $3.5 million which
bears interest at a fluctuating rate of 1% above Dime's established commercial
lending rate. OTEC used this line of credit to provide the cash advanced to us
in 1998. We also maintain a line of credit with Dime in the principal amount of
$500,000 which bears interest at a fluctuating rate of 1% above Dime's
established commercial lending rate. OTEC and two of its affiliates pledged all
of their assets to secure this loan. As at May 31, 1999, $180,000 remained
outstanding under our facility with Dime. We pledged all of our assets to Dime
to secure OTEC's line of credit, and OTEC pledged all of its assets to Dime to
secure our line of credit. In addition, Mr. Johnson and Bennett Carroccio, one
of our principal stockholders and the other stockholder of OTEC, personally
guaranteed repayment of all outstanding amounts under both lines of credit. In
June 1999, Dime released Messrs. Johnson and Carroccio from their guarantees and
released its security interest in our and OTEC's assets.

OTEC paid us $300,000 in 1997 for the license of miscellaneous proprietary
software and $444,000 in 1998 for hosting that software and for purchasing
additional software. We believe that this transaction was entered into on an
arms-length basis.

Until recently, we had several joint insurance policies with OTEC and its
affiliates. HotJobs.com and OTEC maintained joint policies because it was more
economical and convenient to do so. Our commercial property insurance issued by
Federal Insurance Company for a one-year term beginning October 15, 1998,
covered both our California and New York offices as well as OTEC's California
office. Our commercial umbrella policy, also issued by Federal Insurance Company
for a one-year term beginning October 15, 1998, also covered OTEC and its
affiliates, as did our workers compensation insurance, issued by Lumbermans
Mutual Casualty Company on December 1, 1998 for a term ending October 15, 1999.
Effective June 1, 1999, we have stand alone insurance policies in place. We had
a joint fiduciary liability policy, issued by Travelers Insurance for a one-year
term beginning October 20, 1998, with OTEC and its affiliates. Insurance
expenses of $85,096 in 1998 have been allocated by OTEC to HotJobs.com based on
the respective number of personnel of these two companies. On July 20, 1999,
HotJobs.com obtained its own directors and officers' liability insurance policy.

Until July 1, 1999, our employees participated in the 401(k) Profit Sharing
Plan established in January 1996 by RBL Agency, Ltd., one of OTEC's affiliates.
The Plan Trustees are Richard Johnson and Bennett Carroccio. The Plan allowed
our employees to defer between 1% and 15%

57
<PAGE>
of their compensation. Under the Plan, we made matching contributions of $.50
for every $1.00 contributed by an employee on the first 6% of the employee's
salary deferrals, which contribution was subject to vesting. Effective July 1,
1999, our employees began to participate in our own 401(k) Plan and all amounts
attributed to our employees in the RBL Plan were transferred to our 401(k) Plan.

OTEC and RBL, jointly and severally, guarantee certain of our obligations,
including our obligation to pay rent under our leases, dated as of April 16,
1999, pursuant to which we rent the 10th, 14th and 16th floors of a building
located at 24 West 40th Street in New York City.

On March 2, 1999, Mr. Johnson granted Mr. Carroccio an option, which expires
on March 2, 2002, to purchase 34 shares of OTEC common stock at a purchase price
of $4,880 per share and an additional option to purchase 50 shares of each of
OTEC's affiliated companies at a purchase price of $1 per share. In addition,
Mr. Johnson granted to Mr. Carroccio an irrevocable proxy expiring March 2, 2002
to vote all of Mr. Johnson's shares subject to the option. Similarly, on March
2, 1999, Mr. Carroccio granted Mr. Johnson an option, which expires on March 2,
2002, to purchase 3,264,000 shares of our common stock at a purchase price of
approximately $.05 per share. Mr. Carroccio granted Mr. Johnson an irrevocable
proxy expiring March 2, 2002 to vote all of his shares of our stock.

58
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of July 31, 1999, and as adjusted to
reflect the sale of the shares of common stock offered by us in this offering
for:

- each person, or group of affiliated persons, who HotJobs.com knows
beneficially owns 2% or more of our common stock;

- each of our directors;

- each executive officer named in the Summary Compensation Table; and

- all directors and executive officers of HotJobs.com as a group.

Except as otherwise noted, the address of each person listed in the table is
c/o HotJobs.com, Ltd., 24 West 40th Street, 14th Floor, New York, NY 10018.

The table includes all shares of common stock beneficially owned by the
indicated stockholder as of July 31, 1999. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and includes
voting or investment power with respect to securities. In computing the number
of shares beneficially owned by a person and the percentage of ownership of that
person, shares of common stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of July 31, 1999 are deemed
outstanding. These shares, however, are not deemed outstanding for the purposes
of computing the percentage of ownership of any other person. To our knowledge,
except as otherwise noted, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them, subject to community property laws where applicable.

59
<PAGE>
The percent of beneficial ownership for each stockholder is based on
19,620,000 shares of common stock outstanding as of July 31, 1999 and 28,304,019
shares of common stock outstanding after this offering. An "*" indicates
ownership of less than 1%.

<TABLE>
<CAPTION>
PERCENT OF TOTAL SHARES OF COMMON
SHARES STOCK
BENEFICIALLY ------------------------------------
NAME OWNED BEFORE OFFERING AFTER OFFERING
- ----------------------------------------------------------------- ------------- ----------------- -----------------
<S> <C> <C> <C>
Richard S. Johnson(1)............................................ 11,424,000 57.5% 40.0%
Bennett Carroccio(2)............................................. 6,560,352 33.3 23.1
OTEC, Inc.(3).................................................... 2,900,352 14.8 10.2
Generation Partners(4)........................................... 2,561,280 11.5 9.0
John A. Hawkins(5)............................................... 2,561,280 11.5 9.0
Thomas Chin...................................................... 1,800,000 9.2 6.4
Allen Murabayashi................................................ 1,800,000 9.2 6.4
Dimitri J. Boylan(6)............................................. 1,320,000 6.7 4.6
Bessemer Venture Partners(7)..................................... 640,318 3.2 2.3
Boston Millennia(8).............................................. 693,408 3.5 2.4
Christopher J. March(9).......................................... 576,000 2.9 2.0
Earle Ady........................................................ 480,000 2.4 1.7
John G. Murray(10)............................................... 216,123 1.1 *
Stephen W. Ellis(11)............................................. 282,452 1.4 1.0
George J. Nassef, Jr.(12)........................................ 90,000 * *
Kevin P. Ryan(13)................................................ 51,224 * *
Philip Guarascio................................................. 0 -- --
All directors and executive officers as a group (8
persons)(14)................................................... 15,945,079 69.3% 55.1%
</TABLE>

- ------------------------

(1) Includes 240,000 shares issuable upon the exercise of outstanding options;
336,000 shares held by the Richard and Carole Johnson 1999 Trust of which
Mr. Johnson disclaims beneficial ownership; 3,264,000 shares owned by Mr.
Carroccio which Mr. Johnson has a right to purchase pursuant to an option
granted to him by Mr. Carroccio and a right to vote pursuant to an
irrevocable proxy granted by Mr. Carroccio; and 2,900,352 shares owned by
OTEC of which Mr. Johnson disclaims beneficial ownership.

(2) Includes 60,000 shares issuable upon the exercise of outstanding options;
336,000 shares held by the Bennett and Brenda Carroccio 1999 Trust of which
Mr. Carroccio disclaims beneficial ownership; 3,264,000 shares subject to
purchase by Mr. Johnson pursuant to an option of which Mr. Carroccio
disclaims beneficial ownership; and 2,900,352 shares owned by OTEC, of which
Mr. Carroccio is the President, Chief Executive Officer and controlling
stockholder.

(3) OTEC's address is 24 West 40(th) Street, 12(th) Floor, New York, NY 10018.

(4) Includes 2,472,556 shares to be issued upon the automatic conversion upon
completion of this offering of 1,018,178 shares of Series A Preferred Stock
held by Generation Capital Company LLC as general partner of Generation
Parallel Management Partners L.P. and as general partner of the general
partner of Generation Capital Partners L.P. In addition, includes 88,724
shares to be issued upon the conversion of 36,536 shares of Series A
Preferred Stock held in a separate account of State Board of Administration
of Florida with respect to which an affiliate of Generation Capital Company
LLC has management authority.

(5) Includes 2,561,280 shares to be issued upon the automatic conversion upon
completion of this offering of 1,054,714 shares of Series A Preferred Stock
and beneficially owned by Generation Capital Company LLC. Mr. Hawkins is a
Managing Partner of Generation Capital

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<PAGE>
Company LLC and, as such, may be deemed to have voting and investment power
over the shares beneficially owned by Generation Capital Company LLC. Mr.
Hawkins disclaims any beneficial ownership of these shares.

(6) Includes 120,000 shares issuable upon the exercise of outstanding options.

(7) Bessemer Venture Partners is the name used to refer to a group of affiliated
investment partnerships. Shares reflected include 640,318 shares to be
issued upon the automatic conversion upon completion of this offering of
263,678 shares of Series A Preferred Stock held by two investment
partnerships--Bessemer Venture Partners IV L.P. with respect to 380,869
shares and Bessec Ventures IV L.P. with respect to 259,449 shares. The
general partner of these partnerships is Deer IV & Co. LLC. The members of
Deer IV & Co. LLC are William T. Burgin, Robert H. Buescher, Christopher
Gabrieli, David J. Cowan, G. Felda Hardymon and Rob L. Soni. The general
partner and each of the members of Deer IV & Co. LLC disclaim beneficial
ownership of the shares held by the investment partnerships, except to the
extent of their proportionate partnership interests therein. The address for
Bessemer Venture Partners is 1400 Old Country Road, Suite 407, Westbury, NY
11590.

(8) Includes 693,408 shares owned by Boston Millennia Partners Limited
Partnership and shares owned by Boston Millennia Associates I
Partnership. The general partner of Boston Millennia Partners Limited
Partnership is Glen Partners Limited Partnership. The managing general
partners of Boston Millennia Associates I Partnership are A. Dana Callow,
Jr., Robert S. Sherman and Martin J. Hernon. The address for Boston
Millennia is 30 Rowes Wharf, Boston, MA 02110.

(9) Includes 120,000 shares issuable upon the exercise of outstanding options.

(10) Includes 31,872 shares to be issued upon the automatic conversion upon
completion of this offering of 13,125 shares of Series A Preferred Stock;
13,659 shares to be issued upon the conversion of 5,625 shares of Series A
Preferred Stock held by Mr. Murray's IRA; and 170,592 shares owned by
GreenAcre Ventures LLC, of which Mr. Murray is a Managing Member. Of the
shares owned by GreenAcre Ventures LLC, 9,104 shares are attributable to Mr.
Murray's interest in GreenAcre, and Mr. Murray disclaims beneficial
ownership of the remaining 161,488 shares.

(11) Includes 102,452 shares to be issued upon the automatic conversion upon
completion of this offering of 42,189 shares of Series A Preferred Stock
owned by FSA Capital, Inc., of which Mr. Ellis is a director, and 180,000
shares issuable upon the exercise of outstanding options.

(12) Includes 90,000 shares issuable upon the exercise of outstanding options.

(13) Includes 51,224 shares to be issued upon the automatic conversion upon
completion of this offering of 21,094 shares of Series A Preferred Stock.

(14) Includes 2,760,487 shares to be issued upon the automatic conversion upon
completion of this offering of 1,136,747 shares of Series A Preferred Stock,
and 630,000 shares issuable upon the exercise of outstanding options.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

Our amended and restated certificate of incorporation, which will become
effective upon the closing of this offering, authorizes the issuance of up to
100,000,000 shares of common stock, par value $.01 per share, and 10,000,000
shares of preferred stock, par value $.01 per share, the rights and preferences
of which may be established from time to time by our board of directors. As of
July 31, 1999, 19,620,000 shares of common stock were outstanding and 1,620,000
shares of convertible preferred stock convertible into 3,934,019 shares of
common stock were issued and outstanding. As of July 31, 1999, HotJobs.com had
52 stockholders.

COMMON STOCK

Under our amended and restated certificate of incorporation, holders of our
common stock are entitled to one vote for each share held on all matters
submitted to a vote of stockholders, including the election of directors. They
do not have cumulative voting rights. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of common stock are entitled
to receive ratably dividends, if any, as may be declared by the board of
directors out of legally available funds, subject to any preferential dividend
rights of any outstanding preferred stock. In case of a liquidation, dissolution
or winding up of HotJobs.com, the holders of common stock are entitled to
receive ratably our net assets available after the payment of all debts and
other liabilities and subject to the prior rights of any outstanding preferred
stock. Holders of the common stock have no preemptive, subscription or
conversion rights. There are no redemption or sinking fund provisions applicable
to the common stock. The outstanding shares of common stock are, and the shares
offered by us in this offering will be, when issued in consideration for payment
thereof, fully paid and nonassessable. The rights, preferences and privileges of
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock which we may
designate and issue in the future. After the closing of this offering, there
will be no shares of preferred stock outstanding.

PREFERRED STOCK

Under our amended and restated certificate of incorporation, our board of
directors will be authorized, without further stockholder approval, to issue
from time to time up to an aggregate of 10,000,000 shares of preferred stock in
one or more series. Our board of directors may fix or alter the number of
shares, designations, preferences, powers and other special rights of the
preferred stock. The preferences, powers, rights and restrictions of different
series of preferred stock may differ. The issuance of preferred stock could
decrease the amount of earnings and assets available for distribution to holders
of common stock or affect adversely the rights and powers, including voting
rights, of the holders of common stock. The issuance may also have the effect of
delaying, deferring or preventing a change in control of HotJobs.com. All
outstanding shares of preferred stock will be automatically converted into
common stock upon the closing of this offering. We have no present plans to
issue any additional shares of preferred stock.

REGISTRATION RIGHTS

Under the terms of our amended and restated stockholders' agreement, at any
time on or after May 11, 1999, the holders of a majority of the outstanding
shares of common stock issuable upon the conversion of the shares of our
preferred stock may on three occasions require us to register for sale all or
any portion of the shares of common stock issuable upon

62
<PAGE>
conversion of the preferred shares held by them. This type of registration right
is known as a "demand" registration right.

In addition, under the terms of our amended and restated stockholders'
agreement, if required by the stockholder, we are also obligated to register any
currently outstanding shares of common stock and any of the shares of common
stock issuable upon conversion of the preferred shares when we register stock
for our own account or the account of other stockholders. This type of
registration right is known as a "piggyback" registration right.

The foregoing registration rights are subject to certain conditions and
limitations, including:

- the right of the underwriters in any underwritten offering to limit the
number of shares of common stock held by stockholders with registration
rights to be included in any registration;

- our right to delay for up to 120 days after the effectiveness of a
registration statement in connection with a firm commitment underwritten
public offering; and

- our right to delay for up to 120 days the filing of a registration
statement pursuant to a demand registration if our board of directors
determines that the registration would not be in our best interest at that
time.

We are generally required to bear all of the expenses of all registrations,
except underwriting discounts and commissions. Registration of any of the shares
of common stock held by stockholders with registration rights would result in
those shares becoming freely tradable without restriction under the Securities
Act immediately after consummation of this offering. We have agreed to indemnify
the holders of registration rights in connection with the demand and piggyback
registration rights under the terms of our amended and restated stockholders'
agreement.

The holders of our currently outstanding shares of common stock and the
shares of our common stock issuable upon conversion of the Series A Preferred
Stock have piggyback registration rights in connection with this offering. These
holders have agreed to waive their piggyback registration rights with respect to
this offering. In addition, certain holders of our currently outstanding shares
of common stock and the holders of shares of Series A Preferred Stock have
entered into lock-up agreements for at least 180 days with the underwriters.
After expiration of the lock-up periods, these stockholders will have the
ability to exercise the registration rights set forth above.

ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND OUR AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION AND BYLAWS

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law (as amended from time to time, the "DGCL"). Subject to certain
exceptions, Section 203 of the DGCL prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the interested
stockholder attained such status with the approval of the board of directors or
unless the business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to certain exceptions,
an "interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, fifteen percent (15%) or more
of the corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to HotJobs.com and, accordingly, may discourage attempts to acquire
HotJobs.com.

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<PAGE>
In addition, provisions of our amended and restated certificate of
incorporation and bylaws, which provisions will be in effect upon the closing of
this offering and are summarized in the following paragraphs, may be deemed to
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the market price
for the shares held by stockholders.

CLASSES OF DIRECTORS. In accordance with the terms of our amended and
restated certificate of incorporation, our board of directors has been divided
into three classes, denominated as Class I, Class II and Class III. Members of
each class hold office for staggered three-year terms. At each annual meeting of
our stockholders commencing in 2000, the successors to the directors whose terms
expire at that meeting will be elected to serve until the third annual meeting
after their election or until their successors have been elected and qualified.
With respect to each class, a director's term will be subject to the election
and qualification of their successors, or their earlier death, resignation or
removal. These provisions, when taken in conjunction with other provisions of
our amended and restated certificate of incorporation authorizing the board of
directors to fill vacant directorships, may delay a stockholder from removing
incumbent directors and simultaneously gaining control of the board of directors
by filling the vacancies with its own nominees.

BOARD OF DIRECTORS VACANCIES. Our amended and restated certificate of
incorporation authorizes the board of directors to fill vacant directorships or
increase the size of the board of directors. This may deter a stockholder from
removing incumbent directors and simultaneously gaining control of the board of
directors by filling the vacancies created by the removal with its own nominees.

STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our amended and
restated certificate of incorporation eliminates the ability of stockholders to
act by written consent. Our amended and restated bylaws provide that special
meetings of stockholders of HotJobs.com may be called only by the board of
directors.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our amended and restated bylaws provide that stockholders seeking
to bring business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual meeting of stockholders, must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be received at our principal executive offices not less than 120 days nor
more than 150 days prior to the anniversary date of the proxy statement
delivered to stockholders in connection with the immediately preceding year's
annual meeting. In the event that the annual meeting is called for a date that
is not within 30 days before or 70 days after the anniversary date, in order to
be timely, notice from the stockholder must be received:

- not earlier than 120 days prior to the annual meeting of stockholders; and

- not later than 90 days prior to the annual meeting of stockholders or the
tenth day following the date on which notice of the annual meeting was
made public.

In the case of a special meeting of stockholders called for the purpose of
electing directors, notice by the stockholder, in order to be timely, must be
received:

- not earlier than 120 days prior to the special meeting; and

- not later than 90 days prior to the special meeting or the close of
business on the tenth day following the day on which public disclosure of
the date of the special meeting was made.

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<PAGE>

Our amended and restated bylaws also specify certain requirements as to the
form and content of a stockholder's notice. These provisions may preclude
stockholders from bringing matters before an annual meeting of stockholders or
from making nominations for directors at an annual meeting of stockholders.

AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval, subject to certain limitations imposed by the Nasdaq
National Market. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved common stock and preferred stock could
render more difficult or discourage an attempt to obtain control of HotJobs.com
by means of a proxy contest, tender offer, merger or otherwise.

AMENDMENTS; SUPERMAJORITY VOTE REQUIREMENTS. The Delaware General
Corporation Law provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage. Our
amended and restated certificate of incorporation imposes supermajority vote
requirements in connection with the amendment of various provisions of our
amended and restated certificate of incorporation and bylaws, including those
provisions relating to the classified board of directors and the ability of
stockholders to call special meetings.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The amended and restated certificate of incorporation provides that, except
to the extent prohibited by the Delaware General Corporation Law, our directors
shall not be personally liable to HotJobs.com or its stockholders for monetary
damages for any breach of fiduciary duty as directors of HotJobs.com. Under the
Delaware General Corporation Law, the directors have a fiduciary duty to
HotJobs.com which is not eliminated by this provision of the amended and
restated certificate of incorporation and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of nonmonetary relief will
remain available. In addition, each director will continue to be subject to
liability under the Delaware General Corporation Law for breach of the
director's duty of loyalty to HotJobs.com for acts or omissions which are found
by a court of competent jurisdiction to be not in good faith or which involves
intentional misconduct, or knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by the Delaware
General Corporation Law. This provision also does not affect the directors'
responsibilities under any other laws, such as the Federal securities laws.

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers,
provided that this provision shall not eliminate or limit the liability of a
director:

- for any breach of the director's duty of loyalty to the corporation or its
stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- arising under Section 174 of the Delaware General Corporation Law; or

- for any transaction from which the director derived an improper personal
benefit.

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<PAGE>
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate eliminates the personal liability of directors to the fullest extent
permitted by Section 102(b)(7) of the Delaware General Corporation Law and
provides that we may fully indemnify any person 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) by
reason of the fact that such person is or was a director or officer of
HotJobs.com or is or was serving at the request of HotJobs.com as a director or
officer of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding.

Our amended and restated bylaws permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions, regardless of whether the Delaware General Corporation Law
would permit indemnification. On July 20, 1999, we obtained liability insurance
for our officers and directors.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under our amended and restated certificate of
incorporation. We are not aware of any threatened litigation or proceeding that
may result in a claim for such indemnification.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company.

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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has not been any public market for our common
stock, and no prediction can be made as to the effect, if any, that market sales
of shares of common stock or the availability of shares of common stock for sale
will have on the market price of the common stock prevailing from time to time.
Nevertheless, sales of substantial amounts of common stock in the public market,
or the perception that such sales could occur, could adversely affect the market
price of the common stock and could impair our future ability to raise capital
through the sale of our equity securities.

Upon the closing of this offering, we will have a total of 28,304,019 shares
of common stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. As of July 15,
1999, options to purchase 4,314,200 shares of common stock were outstanding, of
which 3,492,000 of such options will vest and become exercisable upon the
closing of the offering. Of the outstanding shares, the 4,750,000 shares sold in
this offering will be freely tradable, except that any shares held by our
"affiliates" may only be sold in compliance with the limitations described
below. Rule 144 defines an affiliate as a person that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, an issuer. The remaining 23,554,019 shares of common stock
will be deemed "restricted securities" as defined under Rule 144. Restricted
securities may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144, 144(k) or 701
promulgated under the Securities Act, which rules are summarized below. Subject
to the lock-up agreements described below and the provisions of Rule 144, and
assuming no exercise of outstanding options additional shares will be available
for sale in the public market as follows:

- 4,750,000 shares will be available for immediate sale in the public market
on the date of this prospectus;

- 540,000 shares will be eligible for sale 90 days after the date of this
prospectus; and

- 18,216,000 shares will be eligible for sale 180 days after the date of
this prospectus.

In general, under Rule 144, as currently in effect, a person, or persons
whose shares are required to be aggregated, including an affiliate, who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of

- 1% of the then outstanding shares of common stock, which will equal
approximately shares immediately after this offering; or

- the average weekly trading volume in the common stock during the four
calendar weeks preceding the date on which notice of such sale is filed,
subject to certain restrictions.

In addition, a person who is not deemed to have been an affiliate of
HotJobs.com 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 would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from an
affiliate of HotJobs.com, such person's holding period for the purpose of
effecting a sale under Rule 144 commences on the date of transfer from the
affiliate.

Rule 701 promulgated under the Securities Act provides that shares of common
stock acquired pursuant to written plans such as our 1999 Stock Option/Stock
Issuance Plan may be resold by persons other than affiliates, beginning 90 days
after the date of this prospectus, subject only to the manner of sale provisions
of Rule 144, and by affiliates, beginning 90 days

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<PAGE>
after the date of this prospectus, subject to all provisions of Rule 144 except
its one-year minimum holding period.

Our senior officers, directors, the holders of our Series A Preferred Stock
who are not affiliated with the underwriters, any other holders of at least
240,000 shares of our common stock and all holders of vested options issued
under our Stock Award Plan have executed lock-up agreements. Under these
agreements, such stockholders, who hold or will hold in the aggregate 26,204,904
shares of our common stock, have agreed that they will not, without the prior
written consent of the representatives of the underwriters, offer, sell, sell
short, transfer, hypothecate, pledge or otherwise dispose of any shares of our
common stock or the securities convertible into or exchangeable or exercisable
for shares of our common stock, or to enter into any agreement or transaction
which is designed to effect, or could be expected to result in, any such
transaction, for a period of 180 days following the date of this prospectus
without the consent of Deutsche Bank Securities Inc. Transfers or dispositions
can be made during the lock-up period in case of gifts for estate planning
purposes where the donee signs a lock-up agreement. In the event a request for
consent to a transfer within the lock-up period is made, Deutsche Bank
Securities Inc. may consider the following factors in determining whether to
consent to the proposed transfer:

- the number of shares proposed to be sold;

- the reason for the sale;

- the proximity in time to this offering; and

- the trading volume of our stock at the time of the requested transfer.

The decision to consent to a proposed transfer during the lock-up period is
within the sole discretion of Deutsche Bank Securities Inc.

In addition, seven individuals affiliated with Deutsche Bank Securities Inc.
will hold an aggregate of 130,523 shares of our common stock upon completion of
this offering as a result of the conversion of Series A Preferred Stock, and
five individuals affiliated with Deutsche Bank Securities Inc. and BancBoston
Roberston Stephens are the beneficial owners of 29,302 shares of our common
stock as a result of their investments in Green Acre Ventures, LLC, a private
investment fund. Each of these individuals has executed a lock-up agreement with
the underwriters. Under these agreements these individuals cannot sell,
transfer, assign, pledge or hypothecate their shares for a period of two years
after the effective date of this offering, except to officers or partners of the
underwriters and members of the selling group and their officers or partners,
and Deutsche Bank Securities Inc. cannot waive the lock-up restriction.

Options representing 3,492,000 shares of common stock will be immediately
exercisable upon the closing of this offering. The shares issuable upon the
exercise of these options will be restricted securities and will not be freely
tradeable unless registered on a Form S-8 registration statement. We intend to
file a Form S-8 to register all shares of common stock issuable under our plans
after the completion of this offering. However, all of these shares are subject
to the 180-day lock-up described above.

We have agreed not to sell or otherwise dispose of any shares of common
stock during the 180-day period following the date of the prospectus, except
that we may issue, and grant options to purchase, shares of common stock under
the 1999 Stock Option/Stock Issuance Plan. In addition, we may issue shares of
common stock in connection with any acquisition of another company if the terms
of such issuance provide that such common stock shall not be resold prior to the
expiration of the 180-day period referenced in the preceding sentence.

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<PAGE>
Following this offering, under certain circumstances and subject to certain
conditions, holders of 3,934,019 shares of our outstanding common stock will
have certain demand registration rights with respect to their shares of common
stock (subject to the lock-up arrangements described above) to require us to
register their shares of common stock under the Securities Act, and they will
have certain rights to participate in any future registration of securities by
us. We are not required to effect more than three demand registrations on behalf
of such holders.

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<PAGE>
UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the
underwriters named below, through their representatives Deutsche Bank Securities
Inc., BancBoston Robertson Stephens, SG Cowen Securities Corporation and
E*OFFERING Corp., have severally agreed to purchase from us the following
respective numbers of shares of common stock at the initial public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ---------------------------------------------------------------------------------------------- ------------------
<S> <C>
Deutsche Bank Securities Inc. ................................................................
BancBoston Robertson Stephens.................................................................
SG Cowen Securities Corporation...............................................................
E*OFFERING Corp...............................................................................

------------------
Total..................................................................................... 4,750,000
------------------
------------------
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
are subject to specified conditions and that the underwriters will purchase all
of the shares of common stock offered in the offering if any of the shares are
purchased.

We have been advised by the underwriters' representatives that the
underwriters propose to offer the shares of common stock to the public at the
initial public offering price set forth on the cover page of this prospectus and
to dealers at that price less a concession not in excess of $ per share.
The underwriters may allow, and the dealers may reallow, a concession not in
excess of $ per share to other dealers. After the initial public offering,
the offering price and other selling terms may be changed by the underwriters'
representatives. The expenses of the offering are estimated to be $1.52 million.
The following table sets forth the public offering price and all discounts and
commissions to be allowed to the underwriters:

<TABLE>
<CAPTION>
PUBLIC OFFERING UNDERWRITING DISCOUNTS PROCEEDS TO
PRICE AND COMMISSIONS HOTJOBS
--------------- ---------------------- -------------
<S> <C> <C> <C>
Per share................................................ $ $ $
Total.................................................... $ $ $
</TABLE>

An electronic prospectus is available on the Web site maintained by E*TRADE
Securities, Inc. The underwriters have agreed to allocate shares to E*TRADE
Securities, Inc. for sale to its brokerage account holders. Other than the
prospectus in electronic format, the information on such Web site relating to
our offering is not part of this prospectus and should not be relied on by
prospective investors.

We have granted to the underwriters an option, exercisable not later than 30
days after the date of this prospectus, to purchase up to 712,500 additional
shares of common stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
prospectus. If the underwriters exercise the option, each of the underwriters
will have a firm commitment to purchase approximately the same percentage of the
option shares that the number of shares of common stock to be purchased by it in
the above table

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<PAGE>
bears to 4,750,000, and we will be obligated to sell these shares to the
underwriters. The underwriters may exercise the option only to cover
over-allotments made in connection with the sale of the common stock offered in
the offering. If purchased, the underwriters will offer the additional shares on
the same terms as those on which the 4,750,000 shares are being offered.

At our request, the underwriters have reserved up to 462,500 shares of
common stock for sale, at the initial public offering price, to employees and
friends of ours through a directed share program. The number of shares of common
stock available for sale to the general public in the public offering will be
reduced to the extent that employees and friends purchase the reserved shares.

We have agreed to indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933, as amended.

We have agreed not to offer, sell, sell short, transfer, hypothecate, pledge
or otherwise dispose of any shares of our common stock or other securities
convertible into or exchangeable or exercisable for shares of our common stock
or derivatives of our common stock or to enter into any agreement or transaction
which is designed to effect, or could be expected to result in, any such
transaction for a period of 180 days after the date of this prospectus, directly
or indirectly, by us or otherwise, except as consideration for business
acquisitions, on exercise of currently outstanding stock options or on the
issuance of options to key employees and directors under our stock option plans
and the exercise of such options, without the prior written consent of Deutsche
Bank Securities Inc.

Our senior officers, directors, the holders of our Series A Preferred Stock
who are not affiliated with the underwriters, any other holders of at least
240,000 shares of our common stock and all holders of vested options issued
under our Stock Award Plan have executed lock-up agreements. Under these
agreements, such stockholders, who hold or will hold in the aggregate 26,204,904
shares of our common stock, have agreed not to offer, sell, sell short,
transfer, hypothecate, pledge or otherwise dispose of any shares of our common
stock or other securities convertible into or exchangeable or exercisable for
shares of our common stock or derivatives of our common stock or to enter into
any agreement or transaction which is designed to effect, or could be expected
to result in, any such transaction for a period of 180 days after the date of
this prospectus, directly or indirectly, without the consent of Deutsche Bank
Securities Inc. Transfers or dispositions can be made during the lock-up period
in case of gifts for estate planning purposes where the donee signs a lock-up
agreement. In the event a request for consent to a transfer within the lock-up
period is made, Deutsche Bank Securities Inc. may consider the following factors
in determining whether to consent to the proposed transfer:

- the number of shares proposed to be sold;

- the reason for the sale;

- the proximity in time to this offering; and

- the trading volume of our stock at the time of the requested transfer.

The decision to consent to a proposed transfer during the lock-up period is
within the sole discretion of Deutsche Bank Securities Inc.

The underwriters' representatives have advised us that the underwriters do
not intend to confirm sales to any account over which they exercise
discretionary authority.

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<PAGE>

Securities Inc. and BancBoston Robertson Stephens are the beneficial owners of
29,302 shares of our common stock as a result of their investments in Green Acre
Ventures, LLC, a private investment fund. Pursuant to the rules of the National
Association of Securities Dealers, Inc., these shares are presumed to be
underwriting compensation. Accordingly, each of these individuals has executed a
lock-up agreement with the underwriters. Under these agreements these
individuals cannot sell, transfer, assign, pledge or hypothecate their shares
for a period of two years after the effective date of this offering, except to
officers or partners of the underwriters and members of the selling group and
their officers or partners, and Deutsche Bank Securities Inc. cannot waive the
lock-up restriction.

We have an advertising contract with E*Trade Group Inc., an affiliate of
E*OFFERING Corp., under which we pay customary monthly advertising fees.

In order to facilitate this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
our common stock. Specifically, the underwriters may over-allot shares of our
common stock in connection with this offering, thereby creating a short position
in the underwriters' syndicate account. Additionally, to cover over-allotments
or to stabilize the market price of our common stock, the underwriters may bid
for, and purchase, shares of our common stock in the open market. Any of these
activities may maintain the market price of our common stock at a level above
that which might otherwise prevail in the open market. The underwriters are not
required to engage in these activities, and, if commenced, the activities may be
discontinued at any time. The underwriters' representatives, on behalf of the
underwriters, also may reclaim selling concessions allowed to an underwriter or
dealer, if the syndicate repurchases shares distributed by that underwriter or
dealer.

The underwriters and their respective affiliates may be lenders to, engage
in transactions with, and perform services for us in the ordinary course of
business.

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be determined by negotiations among us and the underwriters' representatives.
Among the factors to be considered in negotiations are prevailing market
conditions, our results of operations in recent periods, the market
capitalizations and stages of development of other companies that we and the
underwriters' representatives believe to be comparable to us, estimates of our
business potential, the present stage of our development and other factors
deemed relevant.

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<PAGE>
LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for HotJobs.com by Brobeck, Phleger & Harrison LLP, Washington, DC. The
validity of the shares of common stock offered hereby will be passed upon for
the underwriters by Shaw Pittman, a law partnership including professional
corporations, McLean, Virginia.

EXPERTS

The financial statements for HotJobs.com, Ltd. as of December 31, 1997 and
December 31, 1998 and for the period from February 20, 1997 (inception) to
December 31, 1997 and the year ended December 31, 1998 included in this
prospectus have been so included in reliance on the report of KPMG LLP,
independent certified public accountants, appearing elsewhere herein, upon the
authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a Registration
Statement on Form S-1, including the exhibits, schedules and amendments thereto,
under the Securities Act with respect to the shares of common stock to be sold
in this offering. This prospectus does not contain all the information set forth
in the Registration Statement. For further information with respect to
HotJobs.com and the shares of common stock to be sold in this offering,
reference is made to the Registration Statement. Statements contained in this
prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete, and in each instance reference is made
to the copy of such contract, agreement or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference.

You may read and copy all or any portion of the Registration Statement or
any other information we file at the Securities and Exchange Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the Securities and Exchange Commission. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our Securities and Exchange Commission filings,
including the Registration Statement, are also available to you on the
Commission's web site (http://www.sec.gov).

As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934, as amended, and,
in accordance therewith, will file periodic reports, proxy statements and other
information with the Securities and Exchange Commission. Upon approval of the
common stock for the quotation on the Nasdaq National Market, such reports,
proxy and information statements and other information may also be inspected at
the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

We intend to furnish our stockholders with annual reports containing audited
financial statements and with quarterly reports for the first three quarters of
each year containing unaudited interim consolidated financial information.

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<PAGE>
HOTJOBS.COM, LTD.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Independent Auditors' Report.............................................................................. F-2

Balance Sheets as of December 31, 1997 and 1998, and March 31, 1999 (unaudited)........................... F-3

Statements of Operations for the period from February 20, 1997 (inception) to December 31, 1997, the year
ended December 31, 1998, and for the three months ended March 31, 1998 (unaudited) and 1999
(unaudited)............................................................................................. F-4

Statements of Stockholders' Deficit for the period from February 20, 1997 (inception) to December 31,
1997, the year ended December 31, 1998, and for the three months ended March 31, 1999 (unaudited)....... F-5

Statements of Cash Flows for the period from February 20, 1997 (inception) to December 31, 1997, the year
ended December 31, 1998, and for the three months ended March 31, 1998 (unaudited) and 1999
(unaudited)............................................................................................. F-6

Notes to Financial Statements............................................................................. F-8
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
HotJobs.com, Ltd.:

We have audited the accompanying balance sheets of HotJobs.com, Ltd. as of
December 31, 1997 and 1998, and the related statements of operations,
stockholders' deficit, and cash flows for the period from February 20, 1997
(inception) to December 31, 1997 and for 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 HotJobs.com, Ltd. as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the period from February 20, 1997 (inception) to December 31, 1997 and for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.

KPMG LLP

New York, New York
March 15, 1999, except as to notes 2(a), 6, 11 and 13(c)
which are as of June 18, 1999

F-2
<PAGE>
HOTJOBS.COM, LTD.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1999
---------------------------- ----------------------------------------------
1997 1998 ACTUAL
------------- ------------- -------------
(UNAUDITED) PRO FORMA (A) PRO FORMA
-------------- AS ADJUSTED (B)
(UNAUDITED) ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash.................................... $ -- $ 167,004 $ 257,834 $ 16,457,834 $ 16,457,834
Accounts receivable, less allowance for
doubtful accounts of $0 in 1997,
$85,000 in 1998 and $169,000 in
1999.................................. 319,137 1,553,297 2,203,639 2,203,639 2,203,639
Prepaid expenses........................ 20,848 1,042,675 362,473 362,473 362,473
------------- ------------- ------------- -------------- ---------------
Total current assets................ 339,985 2,762,976 2,823,946 19,023,946 19,023,946
Property and equipment, net............... -- 589,693 1,023,284 1,023,284 1,023,284
Other assets.............................. -- 301,285 277,369 277,369 277,369
------------- ------------- ------------- -------------- ---------------
Total assets........................ $ 339,985 $ 3,653,954 $ 4,124,599 $ 20,324,599 $ 20,324,599
------------- ------------- ------------- -------------- ---------------
------------- ------------- ------------- -------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit.......................... $ -- $ 180,000 $ 180,000 180,000 180,000
Accounts payable and accrued expenses... 77,264 617,879 1,885,639 1,885,639 1,885,639
Due to affiliate........................ 294,449 3,631,640 4,406,803 4,406,803 4,406,803
Deferred revenue........................ 776,054 1,954,582 2,248,927 2,248,927 2,248,927
Current installments of obligations
under capital leases.................. -- 72,950 184,915 184,915 184,915
------------- ------------- ------------- -------------- ---------------
Total current liabilities........... 1,147,767 6,457,051 8,906,284 8,906,284 8,906,284
Obligations under capital leases,
excluding current installments.......... -- 79,999 317,107 317,107 317,107
------------- ------------- ------------- -------------- ---------------
Total liabilities................... 1,147,767 6,537,050 9,223,391 9,223,391 9,223,391
Redeemable convertible preferred stock.... -- -- -- -- --
Stockholders' (deficit) equity:
Common stock, $0.01 par value; 2,000,000
shares authorized, 887,500 and
867,500, 867,500 and 867,500 shares
issued and outstanding at December 31,
1997, and December 31, 1998 and March
31, 1999 actual and pro forma,
respectively, and 1,031,407 shares pro
forma as adjusted..................... 8,875 8,675 8,675 8,675 10,314
Additional paid-in capital.............. 128,629 310,829 310,829 16,510,829 16,509,190
Accumulated deficit..................... (945,286) (3,202,600) (5,418,296) (5,418,296) (5,418,296)
------------- ------------- ------------- -------------- ---------------
Total stockholders' (deficit)
equity............................ (807,782) (2,883,096) (5,098,792) 11,101,208 11,101,208
------------- ------------- ------------- -------------- ---------------
Commitments and contingencies.............
Total liabilities and stockholders
(deficit) equity.................. $ 339,985 $ 3,653,954 $ 4,124,599 $ 20,324,599 $ 20,324,599
------------- ------------- ------------- -------------- ---------------
------------- ------------- ------------- -------------- ---------------
</TABLE>

- --------------------------

(a) Pro forma information gives effect to the issuance of 1,620,000 shares of
Series A Preferred Stock for cash proceeds of $16.2 million on May 10, 1999
and the recording of a beneficial conversion feature of $16.2 million as
additional paid-in capital.

(b) Assumes conversion of all outstanding shares of Series A Preferred Stock
upon consummation of the offering.

See accompanying notes to financial statements.

F-3
<PAGE>
HOTJOBS.COM, LTD.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS ENDED
FEBRUARY 20, 1997 MARCH 31,
(INCEPTION) TO YEAR ENDED ------------------------------
DECEMBER 31, DECEMBER 31, 1998 1999
1997 1998 -------------- --------------
----------------- -------------- (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Service fees................................ $ 360,942 $ 3,038,317 $ 346,606 $ 1,960,374
Software license fees....................... 23,437 224,892 44,792 78,221
Job fair fees............................... -- -- -- 215,727
Other....................................... 13,117 249,269 5,000 394,787
----------------- -------------- -------------- --------------
Total revenues............................ 397,496 3,512,478 396,398 2,649,109
Cost of revenues.............................. 12,000 505,527 77,483 588,419
----------------- -------------- -------------- --------------
Gross profit............................ 385,496 3,006,951 318,915 2,060,690
Operating expenses:
Product development......................... 173,846 474,406 89,852 156,411
Sales and marketing......................... 431,165 3,084,712 524,589 3,228,509
General and administrative.................. 725,771 1,642,089 273,719 823,379
----------------- -------------- -------------- --------------
Total operating expenses.................. 1,330,782 5,201,207 888,160 4,208,299
----------------- -------------- -------------- --------------
Loss from operations.................... (945,286) (2,194,256) (569,245) (2,147,609)
Net interest expense.......................... -- 63,058 6,584 68,087
----------------- -------------- -------------- --------------
Net loss................................ $ (945,286) $ (2,257,314) $ (575,829) $ (2,215,696)
----------------- -------------- -------------- --------------
----------------- -------------- -------------- --------------
Basic and diluted net loss per common share... $ (1.07) $ (2.57) $ (0.65) $ (2.55)
----------------- -------------- -------------- --------------
----------------- -------------- -------------- --------------
Weighted average shares outstanding used in
basic and diluted net loss per common share
calculation................................. 887,500 876,841 887,500 867,500
----------------- -------------- -------------- --------------
----------------- -------------- -------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>
HOTJOBS.COM, LTD.

STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
----------- --------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock..................... 887,500 $ 8,875 $ (8,871) $ -- $ 4
Allocation of compensation from affiliate.... -- -- 137,500 -- 137,500
Net loss for the period from February 20,
1997 (inception) to December 31, 1997...... -- -- -- (945,286) (945,286)
----------- --------- ----------- -------------- --------------
Balance as of December 31, 1997.............. 887,500 8,875 128,629 (945,286) (807,782)
Allocation of compensation from affiliate.... -- -- 182,000 -- 182,000
Repurchase of common stock................... (20,000) (200) 200 -- --
Net loss for the year ended December 31,
1998....................................... -- -- -- (2,257,314) (2,257,314)
----------- --------- ----------- -------------- --------------
Balance as of December 31, 1998.............. 867,500 8,675 310,829 (3,202,600) (2,883,096)
Net loss for the three months ended March 31,
1999 (unaudited)........................... -- -- -- (2,215,696) (2,215,696)
----------- --------- ----------- -------------- --------------
Balance as of March 31, 1999 (unaudited)..... 867,500 $ 8,675 $ 310,829 $ (5,418,296) $ (5,098,792)
----------- --------- ----------- -------------- --------------
----------- --------- ----------- -------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>
HOTJOBS.COM, LTD.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 20, 1997 THREE MONTHS ENDED
(INCEPTION) TO YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, -----------------------------
1997 1998 1998 1999
----------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net loss.................................... $ (945,286) $ (2,257,314) $ (575,829) $ (2,215,696)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of
property and equipment................ -- 107,904 3,164 73,378
Provision for doubtful accounts
contributed by affiliate.............. -- 85,000 16,200 84,000
Allocation of compensation cost from
affiliate............................. 137,500 182,000 45,501 --
(Increase)/decrease In:
Accounts receivable................... (319,137) (1,319,160) (245,807) (734,342)
Due to affiliate...................... 294,449 697,396 168,500 95,163
Prepaid expenses...................... (20,848) (1,021,827) -- 680,202
Other assets.......................... -- (301,285) -- 23,916
Increase in:
Accounts payable and accrued
expenses............................ 77,264 540,615 348,375 1,267,760
Deferred revenue...................... 776,054 1,178,528 274,949 294,345
----------------- -------------- ------------ ---------------
Net cash provided by (used in)
operating activities.............. (4) (2,108,143) 35,053 (431,274)
----------------- -------------- ------------ ---------------
Cash flows from investing activities:
Capital expenditures........................ -- (497,054) (13,170) (128,482)
----------------- -------------- ------------ ---------------
Net cash used in investing
activities........................ -- (497,054) (13,170) (128,482)
----------------- -------------- ------------ ---------------
Cash flows from financing activities:
Proceeds from issuance of common stock...... 4 -- -- --
Advances from affiliate..................... -- 2,639,795 -- 680,000
Proceeds from bank loan..................... -- 180,000 -- --
Principal payments under capital lease
obligations............................... -- (47,594) (5,954) (29,414)
----------------- -------------- ------------ ---------------
Net cash provided by (used in)
financing activities.............. 4 2,772,201 (5,954) 650,586
----------------- -------------- ------------ ---------------
Net increase in cash and cash
equivalents....................... -- 167,004 15,929 90,830
----------------- -------------- ------------ ---------------
Cash and cash equivalents at beginning of
period....................................... -- -- -- 167,004
Cash and cash equivalents at end of period.... $ -- $ 167,004 $ 15,929 $ 257,834
----------------- -------------- ------------ ---------------
----------------- -------------- ------------ ---------------
</TABLE>

F-6
<PAGE>
HOTJOBS.COM, LTD.

STATEMENTS OF CASH FLOWS (CONTINUED)

See accompanying notes to financial statements.

F-7
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(1) DESCRIPTION OF BUSINESS

HotJobs.com, Ltd. ("HotJobs") was incorporated in the State of Delaware on
February 20, 1997 (inception) as Hot Jobs, Inc. On September 23, 1998, Hot Jobs,
Inc. changed its name to HotJobs.com, Ltd.

HotJobs is an Internet-based recruiting solutions company. HotJobs leverages
the Internet to provide a direct exchange of information between job seekers and
employers. Hot Jobs' employment exchange, WWW.HOTJOBS.COM, allows member
employers access to a database of job seekers and provides the tools to post,
track and manage job openings in a real-time environment. HotJobs also provides
employers with additional recruiting solutions including Softshoe, its
proprietary recruiting software, WorkWorld job fairs, and online advertising and
consulting services.

HotJobs operates in a highly competitive environment and inherent in the
HotJobs' business are various risks and uncertainties including its limited
operating history and unproven business model. HotJobs' success may depend in
part upon the emergence of the Internet as a recruiting medium, prospective
product and service development efforts, and the acceptance of HotJobs' products
and services by the marketplace.

(2) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

(A) PRIVATE PLACEMENT, INITIAL PUBLIC OFFERING AND UNAUDITED PRO FORMA BALANCE
SHEET

Effective May 10, 1999, HotJobs entered into a Series A convertible
preferred stock purchase agreement with a number of investors whereby HotJobs
issued 1,620,000 shares of Series A Preferred Stock for aggregate proceeds of
$16,200,000.

In June 1999, the Board of Directors authorized the filing of a registration
statement with the Securities and Exchange Commission ("SEC") that would permit
HotJobs to sell shares of HotJobs' common stock in connection with a proposed
initial public offering ("IPO").

Upon the closing of the proposed IPO, the then outstanding shares of
HotJobs' convertible preferred stock will automatically convert into 163,907
shares of common stock based on the current conversion price of the Series A
Preferred Stock. (See Note 8)

(B) UNAUDITED INTERIM FINANCIAL INFORMATION

The unaudited interim financial information for the three months ended March
31, 1998 and 1999, has been prepared in accordance with generally accepted
accounting principles for interim financial information and with instructions to
Article 10 of Regulation S-X. In the opinion of management, such information
contains all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair presentation of such periods. The operating
results for any quarter are not necessarily indicative of results for any future
periods.

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date

F-8
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(2) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.

(D) CASH AND CASH EQUIVALENTS

HotJobs considers all highly liquid securities with original maturities of
three months or less to be cash equivalents.

(E) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over three to five
years, which is the estimated useful life of the related assets. Equipment under
capital leases is stated at the present value of minimum lease payments and is
amortized using the straight-line method over the shorter of the lease term or
the estimated useful life of the assets.

(F) IMPAIRMENT OF LONG-LIVED ASSETS

HotJobs reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

(G) INCOME TAXES

HotJobs accounts for income taxes using the asset and liability method.
Under this method, 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 bases and operating loss and tax credit carryforwards. 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. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in results of operations in
the period that includes the enactment date.

(H) REVENUE RECOGNITION

Service fee revenues consist of subscription fees paid by employers for
memberships to the WWW.HOTJOBS.COM employment exchange and software hosting fees
paid by customers of Softshoe software. HotJobs provides membership
subscriptions for a minimum term of three months and a maximum term of 24
months. HotJobs recognizes subscription revenue ratably over the subscription
term. HotJobs provides hosting services on a monthly basis and recognizes
revenue in the month it provides the hosting service.

HotJobs also licenses its Softshoe and miscellaneous proprietary recruiting
software and may provide hosting of the software. Software license fee revenue
is recognized ratably over the

F-9
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(2) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

four year estimated useful life of the software in accordance with the guidance
provided in AICPA Statements of Position 97-2 and 98-9 "Software Revenue
Recognition."

Job fair revenue consists of fees from employers that rent booths at
WorkWorld jobs fairs. Revenue is recognized in the month in which the job fair
takes place.

Other revenues primarily consist of fees derived from 30-day single ad job
postings on WWW.HOTJOBS.COM, banner advertising, and other Softshoe-related
services, including system customization and resume scanning services. HotJobs
recognizes revenue related to these services over the period of delivery of
service.

Other revenues also include barter revenues. Barter advertising revenues and
expenses are recorded at the fair market value of services provided or received,
whichever is more determinable in the circumstances. Revenue from barter
advertising transactions is recognized as income when advertisements are
delivered on HOTJOBS.COM. Barter expense is recognized when HotJobs'
advertisements are run on third-party web sites, which is typically in the same
period when barter revenue is recognized. Barter expense is included as a
component of cost of revenues.

In the first quarter of 1999, HotJobs entered into a barter arrangement. In
exchange for providing a sponsorship on a television commercial, HotJobs was
provided with online advertising on the other party's website. We recognized
$168,000 of revenues and expenses in the first quarter of 1999 relating to this
barter arrangement. At March 31, 1999, there were no outstanding unused amounts
included on HotJobs' balance sheet as an asset or liability. The values assigned
to the barter revenue and expense were equal to the actual cost of purchasing
advertising on the other party's website.

Deferred revenue represents amounts billed or payments received in advance
of the subscription period and maintenance services to be rendered over a
certain period of time and is recognized as revenue ratably over the term of the
related contracts.

(I) PRODUCT DEVELOPMENT EXPENSES

Product development costs include expenses incurred by HotJobs for research,
design and development of HotJobs' proprietary technology. Product development
costs are expensed as incurred. Software development costs are required to be
capitalized when a product's technological feasibility has been established by
completion of a working model of the product and ending when a product is
available for general release to customers. To date, completion of a working
model of the HotJobs product and general release have substantially coincided.
As a result, HotJobs has not capitalized any software developments costs because
such costs have not been significant.

(J) ADVERTISING EXPENSES

HotJobs expenses advertising costs the first time the advertising takes
place, in accordance with AICPA Statement of Position 93-7. Advertising costs
totaling $287,067 and $1,305,607, respectively, for the period from February 20,
1997 (inception) through December 31, 1997 and the year ended December 31, 1998
and $175,728 and $2,494,280 for the three months ended

F-10
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(2) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
March 31, 1998 and 1999, respectively, are included in sales and marketing
expenses in HotJobs' statements of operations.

(K) STOCK-BASED COMPENSATION

HotJobs adopted Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," which permits entities to recognize
the fair value of all stock-based awards on the date of grant as expense over
the vesting period. Alternatively, SFAS No. 123 also allows entities to continue
to apply the provisions of APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and provide pro forma net loss disclosure for employee stock option
grants made as if the fair value-based method defined in SFAS No. 123 has been
applied. Under APB Opinion No. 25, compensation expense would be recorded on the
date of grant only if the market price of the underlying stock options exceeded
the exercise price. HotJobs has elected to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.

(L) BASIC AND DILUTED NET LOSS PER SHARE

HotJobs computes net income (loss) available per share in accordance with
SFAS No. 128, "Computation of Earnings Per Share," and the SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98,
basic net income (loss) available per share is computed by dividing the net
income (loss) available to common stockholders for the period by the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) available per share is computed by dividing the net income (loss)
for the period by the weighted average number of common and dilutive net income
(loss) available per share in accordance with common equivalent shares
outstanding during the period. HotJobs has presented historical basic and
dilutive net income (loss) available per share in accordance with SFAS No. 128.
As HotJobs had a net loss in each of the periods presented, basic and diluted
net income (loss) available per share is the same.

Diluted net loss per share for the period from February 20, 1997 (inception)
through December 31, 1997, the year ended December 31, 1998, and the three
months ended March 31, 1999, does not include the effects of options to purchase
0, 51,500, and 148,500 shares of common stock, respectively as the effect of
their inclusion is anti-dilutive during each period. Dilutive common stock
equivalents include an option granted by the president of an affiliated company
to purchase shares personally owned by him.

(M) STOCK SPLIT

On April 9, 1999, HotJobs authorized and implemented a 2,000-for-1 stock
split. Accordingly, all share and per share information in the accompanying
financial statements has been retroactively restated to reflect the effect of
this stock split.

In connection with the IPO, the Board of Directors approved a 24-for-one
stock split of HotJobs' common stock to be effected at or prior to the
consummation of the IPO. All common share and per share amounts in the
accompanying financial statements will be adjusted retroactively.

F-11
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(2) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(N) RECENT ACCOUNTING PRONOUNCEMENTS

As of January 1, 1998, HotJobs adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income" which establishes standards for reporting and
displaying comprehensive income and its components in a full set of general
purpose financial statements. The adoption of this standard has had no impact on
HotJobs' financial statements. Accordingly, HotJobs' comprehensive net loss is
equal to its net loss for all periods presented.

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1") which provides guidance for
determining whether computer software is internal-use software and on accounting
for the proceeds of computer software originally developed or obtained for
internal use and then subsequently sold to the public. It also provides guidance
on capitalization of the costs incurred for computer software developed or
obtained for internal use. HotJobs has not yet determined the impact, if any, of
adopting SOP 98-1, which will be effective for HotJobs' year ending December 31,
1999.

In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" which establishes standards for the way
that a public enterprise reports information about operating segments in annual
financial statements, and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. In the initial
year of application, comparative information for earlier years must be restated.
HotJobs has determined that it does not have any separately reportable business
segments.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. This
statement is not expected to affect HotJobs as HotJobs currently does not engage
or plan to engage in derivative instruments or hedging activities.

(3) PREPAID EXPENSES

Prepaid expenses as of December 31, 1997 and 1998 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1998
------------- -------------
<S> <C> <C>
Prepaid advertising...................................................... $ 20,848 $ 791,700
Prepaid software license................................................. -- 155,292
Other.................................................................... -- 95,683
------------- -------------
Total.................................................................... $ 20,848 $ 1,042,675
------------- -------------
------------- -------------
</TABLE>

F-12
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(4) PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
<S> <C> <C>
1997 1998
----------- -----------
Computer equipment, including assets under capital leases of $0 and $200,543
respectively................................................................ $ -- $ 686,117
Furniture and fixtures........................................................ -- 11,480
----------- -----------
-- 697,597
Less accumulated depreciation, including assets under capital leases of $0 and
$41,895, respectively....................................................... -- (107,904)
----------- -----------
Total................................................................... $ -- $ 589,693
----------- -----------
----------- -----------
</TABLE>

(5) INCOME TAXES

There has been no provision for U.S. federal or state income taxes for any
period as HotJobs has incurred operating losses since inception.

HotJobs has adopted the cash method of accounting for income tax purposes.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the HotJobs' deferred tax assets and liabilities for federal and state income
taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................... $ 397,000 $ 961,000
Excess depreciation for tax................................ -- (13,000)
--------- ---------
397,000 948,000
--------- ---------
Less valuation allowance..................................... (397,000) (948,000)
--------- ---------
Deferred tax assets.......................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>

Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. Accordingly, the net deferred
tax assets have been fully offset by a valuation allowance as it is more likely
than not that the deferred tax assets will not be realized.

The net change in valuation allowance for the year ended December 31, 1998
was an increase of approximately $551,000.

As of December 31, 1998, HotJobs had net operating loss carryforwards for
federal income tax purposes of approximately $3.1 million. There can be no
assurance that HotJobs will realize the benefit of the net operating loss
carryforwards. The federal net operating loss carryforwards are available to
offset future taxable income and expire at various dates through 2018 if not
utilized. The Tax Reform Act of 1986 contains provisions which may limit the net
operating loss

F-13
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(5) INCOME TAXES (CONTINUED)
carryforwards available to be used in any given year if certain events occur,
including significant changes in ownership interest.

(6) RELATED PARTY TRANSACTIONS

For the period from February 20, 1997 (inception) to December 31, 1997, the
year ended December 31, 1998 and the three months ended March 31, 1999, OTEC,
Inc. ("OTEC"), an affiliated company, paid various expenses on behalf of
HotJobs. HotJobs recorded its allocated share of the expenses on its financial
statements. The effect of all operating expenses paid on behalf of HotJobs by
OTEC was approximately $741,600, $1,153,000 and $131,200 for the period ended
December 31, 1997, the year ended December 31, 1998 and the three months ended
March 31, 1999, respectively. These expenses primarily consist of rents,
salaries, computer expense and other administrative expenses. OTEC also provided
cash advances of $2,639,795 to HotJobs in 1998, of which $2,259,795 bore
interest at rates ranging from 8.75% to 9.5% per annum. The interest expense
relating to such cash advances was approximately $49,000 during 1998 and was
included in the due to affiliate balance as of December 31, 1998. In June 1999,
HotJobs repaid all amounts due to affiliates.

HotJobs believes that these transactions were entered into on an arms-length
basis. The expenses were based on the actual charge per HotJobs employee, with
respect to salaries and employee benefit plans. With respect to expenses such as
rents, computer expenses, and insurance, expenses were based on the number of
HotJobs employees using the facility or service as a percentage of all employees
using the facility or service. All of these expenses were paid to outside third
parties at market rates.

At December 31, 1997 and 1998, OTEC owned approximately 22.5% and 23.0%,
respectively of HotJobs.

The chief executive officer of HotJobs is a director, executive officer and
shareholder of OTEC. Compensation expense for the chief executive officer of
$137,500 and $182,000 for the period ending December 31, 1997 and for the year
ended December 31, 1998, respectively, was paid by OTEC. These amounts paid by
OTEC are included as capital contributions in the statements of stockholders'
deficit, as they are not required to be repaid.

HotJobs has recorded in the statement of operations $300,000 in 1997 for the
license of miscellaneous propriety software by OTEC and $444,000 in 1998 for
hosting that software and for purchasing additional software.

On March 2, 1999, the chief executive officer of HotJobs granted the
president of OTEC an option, which expires on March 2, 2002, to purchase 34
shares of OTEC common stock owned personally by him at a purchase price of
$4,880 per share aggregating to $165,920, and an additional option to purchase
50 shares of each of OTEC's affiliated companies at a purchase price of $1 per
share. Similarly, on March 2, 1999, the president of OTEC granted HotJobs' chief
executive officer an option, which expires on March 2, 2002, to purchase 136,000
shares of HotJobs' common stock owned personally by the president at a purchase
price of $1.22 per share aggregating to $165,920. In addition, the chief
executive officer of HotJobs granted to the President of OTEC an irrevocable
proxy expiring March 2, 2002 to vote all of the chief executive officer of
HotJobs' shares of stock subject to the option. In turn, the president of OTEC
granted

F-14
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(6) RELATED PARTY TRANSACTIONS (CONTINUED)
the chief executive officer of HotJobs an irrevocable proxy expiring March 2,
2002 to vote all of his shares of stock in HotJobs. This was a nonmonetary
transaction between two individuals with respect to shares personally owned by
them and therefore no accounting was required by HotJobs.

Until recently, HotJobs had several joint insurance polices with OTEC and
its affiliates. HotJobs' commercial property insurance issued by Federal
Insurance Company for a one year term beginning October 15, 1998, covered both
its California and New York offices as well as OTEC's California office.
HotJobs' commercial umbrella policy, also issued by Federal Insurance Company
for a one year term beginning October 15, 1998, also covered OTEC and its
affiliates, as did HotJobs' workers compensation insurance, issued by Lumbermans
Mutual Casualty Company on December 1, 1998 for a term ending October 15, 1999.
Effective June 1, 1999, HotJobs has stand alone insurance policies in place.
HotJobs had a joint fiduciary liability policy, issued by Travelers Insurance
for a one-year term beginning October 20, 1998, with OTEC and its affiliates.
Insurance expenses of $85,096 in 1998 have been allocated by OTEC to HotJobs
based on the respective number of personnel of these two companies. On July 20,
1999, HotJobs obtained its own directors and officers' liability insurance
policy.

OTEC and RBL, jointly and severally, guarantee certain of HotJobs'
obligations, including HotJobs' obligation to pay rent under its leases, dated
as of April 16, 1999, pursuant to which HotJobs rents the 10th, 14th and 16th
floors of a building located at 24 West 40th Street in New York City.

On April 2, 1999, HotJobs repurchased 50,000 shares of common stock from the
chief executive officer and two employees for $1.22 per share.

On May 11, 1999, as part of the Series A Preferred Stock purchase agreement
(see note 8), FSA Capital, Inc. purchased 42,189 shares of Series A Preferred
Stock for $421,890. The chief financial officer and a director of HotJobs, is a
director of FSA Capital, Inc.

Generation Capital Partners, L.P. and affiliated investment entities
("Generation Partners") purchased in the aggregate 1,054,714 shares of Series A
Preferred Stock for $10,547,140. Generation Partners owns more than 5% of
HotJobs' stock. One of HotJobs' directors is a Managing Partner of an affiliate
of Generation Partners.

One of HotJobs' directors purchased 18,750 shares of Series A Preferred
Stock for $187,500. In connection with the Series A Preferred Stock financing,
GreenAcre Ventures LLC, of which one of HotJobs' directors is a managing member,
purchased 11,000 shares of HotJobs' common stock from two employees.

One of HotJobs' directors purchased 21,094 shares of Series A Preferred
Stock for $210,940.

(7) LINE OF CREDIT

On October 13, 1998, HotJobs entered into a $500,000 line of credit with The
Dime Savings Bank of New York (the "Bank"). Any outstanding balance is payable
on demand and bears interest at a fluctuating rate of 1% above the Bank's
reference lending rate for domestic commercial loans. All of HotJobs' assets
were pledged as collateral in the event of default. The amount borrowed on the
line of credit was $180,000 as of December 31, 1998.

F-15
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(7) LINE OF CREDIT (CONTINUED)
On October 13, 1998, an affiliated company refinanced an obligation under a
line of credit. As part of the refinancing agreement, the assets of HotJobs were
pledged as collateral in the event of default by the affiliated company. On June
2, 1999, the bank removed all cross guarantees with both the HotJobs and the
affiliated company lines of credit.

(8) CAPITALIZATION

AUTHORIZED SHARES

In 1998, HotJobs amended and restated its certificate of incorporation to
change its name to HotJobs.com, Ltd. On April 9 and May 10, 1999, HotJobs
amended its certificate of incorporation. As a result, as of May 10, 1999, the
total number of shares which HotJobs is authorized to issue is 4,000,000:
2,000,000 of these shares are common stock, each having a par value of $0.01;
and 2,000,000 of these shares are preferred stock, each having a par value of
$0.01.

Effective upon the closing of the IPO, HotJobs will be authorized to issue
up to 100,000,000 shares of common stock par value $0.01 per share, and
10,000,000 shares of preferred stock, par value $0.01 per share.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

Effective May 10, 1999, HotJobs issued an aggregate of 1,620,000 shares of
Series A Preferred, at a purchase price of $10 per share, in consideration for
cash proceeds of $16.2 million. Holders of Series A Preferred Stock are not
entitled to any dividend. However, in the event of any liquidation, dissolution
or winding up of HotJobs, the holders of the Series A Preferred stock then
outstanding are entitled to be paid a preferential amount of $10 per share.

Each holder of Series A Preferred Stock shall be entitled to the number of
votes equal to the number of whole shares of common stock into which the shares
of preferred stock are convertible on the date of the vote.

At the option of the stockholders, Series A Preferred Stock may be
converted, at any time prior to the date of redemption, into shares of common
stock. The conversion will result from dividing the Preferential Amount (as
defined) for the Series A Preferred stock as of the date of

F-16
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(8) CAPITALIZATION (CONTINUED)

conversion by the conversion price of $98.83 per share (pre 24-for-1 stock
split). Such shares automatically convert into common shares in the event of a
qualified IPO resulting in proceeds to HotJobs of not less than $30 million and
at a price per share of at least twice the conversion price, adjusted for the
stock split to be effected in connection with the IPO. The conversion to common
stock will be based on the same conversion features as disclosed above.

Due to the sale of the Series A Preferred Stock with a conversion price that
was below the expected initial public offering price of the common stock,
HotJobs will record a beneficial conversion feature of $16.2 million. The
beneficial conversion feature is limited to the net proceeds received from the
preferred stock transaction. HotJobs will amortize the value of the beneficial
conversion feature over the four-year period from the date of issuance of the
preferred stock to the date on which the preferred stock is first convertible
into common stock, assuming no acceleration of the date of conversion. Upon
completion of the IPO, all of the preferred stock will automatically convert
into common stock and all of the unamortized amount of the beneficial conversion
feature will be immediately recognized as dividend to preferred stockholders.

Upon request of the majority Series A Preferred stockholders on or after May
1, 2003, HotJobs may be required to redeem Series A Preferred Shares at an
amount equal to the greater of (a) the amount per share payable to the holders
of the Series A Preferred Stock in the event of liquidation, dissolution or
winding up of HotJobs and (b) $10 per share plus an additional amount equal to
10% per annum.

COMMON STOCK

During 1997, HotJobs issued 887,500 shares of common stock to its founders
and original employees at $0.01 per share.

Restricted shares vest, incrementally and equally, over a five-year period
provided that all restricted shares shall become fully vested upon the earlier
of (a) any person or entity purchasing more than 50% of HotJobs' common stock,
(b) HotJobs merging or consolidating one or more corporations where HotJobs'
common stock is exchanged for less than 50% of the voting stock of the surviving
corporation, (c) the sale, assignment, transfer, or other disposition of assets
of the HotJobs having a value in excess of 50% of the total assets of HotJobs
or, (d) the closing of an initial public offering of HotJobs' capital stock.

Upon the termination of the employment contract voluntarily or for any
cause, HotJobs is entitled, at its option, to repurchase from the holder at the
original purchase price the number of restricted shares which have not vested.

(9) CONCENTRATION OF CREDIT RISK

For the period from February 20, 1997 (inception) to December 31, 1997, no
customer, accounted for over 10% of total revenues generated by HotJobs. No
customers for more than 10% of gross accounts receivable at December 31, 1997.

F-17
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(9) CONCENTRATION OF CREDIT RISK (CONTINUED)

For the year ended December 31, 1998, no customer accounted for over 10% of
total revenues generated by HotJobs during that period. Two customers had
balances of 18% and 17%, respectively, of gross accounts receivable at December
31, 1998.

For the three months ended March 31, 1998, one customer, who is an affiliate
company, accounted for approximately 19% of total revenues generated by HotJobs
during that period. One customer accounted for more than 10% of gross accounts
receivable at March 31, 1998.

For the three months ended March 31, 1999, there were no customers that
accounted for more than 10% of total revenues generated by HotJobs during that
period, or of gross accounts receivable at March 31, 1999.

(10) PROFIT SHARING RETIREMENT PLAN

HotJobs' employees participate in a qualified profit sharing retirement plan
with a 401(k) deferred compensation provision through an affiliated company.
HotJobs contributes 50% of the amounts contributed by employees up to a maximum
of 6% of gross wages. Additionally, a discretionary profit sharing contribution
is determined annually by the Board of Directors. The contributions charged to
operations for the 401(k) plan amounted to $23,237 and $21,835 for 1998 and
1997, respectively. There were no discretionary profit sharing contributions
made by HotJobs during either 1997 or 1998.

(11) EMPLOYMENT AGREEMENTS

Richard Johnson, Stephen Ellis, Dimitri Boylan and George Nassef each has an
employment agreement with HotJobs. The agreements of Messrs. Johnson, Ellis and
Boylan each became effective on May 6, 1999 and expires on May 5, 2002, and will
automatically renew for additional one year terms after that date unless HotJobs
gives the executive written notice of its desire not to renew the agreement at
least six months prior to the expiration of the initial or any additional term.
Mr. Nassef's employment agreement became effective on June 18, 1999 and shall
continue until terminated by him or by HotJobs. The annual salary for each of
these executives is as follows: Richard Johnson, $200,000; Stephen Ellis,
$175,000; Dimitri Boylan, $175,000 and George J. Nassef, Jr., $175,000. The
annual salary of each of Messrs. Johnson, Ellis and Boylan will increase by a
minimum of 10% each year. In addition, Stephen Ellis received a non-qualified
stock option to purchase 15,000 shares of HotJobs' common stock, 625 of which
vest monthly beginning on June 5, 1999 and ending on May 6, 2000 and an
additional 3,750 of which vest on each May 6, 2001 and May 6, 2002. On the
closing of this offering, however, 7,500 of these shares will vest automatically
and the remaining shares will vest on May 6, 2001 and 2002 as stated above. Mr.
Nassef received stock options to purchase 7,500 shares of HotJobs' common stock,
208 of which vest monthly from July 18, 1999 through April 18, 2000; 210 of
which vest on May 18, 2000 and June 18, 2000; and an additional 2,500 of which
vest on each of June 18, 2001 and 2002. On the closing of this offering,
however, 3,750 of these shares will vest automatically; 1,250 shares will vest
on June 18, 2001 and 2,500 shares will vest on June 18, 2002. Also, each of
these executives is entitled to an annual bonus determined by the compensation
committee of the Board of Directors. HotJobs can terminate these employment
agreements with or without cause by delivering written notice to the executive.
Each executive

F-18
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(11) EMPLOYMENT AGREEMENTS (CONTINUED)
may terminate his employment agreement with or without good reason by delivering
written notice to HotJobs. Upon termination of the agreement by HotJobs without
cause or by the executive for good reason, the executive is entitled to the
greater of his annual salary for the remainder of the term of the agreement or
one year of salary and all options become immediately exercisable.

(12) STOCK OPTION PLAN

HotJobs' Board of Directors has authorized 600,000 shares of its common
stock for issuance pursuant to its Stock Award Plan. Such options have ten-year
terms and have been issued at the fair market value of the HotJobs' common stock
on the date of the applicable grant and will vest through 2008. Such options
vest over five years. If there is a Change of Control, (as defined) or the
closing of an IPO, the options become immediately exercisable.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTIONS GRANTED EXERCISE PRICE
---------------- -------------------
<S> <C> <C>
Options outstanding at December 31, 1997
Granted at $0.60................................................. 92,000 $ 0.60
Granted at $0.89................................................. 5,500 $ 0.89
Exercised........................................................ -- $ --
Forfeited........................................................ (46,000) $ 0.60
--------
Outstanding as of December 31, 1998.............................. 51,500 $ 0.63
--------
Granted at $1.30 (unaudited)..................................... 97,600 $ 1.30
Exercised (unaudited)............................................ -- $ --
Forfeited (unaudited)............................................ (600) $ 1.30
--------
Outstanding as of March 31, 1999 (unaudited)..................... 148,500 $ 1.07
--------
--------
Vested at December 31, 1998...................................... 0
--------
--------
Total options available as of December 31, 1998.................. 548,500
--------
--------
</TABLE>

The weighted-average remaining life of the 51,500 options outstanding at
December 31, 1998 is approximately 9.7 years.

HotJobs granted 2,000 options under the plan on April 1, 1998 at an exercise
price of $0.60 to a consultant, an employee of a related party who is providing
services to HotJobs. The value of this option using a Black-Scholes pricing
model was deemed insignificant.

HotJobs has adopted the disclosure provisions of SFAS No. 123. Had
compensation costs on the HotJobs' Stock Award Plan been determined based on the
fair market value on the grant

F-19
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(12) STOCK OPTION PLAN (CONTINUED)
date consistent with the provisions of SFAS No. 123, HotJobs' net loss would
have been increased as per the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1998
--------------
<S> <C>
Net loss--actual........................................................................ $ (2,257,314)
--------------
--------------
Net loss--pro forma..................................................................... $ (2,262,255)
--------------
--------------
Basic and diluted net loss per share--actual............................................ $ (2.57)
--------------
--------------
Basic and diluted net loss per share--pro forma......................................... $ (2.58)
--------------
--------------
</TABLE>

Pro forma information regarding net loss has been determined using a
Black-Scholes option pricing model with the following assumptions for 1998:

<TABLE>
<S> <C>
Risk-free interest rate.................................................... 6.0%
Dividend yield............................................................. 0.0%
Volatility factor.......................................................... 0.0%
Average expected life...................................................... 9 years
</TABLE>

(13) COMMITMENTS AND CONTINGENCIES

(A) OFFICE LEASES

HotJobs leases office space in New York and California. The minimum lease
payments under these leases are payable as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 AMOUNT
- ------------------------------------------------------------------------------------------- -----------
<S> <C>
1999....................................................................................... $ 95,526
2000....................................................................................... 91,971
2001....................................................................................... 105,204
2002....................................................................................... 109,176
2003....................................................................................... 109,176
Thereafter................................................................................. 63,686
-----------
$ 574,739
-----------
-----------
</TABLE>

Rent expense for the period from February 20, 1997 (inception) to December
31, 1997 and the year ended December 31, 1998 was $41,667 and $103,398,
respectively.

In March 1999, HotJobs entered into a five-year lease agreement for office
space in California. The lease is due to expire during May 2004 and has been
included above as part of the minimum lease payment schedule.

In April 1999, HotJobs entered into two five-year lease agreements for
office space in New York. These leases are due to expire on March 31, 2004. The
minimum lease payments under these leases amount to approximately $918,000.
Under the terms of these agreements, landlord and tenant have the right to
terminate these leases at any time after July 31, 1999 upon giving

F-20
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(13) COMMITMENTS AND CONTINGENCIES (CONTINUED)
ninety days' written notice. Due to the existence of this termination clause,
these amounts have not been included as part of minimum lease payable
commitments.

An affiliated company unconditionally guaranteed payment and performance of
all obligations, liabilities, terms and conditions of HotJobs' office leases.

(B) EQUIPMENT LEASES

HotJobs is obligated under various capital leases that begin in 1998 and
expire at various dates through November 2001.

Future minimum capital lease payments are payable as follows:

<TABLE>
<CAPTION>
CAPITAL
YEAR LEASES
- ------------------------------------------------------------------------------------------- -----------
<S> <C>
1999....................................................................................... $ 88,470
2000....................................................................................... 64,060
2001....................................................................................... 23,370
-----------
Total minimum lease payments............................................................... 175,900
Less amount representing interest (at rates ranging from 9.7% to 18.7%).................... 22,951
-----------
Present value of net minimum lease payments................................................ 152,949
Less current installment of obligations under capital leases............................... 72,950
-----------
Obligations under capital leases, excluding current installments........................... $ 79,999
-----------
-----------
</TABLE>

From March through April 1999, HotJobs entered into three capital lease
agreements for an aggregate amount of approximately $457,000 to finance computer
equipment. These capital lease commitments are not included in the above lease
schedule.

HotJobs entered into a commitment to purchase 30 seconds of commercial
airtime and a "banner" advertisement from Fox Broadcasting Company during the
National Football League's Super Bowl on January 31, 1999. The cost of the
airtime is $1,360,000. $680,000 was paid in November 1998 and was recorded
within prepaid expenses. The remainder was paid in January 1999.

The Company has also committed approximately $590,000 to advertising firms
and production companies for development of the commercial. This amount was paid
in various installments through January 1999.

Between April 1, 1999 and June 10, 1999, HotJobs incurred approximately
$512,000 in advertising expenses. Also, as of June 1, 1999, HotJobs has
commitments of approximately $10.9 million for various advertising campaigns
over the next three years. These commitments include broadcasting, print, online
and outdoor advertising. These commitments expire over various time periods.

F-21
<PAGE>
HOTJOBS.COM, LTD.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)

(14) SUBSEQUENT EVENT--UNAUDITED

In May and June 1999, HotJobs granted approximately 31,258 options. HotJobs
will record compensation expense of approximately $7.2 million over the vesting
period of these options which represents the difference between the expected
initial public offering price and the exercise price.

F-22
<PAGE>
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF THE SHARES
OF COMMON STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT
AFTER THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY THESE SHARES IN ANY CIRCUMSTANCES UNDER WHICH
THE OFFER OR SOLICITATION IS UNLAWFUL.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.............................. 1
Risk Factors.................................... 5
Forward-Looking Statements...................... 18
Market Data..................................... 18
Use of Proceeds................................. 19
Dividend Policy................................. 19
Capitalization.................................. 20
Dilution........................................ 21
Selected Financial Data......................... 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 24
Business........................................ 35
Management...................................... 48
Related Party Transactions...................... 55
Principal Stockholders.......................... 58
Description of Capital Stock.................... 61
Shares Eligible for Future Sale................. 66
Underwriting.................................... 69
Legal Matters................................... 72
Experts......................................... 72
Where You Can Find More Information............. 72
Index to Financial Statements................... F-1
</TABLE>

DEALER PROSPECTUS DELIVERY OBLIGATION:

Until , 1999 (25 days after the date of this prospectus), all
dealers that buy, sell or trade in these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. Dealers
are also obligated to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

[LOGO]

4,750,000 SHARES

COMMON STOCK

DEUTSCHE BANC ALEX. BROWN

BANCBOSTON
ROBERTSON STEPHENS

SG COWEN

E*OFFERING

Prospectus

, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth an estimate of the costs and expenses, other
than the underwriting discounts and commissions, payable by the Registrant in
connection with the sale of the Common Stock being registered.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-------------
<S> <C>
SEC registration fee........................................................... $ 21,260
NASD filing fee................................................................ 8,148
Nasdaq National Market listing fee............................................. 90,000
Legal fees and expenses........................................................ 285,000*
Accounting fees and expenses................................................... 500,000*
Printing and engraving......................................................... 300,000*
Transfer agent fees............................................................ 15,000*
Other.......................................................................... 300,592*
-------------
Total.................................................................... $ 1,520,000
-------------
-------------
</TABLE>

- ------------------------

* Estimated Amount to be Paid.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the DGCL makes provision for the indemnification of officers
and directors in terms sufficiently broad to indemnify officers and directors
under certain circumstances from liabilities (including reimbursement for
expenses incurred) arising under the Securities Act. Section 145 of the DGCL
empowers a corporation to indemnify its directors and officers and to purchase
insurance with respect to liability arising out of their capacity or status as
directors and officers, provided that this provision shall not eliminate or
limit the liability of a director: (1) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (2) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) arising under Section 174 of the DGCL or (4) for any transaction from
which the director derived an improper personal benefit. The DGCL provides
further that the indemnification permitted thereunder shall not be deemed
exclusive of any other rights to which the directors and officers may be
entitled under the corporation's bylaws, any agreement, a vote of stockholders
or otherwise.

Effective upon the consummation of this offering, our certificate of
incorporation will provide for indemnification of our directors against, and
absolution of, liability to HotJobs.com and its stockholders to the fullest
extent permitted by the DGCL. HotJobs.com intends to purchase directors' and
officers' liability insurance covering liabilities that may be incurred by our
directors and officers in connection with the performance of their duties.

The employment agreements we have entered into with Richard S. Johnson,
Stephen W. Ellis, Dimitri J. Boylan and George J. Nassef, Jr. provide that such
executives will be indemnified by us for all liabilities relating to their
status as officers or directors of HotJobs.com, and any actions committed or
omitted by the executives, to the maximum extent permitted by law of the State
of Delaware.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Registrant has sold and issued the following securities since February
20, 1997 (inception):

COMMON STOCK AND PREFERRED STOCK.

1. In February 1997, the Registrant issued and sold 21,300,000 shares of
common stock to purchasers, including officers and directors, for par value.

2. Effective May 10, 1999, the Registrant issued and sold 1,620,000 shares
of Series A Preferred Stock to 17 accredited investors for an aggregate purchase
price of $16,200,000.

OPTIONS. The Registrant from time to time has granted stock options to
employees and consultants in reliance upon exemption from registration pursuant
to either (i) Section 4(2) of the Securities Act of 1933, as amended, or (ii)
Rule 701 promulgated under the Securities Act of 1933, as amended. The following
table sets forth certain information regarding such grants:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICES
------------- ----------------
<S> <C> <C>
February 20, 1997 (inception) to December 31, 1997........... -- --
January 1, 1998 to December 31, 1998......................... 1,236,000 $0.02 - $0.04
January 1, 1999 to June 30, 1999............................. 3,078,200 $0.05 - $3.38
</TABLE>

The above securities were offered and sold by the Registrant in reliance
upon exemptions from registration pursuant to either (1) Section 4(2) of the
Securities Act of 1933, as amended, as transactions not involving any public
offering or (2) Rule 701 promulgated under the Securities Act of 1933, as
amended. No underwriters were involved in connection with the sales of
securities referred to in this Item 15.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

II-2
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.5** Employment Agreement, dated as of May 6, 1999, between HotJobs.com and Stephen W. Ellis.+
10.6** HotJobs.com Stock Award Plan+
10.7* 1999 Stock Option/Stock Issuance Plan+
10.8** Employee Stock Purchase Plan+
10.9** Lease Agreement, dated as of April 16, 1999, between 24 West 40th St. LLC, as landlord, and
HotJobs.com, Ltd., as tenant for the 14th and 16th floors.
10.10** Guarantee, made as of April 16, 1999, by OTEC, Inc. and RBL Agency, Ltd., related to the above lease.
10.11** Lease Agreement, dated as of April 16, 1999, between 24 West 40th St. LLC, as landlord, and
HotJobs.com, Ltd., as tenant for the 10th floor.
10.12** Guarantee, made as of April 16, 1999, by OTEC, Inc. and RBL Agency, Ltd., related to the above lease.
10.13** Office Lease, dated as of February 10, 1999, between 580 Market Street Corp., as landlord, and
HotJobs.com, Ltd., as tenant.
10.14** Line of Credit, dated as of October 3, 1998, granted by The Dime Savings Bank to HotJobs.com, Ltd.
10.15** Line of Credit, dated as of October 3, 1999, granted by The Dime Savings Bank to OTEC Consulting, Inc.,
RBL Agency, Ltd. and OTEC, Inc.
10.16** Employment Agreement, dated as of June 18, 1999, between HotJobs.com and George J. Nassef, Jr.+
10.17* 401(K) Plan.
23.1* Consent of KPMG LLP.
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1** Powers of Attorney (See Signature Page).
27.1** Financial Data Schedule.
</TABLE>

- ------------------------

* Filed herewith.

** Previously filed.

+ Indicates compensatory plan or arrangement.

(b) Financial Statement Schedules.

Schedule II--Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the

II-3
<PAGE>
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or
(4), or 497(h) under the Securities Act of 1933, 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 this offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in The City of New York,
State of New York, on this 5th day of August, 1999.

HOTJOBS.COM, LTD.

By: /s/ RICHARD S. JOHNSON
-----------------------------------------
Name: Richard S. Johnson
Title: President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on
August 5, 1999:

SIGNATURE TITLE(S)
- ------------------------------ ---------------------------
President, Chief Executive
/s/ RICHARD S. JOHNSON Officer and Chairman of
- ------------------------------ the Board of Directors
Richard S. Johnson (principal executive
officer)

Chief Financial Officer
/s/ * (principal financial and
- ------------------------------ accounting officer) and
Stephen W. Ellis Director

/s/ * Chief Operating Officer,
- ------------------------------ Secretary and Director
Dimitri J. Boylan

/s/ * Director
- ------------------------------
John A. Hawkins

/s/ * Director
- ------------------------------
John G. Murray

Director
- ------------------------------
Kevin P. Ryan

Director
- ------------------------------
Philip Guarascio

- ------------------------

* Pursuant to a power of attorney previously executed.

II-5
<PAGE>
SCHEDULE II

HOTJOBS.COM, LTD.

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE AT
BEGINNING FOR DOUBTFUL END OF
OF PERIOD ACCOUNTS DEDUCTIONS PERIOD
----------- ------------ ----------- -----------

<S> <C> <C> <C> <C>
For the period from February 20, 1997 (inception) to December
31, 1997
Allowance for doubtful accounts............................ $ 0 $ 0 $ 0 $ 0
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------

For the year ended December 31, 1998
Allowance for doubtful accounts............................ $ 0 $ 85,000 $ 0 $ 85,000
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
1.1** Form of Underwriting Agreement.
3.1** Certificate of Incorporation, as amended.
3.2* Form of Amended and Restated Certificate of Incorporation to be in effect upon the closing of this
offering.
3.3** Bylaws.
3.4* Form of Amended and Restated Bylaws to be in effect upon the closing of this offering.
4.1* Specimen Common Stock certificate.
4.2 Please see Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the certificate of incorporation and bylaws
defining the rights of holders of common stock.
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1** Series A Convertible Preferred Stock Purchase Agreement, dated as of May 10, 1999, between HotJobs.com
and the several purchasers names in Schedule I thereto.
10.2** Amended and Restated Stockholders' Agreement, dated as of May 11, 1999.
10.3** Employment Agreement, dated as of May 6, 1999, between HotJobs.com and Richard S. Johnson+
10.4** Employment Agreement, dated as of May 6, 1999, between HotJobs.com and Dimitri J. Boylan+
10.5** Employment Agreement, dated as of May 6, 1999, between HotJobs.com and Stephen W. Ellis.+
10.6** HotJobs.com Stock Award Plan+
10.7* 1999 Stock Option/Stock Issuance Plan+
10.8** Employee Stock Purchase Plan+
10.9** Lease Agreement, dated as of April 16, 1999, between 24 West 40th St. LLC, as landlord, and
HotJobs.com, Ltd., as tenant for the 14th and 16th floors.
10.10** Guarantee, made as of April 16, 1999, by OTEC, Inc. and RBL Agency, Ltd., related to the above lease.
10.11** Lease Agreement, dated as of April 16, 1999, between 24 West 40th St. LLC, as landlord, and
HotJobs.com, Ltd., as tenant for the 10th floor.
10.12** Guarantee, made as of April 16, 1999, by OTEC, Inc. and RBL Agency, Ltd., related to the above lease.
10.13** Office Lease, dated as of February 10, 1999, between 580 Market Street Corp., as landlord, and
HotJobs.com, Ltd., as tenant.
10.14** Line of Credit, dated as of October 3, 1998, granted by The Dime Savings Bank to HotJobs.com, Ltd.
10.15** Line of Credit, dated as of October 3, 1999, granted by The Dime Savings Bank to OTEC Consulting, Inc.,
RBL Agency, Ltd. and OTEC, Inc.
10.16** Employment Agreement, dated as of June 18, 1999, between HotJobs.com and George J. Nassef, Jr.+
10.17* 401(K) Plan.
23.1* Consent of KPMG LLP.
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1** Powers of Attorney (See Signature Page).
27.1** Financial Data Schedule.
</TABLE>

- ------------------------

* Filed herewith.

** Previously filed.

+ Indicates compensatory plan or arrangement.

<PAGE>
Exhibit 3.2

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

HOTJOBS.COM, LTD.

HotJobs.com, Ltd., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies that:

A. The name of the Corporation is HotJobs.com, Ltd.

B. The date of filing of the Corporation's original Certificate of
Incorporation with the Secretary of State of Delaware was February 20, 1997 and
the Corporation was originally incorporated under the name "HotJobs, Inc."

C. As amended by this Amended and Restated Certificate of
Incorporation, and effective upon filing with the Secretary of State of the
State of Delaware, the certificate of incorporation of the Corporation reads in
its entirety as follows:

1. The name of the Corporation is:

HotJobs.com, Ltd.

2. The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The Corporation
Trust Company.

3. The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL").

4. (a) Authorized Shares. The Corporation is authorized to
issue two classes of shares to be designated, respectively, Common Stock and
Preferred Stock. The total number of shares of Common Stock which the
Corporation is authorized to issue is 100,000,000, with a par value of $0.01,
and the total number of shares of Preferred Stock which the Corporation is
authorized to issue is 10,000,000, with a par value of $0.01.

(b) Common Stock. Each share of Common Stock shall have
one vote on each matter submitted to a vote of the stockholders of the
Corporation. Subject to the provisions of applicable law and the rights of the
holders of the outstanding shares of Preferred

<PAGE>

Stock, if any, the holders of shares of Common Stock shall be entitled to
receive, in proportion to the number of shares of Common Stock held, when and as
declared by the Board of Directors of the Corporation, out of the assets of the
Corporation legally available therefor, dividends or other distributions,
whether payable in cash, property or securities of the Corporation. The holders
of shares of Common Stock shall be entitled to receive, in proportion to the
number of shares of Common Stock held, the net assets of the Corporation upon
dissolution after any preferential amounts required to be paid or distributed to
holders of outstanding shares of Preferred Stock, if any, are so paid or
distributed.

(c) Preferred Stock. The Preferred Stock may be issued
from time to time by the Board of Directors as shares of one or more series. The
description of shares of each additional series of Preferred Stock, including
any designations, preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption shall be as set forth in resolutions adopted by the
Board of Directors.

The Board of Directors is expressly authorized, at any time, by
adopting resolutions providing for the issuance of, or providing for a change in
the number of, shares of any particular series of Preferred Stock and, if and to
the extent from time to time required by law, by filing certificates of
amendment or designation which are effective without stockholder action, to
increase or decrease the number of shares included in each series of Preferred
Stock, but not below the number of shares then issued, and to set in any one or
more respects the designations, preferences conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms and
conditions of redemption relating to the shares of each such series. The
authority of the Board of Directors with respect to each series of Preferred
Stock shall include, but not be limited to, setting or changing the following:

a. the dividend rate, if any, on shares of such series,
the times of payment and the date from which
dividends shall be accumulated, if dividends are to
be cumulative;

b. whether the shares of such series shall be redeemable
and, if so, the redemption price and the terms and
conditions of such redemption;

c. the obligation, if any, of the Corporation to redeem
shares of such series pursuant to a sinking fund;

d. whether shares of such series shall be convertible
into, or exchangeable for, shares of stock of any
other class of classes and, if so, the terms and
conditions of such conversion or exchange, including
the price or prices or the rate of rates of
conversion or exchange and the terms of adjustment,
if any;

e. whether the shares of such series shall have voting
rights, in addition to the voting rights provided by
law, and, if so, the extent of such

<PAGE>

voting rights;

f. the rights of the shares of such series in the event
of voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation; and

g. any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof
relating to such series.

5. The Corporation is to have perpetual existence.

6. In furtherance and not in limitations of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation. In addition, the
Bylaws may be amended by the affirmative vote of holders of at least 66 2/3% of
the outstanding shares of voting stock of the Corporation entitled to vote at
any regular meeting of stockholders, or at any special meeting of stockholders,
provided notice of such alteration, amendment, repeal or adoption of new by-laws
shall have been stated in the notice of such special meeting.

7. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be determined by
resolution of the Board of Directors.

8. Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide. Advanced notice of stockholders
nominations for the election of directors and of any other business to be
brought before any meeting of the stockholders shall be given in the manner
provided in the Bylaws of the Corporation.

At each annual meeting of stockholders, directors of the Corporation
shall be elected to hold office until the expiration of the term for which they
are elected, or until their successors have been duly elected and qualified;
except that if any such election shall not be so held, such election shall take
place at a stockholders' meeting called and held in accordance with the DGCL.

The Board of Directors shall be divided into three classes as nearly
equal in size as is practicable, hereby designated as Class I, Class II, and
Class III, respectively. Directors shall be assigned to each class in accordance
with a resolution or resolutions adopted by the Board of Directors. At the first
annual meeting of stockholders following the date hereof, the term of office of
the Class I directors shall expire, and Class I directors shall be elected for a
full term of three years. At the second annual meeting of stockholders following
the date hereof, the term of office of the Class II directors shall expire, and
Class II directors shall be elected for a full term of three years. At the third
annual meeting of stockholders following the date hereof, the term of office of
the Class III directors shall expire, and Class III directors shall be elected
for a full term of three years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of three years to
succeed the directors of the class whose terms expire at

<PAGE>

such annual meeting. If the number of directors is hereafter changed, any newly
created directorship or decrease in directorships shall be so apportioned among
the classes as to make all classes as nearly equal in number as is practicable.

Vacancies occurring on the Board of Directors for any reason may be
filled by vote of a majority of the remaining members of the Board of Directors,
even if less than a quorum, at any meeting of the Board of Directors. A person
so elected by the Board of Directors to fill a vacancy shall hold office for the
remainder of the full term of the director for which the vacancy was created or
occurred and until such director's successor shall have been duly elected and
qualified. A director may be removed from office by the affirmative vote of the
holders of 66 2/3% of the outstanding shares of voting stock of the Corporation
entitled to vote at an election of directors, provided that such removal is for
cause.

9. Stockholders of the Corporation shall take action by meetings held
pursuant to this Amended and Restated Certificate of Incorporation and the
Bylaws of the Corporation and shall have no right to take any action by written
consent without a meeting. Meetings of stockholders may be held within or
without the State of Delaware, as the Bylaws of the Corporation may provide.
Special meetings of the stockholders, for any purpose or purposes, may only be
called by the Board of Directors of the Corporation. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.

10. (a) To the fullest extent permitted by the DGCL as the same exists
or as may hereafter be amended, a director of the Corporation or any subsidiary
of the Corporation shall not be personally liable to the Corporation or its
stockholders and shall otherwise be indemnified by the Corporation for monetary
damages for breach of fiduciary duty as a director of the Corporation, any
predecessor of the Corporation or any subsidiary of the Corporation.

(b) The Corporation shall indemnify to the fullest extent permitted
by law any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or intestate is or was a director or officer
of the Corporation, any predecessor of the Corporation or any subsidiary of the
Corporation or serves or served at any other enterprise as a director or officer
at the request of the Corporation, any predecessor to the Corporation or any
subsidiary of the Corporation.

(c) Neither any amendment nor repeal of this Article 10, nor the
adoption of any provision of the Corporation's Amended and Restated Certificate
of Incorporation inconsistent with this Article 10, shall eliminate or reduce
the effect of this Article 10, in respect of any matter occurring, or any action
or proceeding accruing or arising or that, but for this Article 10, would accrue
or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.

<PAGE>

11. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing, the provisions set forth in Articles
7, 8 9, 10 or 11 of this Amended and Restated Certificate of Incorporation may
not be repealed or amended in any respect without the affirmative vote of
holders of at least sixty-six and two-thirds percent (66-2/3%) outstanding
voting stock of the Corporation entitled to vote at election of directors.

This Amended and Restated Certificate of Incorporation has been duly
adopted by the stockholders of the Corporation in accordance with the provisions
of Sections 242 and 245 of the DGCL, as amended.

This Amended and Restated Certificate of Incorporation was approved by
the holders of the requisite number of shares of the Corporation in accordance
with Section 228 of the DGCL, as amended.

IN WITNESS WHEREOF, HotJobs.com, Ltd. has caused this Amended and
Restated Certificate of Incorporation to be signed by Richard S. Johnson, its
President, and attested by Dimitri J. Boylan, its Secretary, this ___ day of
August, 1999.

----------------------------------
Richard S. Johnson, President

Attested:

- ----------------------------------
Dimitri J. Boylan, Secretary

<PAGE>
Exhibit 3.4

AMENDED AND RESTATED
BY-LAWS

HOTJOBS.COM, LTD.
A DELAWARE CORPORATION
(THE "CORPORATION")

ARTICLE 1 - OFFICES

1.1 Registered Office.

The registered office of the Corporation shall be the
registered office named in the Certificate of Incorporation of the Corporation,
or such other office as may be designated from time to time by the Board of
Directors in the manner provided by law.

1.2 Other Offices.

The Corporation may have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the Corporation may require. The books of
the Corporation may be kept (subject to any provision contained in the General
Corporation Law of Delaware) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
these Bylaws.

ARTICLE 2 - STOCKHOLDER MEETINGS

2.1 Place of Meetings.

All meetings of stockholders shall be held at such place
either within or without the State of Delaware, as may be designated from time
to time by the Board of Directors and stated in the notice of the meeting, or,
if not so designated, at the principal executive office of the Corporation.

2.2 Annual Meeting.

The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date and at such a time to be
fixed by the Board of Directors and stated in the notice of the meeting. If no
annual meeting is held in accordance with the foregoing provisions, the Board of
Directors shall cause the meeting to be held as soon thereafter as convenient.
If no annual meeting is held in accordance with the foregoing provisions, a
special meeting may be held in lieu of the annual meeting, and any action taken
at that special meeting shall have the same effect

<PAGE>

as if it had been taken at the annual meeting, and in such case all references
in these By-Laws to the annual meeting of the stockholders shall be deemed to
refer to such special meeting.

At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors; (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors; or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to Secretary of the Corporation. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
Secretary of the Corporation not less than the close of business on the one
hundred twentieth (120th) day nor earlier than the close of business on the one
hundred fiftieth (150th) day prior to the first anniversary of the proxy
statement delivered to stockholders in connection with the preceding year's
annual meeting; provided, however, that if either (i) the date of the annual
meeting is advanced more than thirty (30) days or delayed (other than as a
result of adjournment) more than seventy (70) days from such anniversary date or
(ii) no proxy statement was delivered to stockholders in connection with the
preceding year's annual meeting, notice by the stockholder to be timely must be
so delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the close of business on the tenth (10th) day following the date on which
public announcement of the date of such meeting is first made by the
Corporation.

A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting: (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting; (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business; (iii) the class and number of shares of the
Corporation which are beneficially owned by the stockholder; (iv) any material
interest of the stockholder in such business; and (v) any other information that
is required to be provided by the stockholder pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "1934 ACT"), in such
stockholder's capacity as a proponent of a stockholder proposal. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
paragraph. The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this paragraph, and,
if the chairman should so determine, the chairman shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.

Only persons who are nominated in accordance with the
procedures set forth in this paragraph shall be eligible for election as
Directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the Corporation entitled to vote
in the election of Directors at the meeting who complies with the notice
procedures set forth in this

<PAGE>

paragraph. Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation in accordance with the earlier provisions of this
Section 2.2. Such stockholder's notice shall set forth (i) as to each person, if
any, whom the stockholder proposes to nominate for election or re-election as a
Director: (A) the name, age, business address and residence address of such
person; (B) the principal occupation or employment of such person; (C) the class
and number of shares of the Corporation which are beneficially owned by such
person; (D) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nominations are to be made by the stockholder;
and (E) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of Directors, or is otherwise
required in each case pursuant to Regulation 14A under the 1934 Act (including
without limitation such person's written consent to being named in the proxy
statement, if any, as a nominee and to serving as a Director if elected); and
(ii) as to such stockholder giving notice, the information required to be
provided pursuant to this Section 2.2. At the request of the Board of Directors,
any person nominated by a stockholder for election as a Director shall furnish
to the Secretary of the Corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a Director of the Corporation unless nominated
in accordance with the procedures set forth in this paragraph. The chairman of
the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if the chairman should so determine, the chairman shall so
declare at the meeting, and the defective nomination shall be disregarded.

2.3 Special Meetings.

Special meetings of stockholders may be called at any time by
theChairman of the Board or the President at the request of two-thirds of the
Board of Directors. Business transacted at any special meeting of stockholders
shall be limited to matters relating to the purpose or purposes stated in the
notice of meeting.

If a special meeting is called for the purpose of electing
directors, notice by the stockholder to be timely must be so delivered not
earlier than the close of business on the one hundred twentieth (120th) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such special meeting or the close of
business on the tenth (10th) day following the date on which public announcement
of the date of such meeting is first made by the Corporation.

2.4 Notice of Meetings.

Except as otherwise provided by law, written notice of each
meeting of stockholders, whether annual or special, shall be given not less than
10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notices of all meetings shall state the
place, date and hour of the meeting. The notice of a special meeting shall
state, in addition, the purpose or purposes for which the meeting is called. If

<PAGE>

mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the records
of the Corporation.

2.5 Voting List.

The officer who has charge of the stock ledger of the
Corporation shall prepare, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or , if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time of the meeting, and may be inspected by any stockholder who is present.

2.6 Record Date.

The Board of Directors may fix in advance a date as a record
date for the determination of the stockholders entitled to notice of or to vote
at any meeting of stockholders, or entitled to receive payment of any dividend
or other distribution or allotment of any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action.
Such record date shall not be more than 60 nor less than 10 days before the date
of such meeting.

If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.

A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed by the Board of Directors,
the record date for determining stockholders for

<PAGE>

any such purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.

2.7 Quorum.

Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business except as otherwise provided by statute
or by the Certificate of Incorporation.

2.8 Adjournments.

Any meeting of stockholders may be adjourned to any other time
and to any other place at which a meeting of stockholders may be held under
these By-Laws by the stockholders present or represented at the meeting and
entitled to vote, although less than a quorum, or, if no stockholder is present,
by the chairman of such meeting. It shall not be necessary to notify any
stockholder of any adjournment of less than 30 days if the time and place of the
adjourned meeting are announced at the meeting at which adjournment is taken,
unless after the adjournment a new record date is fixed for the adjourned
meeting. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting.

2.9 Voting and Proxies.

Unless otherwise provided in the Certificate of Incorporation,
each stockholder shall have one vote for each share of stock entitled to vote
held of record by such stockholder. Each stockholder of record entitled to vote
at a meeting of stockholders, may vote in person or may authorize another person
or persons to vote or act for him by written proxy executed by the stockholder
or his authorized agent and delivered to the Corporation. No such proxy shall be
voted or acted upon after three years from the date of its execution, unless the
proxy expressly provides for a longer period.

2.10 Action at Meeting.

When a quorum is present at any meeting, the holders of shares
of stock representing a majority of the votes cast on a matter (or if there are
two or more classes of stock entitled to vote as separate classes, then in the
case of each such class, the holders of shares of stock of that class
representing a majority of the votes cast on a matter) shall decide any matter
to be voted upon by the stockholders at such meeting, except when a different
vote is required by express provision of law, the Certificate of Incorporation
or these By-Laws. When a quorum is present at any meeting, any election by
stockholders shall be determined by a plurality of the votes cast on the
election.

2.11 Action without Meeting.

Effective upon the closing of the Corporation's initial public
offering of securities

<PAGE>

pursuant to a registration statement filed under the Securities Act of 1933, as
amended, the stockholders of the Corporation may not take action by written
consent without a meeting but must take any such actions at a duly called annual
or special meeting in accordance with these By-Laws and the Certificate of
Incorporation.

ARTICLE 3 - DIRECTORS

3.1 General Powers.

The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors, who may exercise all of the
powers of the Corporation except as otherwise provided by law or the Certificate
of Incorporation. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board until the vacancy is filled.

3.2 Number and Term of Office; Classification.

(a) The number of directors which shall constitute the whole
Board of Directors shall be determined by resolution of the Board of Directors
(provided, however, that no decrease in the number of directors shall have the
effect of shortening the term of an incumbent director), but in no event shall
be less than one. At each annual meeting of stockholders, Directors of the
Corporation shall be elected to hold office until the expiration of the term for
which they are elected, and until their successors have been duly elected and
qualified or until such Director's earlier death, resignation or due removal;
except that if any such election shall not be so held, such election shall take
place at a stockholders' meeting called and held in accordance with the General
Corporation Law of Delaware . Directors need not be stockholders unless so
required by the Certificate of Incorporation. If, for any reason, the Directors
shall not have been elected at an annual meeting, they may be elected as soon
thereafter as convenient at a special meeting of the stockholders called for
that purpose in the manner provided in these By-Laws.

(b) The Board of Directors shall be divided into three classes
as nearly equal in size as is practicable, hereby designated as Class I, Class
II, and Class III, respectively. Directors shall be assigned to each class in
accordance with a resolution or resolutions adopted by the Board of Directors.
At the first annual meeting of stockholders following the date hereof, the term
of office of the Class I directors shall expire, and Class I directors shall be
elected for a full term of three years. At the second annual meeting of
stockholders following the date hereof, the term of office of the Class II
directors shall expire, and Class II directors shall be elected for a full term
of three years. At the third annual meeting of stockholders following the date
hereof, the term of office of the Class III directors shall expire, and Class
III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting. If the number of directors is hereafter changed, any newly
created directorship or decrease in directorships shall be so apportioned among
the classes as to make all classes as nearly equal in number as is practicable.

<PAGE>

3.3 Vacancies.

Unless and until filled by the stockholders, any vacancy in
the Board of Directors, however occurring, including a vacancy resulting from an
enlargement of the Board, may be filled by vote of a majority of the directors
then in office, although less than a quorum, or by a sole remaining director. A
director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office, and a director chosen to fill a position resulting
from an increase in the number of directors shall hold office until the election
of the class for which such director was chosen and until his successor is
elected and qualified, or until his earlier death, resignation or removal.

3.4 Resignation.

Any director may resign by delivering his written resignation
to the Corporation at its principal office or to the President or Secretary,
such resignation to specify whether it will be effective at a particular time,
upon receipt or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the Board
of Directors.

3.5 Regular Meetings.

Regular meetings of the Board of Directors may be held without
notice at such time and place, either within or without the State of Delaware,
as shall be determined from time to time by the Board of Directors; provided
that any director who is absent when such a determination is made shall be given
notice of the determination.

3.6 Special Meetings.

Special meetings of the Board of Directors may be held at any
time and place, within or without the State of Delaware, designated in a call by
the Chairman of the Board, President, two or more directors, or by one director
in the event that there is only a single director in office.

3.7 Notice of Special Meetings.

Notice of any special meeting of directors shall be given to
each director by the Secretary or one of the directors calling the meeting.
Notice shall be duly given to each director by giving notice to such director in
person, by telephone, fax or electronic mail at least 12 hours in advance of the
meeting. A notice of a meeting of the Board of Directors need not specify the
purposes of the meeting, except as may otherwise be required by law or provided
for in the Certificate of Incorporation or these By-Laws.

3.8 Meetings by Telephone Conference Calls.

Directors or any members of any committee designated by the
directors may participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in

<PAGE>

the meeting can hear each other, and participation by such means shall
constitute presence in person at such meeting.

3.9 Quorum.

A majority of the total number of the whole Board of Directors
shall constitute a quorum at all meetings of the Board of Directors. In the
event one or more of the directors shall be disqualified to vote at any meeting,
then the required quorum shall be reduced by one for each such director so
disqualified; provided, however, that in no case shall less than one-third (1/3)
of the number so fixed constitute a quorum. In the absence of a quorum at any
such meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice other than announcement at the meeting,
until a quorum shall be present.

3.10 Action at Meeting.

At any meeting of the Board of Directors at which a quorum is
present, the vote of a majority of those present shall be sufficient to take any
action, unless a different vote is specified by law, the Certificate of
Incorporation or these By-Laws.

3.11 Action by Consent.

Any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee of the Board of Directors may be
taken without a meeting, if all members of the Board or committee, as the case
may be, consent to the action in writing, and the written consents are filed
with the minutes of proceedings of the Board or committee.

3.12 Removal.

Except as otherwise provided by the General Corporation Law of
Delaware, any one or more or all of the directors may be removed by the holders
of 66 2/3% of the outstanding shares then entitled to vote at an election of
directors, provided that such removal is for cause.

3.13 Committees.

The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members of the committee present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board of Directors and subject to the
provisions of the General Corporation Law of Delaware, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation and may authorize the
seal of the Corporation to be affixed to all papers which

<PAGE>

may require it. Each such committee shall keep minutes and make such reports as
the Board of Directors may from time to time request. Except as the Board of
Directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these By-Laws for the Board of Directors.

3.14 Compensation of Directors.

Directors may be paid such compensation for their services and
such reimbursement for expenses of attendance at meetings as the Board of
Directors may from time to time determine. No such payment shall preclude any
director from serving the Corporation or any of its parent or subsidiary
corporations in any other capacity and receiving compensation for such service.

3.15 Organization.

The Chairman of the Board shall preside at every meeting of
the Board of Directors, if present. In the case of any meeting, if there is no
Chairman of the Board or if the Chairman is not present, the Vice Chairman (if
there is one) shall preside, or if there be no Vice Chairman or if the Vice
Chairman is not present, a chairman chosen by a majority of the directors
present shall act as chairman of such meeting. The Secretary of the Corporation
or, in the absence of the Secretary, any person appointed by the Chairman shall
act as secretary of the meeting.

ARTICLE 4 - OFFICERS

4.1 Enumeration.

The officers of the Corporation shall consist of a President,
a Secretary, a Chief Financial Officer and such other officers with such other
titles as the Board of Directors shall determine, including a Chairman of the
Board, a Vice-Chairman of the Board, Chief Executive Officer, Chief Operating
Officer, Chief Information Officer, Treasurer, and one or more Vice Presidents,
Assistant Treasurers, and Assistant Secretaries. The Board of Directors may
appoint such other officers as it may deem appropriate.

4.2 Election.

The President, Chief Financial Officer and Secretary shall be
elected annually by the Board of Directors at its first meeting following the
annual meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.

4.3 Qualification.

No officer need be a stockholder. Any two or more offices may
be held by the same person, unless specifically prohibited therefrom by law.

4.4 Tenure.

<PAGE>

Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.

4.5 Resignation and Removal.

Any officer may resign by delivering his written resignation
to the Corporation at its principal office or to the President or Secretary.
Such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.

Any officer may be removed at any time, with or without cause,
by vote of a majority of the entire number of directors then in office.

Except as the Board of Directors may otherwise determine, no
officer who resigns or is removed shall have any right to any compensation as an
officer for any period following his resignation or removal, or any right to
damages on account of such removal, whether his compensation be by the month or
by the year or otherwise, unless such compensation is expressly provided in a
duly authorized written agreement with the Corporation.

4.6 Vacancies.

The Board of Directors may fill any vacancy occurring in any
office for any reason and may, in its discretion, leave unfilled for such period
as it may determine any offices other than those of President, Chief Financial
Officer and Secretary. Each such successor shall hold office for the unexpired
term of his predecessor and until his successor is elected and qualified, or
until his earlier death, resignation or removal.

4.7 Chairman of the Board and Vice-Chairman of the Board.

The Board of Directors may appoint a Chairman of the Board and
may designate the Chairman of the Board as Chief Executive Officer. If the Board
of Directors appoints a Chairman of the Board, he shall perform such duties and
possess such powers as are assigned to him by the Board of Directors. If the
Board of Directors appoints a Vice-Chairman of the Board, he shall, in the
absence or disability of the Chairman of the Board, perform the duties and
exercise the powers of the Chairman of the Board and shall perform such other
duties and possess such other powers as may from time to time be vested in him
by the Board of Directors.

4.8 President.

The President shall, subject to the direction of the Board of
Directors, have general charge and supervision of the business of the
Corporation. Unless otherwise provided by the Board of Directors, he shall
preside at all meetings of the stockholders and, if he is a director, at all
meetings of the Board of Directors. Unless the Board of Directors has designated
the Chairman of the Board or another officer as Chief Executive Officer, the
President shall be the

<PAGE>

Chief Executive Officer of the Corporation. The President shall perform such
other duties and shall have such other powers as the Board of Directors may from
time to time prescribe.

4.9 Vice Presidents.

Any Vice President shall perform such duties and possess such
powers as the Board of Directors or the President may from time to time
prescribe. In the event of the absence, inability or refusal to act of the
President, the Vice President (or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors) shall perform the
duties of the President and when so performing shall have all the powers of and
be subject to all the restrictions upon the President. The Board of Directors
may assign to any Vice President the title of Executive Vice President, Senior
Vice President or any other title selected by the Board of Directors.

4.10 Secretary and Assistant Secretaries.

The Secretary shall perform such duties and shall have such
powers as the Board of Directors or the President may from time to time
prescribe. In addition, the Secretary shall perform such duties and have such
powers as are incident to the office of the secretary, including without
limitation the duty and power to give notices of all meetings of stockholders
and special meetings of the Board of Directors, to attend all meetings of
stockholders and the Board of Directors and keep a record of the proceedings, to
maintain a stock ledger and prepare lists of stockholders and their addresses as
required, to be custodian of corporate records and the corporate seal and to
affix and attest to the same on documents.

Any Assistant Secretary shall perform such duties and possess
such powers as the Board of Directors, the President or the Secretary may from
time to time prescribe. In the event of the absence, inability or refusal to act
of the Secretary, the Assistant Secretary, (or if there shall be more than one,
the Assistant Secretaries in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Secretary.

In the absence of the Secretary or any Assistant Secretary at
any meeting of stockholders or directors, the person presiding at the meeting
shall designate a temporary secretary to keep a record of the meeting.

4.11 Chief Financial Officer; Treasurer and Assistant Treasurers.

The Chief Financial Officer shall perform such duties and
shall have such powers as may from time to time be assigned to him by the Board
of Directors or the President. In addition, the Chief Financial Officer shall
perform such duties and have such powers as are incident to the office of chief
financial officer, including without limitation the duty and power to keep and
be responsible for all funds and securities of the Corporation, to deposit funds
of the Corporation in depositories selected in accordance with these By-Laws, to
disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
Corporation.

<PAGE>

The Treasurer and Assistant Treasurers shall perform such
duties and possess such powers as the Board of Directors, the President or the
Chief Financial Officer may from time to time prescribe. In the event of the
absence, inability or refusal to act of the Chief Financial Officer, the
Treasurer or Assistant Treasurer (in the order determined by the Board of
Directors or if there be no such determination, then in the order of their
election), (or if there shall be more than one, the Assistant Treasurers in the
order determined by the Board of Directors or if there be no such determination,
then in the order of their election) shall perform the duties and exercise the
powers of the Chief Financial Officer.

4.12 Salaries.

Officers of the Corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.

ARTICLE 5 - CAPITAL STOCK

5.1 Issuance of Stock.

Unless otherwise voted by the stockholders and subject to the
provisions of the Certificate of Incorporation, the whole or any part of any
unissued balance of the authorized capital stock of the Corporation or the whole
or any part of any unissued balance of the authorized capital stock of the
Corporation held in its treasury may be issued, sold, transferred or otherwise
disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.

5.2 Certificates of Stock.

Every holder of stock of the Corporation shall be entitled to
have a certificate, in such form as may be prescribed by law and by the Board of
Directors, certifying the number and class of shares owned by him in the
Corporation. Each such certificate shall be signed by, or in the name of the
Corporation by, the Chairman or Vice-Chairman, if any, of the Board of
Directors, or the President or a Vice President, and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation. Any or all of the signatures on the certificate may be a facsimile.

Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-Laws, applicable federal and state securities laws or any agreement among any
number of shareholders or among such holders and the Corporation shall have
conspicuously noted on the face or back of the certificate either the full text
of the restriction or a statement of the existence of such restriction.

5.3 Transfers.

Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the Corporation by the surrender to the
Corporation or its transfer agent of the certificate

<PAGE>

representing such shares properly endorsed or accompanied by a written
assignment or power of attorney properly executed, and with such proof of
authority or the authenticity of signature as the Corporation or its transfer
agent may reasonably require. Except as may be otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect to such stock, regardless of any transfer, pledge or other
disposition of such stock until the shares have been transferred on the books of
the Corporation in accordance with the requirements of these By-Laws.

5.4 Lost, Stolen or Destroyed Certificates.

The Corporation may issue a new certificate of stock in place
of any previously issued certificate alleged to have been lost, stolen, or
destroyed, upon such terms and conditions as the Board of Directors may
prescribe, including the presentation of reasonable evidence of such loss, theft
or destruction and the giving of such indemnity as the Board of Directors may
require for the protection of the Corporation or any transfer agent or
registrar.

ARTICLE 6 - INDEMNIFICATION

The Corporation may, to the fullest extent authorized under
the laws of the State of Delaware, as those laws may be amended and supplemented
from time to time, indemnify any director, officer, employee and/or agent made,
or threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of being a director, officer
and/or employee of the Corporation or a predecessor corporation or, at the
Corporation's request, a director or officer of another corporation, provided,
however, that the Corporation shall indemnify any such agent in connection with
a proceeding initiated by such agent only if such proceeding was authorized by
the Board of Directors of the Corporation. The indemnification provided for in
this Article 6 shall: (i) not be deemed exclusive of any other rights to which
those indemnified may be entitled under any bylaw, agreement or vote of
stockholders or disinterested directors or otherwise, both as to action in their
official capacities and as to action in another capacity while holding such
office, (ii) continue as to a person who has ceased to be a director, officer,
employee and/or agent, as the case may be, and (iii) inure to the benefit of the
heirs, executors and administrators of such a person. The Corporation's
obligation to provide indemnification under this Article 6 shall be offset to
the extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the Corporation or any other
person.

Expenses incurred by a director of the Corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director of the Corporation (or was serving at the
Corporation's request as a director or officer of another corporation) shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding

<PAGE>

the foregoing, the Corporation shall not be required to advance such expenses to
an agent who is a party to an action, suit or proceeding brought by the
Corporation and approved by a majority of the Board of Directors of the
Corporation which alleges willful misappropriation of corporate assets by such
agent, disclosure of confidential information in violation of such agent's
fiduciary or contractual obligations to the Corporation or any other willful and
deliberate breach in bad faith of such agent's duty to the Corporation or its
stockholders.

The foregoing provisions of this Article 6 shall be deemed to
be a contract between the Corporation and each director who serves in such
capacity at any time while this bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts.

The Board of Directors in its discretion shall have power on
behalf of the Corporation to indemnify any person, other than a director, made a
party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an officer or employee of the Corporation.

To assure indemnification under this Article 6 of all
directors, officers and employees who are determined by the Corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the Corporation which may exist from time to time, Section 145 of the General
Corporation Law of Delaware shall, for the purposes of this Article 6, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including without limitation, any plan of the Corporation
which is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time; the Corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines."

ARTICLE 7 - DIVIDENDS

7.1 Declaration of Dividends.

Dividends upon the capital stock of the Corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors pursuant to law at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.

7.2 Dividend Reserve.

Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies, or

<PAGE>

for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conductive to the interests of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.

ARTICLE 8 - GENERAL PROVISIONS

8.1 Fiscal Year.

The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.

8.2 Corporate Seal.

The corporate seal shall be in such form as shall be approved
by the Board of Directors.

8.3 Waiver of Notice.

Whenever any notice whatsoever is required to be given by law,
by the Certificate of Incorporation or by these By-Laws, a waiver of such notice
either in writing signed by the person entitled to such notice or such person's
duly authorized attorney, or by telegraph, cable or any other available method,
or consent to holding such meeting, whether before, at or after the time stated
in such waiver, or the appearance of such person or persons at such meeting in
person or by proxy or an approval of the minutes of such meeting after the fact,
shall be deemed equivalent to such notice. All such waivers, consents or
approvals shall be filed with the corporate records of made a part of the
minutes of the meeting.

8.4 Voting of Securities.

Except as the directors may otherwise designate, the President
or Chief Financial Officer may waive notice of, and act as, or appoint any
person or persons to act as, proxy or attorney-in-fact for this corporation
(with or without power of substitution) at, any meeting of stockholders or
shareholders of any other corporation or organization, the securities of which
may be held by this corporation.

8.5 Evidence of Authority.

A certificate by the Secretary, or an Assistant Secretary, or
a temporary Secretary, as to any action taken by the stockholders, directors, a
committee or any officer or representative of the Corporation shall as to all
persons who rely on the certificate in good faith be conclusive evidence of such
action.

8.6 Certificate of Incorporation.

All references in these By-Laws to the Certificate of
Incorporation shall be deemed to refer to the Certificate of Incorporation of
the Corporation, as amended and in effect

<PAGE>

from time to time.

8.7 Transactions with Interested Parties.

No contract or transaction between the Corporation and one or
more of the directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of the directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or a committee of the Board of Directors which authorizes the
contract or transaction or solely because his or their votes are counted for
such purpose, if:

The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum;

The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or

The contract or transaction is fair as to the Corporation as
of the time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors, or the stockholders.

Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.

8.8 Severability.

Any determination that any provision of these By-Laws is for
any reason inapplicable, illegal or ineffective shall not affect or invalidate
any other provision of these By-Laws.

8.9 Pronouns.

All pronouns used in these By-Laws shall be deemed to refer to
the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.

ARTICLE 9 - AMENDMENTS

9.1 By the Board of Directors.

These By-Laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of a majority of the directors
present at any regular or special

<PAGE>

meeting of the Board of Directors at which a quorum is present.

9.2 By the Stockholders.

These By-Laws may be altered, amended or repealed or new
by-laws may be adopted by the affirmative vote of the holders of 66 2/3% of the
shares of the capital stock of the Corporation issued and outstanding and
entitled to vote at any regular meeting of stockholders, or at any special
meeting of stockholders, provided notice of such alteration, amendment, repeal
or adoption of new by-laws shall have been stated in the notice of such special
meeting.

(The remainder of this page is intentionally left blank.)

<PAGE>

Exhibit 4.1

COMMON STOCK

HOTJOBS.COM, LTD.
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS

THIS CERTIFIES that

is the owner of

CUSIP 441474 10 3

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR
VALUE $0.01 PER SHARE, OF
HOTJOBS.COM, LTD.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney, upon surrender of this certificate properly
endorsed.
This certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR

AUTHORIZED SIGNATURE

CHIEF OPERATING OFFICER AND SECRETARY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>

HOTJOBS.COM, LTD.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, RELATIVE RIGHTS AND
LIMITATIONS APPLICABLE TO THE SHARES OF EACH CLASS AND SERIES OF ITS AUTHORIZED
STOCK, SO FAR AS THE SAME HAVE BEEN DETERMINED, AND OF THE AUTHORITY OF THE
BOARD OF DIRECTORS TO DIVIDE THE SHARES INTO CLASSES OR SERIES AND TO DETERMINE
AND CHANGE THE RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF ANY SUCH CLASS OR
SERIES.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN--COM
TEN--ENT
JT TEN--as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common

UNIF GIFT MIN ACT-- Custodian
(Cust) (Minor)
under Uniform Gifts to Minors
Act
(State)

Additional abbreviations may also be used though not in the above list.

For Value Received, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

Attorney

to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated

NOTICE:

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE>
Exhibit 5.1

August 3, 1999

HotJobs.com, Ltd.
24 West 40th Street, 14th Floor
New York, New York 10018

Re: HotJobs.com, Ltd. Registration Statement on Form S-1 for
4,750,000 Shares of Common Stock

Ladies and Gentlemen:

We have acted as counsel to HotJobs.com, Ltd., a Delaware corporation
(the "Company"), in connection with the proposed issuance and sale by the
Company of 4,750,000 shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), and up to 712,500 shares of Common Stock which the
underwriters will have an option to purchase from the Company solely for the
purpose of covering over-allotments (collectively, the "Shares") pursuant to the
Company's Registration Statement on Form S-1, as amended (the "Registration
Statement"), filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act").

This opinion is being furnished in accordance with the requirements of
Item 16(a) of Form S-1 and Item 601(b)(5)(i) of Regulation S-K.

We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the issuance and sale of the
Shares. Based on such review and subject to the qualifications set forth below,
we are of the opinion that the Shares have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of the Underwriting
Agreement filed as Exhibit 1.1 to the Registration Statement, will be legally
issued, fully paid and nonassessable.

We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus

<PAGE>

HotJobs.com, Ltd.
Page 2

which is part of the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act, the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, or Item 509 of Regulation S-K.

This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.

Very truly yours,
BROBECK, PHLEGER & HARRISON LLP

<PAGE>
Exhibit 10.7

HOTJOBS.COM, LTD.
1999 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 1999 Stock Option/Stock Issuance Plan is intended to promote the
interests of HotJobs.com, Ltd., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into three separate equity programs:

(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock,

(ii) the Stock Issuance Program under which eligible persons
may, at the discretion of the Plan Administrator, be issued shares of Common
Stock directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary), and

(iii) the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive options at periodic
intervals to purchase shares of Common Stock.

B. The provisions of Articles One and Five shall apply to all equity
programs under the Plan and shall govern the interests of all persons under the
Plan.

III. ADMINISTRATION OF THE PLAN

A. Prior to the Section 12 Registration Date, the Discretionary Option
Grant and Stock Issuance Programs shall be administered by the Board. Beginning
with the Section 12

<PAGE>

Registration Date, the following provisions shall govern the administration of
the Plan:

(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders but may delegate such authority in whole or in part to the Primary
Committee.

(ii) Administration of the Discretionary Option Grant and
Stock Issuance Programs with respect to all other persons eligible to
participate in those programs may, at the Board's discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.

(iii) Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the terms of that program.

B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:

(i) to establish such rules as it may deem appropriate for
proper administration of the Plan, to make all factual determinations, to
construe and interpret the provisions of the Plan and the awards thereunder and
to resolve any and all ambiguities thereunder;

(ii) to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which eligible persons
are to receive such awards, the time or times when such awards are to be made,
the number of shares to be covered by each such award, the vesting schedule (if
any) applicable to the award, the status of a granted option as either an
Incentive Option or a Non-Statutory Option and the maximum term for which the
option is to remain outstanding;

(iii) to amend, modify or cancel any outstanding award with
the consent of the holder or accelerate the vesting of such award; and

(iv) to take such other discretionary actions as permitted
pursuant to the terms of the applicable program.

Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.

C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.

D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be

<PAGE>

entitled to full indemnification and reimbursement as Board members for their
service on such committee. No member of the Primary Committee or the Secondary
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any options or stock issuances under the Plan.

IV. ELIGIBILITY

A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs are as follows:

(i) Employees,

(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).

B. Only non-employee Board members shall be eligible to participate in
the Automatic Option Grant Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall not exceed
4,500,000 shares.

B. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 1,000,000 shares of Common Stock in the aggregate per calendar year,
beginning with the 1999 calendar year.

C. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant to
the Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under the Plan. However, should the exercise price of
an option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common Stock
issued to the holder of such option or stock

<PAGE>

issuance. Shares of Common Stock underlying one or more stock appreciation
rights exercised under the Plan shall NOT be available for subsequent issuance.

D. If any change is made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be
granted options, separately exercisable stock appreciation rights and direct
stock issuances under this Plan per calendar year, (iii) the number and/or class
of securities for which grants are subsequently to be made under the Automatic
Option Grant Program to new and continuing non-employee Board members and (iv)
the number and/or class of securities and the exercise price per share in effect
under each outstanding option under the Plan. Such adjustments to the
outstanding options are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive. In no event shall any such adjustments be made in connection with
the conversion of one or more outstanding shares of the Corporation's preferred
stock into shares of Common Stock.

<PAGE>

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; PROVIDED, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

A. EXERCISE PRICE.

1. The exercise price per share shall be fixed by the Plan
Administrator at the time of the option grant.

2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section II of
Article Five and the documents evidencing the option, be payable in cash or
check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:

(i) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise
Date, or

(ii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-approved brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (b) the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale.

Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

B. EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.

<PAGE>

C. CESSATION OF SERVICE.

1. The following provisions shall govern the exercise
of any options outstanding at the time of the Optionee's cessation of Service or
death:

(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain
exercisable for such period of time thereafter as shall be
determined by the Plan Administrator and set forth in the
documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.

(ii) Any option exercisable in whole or in part by
the Optionee at the time of death may be subsequently
exercised by his or her Beneficiary.

(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for
more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period
or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised.
However, the option shall, immediately upon the Optionee's
cessation of Service, terminate and cease to be outstanding to
the extent the option is not otherwise at that time
exercisable for vested shares.

(iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while
his or her options are outstanding, then all such options
shall terminate immediately and cease to be outstanding.

2. The Plan Administrator shall have complete
discretion, exercisable either at the time an option is granted or at any time
while the option remains outstanding:

(i) to extend the period of time for which the option
is to remain exercisable following the Optionee's cessation of
Service to such period of time as the Plan Administrator shall
deem appropriate, but in no event beyond the expiration of the
option term, and/or

(ii) to permit the option to be exercised, during the
applicable post-Service exercise period, for one or more
additional installments in which the Optionee would have
vested had the Optionee continued in Service.

D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

<PAGE>

E. REPURCHASE RIGHTS. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. Non-Statutory Options shall be
subject to the same restrictions, except that a Non-Statutory Option may, to the
extent permitted by the Plan Administrator, be assigned in whole or in part
during the Optionee's lifetime (i) as a gift to one or more members of the
Optionee's immediate family, to a trust in which Optionee and/or one or more
such family members hold more than fifty percent (50%) of the beneficial
interest or to an entity in which more than fifty percent (50%) of the voting
interests are owned by Optionee and/or one or more such family members or (ii)
pursuant to a domestic relations order. The terms applicable to the assigned
portion shall be the same as those in effect for the option immediately prior to
such assignment and shall be set forth in such documents issued to the assignee
as the Plan Administrator may deem appropriate.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Five shall be applicable to Incentive Options. Options
which are specifically designated as Non-Statutory Options when issued under the
Plan shall NOT be subject to the terms of this Section II.

A. ELIGIBILITY. Incentive Options may only be granted to Employees.

B. EXERCISE PRICE. The exercise price per share shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.

C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is

<PAGE>

granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

<PAGE>

III. CHANGE IN CONTROL/HOSTILE TAKE-OVER

A. Each option outstanding at the time of a Change in Control but not
otherwise fully-vested shall automatically accelerate so that each such option
shall, immediately prior to the effective date of the Change in Control, become
exercisable for all of the shares of Common Stock at the time subject to that
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Change in
Control, assumed or otherwise continued in full force and effect by the
successor corporation (or parent thereof) pursuant to the terms of the Change in
Control, (ii) such option is replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Change in Control on the shares of Common Stock for which the option is not
otherwise at that time exercisable and provides for subsequent payout in
accordance with the same vesting schedule applicable to those option shares or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant.

B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.

C. Immediately following the consummation of the Change in Control, all
outstanding options shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.

D. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted, immediately after such Change in Control, to
apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Change in Control had the option been
exercised immediately prior to such Change in Control. Appropriate adjustments
to reflect such Change in Control shall also be made to (i) the exercise price
payable per share under each outstanding option, PROVIDED the aggregate exercise
price payable for such securities shall remain the same, (ii) the maximum number
and/or class of securities available for issuance over the remaining term of the
Plan and (iii) the maximum number and/or class of securities for which any one
person may be granted options, separately exercisable stock appreciation rights
and direct stock issuances under the Plan per calendar year.

E. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Change in Control,
whether or not those options are assumed or otherwise continued in full force
and effect pursuant to the terms of the Change in Control. Any such option shall
accordingly become exercisable, immediately prior to the effective date of such
Change in Control, for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of

<PAGE>

Common Stock. In addition, the Plan Administrator may at any time provide that
one or more of the Corporation's repurchase rights shall not be assignable in
connection with such Change in Control and shall terminate upon the consummation
of such Change in Control.

F. The Plan Administrator may at any time provide that one or more
options will automatically accelerate upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
options do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the EARLIER of (i) the expiration of
the option term or (ii) the expiration of the one (1)-year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.

G. The Plan Administrator may at any time provide that one or more
options will automatically accelerate in connection with a Hostile Take-Over.
Any such option shall become exercisable, immediately prior to the effective
date of such Hostile Take-Over, for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. In addition, the Plan Administrator may
at any time provide that one or more of the Corporation's repurchase rights
shall terminate automatically upon the consummation of such Hostile Take-Over.
Alternatively, the Plan Administrator may condition such automatic acceleration
and termination upon an Involuntary Termination of the Optionee's Service within
a designated period (not to exceed eighteen (18) months) following the effective
date of such Hostile Take-Over. Each option so accelerated shall remain
exercisable for fully-vested shares until the expiration or sooner termination
of the option term.

H. The portion of any Incentive Option accelerated in connection with a
Change in Control or Hostile Take Over shall remain exercisable as an Incentive
Option only to the extent the applicable One Hundred Thousand Dollar ($100,000)
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.

IV. STOCK APPRECIATION RIGHTS

The Plan Administrator may, subject to such conditions as it may
determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

<PAGE>

ARTICLE THREE

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening options. Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon the
attainment of designated performance goals or Service requirements. Each such
award shall be evidenced by one or more documents which comply with the terms
specified below.

A. PURCHASE PRICE.

1. The purchase price per share of Common Stock subject to
direct issuance shall be fixed by the Plan Administrator.

2. Subject to the provisions of Section II of Article Five,
Shares of Common Stock may be issued under the Stock Issuance Program for any of
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

(i) cash or check made payable to the Corporation, or

(ii) past services rendered to the Corporation (or
any Parent or Subsidiary).

B. VESTING/ISSUANCE PROVISIONS.

1. The Plan Administrator may issue shares of Common Stock
which are fully and immediately vested upon issuance or which are to vest in one
or more installments over the Participant's period of Service or upon attainment
of specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards which shall entitle the recipient to receive a
specified number of vested shares of Common Stock upon the attainment of one or
more performance goals or Service requirements established by the Plan
Administrator.

2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested
shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3. The Participant shall have full stockholder rights with
respect to

<PAGE>

the issued shares of Common Stock, whether or not the Participant's interest in
those shares is vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash dividends paid on such shares.

4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock, or should the performance
objectives not be attained with respect to one or more such unvested shares of
Common Stock, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.

5. The Plan Administrator may waive the surrender and
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the cessation of the
Participant's Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.

6. Outstanding share right awards shall automatically
terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards, if the performance goals or Service requirements
established for such awards are not attained. The Plan Administrator, however,
shall have the authority to issue shares of Common Stock in satisfaction of one
or more outstanding share right awards as to which the designated performance
goals or Service requirements are not attained.

II. CHANGE IN CONTROL/HOSTILE TAKE-OVER

A. All of the Corporation's outstanding repurchase rights shall
terminate automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.

B. The Plan Administrator may at any time provide for the automatic
termination of one or more of those outstanding repurchase rights and the
immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an Involuntary
Termination of the Participant's Service within a

<PAGE>

designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control or Hostile Take-Over in which those repurchase
rights are assigned to the successor corporation (or parent thereof) or
otherwise continue in full force and effect.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

<PAGE>

ARTICLE FOUR

AUTOMATIC OPTION GRANT PROGRAM

I. OPTION TERMS

A. GRANT DATES. Options shall be made on the dates specified below:

1. Each individual who is serving as a non-employee Board
member on the Underwriting Date shall automatically be granted, on the
Underwriting Date, a Non-Statutory Option to purchase 20,000 shares of Common
Stock, provided that individual has not previously been in the employ of any
Parent or Subsidiary.

2. Each individual who is first elected or appointed as a
non-employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 20,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.

3. On the date of each Annual Stockholders Meeting held after
the Underwriting Date, each individual who is to continue to serve as a
non-employee Board member, whether or not that individual is standing for
re-election to the Board, shall automatically be granted a Non-Statutory Option
to purchase 5,000 shares of Common Stock, provided such individual has served as
a non-employee Board member for at least six (6) months.

B. EXERCISE PRICE.

1. The exercise price per share shall be equal to one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.

D. EXERCISE AND VESTING OF OPTIONS. Each option shall be immediately
exercisable for any or all of the option shares. However, any shares purchased
under the option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares. Each initial 20,000 share grant shall vest,
and the Corporation's repurchase right shall lapse, in a series of four (4)
successive equal annual installments over the Optionee's period of continued
service as a Board member, with the first such installment to vest upon the
Optionee's completion of one (1) year of

<PAGE>

Board service measured from the option grant date. Each annual 5,000 share
option grant shall vest, and the Corporation's repurchase right shall lapse upon
the Optionee's completion of one (1) year of Board service measured from the
option grant date.

E. CESSATION OF BOARD SERVICE. The following provisions shall govern
the exercise of any options outstanding at the time of the Optionee's cessation
of Board service:

(i) Any option outstanding at the time of the Optionee's
cessation of Board service for any reason shall remain exercisable for
a twelve (12)-month period following the date of such cessation of
Board service, but in no event shall such option be exercisable after
the expiration of the option term.

(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by his or
her Beneficiary.

(iii) Following the Optionee's cessation of Board service, the
option may not be exercised in the aggregate for more than the number
of shares for which the option was exercisable on the date of such
cessation of Board service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Board service,
terminate and cease to be outstanding for any and all shares for which
the option is not otherwise at that time exercisable

(iv) Upon the expiration of the applicable exercise period or
(if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which
the option has not been exercised.

II. CHANGE IN CONTROL/HOSTILE TAKE-OVER

A. In the event of any Change in Control or Hostile Take-Over, the
shares of Common Stock at the time subject to each outstanding option but not
otherwise vested shall automatically vest in full so that each such option may,
immediately prior to the effective date of such Change in Control or Hostile
Take-Over, became fully exercisable for all of the shares of Common Stock at the
time subject to such option and maybe exercised for all or any of those shares
as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in Control,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the terms of the Change
in Control. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.

<PAGE>

B. All outstanding repurchase rights shall automatically terminate and
the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Change in Control or Hostile Take-Over.

C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Corporation each of his or
her outstanding options. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the shares of Common Stock at the time subject to each
surrendered option over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation.

D. Each option which is assumed in connection with a Change in Control
shall be appropriately adjusted to apply to the number and class of securities
which would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, PROVIDED the aggregate exercise
price payable for such securities shall remain the same.

III. REMAINING TERMS

The remaining terms of each option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for options made under
the Discretionary Option Grant Program.

<PAGE>

ARTICLE FIVE

MISCELLANEOUS

I. NO IMPAIRMENT OF AUTHORITY

Outstanding awards shall in no way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

II. FINANCING

The Plan Administrator may permit any Optionee or Participant to pay
the option exercise price under the Discretionary Option Grant Program or the
purchase price of shares issued under the Stock Issuance Program by delivering a
full-recourse, interest bearing promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

III. TAX WITHHOLDING

A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or the issuance or vesting of such shares under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.

B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:

STOCK WITHHOLDING: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.

STOCK DELIVERY: The election to deliver to the Corporation, at
the time the Non-Statutory Option is exercised or the shares vest, one or more
shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the

<PAGE>

percentage of the Taxes (not to exceed one hundred percent (100%)) designated by
the holder.

IV. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective with respect to the Discretionary
Option Grant and Stock Issuance Programs immediately upon the Plan Effective
Date. The Automatic Option Grant Program shall become effective on the
Underwriting Date. Options may be granted under the Discretionary Option Grant
at any time on or after the Plan Effective Date. However, no options granted
under the Plan may be exercised, and no shares shall be issued under the Plan,
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all options previously granted under this Plan shall
terminate and cease to be outstanding, and no further options shall be granted
and no shares shall be issued under the Plan.

B. The Plan shall terminate upon the EARLIEST of (i) June 29, 2009,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.

V. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
stock options or unvested stock issuances at the time outstanding under the Plan
unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

B. Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant Program and shares of Common Stock may be issued
under the Stock Issuance Program that are in each instance in excess of the
number of shares then available for issuance under the Plan, provided any excess
shares actually issued under those programs shall be held in escrow until there
is obtained stockholder approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees and
the Participants the exercise or purchase price paid for any excess shares
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow, and such shares shall thereupon be automatically cancelled and cease to
be outstanding.

VI. USE OF PROCEEDS

<PAGE>

Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

VII. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any stock option
under the Plan and the issuance of any shares of Common Stock (i) upon the
exercise of any granted option or (ii) under the Stock Issuance Program shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.

B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.

VIII. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.

<PAGE>

APPENDIX

The following definitions shall be in effect under the Plan:

A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option grant
program in effect under the Plan.

B. BENEFICIARY shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by an
Optionee or Participant, pursuant to such procedure, to succeed to such person's
rights under any outstanding awards held by him or her at the time of death. In
the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the
person or persons to whom the award is transferred by will or the laws of
descent and distribution.

C. BOARD shall mean the Corporation's Board of Directors.

D. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:

(i) a merger, consolidation or reorganization approved by the
Corporation's stockholders, UNLESS securities representing more than
fifty percent (50%) of the total combined voting power of the voting
securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the
same proportion, by the persons who beneficially owned the
Corporation's outstanding voting securities immediately prior to such
transaction,

(ii) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or

(iii) the acquisition, directly or indirectly by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
recommend such stockholders to accept.

E. CODE shall mean the Internal Revenue Code of 1986, as amended.

F. COMMON STOCK shall mean the Corporation's common stock.

G. CORPORATION shall mean HotJobs.com, Ltd., a Delaware corporation,
and

<PAGE>

its successors.

H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary
option grant program in effect under the Plan.

I. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

J. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.

K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.

(iii) For purposes of any options made on the Underwriting
Date, the Fair Market Value shall be deemed to be equal to the price
per share at which the Common Stock is to be sold in the initial public
offering pursuant to the Underwriting Agreement.

(iv) For purposes of any options made prior to the
Underwriting Date, the Fair Market Value shall be determined by the
Plan Administrator, after taking into account such factors as it deems
appropriate.

L. HOSTILE TAKE-OVER shall mean:

(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or

<PAGE>

indirectly controls, is controlled by, or is under common control with,
the Corporation) of beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, or

(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or
(B) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such
election or nomination.

M. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.

N. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:

(i) such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or

(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation or Parent or
Subsidiary employing the individual which materially reduces his or her
duties and responsibilities or the level of management to which he or
she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonus under any
performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual's place of
employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without
the individual's consent.

O. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any intentional wrongdoing by such
person, whether by omission or commission, which adversely affects the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. This shall not limit the grounds for the dismissal or discharge of any
person in the Service of the Corporation (or any Parent or Subsidiary).

<PAGE>

P. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.

Q. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

R. OPTION SURRENDER VALUE shall mean the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation or, in the
event of a Hostile Take-Over, effected through a tender offer, the highest
reported price per share of Common Stock paid by the tender offeror in effecting
such Hostile Take-Over, if greater. However, if the surrendered option is an
Incentive Option, the Option Surrender Value shall not exceed the Fair Market
Value per share.

S. OPTIONEE shall mean any person to whom an option is granted under
the Discretionary Option Grant or Automatic Option Grant Program.

T. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

U. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.

V. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.

W. PLAN shall mean the Corporation's 1999 Stock Option/Stock Issuance
Plan, as set forth in this document.

X. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction. However, the Primary Committee shall have
the plenary authority to make all factual determinations and to construe and
interpret any and all ambiguities under the Plan to the extent such authority is
not otherwise expressly delegated to any other Plan Administrator.

<PAGE>

Y. PLAN EFFECTIVE DATE shall mean June 30, 1999, the date on which the
Plan was adopted by the Board.

Z. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders.

AA. SECONDARY COMMITTEE shall mean a committee of one (1) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.

BB. SECTION 12 REGISTRATION DATE shall mean the date on which the
Common Stock is first registered under Section 12(g) of the 1934 Act.

CC. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

DD. SERVICE shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.

EE. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.

FF. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.

GG. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

HH. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

II. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

JJ. UNDERWRITING DATE shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.

<PAGE>

KK. WITHHOLDING TAXES shall mean the Federal, state and local income
and employment withholding tax liabilities to which the holder of Non-Statutory
Options or unvested shares of Common Stock may become subject in connection with
the exercise of those options or the vesting of those shares.

<PAGE>

HOTJOBS.COM, LTD.

401(K) PLAN AND TRUST

<PAGE>

SUMMARY PLAN DESCRIPTION

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
I. INTRODUCTION TO YOUR PLAN 1

A. GENERAL INTRODUCTION 1

B. MAJOR PLAN PROVISIONS 3

II. GENERAL INFORMATION ABOUT YOUR PLAN 7

A. THE EMPLOYER 7

B. THE PLAN 7

C. THE TRUSTEE 7

D. THE PLAN ADMINISTRATOR 8

III. PARTICIPATION IN YOUR PLAN 9

A. ENTRY DATE 9

B. ELIGIBILITY REQUIREMENTS 9

C. YEAR OF SERVICE 9

IV. CONTRIBUTIONS TO YOUR PLAN 11

A. PLAN CONTRIBUTIONS 11
1. VOLUNTARY SALARY DEFERRAL CONTRIBUTIONS 11
2. EMPLOYER MATCHING CONTRIBUTIONS 11
3. EMPLOYER OPTIONAL CONTRIBUTIONS 11
4. COMPENSATION 12
5. TRANSFERS FROM QUALIFIED PLANS (ROLLOVERS) 12

V. BENEFITS UNDER YOUR PLAN 13

A. DISTRIBUTION OF BENEFITS UPON NORMAL RETIREMENT 13

B. DISTRIBUTION OF BENEFITS UPON EARLY RETIREMENT 13

C. DISTRIBUTION OF BENEFITS UPON LATE RETIREMENT 13

D. DISTRIBUTION OF BENEFITS UPON DEATH 14

E. DISTRIBUTION OF BENEFITS UPON DISABILITY 15

F. VESTING IN YOUR PLAN 15

</TABLE>

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

<TABLE>
<S> <C>
G. DISTRIBUTIONS TO TERMINATED EMPLOYEES OTHER THAN DUE TO DEATH, DISABILITY OR RETIREMENT 16

H. BENEFIT PAYMENT OPTIONS 16

I. DOMESTIC RELATIONS ORDER 16

J. PENSION BENEFIT GUARANTY CORPORATION 17

VI. TOP HEAVY RULES UNDER YOUR PLAN 18

A. EXPLANATION OF TOP HEAVY RULES 18

VII. CLAIMS BY PARTICIPANTS AND BENEFICIARIES 19

A. CLAIMS PROCEDURES 19

VIII. STATEMENT OF ERISA RIGHTS 20

A. EXPLANATION OF YOUR ERISA RIGHTS 20

IX. AMENDMENT AND TERMINATION OF YOUR PLAN 22

A. AMENDMENT 22

B. TERMINATION 22

X. HARDSHIP DISTRIBUTIONS 23

A. GENERAL 23

XI. LOANS 24

A. GENERAL 24

</TABLE>

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

HOTJOBS.COM, LTD. 401(K) PLAN
SUMMARY PLAN DESCRIPTION

I - INTRODUCTION TO YOUR PLAN

A. GENERAL INTRODUCTION

HotJobs.com, Ltd. has installed a 401(k) Plan. This Plan is for the
exclusive benefit of eligible employees and their beneficiaries.

The purpose of this Plan is to reward eligible employees for long and
loyal service by providing them with retirement benefits. When you
retire, you will be eligible to receive the value of the amounts which
have accumulated in your account.

However, the Plan does not give any Participant or other employee any
right of employment or interfere with the right of your Employer to
discharge any Participant or other employee.

HotJobs.com, Ltd. will submit this Plan to the Internal Revenue Service
for approval. The Internal Revenue Service will issue a "determination
letter" approving this Plan as a "qualified" retirement plan, if this
Plan meets specific legal requirements.

This Summary Plan Description is a brief description of your Plan and
your rights, obligations, and benefits under that Plan. Some of the
statements made in this Summary Plan Description are dependent upon
this Plan being "qualified" under the provisions of the Internal
Revenue Code. This Summary Plan Description is not meant to interpret,
extend, or change the provisions of your Plan in any way. THE
PROVISIONS OF YOUR PLAN MAY ONLY BE DETERMINED ACCURATELY BY READING
THE ACTUAL PLAN DOCUMENT.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

A copy of your plan is on file at your Employer's office and may be
read by you, your beneficiaries, or your legal representatives at any
reasonable time. IN THE EVENT OF ANY DISCREPANCY BETWEEN THIS SUMMARY
PLAN DESCRIPTION AND THE ACTUAL PROVISIONS OF THE PLAN, THE PLAN WILL
GOVERN.

This Summary Plan Description is designed to give the reader a quick
overview of the major provisions of the plan and then a more detailed
description of how the plan operates. Section B of the Introduction
provides the Major Plan Provisions. The remaining Articles give a more
detailed description on how the plan operates. The Major Plan
Provisions section will be referred to in other parts of the Summary
Plan Description.

For a summary of the major provisions of the Plan, read the following
section (B).

We have tried to keep this Plan Description as straightforward as
possible. If you have any questions regarding either your Plan or this
Summary Plan Description, please contact your Plan Administrator.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

B. MAJOR PLAN PROVISIONS

1. ENTRY DATE

For Employer Matching Contribution and Salary Deferral Contribution
purposes only, if you were hired on or before January 1, 1999, you may
enter the Plan immediately; otherwise, you will be eligible to enter
the Plan as of the first day of the Plan Year quarter coincident with
or next following the date on which the Eligibility Requirements are
met.

For Employer Optional Contribution purposes, all Employees will be
eligible to enter the Plan as of the first day of the Plan Year quarter
coincident with or next following the date on which the Eligibility
Requirements are met.

2. ELIGIBILITY REQUIREMENTS

Attainment of age twenty-one and the completion of one year of service.

3. VOLUNTARY SALARY DEFERRAL CONTRIBUTION

Effective July 1, 1999, you may elect to defer up to 15% of your
compensation or the maximum dollar amount imposed by the Internal
Revenue Service. You may change the amount you defer as of the first
pay period of January, April, July or October; but, in case of an
emergency, you may stop contributing at any time and resume on any
future entry date.

In addition to the foregoing, you may implement a Salary Deferral
Agreement to provide for a single lump sum voluntary salary deferral
during any month in which a bonus is paid, in lieu of, or in addition
to, any other Salary Deferral Agreement.

4. EMPLOYER MATCHING CONTRIBUTION

Effective July 1, 1999. the employer matching contribution will be
fifty cents ($.50) for each one dollar ($1.00) deposited to your
Voluntary Salary Deferral Account. Matching contributions will be made
on the first 6% of compensation.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

5. EMPLOYER OPTIONAL CONTRIBUTION

Each year the Employer, at its sole discretion, shall determine the
amount of Employer contribution to be allocated to each group of
employees. The first group of employees are Owners of the Employer,
excluding their spouses; the second group of employees includes all
other Highly Compensated Employees; and the third group of employees
includes all those who are not in the first or second groups. Each
groups' contribution shall be allocated within the group by applying
the formula (A/B) x C. A is the eligible Participant's compensation for
the year, B is the total compensation of all eligible Participants for
the year for that particular group of employees and C is the total
Employer Contribution for that group of employees. Any forfeitures
shall used to reduce Employer Contributions.

6. DEFINITION OF COMPENSATION

A participant's total non-deferred compensation reportable for federal
income tax purposes which is received from the Employer during the Plan
Year and which is determined before reduction for any contributions
under Code Sections 125, 402(a)(8), 402(h)(1)(B) and 403(b); provided,
however, that for any self-employed individual, compensation shall mean
his Earned Income.

During a participant's initial year of participation in the plan,
compensation paid or accrued prior to his date of participation shall
be disregarded.

7. TRANSFERS FROM QUALIFIED PLANS (ROLLOVERS)

Rollovers from or to other plans are permitted.

8. NORMAL AND EARLY RETIREMENT DATE

First day of the month coincident with or next following the attainment
of Normal or Early Retirement Age.

9. NORMAL RETIREMENT AGE

Attainment of the later of age sixty-five (65) or the fifth (5th)
anniversary of your commencement of plan participation.

10. EARLY RETIREMENT AGE

Attainment of the later of age fifty-five (55) or the sixth (6th)
anniversary of your employment commencement date.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

11. DISTRIBUTION OF BENEFITS UPON DEATH

Your spouse (or other designated beneficiary(ies)) will be entitled to
100% of your account balance upon your death.

12. DISTRIBUTION OF BENEFITS UPON DISABILITY

You will be entitled to 100% of your account balance upon becoming
disabled.

13. VESTED PERCENTAGE OF ACCOUNT BALANCE

You will always be 100% vested in your Voluntary Salary Deferral
Account. Your "vested percentage" in your Employer Matching and
Optional Contribution Accounts is determined under the following
schedule:

YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 but less than 6 years 80%
6 years or more 100%

</TABLE>

14. DISTRIBUTIONS TO TERMINATED EMPLOYEES OTHER THAN DUE TO DEATH,
DISABILITY OR RETIREMENT (CASH-OUT)

Distributions from your Account(s) will be made as soon as
administratively possible following the end of the plan year quarter in
which you terminate employment.

15. BENEFIT PAYMENT OPTIONS

Benefits shall be paid in the form of a single lump sum payment.

16. HARDSHIP DISTRIBUTIONS

This plan provides for a distribution to a Participant from his
Voluntary Salary Deferral Contribution Account because of an immediate
and heavy financial need of a Participant.

17. LOANS

Loans are permitted under this Plan.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

18. PLAN INVESTMENT OPTIONS

Your plan allows you to choose the type of investment fund into which
your Contributions will be invested. Your plan trustees have selected
the funds into which your accounts may be invested. You may choose
where your monies are invested at any time up to twelve (12) times a
year.

<PAGE>

II - GENERAL INFORMATION ABOUT YOUR PLAN

There is certain general information you need to know about your Plan. This
information has been summarized in this section.

A. THE EMPLOYER

Name: HotJobs.com, Ltd.
Address: 24 West 40th Street, 14th Floor
New York, New York 10018

Telephone Number: (212) 302-0060

Employer Identification Number: 13-3931821

B. THE PLAN

Name: HotJobs.com, Ltd. 401(k) Plan
Plan Number: 001
Type Of Plan: 401(k) Profit Sharing Plan
Effective Date of the Plan: January 1, 1999

Your Plan's records are maintained on a twelve-month period of time, known
as the Plan Year. The Plan Year begins on January 1 and ends on December 31.

C. THE TRUSTEE

Names: Richard Johnson
Address: 24 West 40th Street, 14th Floor
New York, New York 10018

The Plan Trustee has been designated to hold and invest Plan Assets for the
benefit of you and other Plan participants.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

D. THE PLAN ADMINISTRATOR

Name: HotJobs.com, Ltd.
Address: 24 West 40th Street, 14th Floor
New York, New York 10018

Telephone Number: (212) 302-0060

The Plan Administrator keeps the records for the Plan and is responsible for
the administration of the Plan. The Plan Administrator will also answer any
questions you may have about your Plan. The Plan's agent for service of
legal process is the Plan Administrator.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

III - PARTICIPATION IN YOUR PLAN

Before you become a member or a "participant" in the Plan, there are certain
eligibility and participation rules which you must meet. These rules are
explained in this section.

A. ENTRY DATE

Upon satisfaction of the eligibility requirements, participation in the
plan will begin on the date specified at Article I, Section B, Item 1
of the Major Plan Provisions (hereafter, abbreviated to I.B.1).

B. ELIGIBILITY REQUIREMENTS

The eligibility requirements are as outlined at I.B.2 of the Major Plan
Provisions.

You must be employed by an adopting Employer or on an authorized leave
of absence.

There are certain employees who will not be eligible to participate in
your plan. These employees are:

a) employees whose employment is governed by a collective
bargaining agreement.

b) leased employees.

c) non-resident aliens.

C. YEAR OF SERVICE

The term "Year of Service" is used throughout this Summary Plan
Description and throughout your Plan. A Year of Service for eligibility
purposes is defined as follows:

You will have completed a Year of Service if, at the end of your first
twelve consecutive months of employment with your Employer, you have
been credited with at least 1,000 Hours of Service.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

If you have not been credited with at least 1,000 Hours of Service by
the end of your first twelve consecutive months of employment, you will
have completed a Year of Service at the end of any following Plan Year
during which you were credited with at least 1,000 Hours of Service.

An "Hour of Service" has a special meaning for Plan purposes. You will
be credited with an Hour of Service for each hour for which you are
directly or indirectly paid or entitled to payment. You may also
receive credit for a limited number of hours of service if you are on
leave, which may be an absence due to pregnancy, birth of a child or
adoption of a child.

If during any Plan Year, you are not credited with more than five
hundred (500) hours of service, a "break in service" will occur.

THE ABOVE IS A VERY GENERAL SUMMARY OF PLAN PROVISIONS. THE RULES FOR
COMPUTING CREDITED SERVICE ARE COMPLICATED AND DEPEND UPON THE
PARTICULAR FACTS AND CIRCUMSTANCES OF EACH SITUATION. PLEASE CONTACT
THE PLAN ADMINISTRATOR IF YOU HAVE ANY QUESTIONS RELATING TO THE
CALCULATION OF CREDITED SERVICE OR PARTICIPATION IN THE PLAN.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

IV - CONTRIBUTIONS TO YOUR PLAN

A. PLAN CONTRIBUTIONS

1. VOLUNTARY SALARY DEFERRAL CONTRIBUTIONS

You may elect to allow the Employer to reduce your Compensation by an
amount specified in I.B.3 of the Major Plan Provisions and to have such
amount deposited to the Plan as Voluntary Salary Deferral
Contributions. You must file a written election form with the Plan
Administrator prior to the date that you elect to make the Voluntary
Salary Deferral Contribution specifying the portion of your
compensation that is to be contributed to the Plan. The portion
contributed will be deposited to your Voluntary Salary Deferral
Contribution Account. Your election will remain in effect unless a new
election is filed with the Plan Administrator.

2. EMPLOYER MATCHING CONTRIBUTIONS

The employer will make a Matching Contribution which will be equal to
the amount specified in I.B.4 of the Major Plan Provisions which will
be deposited to your Matching Contribution Account. The Employer will
not contribute any Matching Contributions with respect to the basic
contributions you elect in excess of the percentages, if any, specified
in I.B.4 of the Major Plan Provisions.

3. EMPLOYER OPTIONAL CONTRIBUTIONS

As a participant, you will share in your Employer's Optional
Contribution for any Plan Year if you:

a) die during the Plan Year;

b) attain retirement age or become disabled during the Plan
Year;

c) are employed on the last day of the Plan Year and have
completed a Year of Service during the Plan Year.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

Each year, your Employer's Optional Contribution, if any, will be
placed into a trust fund for the benefit of Plan participants. The
Trustee of your Plan will then establish and maintain a separate
account for you and all other participants into which the contributions
will be placed. This is referred to as your Employer Optional
Contribution Account.

Any Employer Optional Contribution will be "allocated" or divided among
participants eligible to share in the contribution for the Plan Year as
outlined under I.B.5 of the Major Plan Provisions.

Your share of the gains and losses on the investments of the trust
shall be credited to your Employer Optional Contribution Account no
less frequently than as of the last day of each Plan Year.

4. COMPENSATION

For the purpose of your Plan, compensation has a special meaning as
defined in the Major Plan Provisions under I.B.6. The Plan, by law,
cannot recognize compensation in excess of $160,000. This amount will
be adjusted for cost of living increases.

5. TRANSFERS FROM QUALIFIED PLANS (ROLLOVERS)

Your plan provides for transfers. You may be permitted to deposit into
your plan distributions you have received from other plans. Such a
deposit is called a "rollover" and may result in tax savings to you.
You should consult a qualified counsel to determine if a rollover is in
your best interest. Your rollover will be placed in a separate account
called a "rollover account".

You will always be 100% vested in your "rollover account". This means
that you will always be entitled to all of your rollover contributions.
Rollover contributions will be affected by any investment gains or
losses.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

V - BENEFITS UNDER YOUR PLAN

As a participant, you will be eligible for benefits under your Plan at the
following times:

A. DISTRIBUTION OF BENEFITS UPON NORMAL RETIREMENT

Your Normal Retirement Date is the date specified at I.B.6 of the Major
Plan Provisions.

At your Normal Retirement Age, which is as specified at I.B.7 of the
Major Plan Provisions, you will be 100% vested in your account balance.
If you have terminated employment and elected not to defer benefit
payments, payment of your benefits may begin within sixty (60) days
following the close of the Plan Year in which you reach Normal
Retirement Age.

B. DISTRIBUTION OF BENEFITS UPON EARLY RETIREMENT

Your plan provides for early retirement. The early retirement age is as
specified in I.B.10 of the Major Plan Provisions.

At your Early Retirement Age, you will be 100% vested in your account
balance. If you have terminated employment and elected not to defer
benefit payments, payment of your benefits may begin within sixty (60)
days following the close of the Plan Year in which you reach Early
Retirement Age.

C. DISTRIBUTION OF BENEFITS UPON LATE RETIREMENT

If you work past your Normal Retirement Date, your Late Retirement Date
is the actual day you leave employment.

On your Late Retirement Date, you will be 100% vested in your account
balance. Payments of your Late Retirement benefits may begin, if you
elect not to defer such payment, within sixty (60) days following the
close of the Plan Year after your Late Retirement Date.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

D. DISTRIBUTION OF BENEFITS UPON DEATH

Your beneficiary will be entitled to 100% of your account balance upon
your death.

The Plan Administrator may elect to purchase life insurance on your
behalf with a portion of your Employer's contribution. Any life
insurance purchased shall be used to provide a death benefit for your
beneficiary.

If a life insurance policy is purchased on your behalf with a portion
of your Employer's contribution made to your account, your account will
be reduced by the amount of the premiums and credited with any policy
dividends.

Payments of your death benefits may begin within sixty (60) days
following the close of the Plan Year in which you die.

If you are married at the time of your death, unless you otherwise
elect in writing on the beneficiary designation form furnished to you
by the Plan Administrator, your spouse will be the beneficiary of 100%
of the death benefit.

HOWEVER, IF YOU WISH TO DESIGNATE A BENEFICIARY FOR YOUR DEATH BENEFIT
OTHER THAN YOUR SPOUSE, YOUR SPOUSE MUST IRREVOCABLY CONSENT TO WAIVE
ANY RIGHT TO THE DEATH BENEFIT. YOUR SPOUSE'S CONSENT MUST BE IN
WRITING, BE WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE, AS REQUIRED
ON THE BENEFICIARY DESIGNATION FORM, AND ACKNOWLEDGE THE SPECIFIC
NONSPOUSE BENEFICIARY.

If however,

a) your spouse has validly waived any right to the death benefit
in the manner outlined above,

b) your spouse cannot be located, or

c) you are not married at the time of your death,

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

then your death benefit will be paid to the beneficiary of your own
choosing in a single lump sum. You may designate such beneficiary on a
beneficiary designation form provided by the Plan Administrator. If you
change your designation, your spouse must again consent to the change.

Since your spouse participates in these elections and has certain
rights in the death benefit, you should immediately report any change
in your marital status to the Plan Administrator.

E. DISTRIBUTION OF BENEFITS UPON DISABILITY

If you become disabled while a participant, you will be entitled to
100% of your account balance. Payment of your disability benefits may
begin no later than sixty (60) days after the end of the Plan Year in
which you become disabled.

Under the Plan, a participant is deemed to be totally disabled if he is
rendered unable to engage in his usual and customary activities or in
any comparable activity by reason of any physical or mental impairment
which can be expected to result in death or be of long-continued and
indefinite duration. Receipt of social security disability benefits
shall be conclusive evidence of disability. Disability may also be
proven by way of independent medical opinion.

F. VESTING IN YOUR PLAN

Your "vested percentage" in your Employer Matching and Employer
Optional Accounts is determined under the schedule provided under
I.B.13 of the Major Plan Provisions and is based on vested Years of
Service. You will always, however, be 100% vested in your Voluntary
Salary Deferral Contribution Account, and you will be 100% vested upon
your Normal, Early or Late Retirement Age.

A forfeiture of your nonvested amount of Employer Matching and
Optional Accounts will not occur until the participant from whose
account such amounts are taken shall have incurred five consecutive
one (1) year breaks in service or, if earlier, the participant
receives a "cash-out" distribution in accordance with Article V.G.
below.

You will have completed a Year of Service for vesting purposes if you
are credited with 1,000 Hours of Service during a Plan Year, even if
you were not employed on the first or last day of the Plan Year.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

G. DISTRIBUTIONS TO TERMINATED EMPLOYEES OTHER THAN DUE TO DEATH,
DISABILITY OR RETIREMENT

Your plan provides for a "cash-out" distribution, which is a
distribution to a participant whose employment has been terminated for
reasons other than death, disability, or retirement. The distribution
will begin as specified at I.B.14 of the Major Plan Provisions.

H. BENEFIT PAYMENT OPTIONS

The Plan Administrator will direct the Trustee to pay your benefits to
you according to one or more of the options specified at I.B.15 of the
Major Plan Provisions.

GENERALLY, WHENEVER A DISTRIBUTION OR PAYMENT IS TO BE MADE TO YOU ON
OR BEFORE AN ANNIVERSARY DATE, IT MAY BE POSTPONED FOR A PERIOD UP TO
180 DAYS, AT THE PLAN ADMINISTRATOR'S DISCRETION; HOWEVER, IN NO EVENT
MAY A DISTRIBUTION AS A RESULT OF NORMAL OR LATE RETIREMENT BEGIN LATER
THAN THE 60TH DAY AFTER THE CLOSE OF THE PLAN YEAR IN WHICH THE LATEST
OF THE FOLLOWING EVENTS OCCURS:

1) the date on which you reach the age of 65 or your Normal
Retirement Age

2) the date you terminated employment with your Employer.

Regardless of whether you elect to delay the receipt of benefits, if
you own more than five percent (5%) of the outstanding shares of stock
in the Employer, there are other rules which generally require minimum
payments to begin no later than the April 1st following the year in
which you reach age seventy and one-half (70 1/2). If you own less than
five percent (5%) of the outstanding shares of stock in the Employer,
you will not be required to receive a minimum distribution.

I. DOMESTIC RELATIONS ORDER

As a general rule, your interest in your account may not be alienated.
This means that your interest may not be sold, used as collateral for a
loan, given away or otherwise transferred. In addition, your creditors
may not attach, garnish or otherwise interfere with your account.

There is an exception, however, to this general rule. The Plan
Administrator may be required by law to recognize obligations you incur
as a result of court ordered child support or alimony payments.

<PAGE>

The Plan

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

Administrator must honor a "qualified domestic relations order." A
"qualified domestic relations order" is defined as a decree or order
issued by a court that obligates you to pay child support or alimony,
or otherwise allocates a portion of your assets in the Plan to your
spouse, former spouse, child or other dependent.

If a qualified domestic relations order is received by the Plan
Administrator, all or a portion of your benefits may be used to satisfy
the obligation. The Plan Administrator will determine the validity of
any domestic relations orders he receives.

J. PENSION BENEFIT GUARANTY CORPORATION

Benefits provided by your Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under Title IV of the Employee Retirement
Income Security Act of 1974 because the insurance provisions under
ERISA are not applicable to your Plan.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

VI - "TOP HEAVY RULES" UNDER YOUR PLAN

A. EXPLANATION OF "TOP HEAVY RULES"

A 401(k) Plan that primarily benefits "key employees" is called a "top
heavy plan." A Plan is a "top heavy plan" when more than 60% of the
contributions or benefits have been allocated to key employees.

Each year, the Plan Administrator is responsible for determining
whether your Plan is a "top heavy plan."

If your Plan becomes top heavy in any Plan Year, then non-key employees
may be entitled to certain "top heavy minimum benefits," and other
special rules will apply. Among these top heavy rules are the
following:

1) Your Employer may be required to make a contribution equal to 3% of
your compensation to your account.

2) If you are a participant in more than one Plan, you may not be
entitled to the minimum benefits under both Plans.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

VII - CLAIMS BY PARTICIPANTS AND BENEFICIARIES

A. CLAIMS PROCEDURE

You or your beneficiaries may make a request for any Plan benefits to
which you may be entitled. Any such request must be made in writing,
and it should be made to the Plan Administrator.

Your request for Plan benefits will be considered a claim for Plan
benefits, and it will be subject to a full and fair review. If your
claim is wholly or partially denied, the Plan Administrator will
furnish you with a written notice of this denial. This written notice
must be provided to you within a reasonable period of time (generally
60 days) after the receipt of your claim by the Plan Administrator.

If your claim is denied, you may demand a review of your claim. Such a
demand for review must be made within ninety (90) days of the denial of
your claim.

The review will be made, at your written request, by the Trustee, legal
counsel and the Plan Administrator. You will have access to all
pertinent documents and may submit written or oral arguments to the
reviewing group. A decision on the review must be made within thirty
(30) days of the request for review, and if the claim is again denied,
the decision must be in writing, state the reasons for the denial, and
include specific reference to the pertinent plan provisions on which
the decision was based.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

VIII - STATEMENT OF ERISA RIGHTS

A. EXPLANATION OF YOUR ERISA RIGHTS

As a Participant in this Plan you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974,
also called ERISA. ERISA provides that all Plan participants will be
entitled to:

1) examine, without charge, all Plan documents, including insurance
contracts, collective bargaining agreements and copies of all documents
filed by the Plan with the U.S. Department of Labor, such as detailed
annual reports and Plan descriptions.

This examination may take place at the Plan Administrator's office and
at other specified locations such as worksites and union halls. (See
the Article in the Summary entitled "GENERAL INFORMATION ABOUT YOUR
PLAN.")

2) obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.

3) receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish participants with a copy of
this summary annual report.

4) obtain a statement telling you whether you have a right to receive a
pension at Normal Retirement Age and, if so, what your benefits would
be at Normal Retirement Age if you stop working under the Plan now. If
you do not have a right to a pension, the statement will tell you how
many years you have to work to get a right to a pension. THIS STATEMENT
MUST BE REQUESTED IN WRITING AND IS NOT REQUIRED TO BE GIVEN MORE THAN
ONCE A YEAR. The Plan must provide the statement free of charge.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the
Plan. The people who operate your Plan, called "fiduciaries" of the
Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries. No one, including your
employer, your union, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a
pension benefit or exercising your rights under ERISA.

If your claim for a pension benefit is denied in whole or in part, you
must receive a written explanation of the reason for the denial. You
have the right to have the Plan Administrator review and reconsider
your claim. (See the Article in this Summary entitled "CLAIMS BY
PARTICIPANTS AND BENEFICIARIES.")

Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a
case the court may require the Plan Administrator to provide the
materials and pay you up to $100 a day until you receive the materials,
unless the materials were not sent because of reasons beyond the
control of the Plan Administrator.

If you have a claim for benefits which is denied or ignored, in whole
or in part, you may file suit in a state or federal court.

If the Plan's fiduciaries misuse the Plan's money or if you are
discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor or you may file suit in a
federal court. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order
you to pay these costs and fees if, for example, it finds your claim is
frivolous.

If you have any question about this statement, or about your rights
under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

IX - AMENDMENT AND TERMINATION OF YOUR PLAN

A. AMENDMENT

Your Employer has the right to amend your Plan at any time. In no
event, however, will any amendment:

1) authorize or permit any part of the Plan assets to be used for
purposes other than the exclusive benefit of participants or their
beneficiaries;

2) cause any reduction in the amount previously credited to your
account; or

3) cause any part of the Plan assets to revert to the Employer.

B. TERMINATION

Your Employer has the right to terminate the Plan at any time. Upon
termination, all amounts credited to your accounts will become 100%
vested. Your Employer shall direct that benefits be distributed to you.

A complete discontinuance of contributions by your Employer will
constitute a termination.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

X. HARDSHIP DISTRIBUTIONS

A. GENERAL

A distribution may be made to a Participant from his Voluntary Salary
Deferral Contribution Account at any time provided that the
distribution is made on account of an immediate and heavy financial
need of the Participant. The distribution must not exceed the amount of
the immediate and heavy financial need and the need cannot be satisfied
from other resources that are reasonably available to the Participant.

The determination as to the existence of a heavy and immediate
financial need shall be made by the Plan Administrator on the basis of
all relevant facts and circumstances. A distribution will be deemed to
be on account of an immediate and heavy financial need of the
Participant, if the distribution is made on account of:

1. medical expenses for the participant, spouse, or dependents.

2. purchase of principal residence (excluding mortgage payments) for
the participant.

3. payment of post-secondary tuition for participant, spouse, or
dependents.

4. prevent eviction/foreclosure on participant's principal residence.

5. any other circumstance which is deemed to be an immediate and
heavy financial need by the Commissioner of the Internal Revenue
Service through the publication of regulations, revenue rulings,
notices, and other documents of general applicability.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

XI - LOANS

A. GENERAL

You may apply to the Plan Administrator for a loan from your
Account(s).

Your application must be in writing on forms the Plan Administrator
will provide for you. The Plan Administrator may also request that you
provide additional information, such as financial statements, tax
returns and credit reports. After considering your application, the
Plan Administrator may, at his discretion, determine that you qualify
for the loan. The Plan Administrator will inform the Trustee that you
qualify. The Trustee may then review the Plan Administrator's
determination and make a loan to you.

There are several rules and requirements that apply for any loan.
Generally, the rules include the following:

a) Loans must be made available to all participants and their
beneficiaries on a uniform and non-discriminatory basis.

b) All loans must be adequately secured. You may use up to one-half of
your vested account balance under the Plan as security for the loan.

c) All loans must bear a reasonable rate of interest. The interest rate
must be one a bank or other professional lender would charge for making
a loan under similar circumstances.

d) All loans must have a definite repayment period which provides for
payments to be made not less frequently than quarterly and for the loan
to be amortized on a level basis over a reasonable period of time, not
to exceed five (5) years. However, if you use the loan to acquire your
principal residence, you may repay the loan over a reasonable period of
time that may be longer than five (5) years.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

e) The amount the Plan may loan to you is limited by rules under the
Internal Revenue Code. All loans, when added to the outstanding balance
of all other loans from the Plan, will be limited to the lesser of:

1) $50,000 reduced by the excess, if any, of your highest
outstanding balance of loans from the Plan during the
one-year period prior to the date of the loan on your current
outstanding balance; or

2) 1/2 of your vested account balance.

f) Your spouse must consent to any loan before it can be made if you
use your vested interest as security for the loan. This rule only
applies if the vested interest used as security exceeds $5,000.

HotJobs.com, Ltd. 401(k) Plan

<PAGE>

This is to certify that I have received a copy of the Summary Plan
Description for the HotJobs.com, Ltd. 401(k) Plan.

I understand that, since benefits may be payable to my current or future
spouse, my spouse should be given this Summary Plan Description to read.

I further understand that should I have any questions regarding the plan
provisions they should be directed to the Trustees of the Plan and if there is a
discrepancy between this Summary Plan Description and the Plan document, the
Plan document shall Govern.

- ----------------------- ---------------------------
Date Signature of Employee

- -----------------------
Print Name of Employee

HotJobs.com, Ltd. 401(k) Plan

<PAGE>
EXHIBIT 23.1

The Board of Directors
HotJobs.com, Ltd.

The audits referred to in our report dated March 15, 1999, except for notes
2(a), 6 and 13(c) which are as of June 18, 1999, included the related financial
statement schedule for the period from February 20, 1997 (inception) to December
31, 1997 and the year ended December 31, 1998, included in the registration
statement. The financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

/s/ KPMG LLP

New York, New York
August 5, 1999