<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1999
REGISTRATION NO. 333-80367
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 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>
------------------------
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.......................... $71,012,500 $560
</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) $19,182 of the $19,742 fee due for this registration was previously paid.
------------------------------
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
JULY 19, 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*TRADE SECURITIES, INC.
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 $749,000 for the period ended December 31, 1997, to
approximately $4.2 million for the fiscal year ended December 31, 1998. Our
revenues for the three months ended March 31, 1999 were approximately $2.7
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
1
<PAGE>
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
<PAGE>
THE OFFERING
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<S> <C>
Common stock offered by us.......... 4,750,000 shares
Common stock to be outstanding after
the offering...................... 28,304,014 shares
Use of proceeds..................... For general corporate purposes, including increasing
our sales and marketing efforts; developing our
infrastructure, products and services; build-out of
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 3,934,014 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 stock
option/stock issuance plans;
- excludes 250,000 shares reserved for future issuances under our employee
stock purchase plan; and
- excludes 4,314,192 shares of common stock issuable at a weighted average
exercise price of approximately $0.61 per share upon exercise of stock
options outstanding at July 15, 1999, 3,506,400 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 3,934,014 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....................... 375 563 125 80
Job fair fees............................... -- -- -- 216
Other....................................... 13 550 80 395
---------------- -------------- --------------- --------------
Total revenues.......................... 749 4,151 552 2,651
Cost of revenues............................. 12 506 78 589
---------------- -------------- --------------- --------------
Gross profit............................ 737 3,645 474 2,062
Operating expenses:
Product development......................... 174 474 90 156
Sales and marketing......................... 431 3,085 524 3,229
General and administrative.................. 726 1,642 274 823
---------------- -------------- --------------- --------------
Total operating expenses................ 1,331 5,201 888 4,208
---------------- -------------- --------------- --------------
Loss from operations.................. (594) (1,556) (414) (2,146)
Net interest expense......................... -- 63 7 68
---------------- -------------- --------------- --------------
Net loss.............................. $ (594) $ (1,619) $ (421) $ (2,214)
---------------- -------------- --------------- --------------
---------------- -------------- --------------- --------------
Basic and diluted net loss per common
share....................................... $ (0.03) $ (0.08) $ (0.02) $ (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).............................. (5,091) 11,109 67,016
Total assets........................................... 4,125 20,325 76,232
Obligations under capital leases, excluding current
installments......................................... 317 317 317
Total stockholders' equity (deficit)................... (4,107) (4,107) 68,000
</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.
(3) Pro forma as adjusted information gives effect to the automatic conversion
of all of the outstanding Series A Preferred Stock into 3,934,014 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
OUR LIMITED OPERATING HISTORY MAKES OUR BUSINESS DIFFICULT TO EVALUATE.
We were incorporated and began generating revenues in February 1997.
Accordingly, we have only a limited operating history for you to evaluate our
business. 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
are unsuccessful in addressing these risks and uncertainties or are unable to
execute our strategy, our business could be materially adversely affected.
WE HAVE NOT BEEN PROFITABLE, AND WE EXPECT OUR LOSSES TO CONTINUE.
We have never been profitable. For the year ended December 31, 1998, we
incurred net losses from operations of approximately $1.6 million. For the
quarter ended March 31, 1999, we incurred net losses from operations of
approximately $2.2 million. As of March 31, 1999, we had an accumulated deficit
of approximately $4.4 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. 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.
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;
- the timing, amount and mix of subscription, license and service payments;
5
<PAGE>
- 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, our business could be materially
adversely affected which could reduce the value of your investment. Our current
revenue 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 business may
be adversely affected. 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 intend to continue to grow our business. 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.
6
<PAGE>
These factors may make the timing, amount, terms and conditions of
additional financing unattractive for us. 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 have a material adverse
effect on our business and 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.
RISKS RELATED TO OUR MARKETS AND STRATEGY
THE INTERNET IS NOT A PROVEN RECRUITING MEDIUM.
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. If we are unable to compete
with traditional recruiting and job seeking methods, our business and results of
operations and the value of your investment could be materially adversely
affected. 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.
We believe that continuing to build awareness of our HotJobs.com 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. If we fail to successfully promote and maintain our brand,
incur significant expenses in promoting our brand
7
<PAGE>
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 business and the value of your investment could be
materially adversely affected.
WE MAY NOT BE ABLE TO SUCCESSFULLY INTRODUCE NEW OR ENHANCED PRODUCTS AND
SERVICES.
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. 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 business and the value of your
investment.
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 business and the value of your investment.
WE MAY LOSE BUSINESS IF WE FAIL TO KEEP PACE WITH RAPIDLY CHANGING
TECHNOLOGIES AND CUSTOMER NEEDS. 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.
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 business and the value of your
investment could be materially adversely affected.
OUR BUSINESS AND GROWTH WILL SUFFER IF WE ARE UNABLE TO HIRE AND RETAIN HIGHLY
SKILLED PERSONNEL.
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 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. If we are unable to hire and
retain skilled personnel, our growth may
8
<PAGE>
be restricted, the quality of our products and services reduced and the value of
your investment reduced.
WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE OUR EXPANDING OPERATIONS.
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. We may not succeed in these efforts. Our inability
to expand our operations in an efficiant manner could cause our expenses to grow
disproportionately to revenues, our revenues to decline or grow more slowly than
expected and otherwise have a material adverse effect on our business and the
value of your investment.
INTENSE COMPETITION MAY RENDER OUR SERVICES AND PRODUCTS UNCOMPETITIVE OR
OBSOLETE.
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.
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.
LOSS OF ANY OF OUR KEY MANAGEMENT PERSONNEL COULD NEGATIVELY IMPACT OUR
BUSINESS.
Our future 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. The loss or departure of any of our
officers or key employees could materially adversely affect our ability to
implement our business plan. We do not maintain key person
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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 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.
Accordingly, 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 business and the value of your investment
could be materially adversely affected.
WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF OR INVESTMENTS IN OTHER
COMPANIES.
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 be unable to identify suitable acquisition candidates. If we make an
acquisition of a company, we could have difficulty assimilating the acquired
company's operations and personnel. 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 business.
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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.
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.
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. 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.
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 traffice may result in
fewer job seekers posting their resume 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. In addition, 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 have a material adverse effect on our business and the
value of your investment.
COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS AND MAY
ADVERSELY AFFECT OUR BUSINESS.
Computer viruses may cause our systems to incur delays or other service
interruptions. In 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 materially adversely affect our business and the value of
your investment.
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WE MAY NOT BE ABLE TO ACCESS THIRD PARTY TECHNOLOGY UPON WHICH WE DEPEND.
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. If we lose the ability to access this technology, 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 business and the value of your
investment could be materially adversely affected.
WE COULD LOSE SUBSTANTIAL REVENUES OR INCUR SIGNIFICANT COSTS DUE TO YEAR 2000
ISSUES.
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. 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.
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. 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 business and the value of your
investment.
OUR INTERNAL COMPUTER SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT. Year 2000
problems could materially adversely affect our internal computer systems. 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. Any business disruption caused by the failure of our internal systems
to be year 2000 compliant could have a material adverse effect on our business
and results of operations.
OUR EMPLOYERS' AND JOB SEEKERS' SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT. 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
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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. If either
employers or job seekers experience sustained difficulty in accessing our
products and services due to year 2000 complications, our business and results
of operations could be materially adversely affected.
YEAR 2000 CONCERNS MAY ADVERSELY AFFECT THE PURCHASING PATTERNS OF
EMPLOYERS. 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 our business, results of operations and financial
condition to be materially adversely affected.
WE COULD BE SUBJECT TO YEAR 2000-RELATED LITIGATION. 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. If we
are the subject of any claims related to or are liable for losses resulting from
year 2000-related systems failures, our business, results of operations and the
value of your investment could be materially adversely affected.
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.
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. Uncertainty 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. 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;
- copyright, trademark and patent infringement;
- pricing controls;
- characteristics and quality of products and services;
- sales and other taxes; and
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- 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
ADVERSELY AFFECT OUR BUSINESS. 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. 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 our business could be
adversely affected. See "Business--Intellectual Property."
FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT
OUR BUSINESS. 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 market
position and operating results 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.
We cannot be certain that our products, content and brand names do not or
will not infringe valid patents, copyrights or other intellectual property
rights held by third parties. We expect that infringement claims in our markets
will increase in number as more participants enter the markets. We may be
subject to legal proceedings and claims from time to time relating to the
intellectual property of others in the ordinary course of our business. We may
incur substantial expenses in defending against these third party infringement
claims, regardless of their merit. Successful infringement claims against us may
result in monetary liability or a material disruption in the conduct of our
business.
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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 business 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.
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. 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.
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;
- 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.
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.
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IF OUR STOCK PRICE IS VOLATILE, WE MAY BECOME SUBJECT TO SECURITIES LITIGATION
WHICH IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.
Securities class action litigation has often been brought against companies
that experience volatility in the market price of their securities. 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 cause our
business and the value of your investment to be materially adversely affected.
FUTURE SALES OF OUR COMMON STOCK AFTER THIS OFFERING MAY NEGATIVELY AFFECT OUR
STOCK PRICE.
Following the 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. 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
this offering, or the perception that such sales could occur. 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 stockholders, who will hold a total of
23,014,014 shares of common stock after the offering, have agreed, subject to
certain exceptions, not to sell their shares for at least 180 days after the
date of this prospectus without the consent of Deutsche Bank Securities Inc.
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 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. 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
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- 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 55.0% 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.
The initial public offering price per share will exceed our net tangible
book value per share. Accordingly, investors purchasing shares in this offering
will incur immediate and substantial dilution in their investments. 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 for general corporate
purposes, including:
- increasing our sales and marketing efforts;
- developing our infrastructure, products and services;
- build-out of 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 cannot specify the particular uses for
the net proceeds to be received upon completion of the offering. We are using
the proceeds from the sale of the Series A Preferred Stock for these purposes.
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.
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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 50,000,000 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
(3) on a pro forma as adjusted basis to reflect:
- the automatic conversion of all outstanding shares of Series A
Preferred Stock into 3,934,014 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 stock option/stock
issuance plans; and
- 3,579,600 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, 3,399,600 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............................ -- 16,200 --
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
50,000,000 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; 29,504,014 shares
issued and outstanding pro forma as adjusted.......................... 208 208 295
Additional paid-in capital................................................ 112 112 72,132
Accumulated deficit....................................................... (4,427) (4,427) (4,427)
--------- ----------- -------------
Total stockholders' equity (deficit).................................... (4,107) (4,107) 68,000
--------- ----------- -------------
Total capitalization.................................................. $ (3,790) $ 12,410 $ 68,317
--------- ----------- -------------
--------- ----------- -------------
</TABLE>
20
<PAGE>
DILUTION
Our pro forma net tangible book value at March 31, 1999 was $12.1 million,
or approximately $0.49 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 and the automatic conversion
of all of the outstanding Series A Preferred Stock into our common stock 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 $68.0 million, or approximately $2.30 per share. This represents an
immediate increase in pro forma net tangible book value of approximately $1.81
per share to existing stockholders and an immediate dilution in pro forma net
tangible book value of approximately $10.70 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....... $ 0.49
Increase in pro forma net tangible book value attributable to new
investors......................................................... $ 1.81
---------
Adjusted pro forma net tangible book value per share after this
offering............................................................ $ 2.30
---------
Dilution per share to new investors................................... $ 10.70
---------
---------
</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......................... 24,754,014 83.9% $ 16,200,004 20.8% $ 0.65
New investors................................. 4,750,000 16.1 61,750,000 79.2 13.00
------------- ----- -------------- ----- -------
Total....................................... 29,504,014 100.0% $ 77,950,004 100.0% $ 2.64
------------- ----- -------------- ----- -------
------------- ----- -------------- ----- -------
</TABLE>
The foregoing tables and calculations assume no exercise of outstanding
options. At March 31, 1999, there were 3,579,600 shares of common stock issuable
upon exercise of outstanding options at a weighted average exercise price of
approximately $0.04 per share. To the extent that all of these options are
exercised in full, the dilution per share to new investors would be
approximately $10.94.
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.......................... 375 563 125 80
Job fair fees.................................. -- -- -- 216
Other.......................................... 13 550 80 395
---------------- ------------- ------------- -------------
Total revenues............................... 749 4,151 552 2,651
Cost of revenues................................ 12 506 78 589
---------------- ------------- ------------- -------------
Gross profit................................. 737 3,645 474 2,062
Operating expenses:
Product development............................ 174 474 90 156
Sales and marketing............................ 431 3,085 524 3,229
General and administrative..................... 726 1,642 274 823
---------------- ------------- ------------- -------------
Total operating expenses..................... 1,331 5,201 888 4,208
---------------- ------------- ------------- -------------
Loss from operations....................... (594) (1,556) (414) (2,146)
Net interest expense............................ -- 63 7 68
---------------- ------------- ------------- -------------
Net loss................................... $ (594) $(1,619) $ (421) $(2,214)
---------------- ------------- ------------- -------------
---------------- ------------- ------------- -------------
Basic and diluted net loss per common share..... $(0.03) $ (0.08) $(0.02) $ (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>
<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).............................. (5,091) 11,109 67,016
Total assets........................................... 4,125 20,325 76,232
Obligations under capital leases, excluding current
installments......................................... 317 317 317
Total stockholders' equity (deficit)................... (4,107) (4,107) 68,000
</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.
(3) Pro forma as adjusted information gives effect to the automatic conversion
of all of the outstanding Series A Preferred Stock into 3,934,014 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.
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 Softshoe 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, consisting of one-time license fees paid by our
Softshoe customers.
- 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, and the license of a miscellaneous proprietary
software product.
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 in
accordance with Statements of Position 97-2 and 98-9 issued by the
American Institute of Certified Public Accountants. Under these
pronouncements, revenue is recognized upon the substantial completion and
delivery of the related software, assuming that the fee is fixed and
determinable, and that collectibility is probable.
- 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 fees from the
license of a miscellaneous proprietary software product in 1998, which we
recognized in accordance with Statements of Position 97-2 and 97-9. 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............................................... 48% 73% 63% 74%
Software license fees...................................... 50 14 23 3
Job fair fees.............................................. -- -- -- 8
Other...................................................... 2 13 14 15
--- --- --- ---
Total revenues........................................... 100 100 100 100
Cost of revenues............................................. 2 12 14 22
--- --- --- ---
Gross profit............................................. 98 88 86 78
Operating expenses:
Product development........................................ 23 11 16 6
Sales and marketing........................................ 57 74 95 122
General and administrative................................. 97 40 50 31
--- --- --- ---
Total operating expenses................................. 177 125 161 159
--- --- --- ---
Loss from operations................................... (79) (37) (75) (81)
Net interest expense......................................... -- 2 1 3
--- --- --- ---
Net loss............................................... (79)% (39 )% (76 )% (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 $1.6 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 $2.2 million and $4.4
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 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.
QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998
REVENUES
Our total revenues increased to $2.7 million for the quarter ended March 31,
1999, from $552,000 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 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 decreased 36%, to $80,000
for the quarter ended March 31, 1999, from $125,000 for the quarter ended
March 31, 1998. This decrease was due primarily to the fact that the
Softshoe software we licensed in the first quarter of 1999 required less
customization than the Softshoe software we licensed in 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 $80,000 for the quarter ended March 31, 1998. This increase
primarily relates to a barter transaction for advertising.
COST OF REVENUES
Our cost of revenues increased to $589,000 for the quarter ended March 31,
1999, from $78,000 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 14% 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 73%, to
$156,000 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.
27
<PAGE>
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.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO PERIOD ENDED DECEMBER 31, 1997
REVENUES
Our total revenues increased to $4.2 million for the year ended December 31,
1998, from $749,000 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 50%, to $563,000
for the year ended December 31, 1998, from $375,000 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 $550,000 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 $506,000 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 12% for the year ended December 31, 1998,
from 2% 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.
28
<PAGE>
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 increased as a percentage of revenue to 74% for
the year ended December 31, 1998 from 58% 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
$726,000 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.
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 $431,000 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 sequential
quarterly revenue growth since inception, our historical revenue growth rates
are not necessarily indicative of future revenue growth rates.
29
<PAGE>
<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.................................. 125 125 70 243 80
Job fair fees.......................................... -- -- -- -- 216
Other.................................................. 80 90 245 135 395
----------- ----------- ----- --------- -----------
Total revenues..................................... 552 842 1,229 1,528 2,651
Cost of revenues......................................... 78 89 139 200 589
----------- ----------- ----- --------- -----------
Gross profit....................................... 474 753 1,090 1,328 2,062
Operating expenses:
Product development.................................... 90 112 140 132 156
Sales and marketing.................................... 524 629 754 1,178 3,229
General and administrative............................. 274 280 375 713 823
----------- ----------- ----- --------- -----------
Total operating expenses........................... 888 1,021 1,269 2,023 4,208
----------- ----------- ----- --------- -----------
Loss from operations............................. (414) (268) (179) (695) (2,146)
Net interest expense..................................... 7 5 15 36 68
----------- ----------- ----- --------- -----------
Net loss......................................... $ (421) $ (273) $ (194) $ (731) $ (2,214)
----------- ----------- ----- --------- -----------
----------- ----------- ----- --------- -----------
</TABLE>
<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
----------- ----------- ----------- --------- -----------
AS A PERCENTAGE OF TOTAL REVENUES:
Revenues:
Service fees........................................... 63% 74% 74% 75% 74%
Software license fees.................................. 23 15 6 16 3
Job fair fees.......................................... -- -- -- -- 8
Other.................................................. 14 11 20 9 15
----------- ----------- ----- --------- -----------
Total revenues..................................... 100 100 100 100 100
Cost of revenues......................................... 14 11 11 13 22
----------- ----------- ----- --------- -----------
Gross profit....................................... 86 89 89 87 78
Operating expenses:
Product development.................................. 16 13 12 9 6
Sales and marketing.................................. 95 75 61 77 122
General and administrative........................... 50 33 31 46 31
----------- ----------- ----- --------- -----------
Total operating expenses........................... 161 121 104 132 159
----------- ----------- ----- --------- -----------
Loss from operations............................. (75) (32) (15) (45) (81)
Net interest expense..................................... 1 1 1 3 3
----------- ----------- ----- --------- -----------
Net loss......................................... (76)% (33 )% (16 )% (48)% (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
30
<PAGE>
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 $3.7 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. We have had significant negative
cash flows from operating activities in each fiscal and quarterly period to
date. 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 sales which were partially offset by
increases in accounts payable, accrued expenses and deferred revenues.
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 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 in 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.
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<PAGE>
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 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
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<PAGE>
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.
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.
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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.
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<PAGE>
BUSINESS
GENERAL
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.
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.
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 $749,000 for the period ended December 31, 1997, to
approximately $4.2 million for the fiscal year ended December 31, 1998. Our
revenues for the three months ended March 31, 1999 were approximately $2.7
million.
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.
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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
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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.
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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.
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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.
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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 intends to launch
its Australian operations at the Internet World Show in Sydney, Australia
which will begin 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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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
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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CUSTOMERS
As of May 31, 1999, our customer base included over 1,500 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.
Cisco Systems
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 May 31, 1999, the following clients used 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, OTEC and Lucent
Technologies together accounted for approximately 63% of our revenues. For the
year ended December 31, 1998, OTEC accounted for 11% 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.
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
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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;
- 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
reliance on Level(3) or another co-location provider. Our contract with Level(3)
began on April 15, 1999 and currently lasts for one year and continues on a
month-to-month basis. 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
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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.
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
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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 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
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"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 full-time 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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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................... 35 Chief Information Officer
John A. Hawkins........................ 39 Director
John G. Murray......................... 37 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.
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
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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
and Boylan are Class III directors whose terms expire at the 2002 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.
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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. Each nonemployee
director who is not affiliated with one of our significant stockholders receives
options to purchase 20,000 shares of our common stock under our stock option
plans upon joining the board of directors. Beginning with our annual meeting of
stockholders in 2000, each of these 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 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, and no such interlocking relationship has existed in the
past.
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.
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
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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 Issuance Plan. We have not
granted any options under this plan to date. 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
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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 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
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the date of each annual stockholders meeting, beginning with the 2000 meeting,
each nonemployee director who is not affiliated with one of our significant
stockholders 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 4,314,192
shares at a weighted average exercise price of approximately $0.61, of which
3,506,400 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.
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 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 January 2000. 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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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
3,934,014 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 40,000 shares of Series A Preferred Stock for
$400,000. 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 1,000,000 shares of
Series A Preferred Stock for $10,000,000. 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 25,000 shares of Series A
Preferred Stock for $250,000. In connection with the Series A Preferred
Stock financing, GreenAcre Ventures LLC, of which Mr. Murray is a managing
member, purchased 264,000 shares of our common stock from two of our
employees.
- Kevin P. Ryan, one of our directors, purchased 20,000 shares of Series A
Preferred Stock for $200,000.
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>
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
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$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. 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 have a joint
fiduciary liability policy, issued by Travelers Insurance for a one-year term
beginning October 20, 1998, with OTEC and its affiliates. We are in the process
of applying for a stand alone fiduciary liability 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% 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
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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.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of July 15, 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 15, 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 15, 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.
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The percent of beneficial ownership for each stockholder is based on
19,620,000 shares of common stock outstanding as of July 15, 1999 and 28,304,014
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)........................................... 2,428,410 11.0 8.6
John A. Hawkins(5)............................................... 2,428,410 11.0 8.6
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)..................................... 607,102 3.0 2.1
Boston Millennia(8).............................................. 600,000 3.1 2.1
Christopher J. March(9).......................................... 576,000 2.9 2.0
Earl Ady......................................................... 480,000 2.4 1.7
John G. Murray(10)............................................... 324,710 1.6 1.1
Stephen W. Ellis(11)............................................. 277,136 1.4 1.0
George J. Nassef, Jr.(12)........................................ 90,000 * *
Kevin P. Ryan(13)................................................ 48,568 * *
All directors and executive officers as a group (7
persons)(14)................................................... 15,912,824 69.5% 55.0%
</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 disclaims beneficial ownership.
(3) OTEC's address is 24 West 40(th) Street, 12(th) Floor, New York, NY 10018.
(4) Includes 2,344,288 shares to be issued upon the automatic conversion upon
completion of this offering of 965,359 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 84,122
shares to be issued upon the conversion of 34,641 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 2,428,410 shares to be issued upon the automatic conversion upon
completion of this offering of 1,000,000 shares of Series A Preferred Stock
and beneficially owned by Generation Capital Company LLC. Mr. Hawkins is a
Managing Partner of Generation Capital Company LLC and, as such, may be
deemed to have voting and investment power over the
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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 607,102 shares to be
issued upon the automatic conversion upon completion of this offering of
250,000 shares of Series A Preferred Stock held by two investment
partnerships--Bessemer Venture Partners IV L.P. with respect to 364,261
shares and Bessec Ventures IV L.P. with respect to 242,841 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 600,000 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 42,497 shares to be issued upon the automatic conversion upon
completion of this offering at 17,500 shares of Series A Preferred Stock;
18,213 shares to be issued upon the conversion of 7,500 shares of Series A
Preferred Stock held by Mr. Murray's IRA; and 264,000 shares owned by
GreenAcre Ventures LLC, of which Mr. Murray is a Managing Member. Of the
shares owned by GreenAcre Ventures LLC, 12,142 shares are attributable to
Mr. Murray's interest in GreenAcre, and Mr. Murray disclaims beneficial
ownership of the remaining 251,858 shares.
(11) Includes 97,136 shares to be issued upon the automatic conversion upon
completion of this offering of 40,000 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 48,568 shares to be issued upon the automatic conversion upon
completion of this offering of 20,000 shares of Series A Preferred Stock.
(14) Includes 2,634,824 shares to be issued upon the automatic conversion upon
completion of this offering of 1,085,000 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
50,000,000 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 15, 1999, 19,620,000 shares of common stock were outstanding and 1,620,000
shares of convertible preferred stock convertible into 3,934,014 shares of
common stock were issued and outstanding. As of July 15, 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
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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 our common stock issuable upon
conversion of the Series A Preferred Stock have entered into a 180-day lock-up
agreement with the underwriters. After expiration of this lock-up period, 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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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 chairman of
the board of directors or the president at the request of two-thirds of 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 90 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders. 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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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 form bringing matters before an annual meeting of stockholders or
form 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 various business combination transactions and
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.
63
<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.
We have entered into agreements to indemnify its directors and executive
officers, in addition to the indemnification provided for in our amended and
restated bylaws. We believe that these provisions and agreements are necessary
to attract and retain qualified directors and executive officers. Our amended
and restated bylaws also 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. We have applied for 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.
64
<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 28,304,014 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 4,314,192 shares of common stock were outstanding, of
which 3,506,400 of such options will vest and become exercisable upon the
closing of the offering. Shares of common stock will be issuable upon exercise
of outstanding options. 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 23,554,014 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 Rules 144,
144(k) and 701, 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
- 22,686,187 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 the 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 after the date
65
<PAGE>
of this prospectus, subject to all provisions of Rule 144 except its one-year
minimum holding period.
Our senior officers, directors and certain of our stockholders who hold or
will hold in the aggregate 23,014,014 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 at least
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.
Options representing 3,506,400 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,
however, we have agreed with the underwriters not to file it until 180 days
after the date of this prospectus.
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 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.
Following this offering, under certain circumstances and subject to certain
conditions, holders of 3,934,014 shares of our outstanding common stock will
have certain demand registration rights with respect to their shares of common
stock (subject to the 180-day lock-up arrangement 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. These holders are subject to lock-up periods of not more than
180 days following the date of this prospectus or any subsequent prospectus.
66
<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*TRADE
Securities, Inc., 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*TRADE Securities, Inc.......................................................................
------------------
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 a limited number of
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 has not been
approved and/or endorsed by us or any underwriter, 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
67
<PAGE>
shares that the number of shares of common stock to be purchased by it in the
above table 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 427,500 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.
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 and certain of our stockholders who hold or
will hold in the aggregate 23,014,014 shares of our common stock, have entered
into lock-up agreements. Under these agreements, they 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 at least
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.
Options representing 3,506,400 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 Form S-8. We have agreed with the underwriters
that we will not file our Form S-8 until 180 days after the date of this
prospectus.
68
<PAGE>
The underwriters' representatives have advised us that the underwriters do
not intend to confirm sales to any account over which they exercise
discretionary authority.
Thirty individuals affiliated with Deutsche Bank Securities Inc. and
BancBoston Robertson Stephens are the beneficial owners of shares of our common
stock. Pursuant to the rules of the National Association of Securities Dealers,
Inc., their interest in these shares is presumed to be underwriting
compensation. Accordingly, these shares cannot be sold, transferred, assigned,
pledged or hypothecated by any person for periods of either 2 or 3 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.
We have an advertising contract with E*Trade Group Inc., an affiliate of
E*TRADE Securities, Inc., 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.
69
<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.
70
<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 and 13(c)
which are as of June 10, 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.......................... 424,491 964,711 1,257,277 1,257,277 1,257,277
Current installments of obligations under
capital leases.......................... -- 72,950 184,915 184,915 184,915
----------- ------------- ------------- -------------- ---------------
Total current liabilities............. 796,204 5,467,180 7,914,634 7,914,634 7,914,634
Obligations under capital leases, excluding
current installments...................... -- 79,999 317,107 317,107 317,107
----------- ------------- ------------- -------------- ---------------
Total liabilities..................... 796,204 5,547,179 8,231,741 8,231,741 8,231,741
Redeemable convertible preferred stock...... -- -- -- 16,200,000 --
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
1,031,418 shares pro forma as
adjusted................................ 8,875 8,675 8,675 8,675 10,314
Additional paid-in capital................ 128,629 310,829 310,829 310,829 16,509,190
Accumulated deficit....................... (593,723) (2,212,729) (4,426,646) (4,426,646) (4,426,646)
----------- ------------- ------------- -------------- ---------------
Total stockholders' (deficit)
equity.............................. (456,219) (1,893,225) (4,107,142) (4,107,142) 12,092,858
----------- ------------- ------------- -------------- ---------------
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.
(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....................... 375,000 563,200 125,000 80,000
Job fair fees............................... -- -- -- 215,727
Other....................................... 13,117 549,269 80,000 394,787
----------------- -------------- -------------- --------------
Total revenues............................ 749,059 4,150,786 551,606 2,650,888
Cost of revenues.............................. 12,000 505,527 77,483 588,419
----------------- -------------- -------------- --------------
Gross profit............................ 737,059 3,645,259 474,123 2,062,469
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.................... (593,723) (1,555,948) (414,037) (2,145,830)
Net interest expense.......................... -- 63,058 6,584 68,087
----------------- -------------- -------------- --------------
Net loss................................ $ (593,723) $ (1,619,006) $ (420,621) $ (2,213,917)
----------------- -------------- -------------- --------------
----------------- -------------- -------------- --------------
Basic and diluted net loss per common share... $ (0.67) $ (1.85) $ (0.47) $ (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...... -- -- -- (593,723) (593,723)
----------- --------- ----------- -------------- --------------
Balance as of December 31, 1997.............. 887,500 8,875 128,629 (593,723) (456,219)
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....................................... -- -- -- (1,619,006) (1,619,006)
----------- --------- ----------- -------------- --------------
Balance as of December 31, 1998.............. 867,500 8,675 310,829 (2,212,729) (1,893,225)
Net loss for the three months ended March 31,
1999 (unaudited)........................... -- -- -- (2,213,917) (2,213,917)
----------- --------- ----------- -------------- --------------
Balance as of March 31, 1999 (unaudited)..... 867,500 $ 8,675 $ 310,829 $ (4,426,646) $ (4,107,142)
----------- --------- ----------- -------------- --------------
----------- --------- ----------- -------------- --------------
</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.................................... $ (593,723) $ (1,619,006) $ (420,621) $ (2,213,917)
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...................... 424,491 540,220 119,741 292,566
----------------- -------------- ------------ ---------------
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)
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 20, 1997 THREE MONTHS ENDED
(INCEPTION) TO YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, -----------------------------
1997 1998 1998 1999
----------------- -------------- ------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow
information:
Interest paid............................... $ -- $ 13,128 $ 6,584 $ 8,495
----------------- -------------- ------------ ---------------
----------------- -------------- ------------ ---------------
Noncash transactions:
Equipment acquired under capital leases..... $ -- $ 200,543 $ 39,533 $ 378,487
Barter transaction.......................... $ -- $ -- $ -- $ 168,334
</TABLE>
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, each of the then outstanding shares of
HotJobs' convertible preferred stock will automatically convert into 163,918
shares of common stock based on the current conversion price of the Series A
Preferred Stock.
(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.
(C) USE OF ESTIMATES
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. These hosting fees are
contracted separately from the software license.
HotJobs also licenses its Softshoe proprietary recruiting software. Software
license fee revenue consists of one-time license fees paid by Softshoe
customers. Revenue is recognized in
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)
accordance with the guidance provided in AICPA Statements of Position 97-2 and
98-9 "Software Revenue Recognition." Under this guidance, revenue is recognized
upon the substantial completion and delivery of the related software, assuming
that the fee is fixed and determinable, and that collectibility is probable.
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 revenue also includes fees from a one-time sale of a
miscellaneous proprietary software license in 1998, which HotJobs recognized in
accordance with Statements of Position 97-2 and 98-9.
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.
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)
(J) ADVERTISING EXPENSES
HotJobs expenses advertising costs as incurred or 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 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 149,150 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.
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)
(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
effectiveness of the IPO. All common share and per share amounts in the
accompanying financial statements will be adjusted retroactively.
(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.
F-12
<PAGE>
HOTJOBS.COM, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(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>
(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........................... $ 249,000 $ 693,000
Excess depreciation for tax................................ -- (13,000)
--------- ---------
249,000 680,000
--------- ---------
Less valuation allowance..................................... (249,000) (680,000)
--------- ---------
Deferred tax assets.......................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
HOTJOBS.COM, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(5) INCOME TAXES (CONTINUED)
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 $431,000.
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 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.
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)
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 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 begining 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 begining 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 has a joint fiduciary liability policy, issued by Travelers Insurance
for a one-year term beginning October 20, 1998, with OTEC and its affiliates.
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 40,000 shares of Series A Preferred
Stock for $400,000. 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 1,000,000 shares of Series A
Preferred Stock for $10,000,000. Generation Partners owns more than 5% of
HotJobs' stock. One of HotJobs' directors is a Managing Partner of an affiliate
of Generation Partners.
F-15
<PAGE>
HOTJOBS.COM, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(6) RELATED PARTY TRANSACTIONS (CONTINUED)
One of HotJobs' directors purchased 25,000 shares of Series A Preferred
Stock for $250,000. 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 20,000 shares of Series A Preferred
Stock for $200,000.
(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.
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 50,000,000 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. 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.
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, two
customers, one of which was an affiliate company, accounted for approximately
40% and 23%, respectively, of total revenues generated by HotJobs during that
period. No customers for more than 10% of gross accounts receivable at December
31, 1997.
For the year ended December 31, 1998, one customer who is an affiliate
company 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, two customers, one of which was
an affiliate company, accounted for approximately 25% and 20%, respectively, of
total revenues generated by HotJobs during that period. One customer accounted
for more than 10% of gross accounts receivable at March 31, 1998.
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 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, and Dimitri Boylan each has an employment
agreement with HotJobs. Each agreement 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. The annual salary for each of these
executives is as follows: Richard Johnson, $200,000; Stephen Ellis, $175,000;
and Dimitri Boylan, $175,000. The annual salary of each executive 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. 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 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.
F-18
<PAGE>
HOTJOBS.COM, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(12) STOCK OPTION PLAN (CONTINUED)
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)..................................... 98,150 $ 1.30
Exercised (unaudited)............................................ -- $ --
Forfeited (unaudited)............................................ (500) $ 1.30
--------
Outstanding as of March 31, 1999 (unaudited)..................... 149,150 $ 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 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........................................................................ $ (1,619,006)
--------------
--------------
Net loss--pro forma..................................................................... $ (1,623,947)
--------------
--------------
Basic and diluted net loss per share--actual and pro forma.............................. $ (1.85)
--------------
--------------
</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>
F-19
<PAGE>
HOTJOBS.COM, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(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 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.
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)
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.
(C) COMMITMENT TO PURCHASE COMMERCIAL AIRTIME
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>
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...................... 54
Principal Stockholders.......................... 57
Description of Capital Stock.................... 60
Shares Eligible for Future Sale................. 65
Underwriting.................................... 67
Legal Matters................................... 70
Experts......................................... 70
Where You Can Find More Information............. 70
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*TRADE SECURITIES, INC.
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........................................................... $ 19,742
NASD filing fee................................................................ 7,400
Nasdaq National Market listing fee............................................. 75,000*
Legal fees and expenses........................................................ 300,000*
Accounting fees and expenses................................................... 500,000*
Printing and engraving......................................................... 300,000*
Transfer agent fees............................................................ 15,000*
Other.......................................................................... 302,858
-------------
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 and Dimitri J. Boylan 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 Convertible Preferred Stock to 30 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............................. 3,091,392 $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.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
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
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
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.
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.
+ To be supplied by amendment.
(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 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.
II-3
<PAGE>
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 19th day of July, 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
July 19, 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/ STEPHEN W. ELLIS (principal financial and
- ------------------------------ accounting officer) and
Stephen W. Ellis Director
/s/ DIMITRI J. BOYLAN Chief Operating Officer,
- ------------------------------ Secretary and Director
Dimitri J. Boylan
/s/ JOHN A. HAWKINS Director
- ------------------------------
John A. Hawkins
/s/ JOHN G. MURRAY Director
- ------------------------------
John G. Murray
Director
- ------------------------------
Kevin P. Ryan
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
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
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. Nasset, Jr.
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.
+ To be supplied by amendment.
<PAGE>
Exhibit 1.1
_______________ Shares
HotJobs.com, Ltd.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
_______________, 1999
Deutsche Bank Securities Inc.
BancBoston Robertson Stephens
SG Cowen Securities Corporation
E*TRADE Securities, Inc.
As Representatives of the
Several Underwriters
c/o Deutsche Bank Securities Inc.
One South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
HotJobs.com, Ltd., a Delaware corporation (the "Company"), proposes to
sell to the several underwriters (the "Underwriters") named in Schedule I hereto
for whom you are acting as representatives (the "Representatives") an aggregate
of __________ shares (the "Firm Shares") of the Company's common stock, $.01 par
value (the "Common Stock"). The respective amounts of the Firm Shares to be so
purchased by the several Underwriters are set forth opposite their names in
Schedule I hereto. The Company also proposes to sell at the Underwriters' option
an aggregate of up to __________ additional shares of the Company's Common Stock
(the "Option Shares") as set forth below.
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As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters. The Firm Shares and the Option Shares (to
the extent the aforementioned option is exercised) are herein collectively
called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) A registration statement on Form S-1 (File No. 333-80367) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 424(b). Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Company is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification, except such jurisdictions in which, when
considered in the aggregate, the failure to be so qualified would not have a
material adverse effect on the Company.
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<PAGE>
(c) The outstanding shares of Common Stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable. The
Shares to be issued and sold by the Company have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully paid
and non-assessable; and no preemptive rights of stockholders exist with respect
to any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(e) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct as of the date referenced in the Prospectus.
All of the Shares conform to the description thereof contained in the
Registration Statement. The form of certificates for the Shares conforms to the
General Corporation Law of the State of Delaware (the "DGCL").
(f) The Commission has not issued an order preventing or suspending
the use of any Preliminary Prospectus or Prospectus relating to the proposed
offering of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains, and the Prospectus and any amendments or
supplements thereto will contain, all statements which are required to be stated
therein by, and will conformto the requirements of the Act and the Rules and
Regulations. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact, and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representatives,
specifically for use in the preparation thereof.
(g) The financial statements of the Company, together with related
notes and schedules as set forth in the Registration Statement and the
Prospectus, present fairly the financial position and the results of operations
and cash flows of the Company at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been prepared in
accordance with generally accepted accounting principles , consistently applied
throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods have
been made. The summary financial and statistical data and the
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<PAGE>
selected financial and statistical data included in the Registration Statement
and the Prospectus present fairly the information shown therein and such data
has been compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company. The pro forma financial
information included in the Registration Statement and the Prospectus presents
fairly the information shown therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(h) KPMG LLP, who have certified certain of the financial statements
filed with the Commission as part of the Registration Statement, are independent
public accountants as required by the Act and the Rules and Regulations.
(i) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might, individually or in the aggregate, result in any material adverse change
in the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company or to prevent the
consummation of the transactions contemplated hereby , except as set forth in
the Registration Statement and the Prospectus.
(j) The Company has good and marketable title to all of the
properties and assets reflected in the financial statements (or as described in
the Registration Statement) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements (or as described in the Registration Statement) or which
are not material in amount. The Company occupies its leased properties under
valid and binding leases conforming in all material respects to the description
thereof set forth in the Registration Statement.
(k) The Company has filed all Federal, state, local and foreign tax
returns which have been required to be filed and has paid all taxes indicated by
said returns and all assessments received by it to the extent that such taxes
have become due and are not being contested in good faith and for which an
adequate reserve for accrual has been established in accordance with generally
accepted accounting principles. All tax liabilities have been adequately
provided for in the financial statements of the Company, and the Company does
not know of any actual or proposed additional material tax assessments.
(l) Since the respective dates as of which information is given in
the Registration Statement , as it may be amended or supplemented, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or
4
<PAGE>
otherwise), or prospects of the Company, whether or not occurring in the
ordinary course of business, and there has not been any material transaction
entered into or any material transaction that is probable of being entered into
by the Company, other than transactions in the ordinary course of business,
other than as described in the Registration Statement , as it may be amended or
supplemented. The Company has no material contingent obligations which are not
disclosed in the Company's financial statements which are included in the
Registration Statement.
(m) The Company is not, nor with the giving of notice or lapse of
time or both, will be, in violation of or in default under its Charter or
By-Laws or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound and which default is of material significance in respect of the
condition, financial or otherwise of the Company or the business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company.
(n) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, (i) any agreement, lease,
contract, indenture or other instrument or obligation to which the Company is a
party, (ii) the Charter or By-Laws of the Company or (iii) any order, rule or
regulation applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company.
(o) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(p) The Company holds all material licenses, certificates and
permits from governmental authorities which are necessary to own or lease, as
the case may be, and to operate its propertiesand to conduct its business as
described in the Registration Statement; and, except as described in the
Prospectus (and any amendment or supplement thereto), the Company has not to its
knowledge infringed any patents issued prior to the Closing Date, trade names,
trademarks or copyrights, which infringement is material to the business of the
Company as described in the Registration Statement. The Company knows of no
material infringement by others of patents, patent rights, trade names,
trademarks or copyrights owned by or licensed to the Company. The Company owns,
or possesses adequate rights to use, all patents, patent rights, inventions,
trade secrets, licenses, know-how, proprietary techniques, including processes
and substances,
5
<PAGE>
trademarks, service marks, trade names and copyrights described or referred to
in the Prospectus as owned or used by it or which are necessary for the conduct
of its business as described in the Prospectus, except as otherwise disclosed in
the Prospectus. To the best knowledge of the Company, except as disclosed in the
Prospectus, all such patents, patent rights, licenses, trademarks, service marks
and copyrights are (a) valid and enforceable and (b) not being infringed by any
third parties which infringement could, whether singly or in the aggregate,
materially and adversely affect the business, properties, operations, condition
(financial or otherwise), income, business prospects or results of operations of
the Company, as presently being conducted or as proposed to be conducted in the
Prospectus. Except as disclosed in the Prospectus, the Company has no knowledge
of, nor has it received any notice of, infringement of or conflict with,
asserted rights of others with respect to any patents issued prior to the
Closing Date, inventions, trade secrets, licenses, know-how, proprietary
techniques, including processes and substances, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding could materially and adversely affect
the business, properties, operations, condition (financial or otherwise),
income, business prospects or results of operations of the Company as presently
being conducted or as proposed to be conducted in the Prospectus.
(q) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares. The Company
acknowledges that the Underwriters may engage in passive market making
transactions in the Shares on the Nasdaq Stock Market in accordance with
Regulation M under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(r) The Company is not an "investment company" within the meaning of
such term under the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Commission thereunder.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
6
<PAGE>
(t) The Company carries, or is covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in the same or
similar businesses.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(v) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers,
directors or 5% or greater securityholders, except as set forth in the
Registration Statement.
(w) The Company has implemented procedures to analyze and address
the risk that the computer hardware and software used or produced by it may be
unable to recognize and properly execute date-sensitive functions involving
certain dates after December 31, 1999 (the "Year 2000 Problem"), and has
determined, to the best of its knowledge, that such risk will be remedied on a
timely basis without material expense and will not have a material adverse
effect upon the financial condition and results of operations of the Company.
The Company believes, after due inquiry, that each supplier, vendor, customer or
financial service organization used or serviced by the Company has remedied or
will remedy on a timely basis the Year 2000 Problem, except to the extent that a
failure to remedy by any such supplier, vendor, customer or financial service
organization would not have a material adverse effect on the Company.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $_____ per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof.
7
<PAGE>
(b) Payment for the Firm Shares to be sold hereunder is to be made
by wire transfer in Federal (same day) funds against delivery of the Firm Shares
to the Representatives for the several accounts of the Underwriters. Such
payment and delivery are to be made through the facilities of the Depository
Trust Company, New York, New York at 10:00 a.m., New York time, on the third
business day after the date of this Agreement or at such other time and date not
later than five business days thereafter as you and the Company shall agree
upon, such time and date being herein referred to as the "Closing Date." (As
used herein, "business day" means a day on which the New York Stock Exchange is
open for trading and on which banks in New York are open for business and are
not permitted by law or executive order to be closed.)
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of this
Section 2. The option granted hereby may be exercised in whole or in part by
giving written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such Option Shares are to be
delivered. The time and date at which the Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the "Option Closing Date"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be purchased by
each Underwriter shall be in the same proportion to the total number of Option
Shares being purchased as the number of Firm Shares being purchased by such
Underwriter bears to the total number of Firm Shares purchased by the
Underwriters, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters.
You, as Representatives of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such cancellation
to the Company. To the extent, if any, that the option is exercised, payment for
the Option Shares shall be made on the Option Closing Date, by wire transfer
drawn to the order of the Company, in Federal (same day funds) through the
facilities of the Depository Trust Company in New York, New York.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The
8
<PAGE>
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the Representatives
for the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations, and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(b) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as
9
<PAGE>
are or may be required to continue such qualifications in effect for so long a
period as the Representatives may reasonably request for distribution of the
Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
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<PAGE>
(h) No offering, sale, short sale or other disposition of any shares
of Common Stock of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivatives of Common
Stock (or agreement for such) will be made for a period of 180 days after the
date of this Agreement, directly or indirectly, by the Company otherwise than
hereunder, 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 the Company's stock option plans or the exercise
of such options, or with the prior written consent of Deutsche Bank Securities
Inc.
(i) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the Nasdaq Stock Market.
(j) The Company will cause each officer and director and certain
stockholders of the Company to furnish to you, on or prior to the date of this
agreement, a letter or letters, in form and substance satisfactory to the
Underwriters, pursuant to which each such person shall agree (the "Lockup
Agreements") that, without the prior written consent of Deutsche Bank Securities
Inc., he or she shall not, directly or indirectly offer, sell, sell short,
transfer, hypothecate, pledge, or otherwise dispose of any shares of Common
Stock or other securities convertible into or exchangeable or exercisable for
shares of Common Stock or derivatives of 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 effective
date of the Registration Statement (the "Lock-Up Period"). Notwithstanding the
foregoing, such officer, director or stockholder may transfer any or all of the
Shares by gift, will or intestacy. It shall be a condition to any such permitted
transfer by gift, will, or intestacy that the transferee execute an agreement
obliging such person to hold the transferred Shares subject to the provisions of
the Lockup Agreement.
(k) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company to register as an investment company under the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary
under the DGCL, a registrar for the Common Stock.
11
<PAGE>
(n) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Invitation Letter, the Nasdaq Stock Market Listing
Application, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses incident to securing
any required review by the NASD of the terms of the sale of the Shares; the
Listing Fee of the Nasdaq Stock Market; and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed shares of the Common Stock by the Underwriters to employees and persons
having business relationships with the Company. The Company shall not, however,
be required to pay for any of the Underwriters' expenses (other than those
related to qualification under NASD regulations and state securities or Blue Sky
laws) except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this Agreement is
terminated by the Representatives pursuant to Section 11 hereof, or by reason of
any failure, refusal or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure to satisfy
said condition or to comply with said terms be due to the default or omission of
any Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder;
but the Company shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date or the Option Closing
Date, as the case may be, of the representations and
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warranties of the Company contained herein, and to the performance by the
Company of its covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date or
the Option Closing Date, as the case may be, which would prevent the issuance of
the Shares.
(b) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinions of Brobeck, Phleger &
Harrison LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; and the Company
is duly qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification, except such jurisdictions in which,
when considered in the aggregate, the failure to be so qualified would not have
a material adverse effect upon the business of the Company.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus as of the date
referenced in the Prospectus; the authorized shares of the Company's Common
Stock have been duly authorized; the outstanding shares of the Company's Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform to the description thereof contained
in the Prospectus; the certificates for the Shares, assuming they are in the
form filed with the Commission, are in due and proper form; the shares of Common
Stock, including the Option Shares, if any, to be sold by the Company pursuant
to this Agreement have been duly authorized and will be validly issued, fully
paid and non-assessable when issued and paid for as contemplated by this
Agreement; and no preemptive rights of stockholders exist with respect to any of
the Shares or the issue or sale thereof.
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(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company,
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any shares of Common Stock or other securities of
the Company included in the Registration Statement or the right, as a result of
the filing of the Registration Statement, to require registration under the Act
of any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act.
(v) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations (except that such
counsel need express no opinion as to the financial statements and related
schedules included therein).
(vi) The statements under the captions "Business Business
Alliances," "Business - Government Regulation and Legal Uncertainties,"
"Business - Facilities," "Management - Classes of Directors," "Management -
Employment Agreements," "Management - 1999 Stock Option/Stock Issuance Plan,"
"Management - Employee Stock Purchase Plan," "Related Party Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future Sale" in the
Prospectus, insofar as such statements constitute a summary of documents
referred to therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
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(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company except as set forth in the
Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under (i) the Amended and Restated Certificate of
Incorporation or Amended and Restated Bylaws of the Company or (ii) any
agreement or instrument known to such counsel to which the Company is a party or
by which the Company may be bound.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same and where the failure to
obtain such, when considered together with all other such failures, would not
reasonably be expected to have a material adverse effect on the Company.
(xii) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement, and
application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
In rendering such opinion Brobeck, Phleger & Harrison LLP may rely
as to matters governed by the laws of states other than Delaware or Federal laws
on local counsel in such jurisdictions, provided that in each case Brobeck,
Phleger & Harrison LLP shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may
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be, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Brobeck,
Phleger & Harrison LLP may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(c) The Representatives shall have received from Shaw Pittman,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs (ii), (iii), (iv), and (ix) of Paragraph (b) of this Section 6,
and that the Company is a duly organized and validly existing corporation under
the laws of the State of Delaware. In rendering such opinion, Shaw Pittman may
rely as to all matters governed other than by the laws of the State of Delaware
or Federal laws on the opinion of counsel referred to in Paragraph (b) of this
Section 6. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Prospectus, or any supplement thereto, on
the date it was filed pursuant to the Rules and Regulations and as of the
Closing Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact, necessary in
order to make the statements, in the light of the circumstances under which they
are made, not misleading (except that such counsel need express no view as to
financial statements, schedules and statistical information therein). With
respect to such statement, Shaw Pittman may state that their belief is based
upon the procedures set forth therein, but is without independent check and
verification.
(d) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of KPMG LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating that in their opinion the
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
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(e) The Representatives shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
(iv) He carefully examined the Registration Statement and the
Prospectus and, in his opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true and
correct, and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
(v) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company,
whether or not arising in the ordinary course of business.
(f) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(g) The Firm Shares and Option Shares, if any, shall have been
approved for designation upon notice of issuance on the Nasdaq Stock Market.
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(h) The Lockup Agreements described in Section 4(j) shall be in full
force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Shaw Pittman,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
In such event, the Company and the Underwriters shall not be under
any obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of
the Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the
Act, against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, (ii) the omission
or alleged omission to state in the Registration Statement or any
amendment or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein not misleading, (iii)
the omission or alleged omission to state in any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto a material fact
required to be stated therein or necessary
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to make the statement therein not misleading in the light of the
circumstances under which they were made or (iv) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i), (ii) or (iii) above (provided, that the
Company shall not be liable under this clause (iv) to the extent that it
is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from
any such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct); provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company
by or through the Representatives specifically for use in the preparation
thereof.
(2) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or
governmental inquiry related to the offering of the Shares, whether or not
such Underwriter or controlling person is a party to any action or
proceeding. In the event that it is finally judicially determined that the
Underwriters were not entitled to receive payments for legal and other
expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
(ii) the omission or the alleged omission to state in the Registration Statement
or any amendment or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) the
omission or the alleged omission to state in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses
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<PAGE>
reasonably incurred by the Company or any such director, officer, or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by Deutsche Bank Securities Inc. in the case of parties
indemnified pursuant to Section 8(a), and by the Company in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but if
settled with such consent or
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if there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding with respect to which indemnification may be sought
hereunder (whether or not any indemnified party is an actual or potential party
to such claim, action or proceeding) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the
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provisions of this subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 8(d)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may
be, any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Firm Shares or Option Shares, as the case may
be, which the defaulting Underwriter or Underwriters failed to purchase. If
during such 36 hours you, as such Representatives, shall not have procured such
other Underwriters, or any others, to purchase the Firm Shares or Option Shares,
as the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not
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exceed 10% of the Firm Shares or Option Shares, as the case may be, covered
hereby, the other Underwriters shall be obligated, severally, in proportion to
the respective numbers of Firm Shares or Option Shares, as the case may be,
which they are obligated to purchase hereunder, to purchase the Firm Shares or
Option Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase or (b) if the aggregate number of shares of Firm
Shares or Option Shares, as the case may be, with respect to which such default
shall occur exceeds 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the Company or you as the Representatives of the Underwriters
will have the right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or
Option Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, and the Company may determine
in order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Deutsche Bank Securities
Inc., One South Street, Baltimore, Maryland 21202, Attention: David Weaver; with
a copy to Deutsche Bank Securities Inc., One Bankers Trust Plaza, 130 Liberty
Street, New York, New York 10006, Attention: General Counsel; if to the Company,
to HotJobs.com, Ltd., 24 W. 40th Street, 14th Floor, New York, New York 10018,
Attention: General Counsel with a copy to Brobeck, Phleger & Harrison LLP, 1633
Broadway, 47th Floor, New York, New York 10019, Attention: Alexander D. Lynch,
Esq.
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
at any time prior to the Closing Date if any of the following has occurred: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, of the Company or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency or other national or international calamity
23
<PAGE>
or crisis or change in economic or political conditions if the effect of such
outbreak, escalation, declaration, emergency, calamity, crisis or change on the
financial markets of the United States would, in your reasonable judgment, make
it impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares, or (iii) suspension of trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or limitation on
prices (other than limitations on hours or numbers of days of trading) for
securities on either such Exchange, (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New York
State authorities, (vi) the suspension of trading of the Company's common stock
by the Nasdaq Stock Market, the Commission, or any other governmental authority,
or (vii) the taking of any action by any governmental body or agency in respect
of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
legends required by Item 502(d) of Regulation S-K under the Act and the
information in the third, eighth and ninth paragraphs under the caption
"Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
24
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This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
25
<PAGE>
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
HOTJOBS.COM, LTD.
By
----------------------------------
Name
Title
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first above written.
DEUTSCHE BANK SECURITIES INC.
BANCBOSTON ROBERTSON STEPHENS
SG COWEN SECURITIES CORPORATION
E*TRADE SECURITIES, INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Bank Securities Inc.
By:
---------------------------------
Authorized Officer
26
<PAGE>
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Deutsche Bank Securities Inc.
BancBoston Robertson Stephens
SG Cowen Securities Corporation
E*TRADE Securities, Inc.
----------
Total ----------
27
<PAGE>
28
<PAGE>
<PAGE>
Exhibit 10.1
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
AMONG
HOTJOBS.COM, LTD.
AND
THE PURCHASERS NAMED HEREIN
Dated as of May 10, 1999
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
Article I......................................................................1
1.1 Authorization of the Series A Preferred Stock................1
1.2 Sale and Purchase of Shares..................................1
Article II.....................................................................2
2.1 Purchase Price...............................................2
2.2 Closing Date.................................................2
2.3 Delivery of Purchased Shares.................................2
Article III....................................................................2
3.1 Organization and Good Standing...............................2
3.2 Authorization................................................3
3.3 Capitalization...............................................3
3.4 Subsidiaries.................................................4
3.5 Corporate Records............................................4
3.6 Conflicts; Consents of Third Parties.........................5
3.7 Financial Statements.........................................5
3.8 No Undisclosed Liabilities...................................6
3.9 Absence of Certain Developments..............................6
3.10 Taxes........................................................6
3.11 Real Property................................................8
3.12 Tangible Personal Property...................................8
3.13 Intangible Property..........................................9
3.14 Material Contracts...........................................9
3.15 Employee Benefits...........................................11
3.16 Labor.......................................................12
3.17 Litigation..................................................13
3.18 Compliance with Laws; Permits...............................13
3.19 Environmental Matters.......................................14
3.20 Insurance...................................................14
3.21 Related Party Transactions..................................14
3.22 Product Warranties and Liabilities..........................14
<PAGE>
TABLE OF CONTENTS
(CONT'd)
Section Page
- ------- ----
3.23 Year 2000...................................................15
3.24 No Misrepresentation........................................15
3.25 Financial Advisors..........................................15
3.26 Qualified Small Business Stock..............................15
Article IV....................................................................16
4.1 Authorization of Agreement..................................16
4.2 Conflicts; Consents of Third Parties........................16
4.3 Litigation..................................................16
4.4 Purchase Entirely for Own Account...........................16
4.5 Disclosure of Information...................................17
4.6 Investment Experience.......................................17
4.7 Accredited Investor.........................................17
4.8 Restricted Securities.......................................17
4.9 Financial Advisors..........................................18
Article V.....................................................................18
5.1 Business in the Ordinary Course.............................18
5.2 Maintenance of Properties and Assets........................18
5.3 Employees and Business Relations............................18
5.4 Compliance with Laws, etc...................................18
5.5 Conduct of Business.........................................18
5.6 Access......................................................18
5.7 Third-Party Approvals.......................................19
Article VI....................................................................19
6.1 Conditions Precedent to Obligations of the Purchasers.......19
6.2 Conditions Precedent to Obligations of the Company..........20
Article VII...................................................................20
7.1 Deliveries by the Company to the Purchasers.................20
7.2 Deliveries by the Purchasers to the Company.................21
Article VIII..................................................................22
ii
<PAGE>
TABLE OF CONTENTS
(CONT'd)
Section Page
- ------- ----
8.1 Indemnification.............................................22
8.2 Indemnification Procedures..................................22
8.3 Limitations on Indemnification..............................23
8.4 Tax Treatment of Indemnity Payments.........................24
Article IX....................................................................24
9.1 Termination of Agreement....................................24
9.2 Procedure Upon Termination..................................24
9.3 Effect of Termination.......................................24
Article X.....................................................................25
10.1 Certain Definitions.........................................25
10.2 Transfer Taxes..............................................29
10.3 Survival of Representations and Warranties..................29
10.4 Fees and Expenses...........................................29
10.5 Specific Performance........................................30
10.6 Further Assurances..........................................30
10.7 Submission to Jurisdiction; Consent to Service of Process...30
10.8 Entire Agreement; Amendments and Waivers....................30
10.9 Governing Law...............................................31
10.10 Table of Contents and Headings..............................31
10.11 Notices.....................................................31
10.12 Severability................................................32
10.13 Binding Effect; Assignment..................................32
10.14 Counterparts.........................................................32
iii
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I -- Purchasers
Schedule 3.1 -- Foreign Qualifications
Schedule 3.3 -- Capitalization
Schedule 3.4 -- Subsidiaries
Schedule 3.5 -- Violations
Schedule 3.6 -- Consents
Schedule 3.7 -- Financial Statements
Schedule 3.9 -- Certain Developments
Schedule 3.10 -- Tax Matters
Schedule 3.11 -- Real Property
Schedule 3.12 -- Tangible Personal Property
Schedule 3.13 -- Intangible Person Property
Schedule 3.14 -- Material Contracts
Schedule 3.15 -- Employee Benefit Matters
Schedule 3.16 -- Labor
Schedule 3.17 -- Litigation
Schedule 3.19 -- Environmental Matters
Schedule 3.20 -- Insurance
Schedule 3.21 -- Related Party Transactions
Schedule 3.22 -- Warranties
Schedule 3.25 -- Financial Advisers
Exhibit A -- Certificate of Amendment
Exhibit B -- Amended and Restated Stockholders' Agreement
Exhibit C -- Form of Confidentiality and Inventions Assignment Agreement
Exhibit D -- Form of Opinion of Company's Counsel
Exhibit E -- Board of Directors Resolutions
Exhibit F -- Stockholder Resolutions for Articles of Amendment
iv
<PAGE>
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of May
10, 1999 (this "AGREEMENT"), by and among HOTJOBS.COM, LTD., a Delaware
corporation (the "COMPANY"), and each of the parties listed in Schedule I
annexed hereto (each a "PURCHASER," and collectively, the "PURCHASERS").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution of this Agreement, the Company
had issued and outstanding the equity securities described in Section 3.3
hereof, which constituted all of the issued and outstanding shares of capital
stock of the Company; and
WHEREAS, the Company proposes to issue and sell, and the Purchasers wish
to purchase for an aggregate purchase price of U.S. $20,000,000, an aggregate of
2,000,000 shares of Series A Convertible Preferred Stock, par value $0.01 per
share, of the Company (the "SERIES A PREFERRED STOCK") upon the terms and
subject to the conditions set forth below; and
WHEREAS, certain terms used in this Agreement are defined in Section 10.1;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
ARTICLE I.
AUTHORIZATION AND SALE OF THE SHARES
1.1 AUTHORIZATION OF THE SERIES A PREFERRED STOCK. The Company, by all
requisite action, has designated as authorized capital, 2,000,000 shares of
preferred stock, all of which has been designated as Series A Preferred Stock
and has authorized the issuance and sale of 2,000,000 shares of Series A
Preferred Stock (the "SHARES"), having the rights, privileges, restrictions and
conditions set forth in the Certificate of Amendment to the Company's
Certificate of Incorporation attached to this Agreement as EXHIBIT A (the
"CERTIFICATE OF AMENDMENT").
1.2 Sale and Purchase of Shares. Upon the terms and subject to the
conditions contained herein, on the Closing Date the Company shall sell, assign,
transfer, convey and deliver to the Purchasers, and the Purchasers severally
(and not jointly) shall be obligated to purchase from the Company free and clear
of all Liens (other than the restrictions imposed by the Amended and Restated
Stockholders' Agreement, in the form of EXHIBIT B hereto (the "STOCKHOLDERS'
AGREEMENT")), the number of shares of Series A Preferred Stock set forth
opposite such Purchaser's name on Schedule I hereto.
<PAGE>
ARTICLE II.
PURCHASE PRICE AND CLOSING
2.1 Purchase Price. The aggregate purchase price for the Shares shall be
$20,000,000 (the "Purchase Price"), of which each Purchaser will pay the amount
set forth on Schedule I attached hereto opposite the name of such Purchaser.
2.2 Closing Date. Subject to the satisfaction of the conditions set forth
in Sections 6.1 and 6.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the purchase and sale of the Shares
provided for in Section 1.2 hereof (each, a "CLOSING") shall take place at 10:00
a.m. at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth Avenue,
New York, New York 10153 on May 11, 1999 with respect to each of the Purchasers
other than Generation Capital Partners L.P., Generation Parallel Management
Partners L.P. and the State Board of Administration of Florida (collectively,
"GENERATION") and on May 17, 1999 with respect to Generation, or at such other
place and on such other date as the Company and the Purchasers may mutually
agree. The date on which each Closing shall be held is referred to in this
Agreement as a "CLOSING Date".
2.3 Delivery of Purchased Shares. At each Closing, (i) the Company shall
deliver to the applicable Purchasers the stock certificate or certificates
evidencing the Shares duly endorsed in blank or accompanied by stock powers duly
endorsed in blank, in proper form for transfer, and with all appropriate stock
transfer tax stamps affixed, against payment of the amount of the Purchase Price
payable in accordance with Section 2.1 hereof by wire transfer of immediately
available funds to an account designated in writing by the Company and (ii) the
parties shall make the other deliveries provided in Article VII hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers that:
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business. The Company is duly
qualified or authorized to do business as a foreign corporation and is in good
standing as a foreign corporation under the laws of each jurisdiction in which
it leases real property and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure so to be qualified or authorized would
not have a Material Adverse Effect. Schedule 3.1 sets forth a true, correct and
complete list of each jurisdiction in which the Company is qualified or
authorized to do business as a foreign corporation.
2
<PAGE>
3.2 Authorization. The Company has all requisite power, authority and
legal capacity to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, each of the
documents set forth in Section 7.1(a), (b), (e), (h), (i) and (j) hereof (this
Agreement, together with all such other agreements, documents, instruments and
certificates required to be executed by the Company being referred to herein,
collectively, as the "COMPANY DOCUMENTS"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by the Board of Directors of
the Company and no further corporate action on the part of the Company or its
stockholders is necessary to authorize this Agreement and the performance of the
transactions contemplated hereby. This Agreement has been, and each of the other
Company Documents will be at or prior to each Closing, duly and validly executed
and delivered by the Company and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the other Company Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3 Capitalization.
(a) As of the date hereof, and immediately prior to giving effect to the
Certificate of Amendment:
(i) the authorized capital of the Company consists of 2,000,000
shares designated as common stock, par value $0.01 per share (the "COMMON
STOCK"), of which there are 817,500 shares of Common Stock issued and
outstanding, having the rights, privileges, restrictions and conditions
specified in the Company's Certificate of Incorporation;
(ii) all of the issued and outstanding shares of capital stock of
the Company were duly authorized for issuance and are validly issued,
fully paid and non-assessable and, are held of record and, to the
knowledge of the Company, beneficially owned by the Persons set forth on
Schedule 3.3;
(iii) except as set forth on Schedule 3.3, there are no outstanding
securities of the Company convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of the Company,
there are no outstanding or authorized options, warrants, calls,
subscription rights, commitments or other agreements of any character
requiring, and there are no securities outstanding which upon conversion
3
<PAGE>
or exchange would require, the issuance, sale or transfer of any
additional shares of capital stock of the Company or other equity
securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase
shares of capital stock of the Company or other equity securities of the
Company, or any stock appreciation rights, phantom stock or similar equity
equivalent rights issued by or binding upon the Company ("EQUITY
EQUIVALENTS"); and
(iv) except as set forth on Schedule 3.3, there are no voting trusts
or other voting agreements with respect to the capital stock of the
Company or any agreement relating to the issuance, sale, redemption,
transfer or other disposition of the capital of the Company to which the
Company is a party, or of which the Company has knowledge, that will not
be terminated as of the Closing Date, other than the Stockholders'
Agreement.
(b) Immediately upon giving effect to the execution and filing of the
Certificate of Amendment and the issuance and sale of the shares of Series A
Preferred Stock pursuant to this Agreement, the authorized capital of the
Company shall consist of, in addition to the shares of Common Stock described in
Section 3.3(a), 2,000,000 shares of preferred stock, all of which has been
designated as Series A Preferred Stock, all of which shall be issued and
outstanding, and 202,372 shares of Common Stock shall be authorized for issuance
upon conversion of the authorized shares of Series A Preferred Stock.
(c) The Shares to be issued pursuant to this Agreement, upon delivery to
the Purchasers of share certificates therefor against payment in accordance with
the terms of this Agreement, and the shares of Common Stock issuable upon
conversion of such Shares of the Company, when issued upon conversion of such
Shares in accordance with the Certificate of Amendment, (i) will be validly
issued, fully paid and nonassessable, (ii) will be free and clear of all Liens,
other than the restrictions imposed by the Stockholders' Agreement and (iii)
assuming that the representations of the Purchasers in Article IV hereof are
true and correct, will be issued in compliance with all applicable U.S. federal
and state securities laws.
3.4 Subsidiaries. The Company has no direct or indirect Subsidiaries and
owns no direct or indirect equity interest in any partnership, joint venture
arrangement or other business entity.
3.5 Corporate Records.
(a) The certified copy of the Company's Certificate of Incorporation and
the copy of the Company's Bylaws, both as amended to date, of the Company, and
the copies of all leases, instruments, agreements, licenses, Permits,
certificates or other documents which are included on the schedules attached
hereto or which have been delivered to the Purchasers in connection with the
transactions contemplated hereby, are in the form previously provided to counsel
for the Purchasers.
4
<PAGE>
(b) The minute books of the Company previously made available to the
Purchasers contain complete and accurate records of all meetings and accurately
reflect in all material respects all other corporate action of the shareholders
and board of directors (including committees thereof) of the Company. The stock
certificate books and stock transfer ledgers of the Company previously made
available to the Purchasers are true, correct and complete. All stock transfer
taxes levied or payable with respect to all transfers of shares of capital stock
of the Company prior to the date hereof have been paid and appropriate transfer
tax stamps affixed.
3.6 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 3.6, the execution and delivery by the
Company of this Agreement and the other Company Documents, the consummation of
the transactions contemplated hereby or thereby, or compliance by the Company
with any of the provisions hereof or thereof will not (i) conflict with, or
result in the breach of, any provision of the Certificate of Incorporation or
By-laws of the Company; (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company is a party or by which the Company or its properties or assets are
bound; (iii) violate any statute, rule, regulation, order or decree of any
Governmental Body by which the Company is bound; or (iv) result in the creation
of any Lien upon the properties or assets of the Company except, in case of
clauses (ii), (iii) and (iv), for such violations, breaches or defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
set forth on Schedule 3.6, no consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person,
including without limitation any Governmental Body, is required on the part of
the Company in connection with the execution, delivery and performance of this
Agreement or the other Company Documents, or the compliance by the Company with
any of the provisions hereof or thereof.
3.7 Financial Statements. Attached hereto as Schedule 3.7 are copies of
the following financial statements of the Company:
(a) the balance sheets of the Company at December 31, 1998 and December
31, 1997, and the related statements of income, cash flows and changes in
stockholders' equity for the fiscal years then ended, certified by KPMG, LLP,
together with the report of such independent public accountants thereon (the
"AUDITED FINANCIAL Statements"); and
(b) the unaudited balance sheets of the Company at March 31, 1999 and the
related statements of income and cash flows for the interim period then ended
(the "UNAUDITED FINANCIAL STATEMENTS," and together with the Audited Financial
Statements, the "FINANCIAL STATEMENTS").
Except as set forth on Schedule 3.7, all of the Financial Statements have been
prepared in accordance with GAAP consistently applied throughout the periods
involved, except that the Unaudited Financial Statements may not contain all
footnotes required by GAAP. All
5
<PAGE>
of the balance sheets included in the Financial Statements, including the
related notes, fairly present the financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company as at the
dates indicated and such statements of income, cash flows and changes in
stockholders' equity fairly present the results of operations, cash flows and
changes in stockholders' equity of the Company for the periods indicated. Except
as set forth in Schedule 3.7, the Unaudited Financial Statements contain all
adjustments, which are solely of a normal recurring nature, based upon
historical operations of the Company and reporting determinations made with
respect to the most recent Audited Financial Statements, necessary to present
fairly the financial position for the periods then ended.
For the purposes hereof, the audited balance sheet of the Company as at
December 31, 1998 is referred to as the "BALANCE SHEET", December 31, 1998 is
referred to as the "BALANCE SHEET DATE" and March 31, 1999 is referred to as the
"INTERIM BALANCE SHEET DATE."
3.8 No Undisclosed Liabilities. Except as set forth on Schedule 3.8, the
Company has no indebtedness, obligations or liabilities of any kind that would
be required to be disclosed on financial statements prepared in accordance with
GAAP (whether accrued, absolute, contingent or otherwise, and whether due or to
become due) except (i) as reflected in the Financial Statements, (ii) those
incurred in the ordinary course of business consistent with past practice since
the Balance Sheet Date or (iii) those incurred in the ordinary course of
business and not required under GAAP to be reflected in the Financial
Statements, none of which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
3.9 Absence of Certain Developments. Except as set forth on Schedule 3.9,
there has been no Material Adverse Change since the Balance Sheet Date.
3.10 Taxes.
(a) Except as set forth on Schedule 3.10, (A) all Tax Returns required to
be filed by or on behalf of the Company have been properly prepared and duly and
timely filed with the appropriate taxing authorities in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all such Tax
Returns were true, complete and correct in all material respects; (B) all Taxes
payable by or on behalf of the Company or in respect of its income, assets or
operations have been fully and timely paid, or have been adequately reserved for
in accordance with GAAP in the Financial Statements; and (C) the Company has not
executed or filed with the IRS or any other taxing authority any agreement,
waiver or other document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes (including without
limitation any applicable statute of limitation), and no power of attorney with
respect to any Tax matter is currently in force.
(b) The Company has complied in all material respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes and
has duly
6
<PAGE>
and timely withheld from employee salaries, wages and other compensation and has
paid over to the appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable laws.
(c) Except as set forth on Schedule 3.10, all deficiencies asserted or
assessments made as a result of any examinations by the IRS or any other taxing
authority of the Tax Returns of or covering or including the Company have been
fully paid, and there are no other audits or investigations by any taxing
authority in progress, nor has the Company received any notice from any taxing
authority that it intends to conduct such an audit or investigation. No issue
has been raised by a federal, state, local or foreign taxing authority in any
current or prior examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed deficiency for
any subsequent taxable period.
(d) Except as set forth on Schedule 3.10, neither the Company nor any
other Person on behalf of the Company has (A) filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Company, (B) agreed to or is required to
make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or has any knowledge that the IRS has proposed
any such adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Company, (C)
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law with respect to the Company, or (D) requested any extension
of time within which to file any Tax Return, which Tax Return has since not been
filed.
(e) No property owned by the Company is (i) property required to be
treated as being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
constitutes "tax-exempt use property" within the meaning of Section 168(h)(1) of
the Code or (iii) is "tax-exempt bond financed property" within the meaning of
Section 168(g) of the Code.
(f) The Company is not a party to any tax allocation, tax indemnity, tax
sharing or similar agreement or arrangement (whether or not written and whether
or not by operation of law) pursuant to which it could have any obligation to
make any payments after the Closing.
(g) There is no contract, agreement, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Company or its Affiliates by reason
of Section 280G of the Code, or would constitute compensation in excess of the
limitation set forth in Section 162(m) of the Code.
7
<PAGE>
(h) The Company is not subject to any private letter ruling of the IRS or
comparable rulings of other taxing authorities.
(i) There are no Liens as a result of any unpaid Taxes upon any of the
assets of the Company.
(j) Except as set forth on Schedule 3.10, the Company has never owned any
Subsidiaries and has never been a member of any consolidated, combined or
affiliated group of corporations for any Tax purposes.
3.11 Real Property.
(a) The Company owns no real property. Schedule 3.11 sets forth a complete
list of any real property and interests in real property leased by each Company
(individually, a "REAL PROPERTY LEASE" and the real properties specified in such
leases being referred to herein individually as a "COMPANY PROPERTY" and
collectively as the "COMPANY PROPERTIES") as lessee or lessor. The Company
Properties constitute all interests in real property currently used or currently
held for use in connection with the business of the Company and which is
necessary for the continued operation of the business of the Company as such
business is currently conducted. The Company is in material compliance with each
of the Real Property Leases and the Company has not received any written notice
of any default or event that with notice or lapse of time, or both, would
constitute a default by the Company under any of the Real Property Leases. To
the Company's knowledge, all of the Company Property, buildings, fixtures and
improvements thereon owned or leased by the Company are in good operating
condition and repair (subject to normal wear and tear). The Company has
delivered or otherwise made available to the Purchasers true, correct and
complete copies of the Real Property Leases, together with all amendments,
modifications or supplements, if any, thereto.
(b) The Company has all material certificates of occupancy and Permits of
any Governmental Body necessary or useful for the current use and operation of
each Company Property, and the Company has fully complied with all material
conditions of the Permits applicable to it. To the Company's knowledge, no
default or violation, or event that with the lapse of time or giving of notice
or both would become a default or violation has occurred in the due observance
of any Permit.
3.12 Tangible Personal Property. The Company has good and marketable title
to all of its material items of tangible personal property reflected in their
Balance Sheet (except as sold or disposed of subsequent to the date thereof in
the ordinary course of business consistent with past practice), free and clear
of any and all Liens other than the Permitted Exceptions. To the Company's
knowledge, all such items of tangible personal property which, individually or
in the aggregate, are material to the operation of the business of the Company
are in good condition and in a state of good maintenance and repair (ordinary
wear and tear excepted) and are suitable for the purposes used.
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3.13 INTANGIBLE PROPERTY.
(a) The Company does not utilize any patent, trademark, trade name,
service mark, copyright, software, material trade secret or material know-how
EXCEPT for those listed on Schedule 3.13 (the "INTELLECTUAL Property"),
including without limitation the Company's internet domain name, all of which
scheduled items are owned or licensed by the Company free and clear of any
Liens, except as otherwise set forth in Schedule 3.13 hereto. Except as set
forth in Schedule 3.13, the Intellectual Property constitutes all such
Intellectual Properties which are used or held for use in, or are necessary for,
the conduct of the business of the Company.
(b) Except as otherwise set forth in Schedule 3.13 hereto, there are no
royalty, commission or similar arrangements, and no licenses, sublicenses or
agreements, pertaining to any of the Intellectual Property.
(c) The Company does not infringe upon or unlawfully or wrongfully use any
patent, trademark, trade name, service mark, copyright or trade secret owned or
claimed by another. No action, suit, proceeding or investigation has been
instituted or, to the knowledge of the Company, threatened relating to any,
patent, trademark, trade name, service mark, copyright or trade secret formerly
or currently used by the Company. None of the Intellectual Property is subject
to any outstanding order, decree or judgment. Except as otherwise set forth in
Schedule 3.13 hereto, the Company has not agreed to indemnify any person or
entity for or against any infringement of or by the Intellectual Property.
(d) Except as set forth in Schedule 3.13 hereto, no present or former
employee of the Company and no other person or entity owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any patent, trademark, trade name, service mark or copyright, or in any
application therefor, or in any trade secret, which the Company owns, possesses
or uses in its operations as now or heretofore conducted. Schedule 3.13 lists
all confidentiality or non-disclosure agreements to which the Company or any of
its employees is a party.
(e) All registrable items of Intellectual Property that are material to
the business of the Company have been duly registered in, filed in or issued by
the United States Copyright Office or the United States Patent and Trademark
Office, the appropriate offices in the various states of the United States and
the appropriate offices of the jurisdictions indicated on Schedule 3.13.
3.14 Material Contracts. Schedule 3.14 sets forth an accurate, correct and
complete list of each of the following Contracts, including all amendments and
supplements thereto, of the Company (the "MATERIAL CONTRACTS"), to which the
Company is a party or is bound, or by which any of its assets are bound:
(a) any material Contract with any present or former employee or
consultant or for the employment of any person, including any consultant;
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(b) any Contract for the future purchase of, or payment for, supplies or
products, or for the performance of services by a third party involving in any
one case $100,000 or more;
(c) any Contract to sell or supply products or to perform services
involving in any one case $100,000 or more;
(d) any Contract continuing over a period of more than twelve months from
the date hereof or exceeding $100,000 in value;
(e) any Contract containing a provision to indemnify any person or entity
or assume any Tax, environmental or other liability outside the ordinary course
of business;
(f) any Contract with any Governmental Body outside the ordinary course of
business;
(g) any note, debenture, bond, equipment trust agreement, letter of credit
agreement, loan agreement or other Contract or commitment for the borrowing or
lending of money or agreement or arrangement for a line of credit or guarantee,
pledge or undertaking of the indebtedness of any other person;
(h) any Contract for any capital expenditure or leasehold improvement in
excess of $100,000;
(i) any Contract limiting or restraining the Company or any successor
thereto, or to the knowledge of the Company, any employee of the Company or any
successor thereto, from engaging or competing in any manner or in any business;
(j) any license, franchise, distributorship or other Contract which
relates in whole or in part to any software, patent, trademark, trade name,
service mark or copyright or to any ideas, technical assistance or other
know-how of or used by the Company;
(k) any Contracts for the sale of any of the assets of the Company other
than in the ordinary course of business or for the grant to any person of any
preferential rights to purchase any of its assets;
(l) any joint venture agreements;
(m) any Contracts relating to the acquisition by the Company of any
operating business or the capital stock of any other person;
(n) any Contract to which the Company, on the one hand, and any Affiliate,
officer, director or stockholder of the Company, on the other hand, are parties;
and
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(o) any material agreement, Contract, commitment, arrangement or
understanding not made in the ordinary course of business.
Except as otherwise set forth in Schedule 3.14 hereto, each of the
Contracts listed in Schedule 3.14 is valid and enforceable in accordance with
its terms; the Company is, and to the knowledge of the Company, all other
parties thereto are, in compliance with the provisions thereof. The Company is
not, and to the knowledge of the Company, no other party thereto is, in default
in the performance, observance or fulfillment of any material obligation,
covenant or condition contained therein, and no event has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default thereunder. Except as otherwise set forth in Schedule 3.14 hereto, from
and after the Closing, the Company will continue to enjoy all of the benefits of
each of the Material Contracts without the necessity of any consent,
authorization or agreement from or with any Person. The Company has delivered
accurate and complete copies of each Material Contract to the Purchasers. Except
as otherwise set forth in Schedule 3.14 hereto, no Material Contract obligates
any party to obtain any consent in connection with the transactions contemplated
hereby. The Company has not received any notice or communication from any party
to a Material Contract or other material customer or supplier (whether or not a
party to a Material Contract) relating to such party's intent to modify,
terminate or fail to renew the arrangements and relationships set forth therein.
3.15 Employee Benefits.
(a) Schedule 3.15 sets forth a complete and correct list of (i) all
"employee benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension plans
or employee benefit arrangements, programs or payroll practices (including
without limitation severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or policies,
hospitalization, medical insurance, life insurance and scholarship programs)
maintained by the Company or to which the Company contributes or is obligated to
contribute thereunder with respect to its employees ("EMPLOYEE BENEFIT PLANS")
and (ii) all "employee pension plans," as defined in Section 3(2) of ERISA,
maintained by the Company or any trade or business (whether or not incorporated)
which are under control, or which are treated as a single employer, with the
Company under Section 414(b), (c), (m) or (o) of the Code ("ERISA AFFILIATE") or
to which the Company or any ERISA Affiliate contributed or is obligated to
contribute thereunder ("PENSION PLANS"). Schedule 3.15(a) clearly identifies, in
separate categories, Employee Benefit Plans or Pension Plans that are (i)
subject to Section 4063 and 4064 of ERISA ("MULTIPLE EMPLOYER PLANS"), (ii)
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) ("MULTIEMPLOYER
PLANS") or (iii) "benefit plans," within the meaning of Section 5000(b)(1) of
the Code providing continuing benefits after the termination of employment
(other than as required by Section 4980B of the Code or Part 6 of Title I of
ERISA and at the former employee's or his beneficiary's sole expense). Neither
the Company, any ERISA Affiliate or OTEC, Inc. currently or within the last six
years have maintained, sponsored, contributed to or been obligated to contribute
to any "Employee Benefit Plan" subject to Title IV of ERISA, including any
Multiemployer Plan.
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(b) Each of the Employee Benefit Plans and Pension Plans intended to
qualify under Section 401 of the Code ("QUALIFIED PLANS") so qualify and the
trusts maintained thereto are exempt from federal income taxation under Section
501 of the Code, and, except as disclosed on Schedule 3.15, nothing has occurred
with respect to the operation of any such plan which is reasonably likely to
cause the loss of such qualification or exemption or the imposition of any
material liability, penalty or tax under ERISA or the Code.
(c) All contributions and premiums required by law or by the terms of any
Employee Benefit Plan or Pension Plan or any agreement relating thereto have
been timely made (without regard to any waivers granted with respect thereto) to
any funds or trusts established thereunder or in connection therewith, and no
accumulated funding deficiencies exist in any of such plans subject to Section
412 of the Code.
(d) There has been no violation of ERISA with respect to the filing of
applicable returns, reports, documents and notices regarding any of the Employee
Benefit Plans or Pension Plans with the Secretary of Labor or the Secretary of
the Treasury or the furnishing of such notices or documents to the participants
or beneficiaries of the Employee Benefit Plans or Pension Plans which could
result in a material liability.
(e) True, correct and complete copies of the following documents, with
respect to each of the Employee Benefit Plans and Pension Plans (as applicable),
have been delivered to the Purchasers (A) any plans and related trust documents,
and all amendments thereto, (B) the most recent Form 5500s for the past two
years and schedules thereto, (C) the most recent financial statements and
actuarial valuations for the past two years, (D) the most recent Internal
Revenue Service determination letter, (E) the most recent summary plan
descriptions (including letters or other documents updating such descriptions)
and (F) written descriptions of all non-written agreements relating to the
Employee Benefit Plans and Pension Plans.
(f) The Company and any ERISA Affiliate which maintains a "benefits plan"
within the meaning of Section 5000(b)(1) of ERISA, is in good faith compliance
with the notice and continuation requirements of Section 4980B of the Code or
Part 6 of Title I of ERISA and the applicable regulations thereunder.
3.16 Labor.
(a) Except as set forth on Schedule 3.16, the Company is not a party to
any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company. The
Company has delivered or otherwise made available to the Purchasers true,
correct and complete copies of the labor or collective bargaining agreements
listed on Schedule 3.16, if any, together with all amendments, modifications or
supplements thereto.
(b) Except as set forth on Schedule 3.16, none of the Company's employees
are represented by a labor organization. No labor organization or group of
employees of the Company has made a pending demand for recognition, and there
are no
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representation proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be brought
or filed, with the National Labor Relations Board or other labor relations
tribunal. There is no organizing activity involving the Company pending or, to
the knowledge of the Company, threatened by any labor organization or group of
employees of the Company.
(c) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitration or (ii) material grievances or other labor disputes pending or, to
the knowledge of the Company, threatened against or involving the Company. There
are no unfair labor practice charges, grievances or complaints pending or, to
the knowledge of the Company, threatened by or on behalf of any employee or
group of employees of the Company.
(d) Except as set forth on Schedule 3.16, there are no complaints, charges
or claims against the Company pending or, to the knowledge of the Company,
threatened which could be brought or filed, with any public or Governmental Body
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by the Company, of any individual.
3.17 Litigation. Except as set forth in Schedule 3.17, there is no suit,
action, proceeding, investigation, claim or Order pending or, to the knowledge
of the Company, overtly threatened against the Company (or, to the knowledge of
the Company, pending or threatened, against any of the officers, directors or
key employees of the Company with respect to their business activities on behalf
of the Company), or to which the Company is otherwise a party, which, if
adversely determined, would have a Material Adverse Effect, before any court, or
before any Governmental Body. The Company is not subject to any Order of any
Governmental Body except to the extent the same are not reasonably likely to
have a Material Adverse Effect and the Company is not engaged in any legal
action to recover monies due it or for damages sustained by it.
3.18 Compliance with Laws; Permits. The Company has complied in all
material respects with each, and is not in violation of any, Law to which the
Company's business, operations, assets or properties is subject. Except as
disclosed on Schedule 3.18, the Company owns, holds, possesses or lawfully uses
in the operation of its business all material governmental franchises,
easements, rights, applications, filings, registrations and other authorizations
(other than foreign corporate qualifications) ("PERMITS") that are necessary for
it to conduct its business as now or previously conducted or for the ownership
and use of the assets owned or used by the Company in the conduct of its
business, free and clear of all Liens, and in compliance with all Laws. All such
Permits are listed and described in Schedule 3.18. The Company is not in
default, nor has the Company received any notice of any claim of default, with
respect to any such Permit. All such Permits are renewable by their terms or in
the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
Except as disclosed on Schedule 3.18, none of such Permits will be adversely
affected by consummation of the transactions contemplated hereby. No director,
officer, employee or former employee of the Company or any Affiliate of the
Company, or any other Person, firm or corporation, owns or has any proprietary,
financial or other interest (direct or indirect) in any Permit
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which the Company owns, possesses or uses in the operation of its business as
now or previously conducted.
3.19 Environmental Matters. Except as set forth on Schedule 3.19 hereto:
To its knowledge, the Company is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to its knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
3.20 Insurance. The assets, properties and operations of the Company are
insured under various policies of general liability and other forms of
insurance, all of which are summarized in Schedule 3.20, which discloses for
each policy the risks insured against and coverage limits. To the Company's
knowledge, all such policies are in full force and effect in accordance with
their terms, no notice of cancellation has been received, and there is no
existing default or event which, with the giving of notice or lapse of time or
both, would constitute a default thereunder. All premiums to date have been paid
in full.
3.21 Related Party Transactions. Except as set forth on Schedule 3.21, the
Company has not loaned or borrowed any moneys from or has outstanding any
indebtedness or other similar obligations to any Affiliate of the Company.
Except as set forth in Schedule 3.21, neither the Company, any Affiliate of the
Company nor any officer or, to the best of the Company's knowledge, employee of
any of them (i) owns any direct or indirect interest of any kind in, or controls
or is a director, officer, employee or partner of, or consultant to, or lender
to or borrower from or has the right to participate in the profits of, any
Person which is (A) a competitor, supplier, customer, landlord, tenant, creditor
or debtor of the Company, (B) engaged in a business related to the business of
the Company, or (C) a participant in any transaction to which the Company is a
party or (ii) is a party to any Contract with the Company, except that
employees, officers and directors of the Company and members of their immediate
families may own less than 5% of the stock in any publicly-traded company that
may compete with the Company.
3.22 Product Warranties and Liabilities. Except as set forth on Schedule
3.22, the Company does not have any forms of warranties or guarantees of its
products and services that are in effect or proposed to be used by it. Schedule
3.22 sets forth a description of each pending or, to the knowledge of the
Company, threatened suit, claim, action, proceeding or investigation under any
warranty or guaranty against the Company. The Company has not incurred, nor does
the Company know or have any reason to believe there is any basis for alleging,
any material liability, damage, loss, cost or expense as a result of any
material defect or other deficiency (whether of design, materials, workmanship,
labeling instructions or otherwise) ("PRODUCT LIABILITY") with respect to any
product sold or services rendered by or on behalf of the Company (including any
lessee thereof), whether such Product Liability is incurred by reason of any
express or implied warranty (including, without limitation, any warranty of
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merchantability or fitness), any doctrine of common law (tort, contract or
other), any statutory provision or otherwise and irrespective of whether such
Product Liability is covered by insurance.
3.23 Year 2000. All of the Company's products currently being sold and
under development and all computer software and hardware (including microcode,
firmware, system and application programs, files, databases, computer services
and microcontrollers), including those embedded in computer and noncomputer
equipment contained in the Company's products currently being sold and under
development are Year 2000 Complaint, except to the extent that they may be used
or interfaced with other software, data or operating systems that are not Year
2000 Compliant. All of the Company's internal computer systems are Year 2000
Compliant, except that the Company makes no such representation with respect to
off-the-shelf software that is used in the Company's internal computer systems,
the failure or malfunctioning of which would not have a Material Adverse Effect.
The Company is not relying on the products or services of any third party whose
systems are not Year 2000 Compliant. For purposes of this Agreement, "Year 2000
Compliant" shall mean that such products and data and information systems and
any such data, information or other files or software it uses, individually and
in combination, completely and accurately record, store, process, calculate and
present data involving dates before, on or after January 1, 2000; specifically:
(i) no value for a current date will cause any interruption in operation; (ii)
date-based functionality will behave consistently when dealing with dates
before, on or after January 1, 2000; (iii) no abnormal endings or incorrect
results will be produced when working with dates before, on or after January 1,
2000; (iv) in all interfaces and data storage, the century will be specified
explicitly and will be unambiguously derived; and (v) year 2000 will be
recognized as a leap year.
3.24 No Misrepresentation. The Company has delivered to the Purchasers
true and complete copies of each agreement, Contract, commitment or other
document (or, in the case of any such document not in the possession or
reasonably available to the Company, accurate and complete summaries thereof)
that is identified on the schedules to this Agreement or that has been requested
by the Purchasers or its representatives. Without limiting any exclusion,
exception or other limitation contained in any of the representations and
warranties made herein, this Agreement and the schedules hereto and all other
documents and information furnished to the Purchasers and its representatives
pursuant hereto do not and will not include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements herein
and therein not misleading.
3.25 Financial Advisors. Except as set forth on Schedule 3.25, no Person
has acted, directly or indirectly, as a broker, finder or financial advisor for
the Company or their Affiliates in connection with the transactions contemplated
by this Agreement and no Person is entitled to any fee or commission or like
payment in respect thereof.
3.26 Qualified Small Business Stock. The Company represents and warrants
to the Purchasers that the Company is a "qualified small business" within the
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meaning of Section 1202(d) of the Code as of the date hereof and the Series A
Preferred Stock qualifies as "qualified small business stock" as defined in
Section 1202(c) of the Code as of the date hereof. The Company further
represents and warrants that, as of the date hereof, it meets the "active
business requirement" of Section 1202(e) of the Code, and it has made no
"significant redemptions" within the meaning of Section 1202(c)(3)(B) of the
Code.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers severally, and not jointly, hereby represent and
warrant to the Company that:
4.1 Authorization of Agreement. Each of the Purchasers has full power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Purchasers in connection with the consummation of the
transactions contemplated hereby and thereby (this Agreement, together with such
other agreements, documents, instruments and certificates being hereinafter
referred to, collectively, as the "PURCHASER DOCUMENTS"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by each Purchaser of this Agreement and each other Purchaser
Document have been duly authorized by all necessary action on behalf of each
Purchaser. This Agreement has been, and each other Purchaser Document will be at
or prior to the Closing, duly executed and delivered by each Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document when
so executed and delivered will constitute, legal, valid and binding obligations
of such Purchaser, enforceable against such Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.2 Conflicts; Consents of Third Parties. No consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Purchasers in connection with the execution and delivery of this Agreement or
the Purchaser Documents or the compliance by Purchasers with any of the
provisions hereof or thereof.
4.3 Litigation. There are no Legal Proceedings pending or, to the
knowledge of the Purchasers, threatened that are reasonably likely to prohibit
or restrain the ability of the Purchasers to enter into this Agreement or
consummate the transactions contemplated hereby.
4.4 Purchase Entirely for Own Account. This Agreement is made with each
Purchaser in reliance upon such Purchaser's representation to the Company, which
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by such Purchaser's execution of this Agreement such Purchaser hereby confirms,
that the Series A Preferred Stock to be received by such Purchaser and the
Common Stock issuable upon conversion thereof (collectively, the "Securities")
will be acquired for investment for Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that such Purchaser has no present intention of selling, granting any
participation in or otherwise distributing the same, in each case in violation
of applicable law. By executing this Agreement, such Purchaser further
represents that such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
4.5 Disclosure of Information. Such Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Series A Preferred Stock. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series A Preferred
Stock and the business, properties, and financial condition of the Company. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 3 of this Agreement or the right of the Purchasers to
rely thereon.
4.6 Investment Experience. Such Purchaser is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Series A Preferred Stock. If other than an
individual, such Purchaser also represents it has not been organized for the
purpose of acquiring the Series A Preferred Stock.
4.7 Accredited Investor. Such Purchaser is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
4.8 Restricted Securities. Such Purchaser understands that the Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), only in certain
limited circumstances. In the absence of an effective registration statement
covering the Securities or an available exemption from registration under the
Act, the Series A Preferred Stock (and any Common Stock issued on conversion
thereof) must be held indefinitely. Such Purchaser represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act, including without limitation the
Rule 144 condition that current information about the Company be available to
the public. Such information is not now available and the Company has no present
plans to make such information available.
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4.9 Financial Advisors. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for the Purchasers in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
ARTICLE V.
COVENANTS OF THE COMPANY
The Company agrees as follows with respect to the period between the date
hereof and the second Closing Date.
5.1 Business in the Ordinary Course. The Company shall conduct its
business solely in the ordinary course and consistent with past practice.
5.2 Maintenance of Properties and Assets. The Company shall maintain and
service its properties and assets in order to preserve their value and
usefulness in the conduct of its business consistent with past practice and
commercially reasonable standards.
5.3 Employees and Business Relations. The Company shall use its reasonable
best efforts to keep available the services of its current employees and agents
and to maintain its relations and goodwill with its suppliers, customers,
distributors and any others with whom or with which it has business relations.
5.4 Compliance with Laws, etc. The Company shall comply with all Laws
applicable to it or its business, operations, properties or assets,
noncompliance with which would be reasonably likely to result in a Material
Adverse Effect.
5.5 Conduct of Business. The Company shall use its reasonable best efforts
to conduct its business in such a manner that on each Closing Date the
representations and warranties of the Company contained in this Agreement shall
be true in all material respects, as though such representations and warranties
were made on and as of each such date, and the Company shall use its reasonable
best efforts to cause all of the conditions to the obligations of the Purchasers
under this Agreement to be satisfied on or prior to the Closing Date.
5.6 Access. The Company shall give to the Purchasers' officers, employees,
counsel, accountants and other representatives free and full access to and the
right to inspect, during normal business hours with reasonable advance notice to
the Company, all of the premises, properties, assets, records, contracts and
other documents relating to the Company, and shall permit them to consult with
the officers, employees, accountants, counsel and agents of the Company for the
purpose of making such investigation of such Company as the Purchasers shall
desire to make, PROVIDED that such investigation shall not unreasonably
interfere with such Company's business operations. Furthermore, the Company
shall furnish to the Purchasers all such documents and copies of documents and
records and information directly related to the affairs of the Company and
copies of any working papers relating directly thereto as the Purchasers shall
from
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time to time reasonably request. No information or knowledge obtained in any
investigation by the Purchasers or any of their representatives or Affiliates
pursuant to this Section 5.6 otherwise shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the transactions contemplated hereby.
5.7 Third-Party Approvals. Prior to each Closing Date, the Company shall
use its best efforts to satisfy any requirement for notice and approval of the
transactions contemplated by this Agreement under applicable agreements, and
shall provide the Purchasers with satisfactory evidence of such third-party
approvals.
ARTICLE VI.
CONDITIONS TO CLOSING
6.1 Conditions Precedent to Obligations of the Purchasers. The obligation
of the Purchasers to consummate the transactions contemplated by this Agreement
is subject to the fulfillment, on or prior to the applicable Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchasers in whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of the Company contained herein
qualified as to materiality shall be true and correct, and the representations
and warranties of the Company contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date, except to the extent expressly made as of an earlier date;
(b) the Company shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be performed or
complied with by the Company on or prior to the Closing Date;
(c) there shall not have been or occurred any Material Adverse Change
since the Balance Sheet Date;
(d) no material Legal Proceedings shall have been instituted or threatened
or claim or demand made against the Company or the Purchasers seeking to
restrain or prohibit or to obtain material damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any Order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;
(e) the Company shall have paid, or reimbursed the Purchasers for, all
reasonable costs and expenses provided in Section 10.4 to be borne by the
Company upon consummation of the transactions contemplated hereby;
(f) the Company shall have amended its existing Shareholders' Agreement
dated February 22, 1997;
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(g) the Purchasers shall have been furnished evidence acceptable to the
Purchasers of the recomposition of the Company's Board of Directors as
contemplated by the Stockholders' Agreement; and
(h) each of the Company's employees shall have executed a Confidential
Information and Inventions Assignment Agreement in the form of EXHIBIT C hereto.
6.2 Conditions Precedent to Obligations of the Company. The obligation of
the Company to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, prior to or on the applicable Closing Date, of each
of the following conditions (any or all of which may be waived by the Company in
whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of the Purchasers contained herein
qualified as to materiality shall be true and correct, and all representations
and warranties of the Purchasers contained herein not qualified as to
materiality shall be true and correct in all material respects, at and as of the
Closing Date;
(b) the Purchasers shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchasers on or prior to the Closing Date; and
(c) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby.
ARTICLE VII.
DOCUMENTS TO BE DELIVERED
7.1 Deliveries by the Company to the Purchasers. At each Closing, the
Company shall deliver, or shall cause to be delivered, to the applicable
Purchasers the following:
(a) certificates (dated the Closing Date and in form and substance
reasonably satisfactory to the Purchasers) executed on behalf of the Company
certifying as to the fulfillment of the conditions specified in Sections 6.1(a),
6.1(b), 6.1(c) and 6.1(d) hereof;
(b) stock certificates representing 100% of the Shares shall have been, or
shall at the Closing be, validly delivered and transferred to the Purchasers,
free and clear of any and all Liens;
(c) all consents and waivers referred to in Section 3.6 hereof, in a form
reasonably satisfactory to the Purchasers, with respect to the transactions
contemplated by this Agreement and the Company Documents;
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(d) a filed copy of the Certificate of Amendment certified by the
Secretary of State of the State of Delaware;
(e) the Stockholders' Agreement substantially in the form attached hereto
as Exhibit B, duly executed by the Company and each of the parties thereto
(other than the Purchasers);
(f) the Confidential Information and Inventions Assignment Agreements
substantially in the form attached hereto as EXHIBIT C, duly executed by the
Company and each of its employees.
(g) an opinion of Brobeck Phleger & Harrison LLP, counsel for the Company,
dated the Closing Date substantially in the form attached hereto as EXHIBIT D;
(h) a receipt for the Purchase Price paid at Closing;
(i) a certificate of the Secretary of the Company, certifying as to the
adoption by the Board of Directors of the Company of the resolutions attached
hereto as EXHIBIT E;
(j) a certificate of the Secretary of the Company, certifying as to (i) a
true and correct copy of the Company's By-Laws as currently in effect, (ii) the
incumbency of those officers of the Company who shall be executing and
delivering this Agreement or the Company Document, and (iii) the adoption by the
stockholders of the Company of the resolutions attached hereto as EXHIBIT F;
(k) certificates of good standing with respect to the Company issued by
the Secretary of State of the State of Delaware and for each state in which the
Company is qualified to do business as a foreign corporation dated as soon as
practicable prior to the Closing Date; and
(l) copies, certified as true, complete and correct by the Chief Executive
Officer of the Company, of all of the agreements, instruments and other
documentation entered into in connection with the satisfaction of the conditions
to the obligations of the Purchasers set forth in Section 6.1 hereof.
7.2 Deliveries by the Purchasers to the Company. At each Closing, the
Purchasers shall have delivered to the Company (a) the applicable Purchase Price
payable on the Closing and (b) the Stockholders' Agreement substantially in the
form attached hereto as EXHIBIT B, duly executed by the applicable Purchasers
and each of the parties thereto (other than the Company).
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ARTICLE VIII.
INDEMNIFICATION
8.1 Indemnification.
(a) General. Subject to the limitations contained in Section 8.3 hereof,
the Company hereby agrees to indemnify and hold the Purchasers and their
respective directors, officers, employees, agents, successors and assigns
(collectively, the "PURCHASER INDEMNIFIED PARTIES") harmless from and against:
(1) any and all losses, liabilities, obligations, damages, claims,
judgments, assessments, penalties, costs and expenses, including
attorneys' and other professionals' fees and disbursements (collectively,
"LOSSES") based upon, attributable to or resulting from the breach of any
representation or warranty of the Company set forth in Article III hereof,
or any representation or warranty contained in any certificate delivered
by or on behalf of the Company pursuant to this Agreement, to be true and
correct in all respects as of the date made; and
(2) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of any of the
Company under this Agreement.
(b) Subject to the limitations contained in Section 8.3 hereof, the
Purchasers hereby agree, severally and not jointly, to indemnify and hold the
Company harmless from and against:
(1) any and all Losses based upon, attributable to or resulting from
the breach of any representation or warranty of the Purchasers set forth
in Article IV hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of the Purchasers pursuant to this
Agreement, to be true and correct as of the date made; and
(2) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of the
Purchasers under this Agreement.
8.2 Indemnification Procedures.
(a) In the event that any third-party Legal Proceedings shall be
instituted or any third-party claim or demand ("CLAIM") shall be asserted by any
Person in respect of which payment may be sought under Section 8.1 hereof, the
indemnified party shall promptly cause written notice of the assertion of any
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the indemnifying party. The indemnifying party shall have the
right, at its sole option and expense, to be represented by counsel of its
choice, which must be reasonably satisfactory to the indemnified party, and to
assume the defense of, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder. If the indemnifying party
elects to assume the defense of, negotiate, settle or otherwise deal with any
Claim which
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relates to any Losses indemnified against hereunder, it shall within five (5)
days of receipt of written notice of the assertion of a Claim (or sooner, if the
nature of the Claim so requires) notify the indemnified party of its intent to
do so. If the indemnifying party elects not to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified party for such
Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim. If the indemnified party
defends any Claim, then the indemnifying party shall reimburse the indemnified
party for the expenses of defending such Claim upon submission of periodic
bills. If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Claim; PROVIDED, HOWEVER, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable. The
parties hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall have
been consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement with respect to a Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within ten (10) Business Days after the date of such notice.
(c) The failure of the indemnified party to give reasonably prompt notice
of any Claim shall not release, waive or otherwise affect the indemnifying
party's obligations with respect thereto except to the extent that the
indemnifying party can demonstrate actual loss and prejudice as a result of such
failure.
(d) In the circumstance in which the Company is the Indemnifying Party, in
order to prevent the Purchasers from effectively bearing a portion of any such
Loss, any indemnification payment required to be made by the Company pursuant to
this Section 8.2 shall be increased such that (i) the indemnification payment
MINUS (ii) the product of the indemnification payment and the Purchasers' fully
diluted ownership percentage of Common Stock, equals the Loss.
8.3 Limitations on Indemnification. No indemnified party shall assert any
claim for any Loss covered under Section 8.1(a)(1) or 8.1(c)(1) hereunder until
such
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time as the aggregate of all claims which such indemnified party may have
against an indemnifying party thereunder shall exceed $500,000 in the aggregate
for all Purchasers (the "BASKET"), at which time an indemnified party shall be
entitled to seek indemnification for 100% of all Losses up to and in excess of
the Basket but in no event shall an indemnifying party be made to indemnify an
indemnified party for any Losses pursuant to this Article VIII in excess of the
amount equal to the aggregate Purchase Price for the Shares.
8.4 Tax Treatment of Indemnity Payments. The Company and the Purchasers
agree to treat any indemnity payment made pursuant to this Article VIII as an
adjustment to the Purchase Price for federal, state, local and foreign income
tax purposes.
ARTICLE IX.
TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated prior to
the initial Closing as follows:
(a) At the election of the Company or the Purchasers on or after May 31,
1999, if the initial Closing shall not have occurred by the close of business on
such date, provided that the terminating party is not in default of any of its
obligations hereunder;
(b) by mutual written consent of the Company and the Purchasers; or
(c) by the Company or the Purchasers if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is appealable (and pursue such
appeal with reasonable diligence).
9.2 Procedure Upon Termination. In the event of termination and
abandonment by the Purchasers or the Company, or both, pursuant to Section 9.1
hereof, written notice thereof shall forthwith be given to the other party or
parties, and this Agreement shall terminate, and the purchase of the Shares
hereunder shall be abandoned, without further action by the Purchasers or the
Company.
9.3 Effect of Termination. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of
their duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to the Purchasers or
the Company; PROVIDED, HOWEVER, that the obligations of the parties set forth in
Section 10.4 hereof shall survive any such termination and shall be enforceable
hereunder; PROVIDED, FURTHER, HOWEVER, that nothing in this Section 9.3 shall
relieve the Purchasers or the Company of any liability for a breach of this
Agreement occurring prior to such termination.
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ARTICLE X.
MISCELLANEOUS
10.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 10.1:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Audited Financial Statements" shall have the meaning ascribed to such
term in Section 3.7 hereof.
"Balance Sheet" shall have the meaning ascribed to such term in Section
3.7 hereof.
"Balance Sheet Date" shall have the meaning ascribed to such term in
Section 3.7 hereof.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Certificate of Amendment" shall have the meaning ascribed to such term in
Section 1.1 hereof.
"Claim" shall have the meaning ascribed to such term in Section 8.3
hereof.
"Closing" shall have the meaning ascribed to such term in Section 2.2
hereof.
"Closing Date" shall have the meaning ascribed to such term in Section 2.2
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
"Common Stock" shall have the meaning ascribed to such term in Section
3.3(a) hereof.
"Company" shall have the meaning ascribed to such term in the introductory
paragraph hereof.
"Company Documents" shall have the meaning ascribed to such term in
Section 3.2 hereof.
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"Company Property" shall have the meaning ascribed to such term in Section
3.11(a) hereof.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement.
"Employee Benefit Plans" shall have the meaning ascribed to such term in
Section 3.15 hereof.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, rule of common law or other legally binding requirement
relating to the environment, natural resources or the protection of human health
and safety including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601 eT SEq.), the
Hazardous Materials Transportation Act (49 U.S.C. App. ss. 1801 eT SEq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 ET seq.), the Clean
Water Act (33 U.S.C. ss. 1251 eT SEq.), the Clean Air Act (42 U.S.C. ss. 7401 ET
seq.) the Toxic Substances Control Act (15 U.S.C. ss. 2601 eT SEq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 ET seq.), and the
Occupational Safety and Health Act (29 U.S.C. ss. 651 eT SEq.), and the
regulations promulgated pursuant thereto.
"Equity Equivalents" shall have the meaning ascribed to such term in
Section 3.3 hereof.
"ERISA" shall have the meaning ascribed to such term in Section 3.15
thereof.
"ERISA Affiliate" shall have the meaning ascribed to such term in Section
3.15 hereof.
"Financial Statements" shall have the meaning ascribed to such term in
Section 3.7 hereof.
"GAAP" means generally accepted United States accounting principles as of
the date hereof.
"Governmental Body" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"Hazardous Material" means any substance, material or waste which is
regulated by the United States, the foreign jurisdictions in which the Company
conducts business, or any state or local governmental authority including,
without limitation, petroleum and its by-products, asbestos, and any material or
substance which is defined as a "hazardous waste," "hazardous substance,"
"hazardous material," "restricted hazardous waste," "industrial waste," "solid
waste," "contaminant," "pollutant," "toxic waste" or "toxic substance" under any
provision of Environmental Law.
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"Intellectual Property" shall have the meaning ascribed to such term in
Section 3.13 hereof.
"Interim Balance Sheet Date" shall have the meaning ascribed to such term
in Section 3.7 hereof.
"IRS" means the United States Internal Revenue Service.
"Law" means any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement.
"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private), claims or governmental proceedings.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Material Adverse Change" means any material adverse change in (i) the
business, properties, results of operations or condition (financial or
otherwise) of the Company, (ii) the ability of the Company to perform its
obligations under this Agreement or to perform its obligations hereunder, or
(iii) the ability of the Company to conduct its business after the Closing Date
as such business is being conducted as of the date hereof.
"Material Adverse Effect" means any effect which has resulted in, or is
reasonably likely to result in, a Material Adverse Change.
"Material Contracts" shall have the meaning ascribed to such terms in
Section 3.14. hereof.
"Multiemployer Plans" shall have the meaning ascribed to such term in
Section 3.15 hereof.
"Multiple Employer Plans" shall have the meaning ascribed to such term in
Section 3.15 hereof.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"PBGC" shall have the meaning ascribed to such term in Section 3.15
hereof.
"Pension Plans" shall have the meaning ascribed to such term in Section
3.15 hereof.
"Permits" shall have the meaning ascribed to such term in Section 3.18
hereof.
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"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to the Purchasers; (ii) statutory liens
for current taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are not material to
the business, operations and financial condition of the property so encumbered
or the Company; (iv) zoning, entitlement and other land use and environmental
regulations by any Governmental Body, provided that such regulations have not
been violated; and (v) such other imperfections in title, charges, easements,
restrictions and encumbrances which do not materially detract from the value of
or materially interfere with the present use of the Company Property subject
thereto or affected thereby.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Product Liability" shall have the meaning ascribed to such term in
Section 3.22 hereof.
"Purchaser Indemnified Parties" shall have the meaning ascribed to such
term in Section 8.1 hereof.
"Qualified Plans" shall have the meaning ascribed to such term in Section
3.15 hereof.
"Real Property Lease" shall have the meaning ascribed to such term in
Section 3.11 hereof.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, migration or leaching into the indoor
or outdoor environment, or into or out of any property.
"Remedial Action" means all actions to (x) clean up, remove, treat or in
any other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
"Securities Act" shall have the meaning ascribed to such term in Section
4.8 hereof.
"Stockholders' Agreement" shall have the meaning set forth in Section 1.2
hereof.
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"Subsidiary" means any Person of which one-half or more of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever, (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any taxing authority in connection with
any item described in clause (i) and (iii) any transferee liability in respect
of any items described in clauses (i) and/or (ii).
"Unaudited Financial Statements" shall have the meaning ascribed to such
term in Section 3.7 hereof.
10.2 Transfer Taxes. All documentary stamp or similar Taxes or charges, of
any nature whatsoever, applicable to, or resulting from, the transactions
contemplated by this Agreement shall be borne by the Company.
10.3 Survival of Representations and Warranties. The parties hereto hereby
agree that the representations and warranties contained in this Agreement or in
any certificate, document or instrument delivered in connection herewith, shall
survive the execution and delivery of this Agreement, and the Closing hereunder,
regardless of any investigation made by the parties hereto; provided, however,
that any claims or actions with respect thereto (other than claims for
indemnifications with respect to the representations and warranties contained in
Sections 3.3, 3.10, 3.15, 3.16, 3.19 and 3.25 which shall survive for periods
coterminous with any applicable statutes of limitation) shall terminate unless
written notice of such claims is given to the Company or such actions are
commenced prior to the ninetieth (90th) day after the delivery to the Purchasers
of the audited financial statements of the Company for the year ended December
31, 1999.
10.4 Fees and Expenses.
Except as otherwise provided in this Agreement, the Company and the
Purchasers shall each bear their own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, PROVIDED, that in the event the
Closing shall occur, all such costs and expenses of the Purchasers, including
without limitation the Purchasers' reasonable attorneys', accountants' and other
third-party professional advisors' fees and expenses
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and other out-of-pocket costs, up to a maximum of $100,000, shall be borne by
the Company upon receipt of invoices for such fees, expenses and costs.
10.5 Specific Performance. The Company acknowledges and agrees that the
breach of this Agreement would cause irreparable damage to the Purchasers and
that the Purchasers will not have an adequate remedy at law. Therefore, the
obligations of the Company under this Agreement, including, without limitation,
the Company's obligation to sell the Shares to the Purchasers, shall be
enforceable by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
10.6 Further Assurances. The Company and the Purchasers each agree to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.
10.7 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of New York
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 10.11.
10.8 Entire Agreement; Amendments and Waivers. This Agreement (including
the schedules and exhibits hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the Company and the Purchasers of a majority of the shares of Series A
Preferred Stock, PROVIDED, HOWEVER, that no such amendment supplement or change
of Article II hereof shall be effective without the consent of the Company and
all of the Purchasers. No action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained
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herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
10.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
10.10 Table of Contents and Headings. The table of contents and section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
10.11 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally or
mailed by certified mail, return receipt requested, to the parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
If to the Company, to:
HotJobs.com, Ltd.
24 West 40th Street, 14th Floor
New York, New York 10018
Attention: Richard Johnson
Telecopier: (212) 944-8962
With a copy to:
Brobeck, Phleger & Harrison LLP
701 Pennsylvania Avenue, NW
Suite 220
Washington, DC 20004
Attention: Stephen Riddick, Esq.
Telecopier: (202) 824-0949
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If to a Generation Party, to:
c/o Generation Partners Management LLC
551 Fifth Avenue
Suite 3100
New York, New York 10176
Attention: Lloyd Mandell
Telecopier: (212) 450-8550
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Norman D. Chirite, Esq.
Telecopier: (212) 310-8007
If to the Additional Investors, addressed to such Additional Investor at
its address as shown on the books of the Company, or at such other address as
such Additional Investor may specify by written notice to the Company.
10.12 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
10.13 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Company or the
Purchasers (by operation of law or otherwise) without the prior written consent
of the other parties hereto and any attempted assignment without the required
consents shall be void; PROVIDED, HOWEVER, that any Purchaser may assign its
rights and obligations under this Agreement (including, without limitation, such
Purchaser's rights to purchase the Shares to seek indemnification hereunder) to
any Affiliate of such Purchaser. Upon any such permitted assignment, the
references in this Agreement to the Purchasers shall also apply to any such
assignee unless the context otherwise requires.
10.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
[Remainder of page intentionally left blank.]
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
THE COMPANY
HOTJOBS.COM, LTD.
By: /s/
------------------------
Name:
Title:
33
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
PURCHASERS:
GENERATION CAPITAL PARTNERS L.P.,
By: Generation Partners L.P.,
as General Partner
By: Generation Capital Company LLC,
its general partner
By: /s/
---------------------------------
John Hawkins
Managing Director
STATE BOARD OF ADMINISTRATION OF FLORIDA
By: Generation Parallel Management Partners L.P.,
as Manager
By: Generation Capital Company LLC,
as General Partner
By: /s/
---------------------------------
John Hawkins
Managing Director
GENERATION PARALLEL MANAGEMENT PARTNERS L.P.
By: Generation Capital Company LLC,
as General Partner
By: /s/
---------------------------------
John Hawkins
Managing Director
34
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC
its General Partner
By: /s/
------------------------------
Name: Robert H. Buescher
Title: Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC
its General Partner
By: /s/
------------------------------
Name: Robert H. Buescher
Title: Manager
35
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
ORION TECHNOLOGY VENTURES
By: /s/
------------------------------
Name: David Kohl
Title: General Partner
FSA CAPITAL, INC.
By: /s/
------------------------------
Name: Stephen W. Ellis
Title: President and CEO
BT ALEX.BROWN INC. CUSTODIAN
FBO JOHN G. MURRAY
IRA, DATED 07/08/98
By: /s/
------------------------------
Name:
Title:
36
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
/s/
---------------------------------------
Kevin O'Connor
/s/
---------------------------------------
Andrew G. Matthes and Tracy Matthes
/s/
---------------------------------------
George Bolton
/s/
---------------------------------------
John Murray
/s/
---------------------------------------
Anne Martin
/s/
---------------------------------------
Stephen Oxman
/s/
---------------------------------------
Bob Packard
/s/
---------------------------------------
Shaun Andrikopoulos
/s/
---------------------------------------
Ray Yeung
/s/
---------------------------------------
Joelle Kayden
37
<PAGE>
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
/s/
---------------------------------------
Dyan Triffo
/s/
---------------------------------------
John Varughese
/s/
---------------------------------------
Karl Will
/s/
---------------------------------------
Tony Meneghetti
/s/
---------------------------------------
Jeff Liu
/s/
---------------------------------------
Buz Walters
/s/
---------------------------------------
Carleigh Jacques
/s/
---------------------------------------
Zach Maurus
/s/
---------------------------------------
Jim Mahern
/s/
---------------------------------------
Jerry Murdock
/s/
---------------------------------------
Kevin Ryan
/s/
---------------------------------------
Peter Breck
/s/
---------------------------------------
David Weaver
/s/
---------------------------------------
Jay Eastman
38
<PAGE>
Schedule I
<TABLE>
<CAPTION>
Purchasers No. of Shares of Purchase Price
- ---------- ---------------- --------------
Preferred Stock
---------------
<S> <C> <C>
GENERATION CAPITAL PARTNERS L.P. 965,009 9,650,090
STATE BOARD OF ADMINISTRATION OF FLORIDA 34,641 346,410
GENERATION PARALLEL MANAGEMENT PARTNERS L.P. 350 3,500
BESSEMER VENTURE PARTNERS IV L.P. 150,000 1,500,000
BESSEC VENTURES IV L.P. 100,000 1,000,000
FSA CAPITAL, INC. 40,000 400,000
ORION TECHNOLOGY VENTURES 15,000 150,000
KEVIN O'CONNOR 50,000 500,000
ANDREW G. MATTHES AND TRACY MATTHES 10,000 100,000
GEORGE BOLTON 40,000 400,000
JOHN MURRAY 17,500 175,000
BT ALEX BROWN INC. CUSTODIAN FBO 7,500 75,000
JOHN G. MURRAY IRA, DATED 07/08/98
ANNE MARTIN 7,500 75,000
STEPHEN OXMAN 2,500 25,000
BOB PACKARD 15,000 150,000
SHAUN ANDRIKOPOULOS 2,500 25,000
RAY YEUNG 1,500 15,000
JOELLE KAYDEN 5,000 50,000
DYAN TRIFFO 2,500 25,000
JOHN VARUGHESE 1,500 15,000
KARL WILL 7,950 79,500
TONY MENEGHETTI 7,950 79,500
JEFF LIU 350 3,500
BUZ WALTERS 8,000 80,000
CARLEIGH JACQUES 1,250 12,500
ZACH MAURUS 1,000 10,000
JIM MAHERN 1,000 10,000
JERRY MURDOCK 100,000 1,000,000
KEVIN RYAN 20,000 200,000
PETER BRECK 2,000 20,000
DAVID WEAVER 1,700 17,000
JAY EASTMAN 800 8,000
</TABLE>
39
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
40
<PAGE>
EXHIBIT B
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
41
<PAGE>
EXHIBIT C
FORM OF CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT
42
<PAGE>
EXHIBIT D
FORM OF OPINION OF BROBECK, PHLEGER & HARRISON LLP
43
<PAGE>
EXHIBIT E
BOARD OF DIRECTORS RESOLUTIONS
44
<PAGE>
EXHIBIT F
STOCKHOLDER RESOLUTIONS
45
<PAGE>
Exhibit 10.6
HOT JOBS, INC.
STOCK AWARD PLAN
1. PURPOSE.
The purpose of this Stock Award Plan (the "Plan") is to
provide to selected officers, directors, employees and consultants and other
non-employee individuals providing or expected to provide valuable services
contributing to the growth and success of Hot Jobs, Inc. (the "Company"), an
opportunity to obtain or increase a proprietary interest in the Company, or to
benefit from the appreciation in the value of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), as an incentive to such persons to
continue and to increase their efforts to benefit the Company and to continue
their relationship with the Company.
2. ADMINISTRATION.
The Plan shall be administered by, and all decisions and
determinations concerning the Plan shall be made solely by, the Award Committee
or any successor committee (the "Committee") appointed by the Board of Directors
of the Company (the "Board"). The Committee may establish, modify or rescind any
rules or regulations for the conduct of its business and the administration of
the Plan, in any case, not inconsistent with the express provisions of the Plan,
the By-laws or Certificate of Incorporation of the Company or any resolutions of
the Board. Any decision of the Committee in the administration of the Plan,
shall be final, conclusive and binding on all persons. No member of the
Committee shall be liable for any action taken, or determination made, in good
faith.
3. ELIGIBILITY AND PARTICIPATION.
Officers, directors and employees of the Company shall be
eligible for selection to participate in the Plan. Non-employee individuals,
providing or expected to provide valuable services to the Company, as the
Committee may determine, also shall be eligible for selection to participate in
the Plan. Notwithstanding the foregoing, only persons employed by the Company
(or any subsidiary thereof) shall be eligible to receive options intended to
meet the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended ("Incentive Stock Options" or "ISOs"), hereunder.
4. AWARDS UNDER THE PLAN.
(a) "Awards" under the Plan shall mean and include any one or
a combination of ISOs, nonqualified stock options ("NQSOs," and together with
ISOs, "Options") and shares of Common Stock subject to restrictions ("Restricted
Stock"). Awards shall be represented by, or issued pursuant to, agreements in
such form as the Committee may from time to time approve, which agreements need
not contain uniform terms and conditions but shall comply with and be subject to
all the terms, conditions and restrictions of the Plan ("Award Agreements").
(b) Subject to adjustment as provided in paragraph 7 below,
there may be issued under the Plan pursuant to Awards an aggregate of not more
than 300 shares of
<PAGE>
Common Stock; PROVIDED, HOWEVER, that if an Option shall expire or terminate
without having been exercised in full, or if any shares of Restricted Stock
shall be forfeited by a recipient thereof, any shares of Common Stock which were
covered by that Award may be added to the shares otherwise available for Awards
to be granted pursuant to the Plan. The Company hereby reserves 300 shares of
Common Stock for issuance under the Plan.
(c) A participant who has been awarded an Option hereunder (an
"Optionee") (and any person succeeding to the Optionee's rights pursuant hereto)
shall not have any rights as a stockholder with respect to any shares of Common
Stock issuable pursuant to any Option until the date of the issuance of a stock
certificate to the Optionee for the shares. Except as provided in paragraph 7
below, no adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or other
property) for which the record date is prior to the date a stock certificate is
issued. A participant who has been awarded Restricted Stock hereunder shall,
except for the restrictions on transfer, be the owner of such Restricted Stock
and shall have all the rights of a stockholder.
5. OPTIONS.
Each Option granted under the Plan shall comply with the
following terms and conditions:
(a) An Option exercise price shall be determined by the
Committee in its sole discretion, but in the case of an ISO, such exercise price
shall be not less than the Fair Market Value, as hereinafter defined, of the
Common Stock on the date of grant.
(b) The term of an Option shall be determined by the
Committee, but in no event shall any ISO be exercisable more than ten years
after the date on which it was granted.
(c) An Option shall not be transferable by the Optionee
otherwise than by will or the applicable laws of descent and distribution and
shall be exercisable during the Optionee's lifetime only by the Optionee.
(d) An Option shall not be exercisable:
(i) prior to six months from the date it is granted;
(ii) unless payment in full is made for the shares of
Common Stock being acquired thereunder at the time of exercise (A) in United
States dollars by cash or check, (B) by tendering to the Company shares of
Common Stock owned by the person exercising the Option and having a Fair Market
Value equal to the cash price applicable to Option, (C) by a combination of
United States dollars and shares of Common Stock as aforesaid, or (D) with the
prior approval of the Committee, by tendering to the Company a promissory note
on which such person exercising the Option is personally liable and which is in
a form satisfactory to the Committee; and
(iii) unless the person exercising the Option
fulfills the eligibility and participation requirements in paragraph 3 above at
all times during the period beginning with the date of grant of the Option and
ending on the date of such exercise, except that each Award Agreement with
respect to an Option shall specify the conditions and circumstances under which
an unexercised Option may or may not be exercised in
2
<PAGE>
the event that the relationship between the Company and the Optionee is
terminated prior to the expiration date of the Option.
For purposes hereof "Fair Market Value" shall mean the fair
market value per share of the Company's Common Stock as determined by the
Committee in good faith; PROVIDED, HOWEVER, that if the Company's Common Stock
is listed or admitted to trading on a securities exchange registered under the
Exchange Act, or as a national market security on the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or any similar
system then in use, the Fair Market Value per share shall be the average of the
reported high and low sales price on the date in question (or if there was no
reported sale on such date, on the last preceding date on which any reported
sale occurred) on the principal securities exchange or system on which such
share is listed or admitted to trading, or if a share is not listed or admitted
to trading on any such exchange and is not listed as national market security on
NASDAQ but is quoted on NASDAQ or any similar system then in use, the Fair
Market Value per share shall be the average of the closing high bid and low
asked quotations on such system for such share on the date in question.
6. RESTRICTED STOCK.
An Award of Restricted Stock hereunder shall entitle the
holder thereof to receive shares of Common Stock which shall be forfeited if the
relationship between the Company and such holder terminates during the
Restricted Period, as defined below, for any reason other than those set forth
in the related Award Agreement. For purposes hereof, "Restricted Period" shall
mean that period as determined by the Committee during which the shares of
Restricted Stock awarded to a participant may be forfeited. The committee may at
any time provide that a Restricted Period shall terminate upon the attainment of
any performance objective established by the Committee. Upon termination of the
Restricted Period, the shares of Restricted Stock shall be delivered to the
recipient free and clear of all such restrictions.
7. CERTAIN ADJUSTMENTS.
In the event of any change in the outstanding shares of Common
Stock of the Company by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event, the number or kind of shares issued, or that
may be issued under the Plan pursuant to paragraph 4 above shall be
automatically adjusted to give effect to the occurrence of such event (and, in
the case of an Option, the number or kind of shares subject to, or the Option
price per share under, any outstanding Option shall be automatically adjusted)
so that the proportionate interest of the participant shall be maintained as
before the occurrence of such event. Any adjustment in outstanding Options
pursuant to this paragraph 7 shall be made without change in the total Option
exercise price applicable to the unexercised portion of such Options and with a
corresponding adjustment in the Option exercise price per share. No fractional
shares of Common Stock shall be issued pursuant to any adjustment referred to
herein, and any fractions resulting from any such adjustment shall be eliminated
in each case by rounding downward to the nearest whole share. Any adjustment
made pursuant to this paragraph 7 shall be conclusive and binding for all
purposes of the Plan.
3
<PAGE>
8. MISCELLANEOUS.
(a) No person shall have any claim or right to be granted an
Award under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any person any right to be retained in any way in the
service of the Company.
(b) No shares of Common Stock shall be issued hereunder unless
counsel for the Company shall be satisfied, that such issuance will be in
compliance with applicable federal, state and other securities laws.
(c) It shall be a condition to the obligation of the Company
to issue shares of Common Stock upon exercise of an Option, or deliver shares
upon termination of a Restricted Period, as the case may be, that the
participant (or any beneficiary or person entitled to act under paragraph 9
below) pay to the Company, upon its demand, any taxes required to be withheld.
(d) The expenses of the Plan shall be borne by the Company.
(e) By accepting any Award or other benefit under the Plan,
each participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or the Committee.
9. TOTAL DISABILITY OR DEATH.
(a) Except as otherwise provided in the Award Agreement, if an
employee Optionee terminates employment with the Company as the result, in the
sole judgment of the Committee, of his becoming totally disabled, the Optionee
shall be entitled to exercise any Option to the extent his right to exercise
such Option had accrued at the date of termination of employment and had not
previously been exercised, for a period of three months after such termination,
subject, in any case, to all other provisions of the Plan.
(b) Except as otherwise provided in the Award Agreement, if
the employee Optionee should die either (i) while employed by the Company, or
(ii) during any period in which the Optionee may exercise the Option following
termination of employment, then the person or persons to whom the Optionee's
rights under the Option shall pass by will or by the applicable laws of descent
and distribution shall be entitled to exercise the Option to the extent his
right to exercise such Option had accrued at the date of termination of
employment and had not previously been exercised, for a period of twelve months
from the date of such death, subject, in any case, to all other provisions of
the Plan.
10. AMENDMENT OR TERMINATION.
The Plan may be terminated at any time or amended at any time
or from time to time by the Committee as the Committee shall deem advisable;
PROVIDED, HOWEVER, that except as provided in paragraph 7 above, the Committee
may not, without further approval by the stockholders of the Company, increase
the maximum number of shares of Common Stock as to which Options may be granted,
or awarded as Restricted Stock, under the Plan, materially increase the benefits
accruing to participants under the
4
<PAGE>
Plan or change the class of persons eligible to receive Awards under the Plan.
No amendment or termination of the Plan shall materially and adversely affect
any right of any participant with respect to any Award theretofore granted
without such participant's written consent.
11. EFFECTIVENESS.
The Plan shall not be effective and no Award granted hereunder
shall have effect unless and until the Plan has been approved and adopted by a
majority in voting power of the stockholders of the Company.
Dated as of February 21, 1997
5
<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 Registration Date, the following
provisions shall govern the administration of the Plan:
<PAGE>
(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 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.
2
<PAGE>
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
(including options incorporated into this Plan from the Predecessor Plan) 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 issuance.
3
<PAGE>
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, (iv) the number and/or class of securities and the exercise price per
share in effect under each outstanding option under the Plan and (v) the number
and/or class of securities and price per share in effect under each outstanding
option incorporated into this Plan from the Predecessor 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.
4
<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.
5
<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.
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
6
<PAGE>
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 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 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.
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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 Common Stock. In addition, the Plan Administrator may at
any time provide that one or more of
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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.
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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 the issued shares of Common Stock, whether or not the
Participant's interest in those shares is
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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 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.
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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.
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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 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 _________ shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent.
2. 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 _______ 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 ________ 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 Board service measured from
the option grant date. Each annual ________ 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:
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(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.
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
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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.
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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
percentage of the Taxes (not to exceed one hundred percent (100%)) designated by
the holder.
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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 serve as the successor to the Predecessor
Plan, and no further options or direct stock issuances shall be made under the
Predecessor Plan after the Plan Effective Date. All options outstanding under
the Predecessor Plan on the Plan Effective Date shall be incorporated into the
Plan at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so incorporated shall continue to be governed
solely by the terms of the documents evidencing such option, and no provision of
the Plan shall be deemed to affect or otherwise modify the rights or obligations
of the holders of such incorporated options with respect to their acquisition of
shares of Common Stock.
C. The Plan shall terminate upon the EARLIEST of (i) ________,
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
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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
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.
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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 its successors.
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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 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
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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).
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
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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 Incentive
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.
Y. PLAN EFFECTIVE DATE shall mean _______, 1999, the date on
which the Plan was adopted by the Board.
Z. PREDECESSOR PLAN shall mean the Corporation's pre-existing
Stock Award Plan in effect immediately prior to the Plan Effective Date
hereunder.
AA. 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.
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BB. 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.
CC. SECTION 12 REGISTRATION DATE shall mean the date on which
the Common Stock is first registered under Section 12(g) of the 1934 Act.
DD. 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.
EE. 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.
FF. STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.
GG. STOCK ISSUANCE PROGRAM shall mean the stock issuance
program in effect under the Plan.
HH. 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.
II. 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).
JJ. UNDERWRITING AGREEMENT shall mean the agreement between
the Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
KK. 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.
LL. 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.
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Exhibit 10.8
HOTJOBS.COM, LTD.
1999 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 1999 Employee Stock Purchase Plan is intended to promote
the interests of HotJobs.com, Ltd., a Delaware corporation, by providing
eligible employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll-deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret
and construe any provision of the Plan and to adopt such rules and regulations
for administering the Plan as it may deem necessary in order to comply with the
requirements of Section 423 of the Code. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed two hundred
and fifty thousand (250,000) shares.
B. Should any change be 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 class of securities
issuable under the Plan, (ii) the maximum number and class of securities
purchasable per Participant and in the aggregate on any one Purchase Date and
(iii) the number and class of securities and the price per share in effect under
each outstanding purchase right in order to prevent the dilution or enlargement
of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of successive offering periods until such time as
(i) the maximum number of shares of Common Stock available for issuance under
the Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated.
B. Each offering period shall be of such duration (not to
exceed twenty-four (24) months) as determined by the Plan Administrator prior to
the start date of such offering
<PAGE>
period. However, the initial offering period shall commence at the Effective
Time and terminate on the last business day in July 2001. Subsequent offering
periods shall commence as designated by the Plan Administrator.
C. Each offering period shall be comprised of a series of one
or more successive Purchase Intervals. Purchase Intervals shall run from the
first business day in February each year to the last business day in July of the
same year and from the first business day in August each year to the last
business day in January of the following year. However, the first Purchase
Interval in effect under the initial offering period shall commence at the
Effective Time and terminate on the last business day in January 2000.
D. Should the Fair Market Value per share of Common Stock on
any Purchase Date within an offering period be less than the Fair Market Value
per share of Common Stock on the start date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date, and a new offering period shall
commence on the next business day following such Purchase Date. The new offering
period shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start
date of an offering period under the Plan may enter that offering period on such
start date or on any subsequent Semi-Annual Entry Date within that offering
period, provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible Employee
after the start date of an offering period may enter that offering period on any
subsequent Semi-Annual Entry Date within that offering period on which he or she
is an Eligible Employee.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering
period, the Eligible Employee must complete the enrollment forms prescribed
by the Plan Administrator (including a stock purchase agreement and a payroll
deduction authorization) and file such forms with the Plan Administrator (or
its designate) on or before his or her scheduled Entry Date.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock during an offering period may be
any multiple of one percent (1%) of the Cash Earnings paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
[FIFTEEN PERCENT (15%)]. The deduction rate so authorized shall continue in
effect throughout the offering period, except to the extent such rate is changed
in accordance with the following guidelines:
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(i) The Participant may, at any time during the
offering period, reduce his or her rate of payroll deduction
to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant
may not, however, effect more than one (1) such reduction per
Purchase Interval.
(ii) The Participant may, prior to the commencement
of any new Purchase Interval within the offering period,
increase the rate of his or her payroll deduction by filing
the appropriate form with the Plan Administrator. The new rate
(which may not exceed the [FIFTEEN PERCENT (15%)] maximum)
shall become effective on the start date of the first Purchase
Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day
following the Participant's Entry Date into the offering period and shall
(unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be required to be held in any segregated account or trust fund and may be
commingled with the general assets of the Corporation and used for general
corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.
D. The Participant's acquisition of Common Stock under the
Plan on any Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date, whether within the
same or a different offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive installments over
the remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall
be automatically exercised in installments on each successive Purchase Date
within the offering period, and shares of Common Stock shall accordingly be
purchased on behalf of each
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Participant (other than Participants whose payroll deductions have previously
been refunded pursuant to the Termination of Purchase Right provisions below) on
each such Purchase Date. The purchase shall be effected by applying the
Participant's payroll deductions for the Purchase Interval ending on such
Purchase Date to the purchase of whole shares of Common Stock at the purchase
price in effect for the Participant for that Purchase Date.
C. PURCHASE PRICE. The purchase price per share at which
Common Stock will be purchased on the Participant's behalf on each Purchase Date
within the offering period shall be equal to eighty-five percent (85%) of the
LOWER of (i) the Fair Market Value per share of Common Stock on the
Participant's Entry Date into that offering period or (ii) the Fair Market Value
per share of Common Stock on that Purchase Date.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of
Common Stock purchasable by a Participant on each Purchase Date during the
offering period shall be the number of whole shares obtained by dividing the
amount collected from the Participant through payroll deductions during the
Purchase Interval ending with that Purchase Date by the purchase price in
effect for the Participant for that Purchase Date. However, the maximum
number of shares of Common Stock purchasable per Participant on any one
Purchase Date shall not exceed one thousand four hundred (1,400) shares,
subject to periodic adjustments in the event of certain changes in the
Corporation's capitalization. In addition, the maximum number of shares of
Common Stock purchasable in the aggregate by all Participants on any one
Purchase Date shall not exceed sixty-two thousand five hundred (62,500)
shares, subject to periodic adjustments in the event of certain changes in
the corporation's capitalization.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not
applied to the purchase of shares of Common Stock on any Purchase Date because
they are not sufficient to purchase a whole share of Common Stock shall be held
for the purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable on the Purchase Date
shall be promptly refunded.
F. TERMINATION OF PURCHASE RIGHT. The following provisions
shall govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his
or her outstanding purchase right by filing the appropriate
form with the Plan Administrator (or its designate), and no
further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right. Any
payroll deductions collected during the Purchase Interval in
which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made
at the time such purchase right is terminated, then the
payroll deductions collected with respect to the terminated
right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin
the offering period for which the
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<PAGE>
terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such
individual must re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into that offering period.
(iii) Should the Participant cease to remain an
Eligible Employee for any reason (including death, disability
or change in status) while his or her purchase right remains
outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions for
the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall
have the right, exercisable up until the last business day of
the Purchase Interval in which such leave commences, to (a)
withdraw all the payroll deductions collected to date on his
or her behalf for that Purchase Interval or (b) have such
funds held for the purchase of shares on his or her behalf on
the next scheduled Purchase Date. In no event, however, shall
any further payroll deductions be collected on the
Participant's behalf during such leave. Upon the Participant's
return to active service (i) within ninety (90) days following
the commencement of such leave or, (ii) prior to the
expiration of any longer period for which such Participant's
right to reemployment with the Corporation is guaranteed by
either statute or contract, his or her payroll deductions
under the Plan shall automatically resume at the rate in
effect at the time the leave began. However, should the
Participant's leave of absence exceed ninety (90) days and his
or her re-employment rights not be guaranteed by either
statute or contract, then the Participant's status as an
Eligible Employee will be deemed to terminate on the
ninety-first (91st) day of that leave, and such Participant's
purchase right for the offering period in which that leave
began shall thereupon terminate. An individual who returns to
active employment following such a leave shall be treated as a
new Employee for purposes of the Plan and must, in order to
resume participation in the Plan, re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on
or before his or her scheduled Entry Date into the offering
period.
G. CORPORATE TRANSACTION. Each outstanding purchase right
shall automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole shares of Common Stock at a purchase price per share equal to
eighty-five percent (85%) of the LOWER of (i) the Fair Market Value per share of
Common Stock on the Participant's Entry Date into the offering period in which
such Corporate Transaction occurs or (ii) the Fair Market Value per share of
Common Stock immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitations on the number of shares of
Common Stock purchasable per Participant and in the aggregate shall continue to
apply to any such purchase.
The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any Corporate
Transaction, and Participants shall, following
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<PAGE>
the receipt of such notice, have the right to terminate their outstanding
purchase rights prior to the effective date of the Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total number of
shares of Common Stock to be purchased pursuant to outstanding purchase
rights on any particular date exceed the number of shares then available for
issuance under the Plan, the Plan Administrator shall make a pro-rata
allocation of the available shares on a uniform and nondiscriminatory basis,
and the payroll deductions of each Participant, to the extent in excess of
the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded.
I. ASSIGNABILITY. The purchase right shall be exercisable only
by the Participant and shall not be assignable or transferable by the
Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations to the
purchase rights granted under the Plan, the following provisions shall be in
effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of
installments on each successive Purchase Date during the
offering period on which such right remains outstanding.
(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the
Participant has already accrued in the same calendar year the
right to acquire Common Stock under one (1) or more other
purchase rights at a rate equal to Twenty-Five Thousand
Dollars ($25,000) worth of Common Stock (determined on the
basis of the Fair Market Value per share on the date or dates
of grant) for each calendar year such rights were at any time
outstanding.
C. If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Purchase Interval, then
the payroll deductions which the
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<PAGE>
Participant made during that Purchase Interval with respect to such purchase
right shall be promptly refunded.
D. In the event there is any conflict between the provisions
of this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on April 19, 1999 and
shall become effective at the Effective Time, PROVIDED no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect, and all sums collected
from Participants during the initial offering period hereunder shall be
refunded.
B. Unless sooner terminated by the Board, the Plan shall
terminate upon the EARLIEST of (i) the last business day in July 2009, (ii) the
date on which all shares available for issuance under the Plan shall have been
sold pursuant to purchase rights exercised under the Plan or (iii) the date on
which all purchase rights are exercised in connection with a Corporate
Transaction. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.
X. AMENDMENT/TERMINATION OF THE PLAN
A. The Board may alter, amend, suspend or terminate the Plan
at any time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time be subsequently revised so as to require the recognition of compensation
expense in the absence of such amendment or termination.
B. In no event may the Board effect any of the following
amendments or revisions to the Plan without the approval of the Corporation's
stockholders: (i) increase the number of shares of Common Stock issuable under
the Plan or the maximum number of shares purchasable per Participant on any one
Purchase Date, except for permissible adjustments in the event of certain
changes in the Corporation's capitalization, (ii) alter the purchase price
formula
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<PAGE>
so as to reduce the purchase price payable for the shares of Common Stock
purchasable under the Plan or (iii) modify eligibility requirements for
participation in the Plan.
XI. GENERAL PROVISIONS
A. Nothing in the Plan shall confer upon the Participant any
right to continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with or
without cause.
B. All costs and expenses incurred in the administration of
the Plan shall be paid by the Corporation; however, each Plan Participant shall
bear all costs and expenses incurred by such individual in the sale or other
disposition of any shares purchased under the Plan.
C. The provisions of the Plan shall be governed by the laws of
the State of New York without regard to that State's conflict-of-laws rules.
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SCHEDULE A
CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME
HotJobs.com, Ltd.
[ADD SUBSIDIARIES]
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CASH EARNINGS shall mean the (i) base salary payable to a
Participant by one or more Participating Corporations during such individual's
period of participation in one or more offering periods under the Plan plus
(ii) all overtime payments, bonuses, commissions, current profit-sharing
distributions and other incentive-type payments. Such Cash Earnings shall be
calculated before deduction of (A) any income or employment tax withholdings or
(B) any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate. However,
Cash Earnings shall NOT include any contributions (other than Code Section
401(k) or Code Section 125 contributions) made on the Participant's behalf by
the Corporation or any Corporate Affiliate to any employee benefit or welfare
plan now or hereafter established.
C. CODE shall mean the Internal Revenue Code of 1986, as
amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE AFFILIATE shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code
Section 424), whether now existing or subsequently established.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation in
complete liquidation or dissolution of the Corporation.
G. CORPORATION shall mean HotJobs.com, Ltd., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of HotJobs.com, Ltd. which shall by appropriate action
adopt the Plan.
H. EFFECTIVE TIME shall mean the time at which the
Underwriting Agreement is executed. Any Corporate Affiliate which becomes a
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.
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I. ELIGIBLE EMPLOYEE shall mean any person who is employed by
a Participating Corporation on a basis under which he or she is regularly
expected to render more than twenty (20) hours of service per week for more than
five (5) months per calendar year for earnings considered wages under Code
Section 3401(a).
J. ENTRY DATE shall mean the date an Eligible Employee first
commences participation in the offering period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
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 by the National
Association of Securities Dealers 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 the initial offering period
which begins at the Effective Time, the Fair Market Value
shall be deemed to be equal to the price per share at which
the Common Stock is sold in the initial public offering
pursuant to the Underwriting Agreement.
L. 1933 ACT shall mean the Securities Act of 1933, as amended.
M. PARTICIPANT shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.
N. PARTICIPATING CORPORATION shall mean the Corporation and
such Corporate Affiliate or Affiliates as may be authorized from time to time by
the Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.
O. PLAN shall mean the Corporation's 1999 Employee Stock
Purchase Plan, as set forth in this document.
A-2
<PAGE>
P. PLAN ADMINISTRATOR shall mean the committee of two (2) or
more Board members appointed by the Board to administer the Plan.
Q. PURCHASE DATE shall mean the last business day of each
Purchase Interval. The initial Purchase Date shall be January 31, 2000.
R. PURCHASE INTERVAL shall mean each successive six (6)-month
period within the offering period at the end of which there shall be purchased
shares of Common Stock on behalf of each Participant.
S. SEMI-ANNUAL ENTRY DATE shall mean the first business day in
February and August each year on which an Eligible Employee may first enter an
offering period.
T. STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.
U. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the Corporation's
initial public offering of its Common Stock.
A-3
<PAGE>
Exhibit 10.9
Execution Counterpart No.
Of Four Execution Counterparts
LEASE AGREEMENT
24 WEST 40TH ST. LLC,
LANDLORD
AND
HOTJOBS.COM, LTD.
TENANT
DATE: APRIL 16, 1999
LEASED PREMISES: ENTIRE FOURTEENTH (14TH) AND SIXTEENTH (16TH) FLOORS
24 WEST 40TH STREET
NEW YORK, NEW YORK
<PAGE>
LEASE AGREEMENT DATED APRIL 16, 1999
BETWEEN
24 WEST 40 ST. LLC, LANDLORD
AND
HOTJOBS.COM, LTD., TENANT
CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
------------
<S> <C> <C>
Recitals............................................................1
1. Certain Definitions........................................1
2. Demise.....................................................2
3. Use........................................................2
4. Rent.......................................................3
5. Term.......................................................5
6. Alterations................................................5
7. Repairs....................................................7
8. Compliance With Law; Floor Loads...........................7
9. Liens......................................................7
10. Insurance and Indemnity....................................8
11. Property Loss; Damage; Reimbursement......................10
12. Fire; Casualty; and Condemnation..........................10
13. Electricity and Other Services............................12
14. Defaults; Landlord's Remedies.............................15
15. Subordination and Attornment..............................17
16. Guarantee.................................................17
17. Assignment and Subletting.................................17
18. Condition of the Leased Premises..........................22
19. Surrender.................................................22
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
20. No Waiver.................................................23
21. Brokerage.................................................23
22. Notices...................................................23
23. Certificates..............................................24
24. Access to Leased Premises.................................24
25. Quiet Enjoyment...........................................24
26. FORCE MAJEURE.............................................25
27. Security..................................................25
28. Termination Right.........................................26
29. Miscellaneous.............................................26
Signatures.........................................................28
</TABLE>
<PAGE>
EXHIBITS
A. Diagram of Leased Premises
B. Form of Guarantee
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT made this 16th day of April, 1999, by and between
24 WEST 40TH ST. L.L.C. ("Landlord"), having an office c/o Jenel Management
Corp., 275 Madison Avenue, Suite 702, New York, New York 10016, and HOTJOBS.COM,
LTD., a Delaware corporation ("Tenant"), having an office at 24 West 40th
Street, New York, New York 10018.
W I T N E S S E T H:
Landlord is the owner of the building located at 24 West 40th
Street, New York, New York 10018 (the "Building"). Tenant desires to lease from
Landlord the entire fourteenth (14th) floor and the entire sixteenth (16th)
floor of the Building, and Landlord desires to lease to Tenant such premises,
upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
1.01 The following terms shall have the meanings hereinafter
ascribed to them:
(a) "Additional Rent" shall mean all sums of money payable
under this Lease by Tenant to Landlord other than Fixed Rent. All Additional
Rent payable hereunder shall be treated as rent payable in consideration for the
granting of the leasehold estate created hereby and the non-payment of any
Additional Rent shall be treated in the same manner and shall give rise to the
same rights and remedies in favor of Landlord as if the same were the
non-payment of Fixed Rent.
(b) "Affiliate" shall mean any person or entity who controls,
is controlled by it is under common control with Tenant. For the purposes of
this definition, control means ownership, directly or indirectly, of not less
than fifty (50%) percent of the voting interests, capital or profits of an
entity.
(c) "Bankruptcy Code" means the Federal Bankruptcy Code, 11
U.S.C.Sections 101 ET SEQ., as the same has been or may be amended, or any
successor statute thereto.
(d) "Business Days" means all days, excluding Saturdays,
Sundays and all days observed by either the State of New York, the Federal
Government or the labor unions servicing the Building as legal holidays.
(e) "Business Hours" means the hours of 8:00 a.m. through
6:00 p.m. on Business Days and the hours of 8:00 a.m. through 2:00 p.m. on
Saturdays.
(f) "Commencement Date" shall mean the later of (i) August 1,
1999 and (ii) the date Landlord delivers exclusive possession of the Leased
Premises to Tenant.
<PAGE>
(g) "Default Rate" shall mean the lesser of two (2)
percentage points in excess of the average "prime rate" from time to time
published in THE WALL STREET JOURNAL (Eastern Edition) and the highest legal
rate(s), in effect during the relevant period for which such Default Rate shall
be applicable in accordance with the terms and provisions hereof, adjusted on a
daily for each change in such prime or lower highest legal rate.
(h) "Expiration Date" shall mean March 31, 2004.
(i) "Fixed Rent" shall mean the rental payable by Tenant to
Landlord pursuant to Section 4.01 hereof.
(j) "Lease Year" shall mean each consecutive 12-month period
during the Term of this Lease commencing on the Commencement Date and expiring
on the day immediately preceding the anniversary of the Commencement Date;
provided, that if the Commencement Date is not the first day of a month, then
the first Lease Year shall expire on the last day of the month immediately
preceding the month in which the first anniversary of the Commencement Date
occurs and each Lease Year thereafter shall commence on the anniversary of the
first day of the month in which the Commencement Date occurred; and further
provided, that the last Lease Year shall expire on the Expiration Date.
(k) "Leased Premises" shall mean the entire fourteenth (14th)
floor and the entire sixteenth (16th) floor of the Building as shown on Exhibit
A annexed hereto and made part hereof.
(l) "Person" shall mean a natural person, governmental entity
or agency, mission or department, corporation, partnership (general, limited or
limited liability), limited liability company, trust, pension fund, union,
association, organization or any other artificial person.
(m) "Rent" shall mean any or all Fixed Rent and Additional
Rent payable by Tenant to Landlord pursuant to the terms of this Lease.
(n) "Tenant's Proportionate Share" shall mean 12.0%.
(o) "Term" shall mean the Term of this Lease prescribed by
Article 5 of this Lease.
1.02 As used in this Lease, the words "hereof," "hereto",
"hereunder" and similar words shall refer to this Lease as a whole and not to
the particular sentence, paragraph, Section or Article in which such word
appears. The words "include" and "including" shall be read to mean include or
including without limitation.
2. DEMISE.
Landlord hereby demises unto Tenant for the Term hereinafter set
forth, and Tenant hereby accepts and hires from Landlord the Leased Premises in
their "as is" condition on the date hereof, normal wear and tear excepted
<PAGE>
3. USE.
(a) Tenant may use the Leased Premises for executive and
general office purposes only, and for no other purposes whatsoever.
(b) Tenant shall not at any time use or occupy the Leased
Premises or the Building, or suffer or permit anyone to use or occupy the Leased
Premises, or do anything in the Leased Premises or the Building, or suffer or
permit anything to be done in, brought into or kept on the Leased Premises,
which in any manner in the reasonable judgment of Landlord (i) constitutes a
violation of the laws and requirements of any public authorities or the
requirements of insurance bodies; (ii) impairs the character, reputation or
appearance of the Building; or (iii) discharges objectionable fumes, vapors or
odors into the Building's flues or vents or otherwise in such manner as
Landlord, in the exercise of its reasonable judgment, concludes may offend other
tenants or occupants of the Building.
(c) Tenant shall not use, or suffer or permit anyone to use,
the Leased Premises or any part thereof, for (i) an agency, department or bureau
of the United States Government, any state or municipality within the United
States or any foreign government, or any political subdivision of any of them,
or any other entity subject to diplomatic or sovereign immunity, (ii) an
employment agency (except that Tenant will be permitted to operate an internet
recruiting site at the Leased Premises), (iii) any charitable, religious, union
or other not-for-profit organization, or (iv) any tax exempt entity within the
meaning of Section 168(h)(2)(A) of the Internal Revenue Code of 1986, as
amended, or any successor or substitute statute, or rule or regulation
applicable thereto, as same may be amended.
(d) If any governmental license or permit (other than a
certificate of occupancy for the entire Building) shall be required for the
proper and lawful conduct of Tenant's business in the Leased Premises or any
part thereof, Tenant, at its expense and prior to conducting business in the
Leased Premises, shall duly procure and thereafter maintain such license or
permit and submit the same to Landlord for inspection. Tenant shall at all times
comply with the terms and conditions of each such license or permit.
4. RENT.
4.01 (a) There is herein reserved to Landlord the entire Fixed
Rent payable pursuant to this Section 4.01. Fixed Rent shall be paid in equal
monthly installments, at the following annual rates, in the lawful currency of
the United States of America, without notice, demand, abatement, deduction or
set-off:
(i) for the period from the Commencement Date
through the day preceding the one year
anniversary of the Commencement Date, one
hundred nine thousand five hundred and no/100
($109,500.00) dollars ($9,125.00 per month);
(ii) for the period from the one year anniversary
of the Commencement Date through the day
preceding the two year anniversary of the
Commencement Date, one hundred thirteen
thousand eight hundred eighty and no/100
($113,880.00) dollars ($9,490.00 per month);
(iii) for the period from the two year anniversary
of the Commencement Date through the day
preceding the three year anniversary of the
Commencement Date, one hundred eighteen
thousand four hundred thirty-five and 20/100
($118,435.20) dollars ($9,869.60 per month);
(iv) for the period from the three year anniversary
of the Commencement Date through the day
preceding the four year anniversary of the
Commencement Date, one hundred twenty-three
thousand one hundred
<PAGE>
seventy-two and 61/100 ($123,172.61) dollars
($10,264.38 per month); and
(v) for the period from the four year anniversary
of the Commencement Date through the
Expiration Date, one hundred twenty-eight
thousand ninety-nine and 51/100 ($128,099.51)
dollars ($10,674.96 per month).
(b) Monthly installments of Fixed Rent shall be paid on the
first day of each month during the Term hereof, except that Fixed Rent for the
first month of the Term shall be paid on the date hereof. If the Commencement
Date is not the first day of a month, then the first such installment of Fixed
Rent payable on the first day of the first month following the Commencement Date
shall be prorated on a per diem basis to account for the number of days of such
month covered by the installment of Fixed Rent paid upon the execution hereof.
4.02 (a) In addition to the Fixed Rent reserved hereunder as set
forth in Section 4.01, Tenant shall pay as Additional Rent during the Term,
escalations in Taxes in accordance with this Section 4.02.
(b) The terms defined below shall for the purposes of this
Lease have the meanings herein specified:
(i) "Taxes" shall mean all real estate taxes,
sewer rents, water frontage charges and other
assessments, special or otherwise, levied,
assessed or imposed by the City of New York or
any other taxing authority upon or with
respect to the Building and the land
thereunder (the "Land") and any charge, fee or
imposition resulting from the Land or the
Building being located within a business
improvement district, and all taxes assessed
or imposed with respect to the rentals payable
hereunder other than general income, gross
receipts and excess profits taxes (except that
general income, gross receipts and excess
profits taxes shall be included if covered by
the provisions of the following sentence).
Taxes shall also include any taxes, charges or
assessments levied, assessed or imposed by any
taxing authority in addition to or in lieu of
the present method of real estate taxation,
provided such additional or substitute taxes,
charges and assessments are computed as if the
Building were the sole property of Landlord
subject to said additional or substitute tax,
charge or assessment. With respect to any Tax
Year, all expenses, including legal fees,
experts' and other witnesses' fees, incurred
in contesting the validity or amount of any
Taxes or in obtaining a refund of Taxes, shall
be considered as part of the Taxes for such
Tax Year. Notwithstanding the foregoing, Taxes
shall not include franchise taxes, gift taxes,
capital stock taxes, inheritance taxes or
estate taxes. Tenant hereby waives any right
to institute or join in tax certiorari
proceedings or other similar proceedings
contesting the amount or validity of any
Taxes.
(ii) "Tax Year" shall mean the twelve (12) month
period from July 1 through June 30 (or such
other period as hereafter may be duly adopted
by the City of New York as its fiscal year for
real estate tax purposes) during the Term
commencing July 1, 2000.
(iii) "Tax Statement" shall mean an instrument or
instruments setting forth the amount payable
by Tenant for a specified Tax Year pursuant to
this Section. If any Tax Statement is not
accompanied by a copy of the tax bill,
Landlord shall furnish the same to Tenant
promptly after Landlord's receipt of notice
from Tenant requesting the same.
(iv) "Base Taxes" shall mean the Taxes payable for
the Tax Year commencing July 1, 1999.
<PAGE>
(c) If the Taxes payable for any Tax Year shall exceed the
Base Taxes, Tenant shall pay to Landlord, as Additional Rent for such Tax Year,
an amount (herein called the "Tax Payment") equal to Tenant's Proportionate
Share of the amount by which the Taxes payable by Landlord for such Tax Year are
greater than the Base Taxes.
(d) The Tax Payment for each Tax Year shall be due and
payable in installments in the same manner that Taxes for such Tax Year are due
and payable to the City of New York, except that Tenant shall pay Tenant's
Proportionate Share of each such installment to Landlord at least thirty (30)
days prior to the date such installment first becomes due to the City of New
York. Landlord's failure to render a Tax Statement with respect to any Tax Year
shall not prejudice Landlord's right thereafter to render a Tax Statement with
respect to any such Tax Year nor shall the rendering of a Tax Statement
prejudice Landlord's right thereafter to render a corrected Tax Statement for
that Tax Year.
(e) In the event Taxes for any Tax Year or part thereof shall
be reduced after Tenant shall have paid Tenant's Tax Payment in respect of such
Tax Year, Landlord shall set forth in the first Tax Statement thereafter
submitted to Tenant the amount of such refund and, provided that Tenant is not
then in default beyond any applicable notice and cure period under this Lease,
Tenant shall receive a credit against the installment or installments of
Tenant's Tax Payment next falling due equal to Tenant's Proportionate Share of
such refund, but in no event shall the credit exceed the amount of the
Additional Rent paid by Tenant with respect to Taxes for said Tax Year. If the
Taxes comprising the Base Taxes are reduced as a result of an appropriate
proceeding or otherwise, the Taxes as so reduced shall for all purposes be
deemed to be Taxes for the Base Taxes, and Landlord shall give notice to Tenant
of the amount by which the Tax Payments previously made were less than the Tax
Payments required to be made under this Section 4.02, and Tenant shall pay the
amount of the deficiency within ten (10) days after demand therefor.
(f) The expiration or termination of this Lease during any
Tax Year for any part or all of which there is a Tax Payment or refund due under
this Section 4.02 shall not affect the rights or obligations of the parties
hereto respecting such Tax Payment or refund and any Tax Statement relating to
such Tax Payment may, on a pro-rata basis, be sent to Tenant subsequent to, and
all such rights and obligations shall survive, any such expiration or
termination. Any such payment shall be (i) calculated based on a year of 365
days and paid based on the actual number of days elapsed and (ii) shall be
payable within thirty (30) days after such statement is sent to Tenant.
4.03 Tenant agrees to pay the following amounts to Landlord as
Additional Rent hereunder:
(a) Tenant shall pay to Landlord for water and sewer rental
charges three hundred sixty (360) dollars per year ($30 per month) in equal
monthly installments in advance on the first day of each month during the Term
(pro rated for partial months);
(b) Tenant shall pay to Landlord as a sprinkler service
charge four hundred eighty ($480) dollars per year ($40 per month), in equal
monthly installments in advance on the first day of each month during the Term
(pro rated for partial months).
5. TERM.
The Term of this Lease shall commence on the Commencement Date and
expire at noon on
<PAGE>
the Expiration Date, unless terminated earlier as hereinafter provided. If
Landlord is unable to deliver possession of the Leased Premises to Tenant on
August 1, 1999 because of the holding over or retention of possession by any
tenant or occupants, Landlord shall not be subject to any liability for failure
to deliver possession of the Leased Premises on such date and the validity of
this Lease shall not be impaired under such circumstances, nor shall the same be
construed to extend the Term of this Lease, but the Rent payable hereunder shall
be abated (provided Tenant is not responsible for Landlord's inability to obtain
possession) until after Landlord shall have given Tenant written notice that the
Leased Premises are ready for Tenant's occupancy.
6. ALTERATIONS.
6.01 (a) Tenant shall not make any alterations or installations
(including air-conditioning units, partitions and fixtures), additions or
improvements in or to the Leased Premises without first obtaining the written
consent of Landlord. If any such consent to alterations, installations,
additions or improvements is given by Landlord, then, whether or not any such
consent contains the same, it shall be a condition of such consent that all
approved alterations, installations, additions and improvements shall be done in
a first-class, workmanlike manner, in accordance with plans and specifications
first approved by Landlord and in accordance with all laws, statutes,
ordinances, rules and regulations applicable to the Leased Premises.
(b) Notwithstanding the foregoing Tenant may make purely
decorative changes to the Leased Premises, such as painting, carpeting, changing
wall covers, hanging pictures, without the consent of Landlord. Landlord shall
not unreasonably withhold or delay its consent to any non-structural changes,
alterations, installations, additions or improvements (collectively, "Tenant's
Work"), provided such Tenant's Work is performed only by contractors or
mechanics selected by Tenant and reasonably satisfactory to Landlord, and such
Tenant's Work, in the sole opinion of Landlord, shall not (i) adversely affect
the proper functioning of the Building's mechanical, electrical, sanitary
plumbing, heating, air-conditioning, ventilating, utility or any other service
systems, (ii) result in a violation of, or require a change in, any certificate
of occupancy applicable to the Leased Premises or the Building, (iii) affect in
any way the outside appearance, usefulness or rentability of the Building or any
part thereof, (iv) weaken or impair (temporarily or permanently) the structure
of the Leased Premises or the Building either in the course of the making of
such Tenant's Work or upon its completion, or (v) physically affect any part of
the Building outside of the Leased Premises.
6.02 Prior to commencing any work for any alterations,
installations, additions or improvements in or to the Leased Premises, Tenant
shall submit construction plans and specifications therefor (which plans and
specifications, if required by law to be so filed, shall be (i) in form suitable
for filing and (ii) filed with the New York City Building Department) and obtain
all permits, licenses, and approvals required by law for such work. Upon
completion of any such work for alterations, installations, additions or
improvements, Tenant shall arrange for and obtain all inspections, certificates
and permits as may be required by law for the maintenance, use, operation or
existence of such alterations, installations, additions and improvements.
6.03 Tenant shall indemnify Landlord and hold Landlord harmless
from and against all claims, liens and costs (including, without limitation,
reasonable attorneys' fees), arising out of or due to the performance or
construction of such alterations, installations, additions or improvements. The
provisions of the preceding sentence shall survive the expiration or earlier
termination of the Term of this Lease. Tenant shall carry and shall cause its
general contractor (or if there is no general contractor, then its major
subcontractors) to carry, during the course of any such work, workers'
compensation insurance, general liability insurance, personal and property
damage insurance as required by law and as Landlord may reasonably require. All
such insurance for bodily injury and property damage shall name Landlord as an
additional insured thereunder. All such insurance shall be written by insurance
companies qualified to do business in the State of New York rated
<PAGE>
in Best's Insurance Guide, or any successor thereto (or if there is none, an
organization having a national reputation) as having a "Best's Rating" of B+ and
a "Financial Size Category" of at least IX, or if such ratings are not then in
effect, their equivalent. Before proceeding with the work, certificates of such
insurance shall be furnished to Landlord and shall name Landlord and such other
parties as Landlord may prescribe as additional insureds as their interests may
appear at no additional cost to Landlord.
6.04 All fixtures and all paneling, partitions, railings and like
installations, installed in the Leased Premises at any time, either by Tenant or
by Landlord on Tenant's behalf, shall, upon installation, become the property of
Landlord and shall remain upon and be surrendered with the Leased Premises
unless Landlord by notice to Tenant not later than twenty (20) days prior to the
Expiration Date, elects to relinquish Landlord's right thereto and to have them
removed by Tenant, in which event the same shall be removed from the Leased
Premises by Tenant at Tenant's expense prior to the Expiration Date. Nothing in
this Section shall be construed to give Landlord title to or to prevent Tenant's
removal of trade fixtures, movable office furniture and equipment, but upon
removal of any such items from the Leased Premises or upon removal of other
installations as may be required by Landlord, Tenant shall immediately and at
its expense repair and restore the Leased Premises to the condition existing
prior to the installation and repair any damage to the Leased Premises or the
Building due to such removal.
7. REPAIRS.
7.01 Tenant shall, throughout the Term, (i) make all nonstructural
repairs to the Leased Premises and the fixtures, equipment and appurtenances
therein as and when needed to preserve the Leased Premises in good working order
and condition, except for reasonable wear and tear and damage for which Tenant
is not responsible pursuant to this Lease, and (ii) replace scratched or damaged
doors, signs and glass (other than exterior window glass) in and about the
Leased Premises. Without limiting the foregoing, all damage to the Leased
Premises or to any other part of the Building, or to any fixtures, equipment,
sprinkler system and/or appurtenances thereof, whether requiring structural or
nonstructural repairs, caused by or resulting from any act, omission, neglect or
improper conduct of, or alterations made by, or the moving of Tenant's fixtures,
furniture or equipment, including machinery and heavy equipment, into, within or
out of the Leased Premises by Tenant, shall be repaired at Tenant's expense.
Such repairs shall be made by (A) Tenant, at Tenant's expense if the required
repairs are nonstructural in nature and do not affect any Building system or any
portion of the Building outside of the Leased Premises, or (B) Landlord, at
Tenant's expense, if the required repairs are structural in nature, involve
replacement of exterior window glass (if damaged by Tenant), or affect any
Building system or any portion of the Building outside of the Leased Premises.
Tenant shall give Landlord prompt notice of any defective condition of which
Tenant is aware in any structural element or any Building system located in,
servicing or passing through the Leased Premises. All Tenant repairs shall be of
a quality at least equal to the original work or construction using new
construction materials, and shall be made in accordance with this Lease.
7.02 There shall be no allowance to Tenant for diminution of
rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord or any
other person or entity making or failing to make repairs, alterations,
installations, additions or improvements in or to any portion of the Building or
the Leased Premises or to any fixtures, appurtenances or equipment thereof.
7.03 Landlord shall operate, maintain and, except as set forth in
Section 7.01, make all necessary repairs (both structural and nonstructural) to
(i) the Building systems, (ii) the public portions of the Building, and (iii)
the structural elements of the Building, both exterior and interior, including
the roof, foundation and curtain wall, in conformance with standards applicable
to office buildings of comparable age
<PAGE>
and quality in midtown Manhattan.
8. COMPLIANCE WITH LAW; FLOOR LOADS.
8.01 During the Term hereof, with respect to the Leased Premises
only and such wiring, cabling, signage and other property of Tenant maintained
and/or installed outside the Leased Premises, Tenant shall comply with all laws,
orders and regulations of Federal, State, County and Municipal authorities and
with all directions, pursuant to law, of all public officers, and with all
applicable rules, orders, regulations and requirements of the New York Board of
Fire Underwriters and the New York Fire Insurance Rating Organization or any
similar body.
8.02 Tenant shall not place a load upon any floor of the Leased
Premises exceeding the floor load per square foot area which such floor was
designed to carry and which is allowed by law.
9. LIENS.
Tenant shall not suffer or permit any mechanic's, materialman's or
other liens, charges or orders for the payment of money to be filed against the
Building or the Leased Premises. If, because of any act or omission (or alleged
act or omission) of Tenant or any contractor, subcontractor, employee or agent
of Tenant, any lien, charge or order for the payment of money shall be filed
against the Building or the Leased Premises (whether or not such lien, charge or
order is valid or enforceable as such), then Tenant shall, at its sole cost and
expense, cause the same to be discharged of record (which may be accomplished by
bonding), within forty-five (45) days after receipt by Tenant of actual notice
of the filing of the notice of lien. The obligations of Tenant under this
Article 9 shall survive the expiration or sooner termination of the Term of this
Lease.
10. INSURANCE AND INDEMNITY.
10.01 (a) In addition to the insurance required to be maintained
under Article 6 of this Lease, Tenant, at its expense, shall obtain and keep in
full force and effect a policy of commercial general liability insurance under
which Tenant is named as the insured and Landlord, Landlord's managing agent and
any lessors under underlying leases and the holders of any mortgages encumbering
the Building (whose names shall have been furnished to Tenant) are named as
additional insureds, and which shall contain a contractual liability endorsement
insuring Tenant from and against all cost, expense and/or liability arising out
of or based upon any and all claims, accidents, injuries, costs, liabilities and
damages referred to in paragraph (b) below. Such policy shall be primary
insurance for all additional insureds and contain a provision that no act or
omission of Tenant shall affect or limit the obligation of the insurance company
to pay the amount of any loss sustained and that the policy shall be
non-calculable with respect to Landlord and such underlying lessors and
mortgagees nor shall the amount thereof shall not be reduced or terminated
unless thirty (30) days' written notice shall have first been given to Landlord
by certified mail, return receipt requested, which notice shall contain the
policy number and the names of the insured and additional insureds. The minimum
limits of liability shall be a combined single limit with respect to each
occurrence in amounts of not less than one million and no/100 ($1,000,000.00)
dollars for injury (or death) or damage to property arising from any one
occurrence and five million and no/100 ($5,000,000.00) dollars from the
aggregate of all occurrences within each policy year. All insurance required to
be carried by Tenant pursuant to the terms of this lease shall be effected under
valid and enforceable policies issued by reputable and independent insurers
permitted to do business in the State of New York, and rated in Best's Insurance
Guide, or any successor thereto (or if there is none, an organization having a
national reputation) as having a "Best's Rating" of "B+" and a "Financial Size
Category" of at least "IX" or if such ratings are not then in effect, their
equivalent.
<PAGE>
(b) Tenant covenants and agrees that it shall procure and
maintain in full force and effect, at its sole expense, an "all-risk" policy of
property insurance covering Tenant's personal property in an amount equal to the
actual replacement cost thereof as may be determined for insurance purposes from
time to time. Tenant shall have no obligation to name Landlord as a beneficiary
or additional insured under such policy of property insurance.
(c) On the Commencement Date (or such earlier date as
Landlord may allow Tenant entry into the Leased Premises for any purpose),
Tenant shall deliver to Landlord appropriate certificates of insurance stating
that the appropriate insurance policy has been issued and permitting the
certificate holder to rely on the fact insurance has been issued and is in full
force and effect, including evidence of waivers of subrogation required to be
carried pursuant to this Article 10. Evidence of each renewal or replacement of
a policy shall be delivered by Tenant to Landlord at least thirty (30) days
prior to the expiration of such policy. Notwithstanding anything to the contrary
contained herein, Tenant agrees that it waives its right of recovery against
Landlord for any damage caused to Tenant's property and for any loss suffered by
Tenant due to interruption of Tenant's business.
(d) Tenant shall cause each insurance policy carried by
Tenant and insuring the Leased Premises, its fixtures, contents and the other
Tenant's property against loss, to be written in a manner so as to, provide that
the insurance company waives all right of recovery by way of subrogation against
Landlord in connection with any loss or damage covered by any such policies.
Landlord agrees to obtain in its insurance policies insuring the Building a
waiver of the insurer's right of subrogation against Tenant, provided the
inclusion of such waiver provision does not subject Landlord to additional fees,
charge or premiums by the insurer; if such waiver is not obtainable without
additional charge, Landlord shall so notify Tenant, and Tenant shall then have
the right to pay the additional charge for the inclusion of the waiver provision
in Landlord's insurance policies.
10.02 Tenant shall (i) take or cause to be taken all action, and
incur and be responsible for the payment of any and all expenses incident to
undertaking any action that may be required by a governmental agency having
jurisdiction, to clean up and remove from and about, and remediate any damage
caused by the release or presence in or about the Building, of all hazardous
substances which may be introduced into the Building during or after the Term as
a result of the acts or omissions of Tenant, its agents, contractors, employees
or invitees; provided, however, to the extent any such hazardous substances
existed prior to the date hereof, Tenant shall have no liability unless the same
shall have been disturbed by Tenant or must be removed or otherwise abated in
connection with work to be performed by or on behalf of Tenant and not part of
the initial work to be performed in connection with Tenant's preparation to make
the Leased Premises suitable for Tenant's initial occupancy thereof; and (ii)
defend, indemnify and hold Landlord and Landlord's partners, members, directors,
officers, agents and employees harmless from and against any and all claims,
demands, actions, proceedings, judgments, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and disbursements) suffered or
incurred by Landlord or Landlord's partners, members, directors, officers,
agents and employees as a result of Tenant's failure to perform the actions
required to be performed by it pursuant to this Section. Without in any way
limiting the generality of the foregoing, Tenant covenants and agrees that the
amount for which it shall be liable to Landlord under this Section shall include
all fines, penalties and judgments, including interest thereon, which may be
imposed upon or incurred by Landlord incident to any violation by Tenant of any
provision of any statute, rule, regulation, order or decree. Excluded from the
definition of hazardous substances with respect to Tenant's indemnity are those
substances typically found in an office environment such as, but not limited to,
photocopier inks and cleaning fluids, provided that they are kept at the Leased
Premises in commercially reasonable quantities consistent with office use and
stored, managed,
<PAGE>
used and transported in accordance with all applicable governmental
requirements.
10.03 (a) Tenant shall indemnify and hold harmless Landlord and
Landlord's partners, directors, officers, agents and employees from and against
any and all claims arising from or in connection with (i) the conduct or
management of the Leased Premises or of any business therein, or any work or
thing whatsoever done, or any condition created (other than by Landlord) in or
about the Leased Premises during the Term or during the period of time, if any,
prior to the Commencement Date that Tenant may have been given access to the
Leased Premises; (ii) any act, omission or negligence of Tenant or any of its
subtenants or licensees or its or their partners, directors, officers, agents,
employees or contractors; (iii) any accident, injury or damage whatever (unless
caused solely by Landlord's negligence) occurring in, at or upon the Leased
Premises; and (iv) any breach or default by Tenant in the full and prompt
payment and performance of Tenant's obligations under this Lease; together with
all costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
reasonable attorneys' fees and expenses. In case any action or proceeding be
brought against Landlord and/or its partners, directors, officers, agents and/or
employees by reason of any such claim, Tenant, upon notice from Landlord, shall
resist and defend such action or proceeding (by counsel reasonably satisfactory
to Landlord).
(b) Landlord shall indemnify and hold harmless Tenant and its
partners, directors, officers, agents and employees from and against any and all
claims arising from or in connection with (i) any act, omission or negligence of
Landlord or its partners, directors, officers, agents, employees or contractors
and (ii) any breach or default by Landlord in the full and prompt performance of
Landlord's obligations under this Lease; together with all costs, expenses and
liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, reasonable attorneys'
fees and expenses. In case any action or proceeding be brought against Tenant
and/or its partners, directors, officers, agents and/or employees by reason of
such claim, Landlord, upon notice from Tenant, shall resist and defend such
action or proceeding (by counsel reasonably satisfactory to Tenant).
10.04 Landlord shall take or cause to be taken all action, and
incur and be responsible for the payment of any and all expenses incident to
undertaking any action that may be required by a governmental agency having
jurisdiction, to clean up and remove from and about, and remediate any damage
caused by the release or presence in or about the Building, of all hazardous
substances which may be present or released in or about the Building prior to,
during or after the Term as a result of the acts or omissions of Landlord, its
agents, contractors, employees or invitees.
10.05 The indemnity obligations of Tenant and Landlord pursuant to
this Article 10 shall survive the expiration or earlier termination of the Term
of this Lease.
11. PROPERTY LOSS; DAMAGE; REIMBURSEMENT.
Landlord and its agents shall not be liable for any damage to
property of Tenant or of others entrusted to Landlord, its employees, or
employees of the Building, nor for the loss or damage to any property of Tenant
by theft or otherwise. Landlord and its agents shall not be liable for any
injury or damage to persons or property resulting from any cause whatsoever
except to the extent caused by Landlord's or its agents' wilful misconduct or
gross negligence, nor shall Landlord and its agents be liable for any such
damage caused by other tenants of Landlord or persons in the Building; nor,
except to the extent caused by Landlord's or its agents' wilful misconduct or
negligence, caused by operations in construction, renovation, alterations,
improvements, additions and installations to any other space in the Building.
Notwithstanding anything herein set forth to the
<PAGE>
contrary, Tenant shall look first for the recovery of any damage or injury to
any insurance in its favor before making any claim against Landlord.
12. FIRE; CASUALTY; AND CONDEMNATION.
12.01 If the Leased Premises or any part thereof shall be damaged
by fire or other catastrophe, Tenant shall give prompt written notice thereof to
Landlord. Landlord shall, subject to Sections 12.03 and 12.04 hereof, proceed
with reasonable diligence to repair or cause the Leased Premises to be repaired
to the condition they were in prior to such fire or catastrophe (for the
elements thereof which Landlord is required to insure as herein specified). If
the Leased Premises, or any part thereof, shall be rendered untenantable by
reason of such damage or if Tenant is deprived of access to the Leased Premises,
the Rent hereunder shall be apportioned according to the area of the Leased
Premises so rendered untenantable or inaccessible for the period from the date
of such damage to the date when the damage shall have been repaired as
aforesaid. Such Rent apportionment shall apply whether or not Landlord or Tenant
cancels this Lease pursuant to Section 12.03 or Section 12.04 below. Tenant
shall cooperate with Landlord and any mortgagee of the Building in their efforts
to collect insurance proceeds (including rent insurance proceeds) payable to
such parties.
12.02 Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from damage from fire or other catastrophe or the repair thereof, except as
provided in Section 12.01. Tenant understands that Landlord shall not carry
insurance of any kind on Tenant's alterations (except as hereinabove provided)
or any of Tenant's property and that Landlord shall not be obligated to repair
any damage thereto or replace the same.
12.03 Notwithstanding the above Sections,
(a) If the Building shall be so damaged by such fire or other
casualty that reconstruction (which may include an alteration) reasonably
estimated to cost at least seventy-five (75%) percent of the replacement value
of the Building shall be required (whether or not the Leased Premises shall have
been damaged by such fire or other casualty) and Landlord shall have terminated
leases covering all or substantially all of the rentable area of the Building;
or
(b) If there is any damage to the Leased Premises within the
last two (2) years of the Term wherein Landlord's cost of repair exceeds an
amount equal to the aggregate of Fixed Rent payable for the final eighteen (18)
calendar months of the Term of this Lease, then Landlord or Tenant may terminate
this Lease and the Term and estate hereby granted, by notifying the other party,
in writing, of such termination, within ninety (90) days after the date of such
damage. In the event that such a notice of termination shall be given, this
Lease and the Term and estate hereby granted shall expire as of the date of
termination specified in such notice of termination with the same effect as if
that were the date hereinbefore set for the expiration of the Term of this
Lease, and the Rent hereunder shall be apportioned as of such date.
12.04 If the Leased Premises shall be so damaged by fire or
other casualty as to render at least seventy-five (75%) percent of the rentable
area of the Leased Premises (using any combination or portions of floors
excluding basement space, if any) which together constitutes the equivalent
floor area of seventy-five (75%) percent of the rentable area of the Leased
Premises (excluding basement space, if any) untenantable or inaccessible,
Landlord shall within sixty (60) days give Tenant a written notice stating
whether said damage which Landlord is obligated to repair can, in the opinion of
an independent construction consultant retained by Landlord (the "Casualty
Consultant") be restored within twelve (12) months. If Landlord's notice states
that
<PAGE>
such damage cannot, in the Casualty Consultant's opinion, be restored
within twelve (12) months, Tenant may elect to cancel this Lease by written
notice to Landlord given within sixty (60) days after the date of Landlord's
notice, time being of the essence. In the event that such notice of termination
shall be given, this Lease and the Term and estate hereby granted shall expire
sixty (60) days after the date of such notice, with the same effect as if such
sixtieth (60th) day was the Expiration Date of the Term of this Lease and the
Rent hereunder shall be apportioned as of the date of such damage. If Tenant
does not elect to cancel this Lease, as aforesaid, or if the Casualty
Consultant's opinion is that the damage can be restored within said twelve (12)
month period, then Section 12.01 shall apply, and Landlord shall have no
additional liability to Tenant if for any reason the damage shall not be
restored within the twelve (12) month period, but Tenant shall be entitled to
abatement of Rent as therein provided.
12.05 Except as may be specifically provided elsewhere in this
Lease, nothing herein contained shall relieve Landlord or Tenant from any
liability to the other party, or to its insurers, in connection with any damage
to the Leased Premises or the Building by fire or other catastrophe if either
party shall be legally liable in such respect.
12.06 This Lease shall be considered an "express agreement to the
contrary" governing any case of damage to or destruction of the Building or any
part thereof by fire or other casualty under Section 227 of the Real Property
Law of the State of New York and any other law of like import now or hereafter
in force and neither said Section 227 or any other law shall have any
application in such case.
12.07 If the whole of the Leased Premises shall be lawfully
condemned or taken in any manner for any public or QUASI-public use, this Lease
and the Term and estate hereby granted shall forthwith cease and terminate as of
the date of vesting of title. If only a part of the Leased Premises shall be so
condemned or taken, then, effective as of the date of vesting of title, the Rent
hereunder shall be abated in an amount thereof apportioned according to the area
of the Leased Premises so condemned or taken. If only a part of the Building
shall be so condemned or taken and the Building or the Leased Premises, or any
substantial part of either, in Landlord's reasonable judgment requires
substantial reconstruction or is no longer economically suitable for leasing
(whether or not the Leased Premises be affected), and if Landlord shall have
terminated leases covering all or substantially all of the rentable area of the
Building, then (i) Landlord may, at Landlord's option, terminate this Lease and
the Term and estate hereby granted by notifying Tenant in writing of such
termination within sixty (60) days following the date on which Landlord shall
have received notice of vesting of title, such termination to be effective on
the date specified in such notice of Landlord, which date shall be no later than
sixty (60) days after the date of such notice, and (ii) if such condemnation or
taking shall (A) deprive Tenant of access to the Leased Premises and Landlord
shall not have provided or undertaken steps to provide other means of access
thereto, or (B) reduce the rentable area of the Leased Premises (excluding
basement space, if any) physically occupied by Tenant (and not by any sublessee
of Tenant) by more than seventy-five (75%) percent and the remaining portion
thereof shall not be reasonably utilizable by Tenant, Tenant may, at Tenant's
option, by delivery of notice in writing to Landlord within sixty (60) days
following the date on which Tenant shall have received notice of vesting of
title, terminate this Lease and the term and estate hereby granted, such
termination to be effective on the date specified in such notice, which date
shall be no later than sixty (60) days after the date of such notice. If neither
Landlord nor Tenant elects to terminate this Lease, as aforesaid, this Lease
shall be and remain unaffected by such condemnation or taking, except that the
Rent shall be abated to the extent, if any, hereinbefore provided in this
Section 12.07. If only a part of the Leased Premises shall be so condemned or
taken and this Lease and the Term and estate hereby granted are not terminated
as hereinbefore provided, Landlord shall, with reasonable diligence and at its
expense, restore the remaining portion of the Leased Premises as nearly as
practicable to the same condition as it was in prior to such condemnation or
Taking.
<PAGE>
12.08 In the event of any Taking hereinbefore mentioned of all or
a part of the Building or the Leased Premises, Landlord shall be entitled to
receive the entire award in the condemnation proceeding, including any award
made for the value of the estate vested by this Lease in Tenant, and Tenant
hereby expressly assigns to Landlord any and all right, title and interest of
Tenant now or hereafter arising in or to any such award or any part thereof, and
Tenant shall be entitled to receive no part of such award.
12.09 If all or any portion of the Leased Premises shall be taken
by the exercise of the right of eminent domain for occupancy for a limited
period, this Lease shall continue in full force and effect and Tenant shall
continue to pay in full the Rent and other charges herein reserved, without
reduction or abatement, and Tenant shall be entitled to receive, for itself, so
much of any award or payment made for such use as is equal to actual payments
made by Tenant to Landlord during such temporary Taking, except as hereinafter
provided, and any balance of any award or payment shall be paid to Landlord. If
the taking is for a period not extending beyond the Term of this Lease and if
such award or payment is made in a lump sum, Landlord shall receive such lump
sum, and out of such lump sum an amount equal to the total of the Rent and other
charges due to Landlord or to be paid by Tenant under the terms of this Lease
for the period of such Taking (including the cost of restoration and the fees,
costs and expenses referred to in the last sentence of this Section 12.09),
shall be held by Landlord as a trust fund which Landlord shall apply from time
to time to the payments due to Landlord from Tenant under the terms of this
Lease, and the balance of such sum shall be paid to Landlord. If the taking is
for a period extending beyond the Term of this Lease, and if such award or
payment is made in a lump sum, such award or payment shall be paid to Landlord,
and apportioned between Landlord and Tenant as of the stated Expiration Date of
the Term and Tenant's share thereof shall then be paid and applied in accordance
with the preceding sentence. If such Taking results in changes or alterations to
the Leased Premises which would necessitate an expenditure to restore the Leased
Premises to its former condition and such taking shall be for a period extending
beyond the Term of this Lease, and (i) if an award shall be made for the cost of
restoration, such award shall be paid to, and shall be the sole property of,
Landlord, and (ii) if no such award shall be made, Landlord shall retain from
any other award made in respect of such Taking, an amount equal to the cost of
such restoration and the balance of such award shall be apportioned between
Landlord and Tenant as set forth above.
13. ELECTRICITY AND OTHER SERVICES.
13.01 SUBMETERED ELECTRICITY. Landlord shall redistribute or
furnish electricity to or for the use of Tenant in the Leased Premises for the
operation of Tenant's electrical systems and equipment in the Leased Premises,
at a level sufficient to accommodate a demand load of 4 watts per usable square
foot of office space in the Leased Premises (the "Permitted Capacity"). Tenant
shall pay to Landlord, on demand from time to time but no more frequently than
monthly, for its consumption of electricity at the Leased Premises, a sum equal
to 110% of the product obtained by multiplying (i) the Cost Per Kilowatt Hour,
by (ii) the actual number of kilowatt hours of electric current consumed by
Tenant in such billing period. "Cost Per Kilowatt Hour" means the actual total
cost incurred by Landlord to provide electricity to the Building during a
particular billing period, including energy charges, demand charges, surcharges,
time-of-day charges, fuel adjustment charges, rate adjustment charges, taxes
(regardless of whether included in the utility company's charges or paid
separately by Landlord), rebates and any other factors used by the utility
company in computing its charges to Landlord, divided by the total kilowatt
hours purchased by Landlord to provide electricity to the Building during such
period. If any tax is imposed upon Landlord's receipts from the sale or resale
of electricity to Tenant, Tenant shall reimburse Landlord for such tax, if and
to the extent permitted by law. Landlord shall install a meter or meters, at
Landlord's expense, to measure Tenant's consumption of electricity in the Leased
<PAGE>
Premises, which meter shall be maintained by Landlord at Landlord's expense;
provided, however, if repairs to the meter are required because of any acts or
omissions of Tenant, such repairs shall be made at Tenant's expense. Where more
than one meter measures Tenant's consumption of electricity in the Premises, the
electricity measured by each meter shall be computed and billed separately in
accordance with the provisions set forth above. Bills for such amounts shall be
rendered to Tenant at such times as Landlord may elect.
13.02 USE OF ELECTRICITY. Tenant shall at all times comply with
the rules and regulations of the utility company supplying electricity to the
Building. Tenant shall not use any electrical equipment which, in Landlord's
reasonable judgment, would exceed the Permitted Capacity or interfere with
electrical service to other tenants of the Building. Tenant shall not make or
perform, or permit the making or performance of, any alterations to wiring
installations or other electrical facilities in or serving the Leased Premises,
or make any additions to the office equipment or other appliances in the Leased
Premises which utilize electrical energy (other than ordinary small office
equipment) without the prior consent of Landlord, in each instance, and in
compliance with this Lease.
13.03 SERVICE DISRUPTION. Landlord shall not be liable in any way
to Tenant for any failure, defect or interruption of, or change in the supply,
character and/or quantity of, electric service furnished to the Leased Premises
for any reason except if attributable to the gross negligence or willful
misconduct of Landlord, nor shall there be any allowance to Tenant for a
diminution of rental value, nor shall the same constitute an actual or
constructive eviction of Tenant, in whole or in part, or relieve Tenant from any
of its Lease obligations, and no liability shall arise on the part of Landlord
by reason of inconvenience, annoyance or injury to business, whether electricity
is provided by public or private utility or by any electricity generation system
owned and operated by Landlord. Landlord shall use reasonable efforts to
minimize interference with Tenant's use and occupancy of the Leased Premises as
a result of any such failure, defect or interruption of, or change in the
supply, character and/or quantity of, electric service, provided that Landlord
shall have no obligation to employ contractors or labor at overtime or other
premium pay rates or to incur any other overtime costs or additional expenses
whatsoever.
13.04 DISCONTINUANCE OF ELECTRIC SERVICE. Landlord reserves the
right to discontinue furnishing electricity to Tenant in the Leased Premises on
not less than 30 days notice to Tenant, if Landlord is required to do so under
applicable law. If Landlord is compelled to discontinue furnishing electricity
to Tenant, this Lease shall continue in full force and effect and shall be
unaffected thereby except that from and after the effective date of such
discontinuance, Landlord shall not be obligated to furnish electricity to Tenant
hereunder. If Landlord so discontinues furnishing electricity, Tenant shall
arrange to obtain electricity directly from any utility company or other
electricity provider serving the Leased Premises to the extent available,
suitable and safe for such purposes. All equipment which may be required to
obtain electricity of substantially the same quantity, quality and character
shall be installed by Landlord at the sole cost and expense of (i) Landlord, if
Landlord voluntarily discontinues such service, or (ii) Tenant, if (A) Landlord
is compelled to discontinue such service by the utility company or pursuant to
applicable law, or (B) such discontinuance arises out of the acts or omissions
of Tenant. Landlord will not voluntarily discontinue furnishing electricity to
Tenant until Tenant is able to receive electricity directly from the utility
company or other company servicing the Building, unless the utility company or
other company is not prepared to furnish electricity to the Leased Premises on
the date required as a result of Tenant's delay or negligence in arranging for
service, Tenant's refusal to provide the utility company or other company with a
deposit or other security requested by the utility company, or Tenant's refusal
to take any other action requested by the utility company or other company.
13.05 ELEVATORS. Landlord shall provide passenger elevator service
to the Leased Premises during Business Hours, with at least one elevator being
subject to call at all other times. In addition, Landlord
<PAGE>
shall make available to Tenant at least one freight elevator serving the Leased
Premises upon Tenant's prior request, on a non-exclusive "first come, first
serve" basis with other Building tenants, on all Business Days from 8:00 a.m. to
12:00 noon, and from 1:00 p.m. to 5:00 p.m.
13.06 HEAT. Landlord shall furnish heat to the Leased Premises
during Business Hours throughout the Term.
13.07 OVERTIME BUILDING SERVICES. The Rent does not reflect or
include any charge to Tenant for the furnishing of any building services such as
freight elevator service or heat other than to the extent described in this
Article 13. Landlord shall not be required to furnish any building services at
any times ("OVERTIME PERIODS") other than the times specifically described in
this Lease for the provision of such building services unless Tenant delivers
notice to Landlord's property management office serving the Building requesting
such services at least 24 hours prior to the time at which such services are to
be provided, but Landlord shall use reasonable efforts (without obligation to
incur any additional cost) to arrange for building services during Overtime
Periods on such shorter notice as Tenant shall provide. If Landlord furnishes
freight elevator service or any other building service to the Leased Premises
during Overtime Periods, Tenant shall pay to Landlord Landlord's then
established rates for supplying such overtime building services in the Building.
13.08 WATER. Landlord, at Landlord's expense, shall provide cold
water for drinking, cleaning and lavatory purposes. If Tenant requires or uses
water or steam for any additional purposes, Landlord may install a meter to
measure the water or steam furnished. Tenant shall pay the cost of such
installation, and for all maintenance, repairs and replacements thereto, and for
the reasonable charges of Landlord for the water or steam furnished. Tenant
shall also pay Landlord's reasonable charge for any required pumping or heating
thereof, and any sewer rent, tax and/or charge now or hereafter assessed or
imposed upon the Leased Premises or the Land pursuant to any applicable law.
13.09 BUILDING DIRECTORY. Landlord shall, at the request of
Tenant, maintain up to eight (8) listings on the directory in the Building lobby
of the names of Tenant and any officers or employees of Tenant. Tenant shall
deliver to Landlord, on or prior to the Commencement Date, a list of the names
to be included in the directory. Tenant may deliver revised listings to Landlord
from time to time throughout the Term (but Landlord shall not be obligated to
revise the directory more often than once a month), and Tenant shall pay
Landlord's actual costs incurred therefor.
13.10 CLEANING; REFUSE AND RUBBISH REMOVAL. (a) Tenant, at
Tenant's sole cost and expense, shall (i) cause the Leased Premises to be
cleaned, in a manner satisfactory to Landlord, (ii) cause the Leased Premises to
be exterminated with such frequency and in such manner as to prevent the
existence of vermin or other infestation, (iii) cause all portions of the Leased
Premises used for the storage, preparation or consumption of food or beverages
to be cleaned daily in a manner satisfactory to Landlord, and (iv) cause
Tenant's garbage and other refuse to be removed from the Leased Premises, at
such times and from such place as Landlord shall designate, by Landlord's
designated cartage service, and until removed, shall be kept in a neat and
orderly condition, properly bagged or in the case of packing boxes and cartons,
securely tied, in such place designated by Landlord. Tenant shall cause its
employees, agents, contractors and business visitors to observe such additional
rules and regulations regarding rubbish removal and/or recycling as Landlord
may, from time to time, reasonably impose. The aforementioned services shall be
performed by contractors designated by Landlord or by contractors approved by
Landlord. Tenant may place its dry paper garbage in the Building's compactor at
no charge.
14. DEFAULTS; LANDLORD'S REMEDIES.
<PAGE>
14.01 Each of the following shall constitute a default by Tenant
under the Lease:
(a) Failure to make any payment of Rent to Landlord within
five (5) days after notice that any such payment was not paid when first due;
(b) Failure of Tenant to remove any lien, charge or order for
the payment of money, against the Building, the Leased Premises, or any
leasehold estate, arising out of Tenant's acts or omissions or alleged acts or
omissions, within the time period specified by Article 9 for the removal of such
a lien, charge or order;
(c) There having been commenced by Tenant a voluntary case
under the federal bankruptcy laws, as now constituted or as hereafter amended or
replaced, or under any other applicable federal or state bankruptcy, insolvency
or other similar law; or the entry of a decree or order of relief by a court
having jurisdiction in respect of Tenant in any involuntary case under the
federal bankruptcy laws, as now constituted or as hereafter amended or replaced,
or under any other applicable federal or state bankruptcy, insolvency or other
similar law; or the appointment of a receiver, liquidator, custodian, trustee,
sequestrator, conservator or similar official of Tenant; or the making by Tenant
of any assignment for the benefit of creditors.
(d) Any assignment of this Lease by Tenant or the subletting
of the Leased Premises or any part or parts thereof, except as specifically
permitted hereunder;
(e) The failure of Tenant to deliver the Security referred to
in Article 27 hereof in a timely fashion and for ten (10) days after notice of
such failure;
(f) If there shall occur a default under any guarantee of
Tenant's obligations hereunder;
(g) If there shall occur a default by the tenant under any
other lease between Landlord and Tenant (or an entity related to or affiliated
with Tenant) of any space in the Building other than the Leased Premises;
(h) The failure of Tenant to perform any covenant or
obligation of Tenant under this Lease (not heretofore referred to in this
Section 14.01) within thirty (30) days after the giving of any notice by
Landlord of such failure; or if such covenant or obligation is not of the nature
that it can be completely performed within such thirty (30) day period, if
Tenant shall have failed to commence to perform such covenant or obligation
within such thirty (30) day period and shall have failed to pursue the
performance of the same diligently thereafter.
14.02 (a) If there shall occur any default under Section 14.01,
then, at the option of Landlord in its sole and absolute discretion, Landlord
may re-enter the Leased Premises, terminate the Term of this Lease and/or
dispossess Tenant from the Leased Premises by summary or other proceeding as may
be permitted by law and Tenant shall forthwith remove its effects from the
Leased Premises and surrender the same. Tenant hereby waives service of notice
of intention to re-enter or institute legal proceedings to that end (except as
may be required as a predicate to the institution of a summary proceeding for
the non-payment of rent).
(b) If a court of competent jurisdiction shall determine that
notwithstanding the
<PAGE>
provisions of paragraph (a) of this Section 14.02 and Article 17 hereof, the
Term of this Lease shall not have been terminated and that a trustee (or Tenant)
in a proceeding or case under Title 11 of the United States Code (or any
successor statute of like import or substance) has the right to assign this
Lease under the conditions specified in Section 365(f) of the Bankruptcy Code
(or any successor provision or statute of like import or substance) and if there
is an assignment by such trustee or Tenant pursuant to Section 365(f) of the
Bankruptcy Code (or any successor provision or statute of like import or
substance), or otherwise as authorized by court order in such a proceeding or
case, then all proceeds and other consideration received by the trustee (or
Tenant) from, in connection with, or attributable to the assignment of this
Lease shall constitute the property of, and be turned over upon receipt to,
Landlord. It is agreed that none of the proceeds of any such assignment shall
become the property of the debtor's estate created by Section 541 of the
Bankruptcy Code (or any successor provision or statute of like import or
substance). Furthermore, as one element (but not the exclusive element) of the
adequate assurance that such a trustee must provide Landlord for the future
performance of any such assignee of Tenant's obligations under this Lease, there
shall be deposited with Landlord the amount of at least one (1) full year's
Fixed Rent and Additional Rent (at the then current level of Fixed and
Additional Rent on the effective date of such assignment) as further security to
secure the full and faithful performance of the obligations of Tenant hereunder.
14.03 In the case of any default as specified in Section
14.01, re-entry, termination or dispossess: (1) the excess (discounted to
present value at 6% PER ANNUM) of all accrued and future Rent over the rental
value of the Leased Premises over the balance of the Term shall at the option of
Landlord, in its sole and absolute discretion, become due immediately thereupon
and be paid upon the time of such reentry, termination and/or dispossess,
together with such expenses as Landlord may incur for attorney's fees, brokerage
and/or putting the Leased Premises in good order and/or preparing the same for
re-rental and interest thereon at the Default Rate until payment is made
(whether before or after entry of a judgment against Tenant); or (2) Landlord
may (A) re-let the Leased Premises or any part or parts thereof, in the name of
Landlord or otherwise, for a term or terms, which may, at Landlord's option, be
less than or exceed the period which would otherwise have constituted the
balance of the term of this Lease and (B) grant concessions or free rent or
charge a lower or higher rental than that of this Lease, and Tenant, or its
legal representative, shall also pay to Landlord as liquidated damages for the
failure of Tenant to observe and perform Tenant's covenants and obligations
hereunder, any deficiency between the Rent hereby reserved and/or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
Lease of the Leased Premises for each month of the period which would otherwise
have constituted the balance of the Term of this Lease. Landlord shall be under
no obligation to re-let the Leased Premises or to mitigate its damages, either
before or after a termination of this Lease. The failure of Landlord to re-let
the Leased Premises, or any part or parts thereof, or to mitigate its damages,
either before or after a termination of this Lease, shall not release Tenant or
affect its liability for damages. In computing such liquidated damages, there
may be added to said deficiency such expenses as Landlord may incur in
connection with the re-letting, such as attorney's fees, brokerage, advertising,
and for keeping the Leased Premises in good order and for preparing the same for
re-letting and interest on such sums computed at the Default Rate. Any such
liquidated damages shall be paid in monthly installments on the dates specified
for the payment of Fixed Rent hereunder. Without limiting the rights and
remedies of Landlord herein set forth, if Tenant shall default in any of its
obligations hereunder and Landlord shall re-enter the Leased Premises, Landlord
shall consider leasing the Leased Premises for the then remainder of the Term
hereof to such proposed tenant as Tenant may propose to Landlord. Under no
circumstances shall Landlord be required to lease the Leased Premises or any
portion thereof to such proposed tenant and Landlord may refuse to do so for any
reason or no reason whatsoever in its sole and arbitrary discretion. Refusal or
failure of Landlord to lease the Leased Premises to any such proposed tenant
shall not form the basis of any defense, set-off or counterclaim to any action
for rent or damages commenced by Landlord against Tenant and Tenant hereby
expressly waives any such defense, set-off or counterclaim.
<PAGE>
14.04 If Tenant shall default in the observance or performance of
any term or covenant on Tenant's part to be observed, then Landlord may, after
notice to Tenant, but shall not be obligated to, perform the same on behalf of
Tenant. The cost of observing or performing any such term or covenant, and all
other expenses, including, but not limited to, reasonable attorney's fees, which
Landlord may have incurred, shall be repaid to Landlord with interest at the
Default Rate, as Additional Rent hereunder, upon demand. If any payment of Rent
is accepted more than ten (10) days late, Tenant shall also pay interest at the
Default Rate on such late payment from the date when such Rent was first due.
14.05 Whether or not specifically set forth herein, in any case
where Landlord is entitled to recover interest from Tenant at the Default Rate,
such rate of interest shall be applicable until all sums to which such rate
applies are fully paid, even if such payment is made after the entry of any
judgment with respect thereto against Tenant. If a higher rate of interest would
otherwise be permitted, it shall not be argued nor shall it be construed that
the statutory judgment rate of interest is the highest rate of interest
permitted by law.
14.06 All of Landlord's remedies under this Lease shall be deemed
to be cumulative and no remedy on behalf of Landlord shall be deemed in lieu of
any other remedy as may be available to Landlord under this Lease, at law or in
equity.
14.07 It is mutually agreed by Landlord and Tenant that they do
hereby waive trial by jury in any action, proceeding or counterclaim brought by
either of them, to the extent permitted by law. It is further agreed by Tenant
that in any summary proceedings or other proceedings for possession of all or
any part of the Leased Premises, Tenant shall not interpose any counterclaim of
whatever nature or description.
15. SUBORDINATION AND ATTORNMENT.
15.01 This Sublease is subject to and subordinate to all ground or
underlying leases and to all mortgages, which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications, consolidations,
replacements and extensions of any such mortgages, ground or underlying leases.
The provisions of this Article 15 shall be self-operative and no further
instrument of subordination shall be required to effect such subordination.
Notwithstanding the foregoing, Tenant shall execute promptly any certificate or
other instrument of subordination which may reasonably be requested to confirm
or further effect such subordination.
15.02 If at any time, and for any reason, any mortgage affecting
the Building, or this Lease is foreclosed, or any ground or underlying lease to
which this Lease is subordinate is terminated, then within ten (10) Business
Days after demand of the mortgage holder or ground or underlying lessor or
Landlord (or any person claiming by, through or under any of them), Tenant shall
attorn, from time to time, to any such mortgage holder, ground or underlying
lessor or Landlord (or any person claiming by, through or under any of them)
upon the executory terms of this Lease for the remainder of the Term.
16. GUARANTEE.
Tenant is simultaneously herewith delivering to Landlord a
guarantee of this Lease made, jointly and severally, by OTEC, Inc. and RBL
Agency Ltd. in the form annexed hereto as Exhibit B.
17. ASSIGNMENT AND SUBLETTING.
<PAGE>
17.01 Except as expressly permitted herein, Tenant, without the
prior consent of Landlord in each instance, shall not (i) assign its rights or
delegate its duties under this Lease (whether by operation of law, transfers of
interests in Tenant or otherwise), mortgage or encumber its interest in this
Lease in whole or in part, (ii) underlet, or permit the underletting of, the
Leased Premises or any part thereof, or (iii) permit the Leased Premises or any
part thereof to be occupied, or used for desk space, mailing privileges or
otherwise, by any Person other than Tenant. Tenant acknowledges and agrees that
the transfer in one or more transactions or series of transactions of more than
fifty (50%) percent of the record or beneficial ownership (whether direct or
indirect) of the capital stock, equity interests in, right to participate in
distributions, earnings, profits or losses or capital of Tenant shall be deemed
to be an assignment of this Lease. Notwithstanding the foregoing, transfers of
stock in a corporation whose shares are traded in the "over-the-counter" market
or any recognized national securities exchange shall not constitute an
assignment for the purposes of this Lease, provided that the principal purpose
of such transfer or transfers is not to avoid the restrictions on assignment
otherwise applicable under this Article 17. Any subtenant or assignee of Tenant
shall deliver to Landlord a guarantee of the sublease or lease, as the case may
be, in the same form as the guarantee annexed hereto as Exhibit B, executed by a
party reasonably satisfactory to Landlord.
17.02 If this Lease is assigned to any Person pursuant to the
provisions of the Bankruptcy Code, any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or other
consideration constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and shall be promptly paid to or turned over to Landlord.
17.03 If Tenant's interest in this Lease is assigned in violation
of the provisions of this Article 17, such assignment shall be void and of no
force and effect against Landlord; provided, however, that Landlord may collect
an amount equal to the then Fixed Rent plus any other item of Additional Rent
from the assignee as a fee for its use and occupancy. If the Leased Premises or
any part thereof are underlet to, or occupied or used by, any Person other than
Tenant, whether or not in violation of this Article 17, Landlord, after default
by Tenant under this Lease, may collect any item of rent or other sums paid by
the subtenant, user or occupant as a fee for its use and occupancy, and shall
apply the net amount (I.E., the amount remaining after costs of collection,
including legal fees, charges and disbursements whether or not a legal action is
commenced) collected to the Rent reserved in this Lease. No underletting,
occupancy or use, whether with or without Landlord's prior consent, nor any such
collection or application of Rent or fee for use and occupancy, shall be deemed
a waiver by Landlord of any term, covenant or condition of this Lease or the
acceptance by Landlord of such subtenant, occupant or user as tenant hereunder.
No such collection or application of rent or fee for use and occupancy from any
assignee, subtenant, occupant or user shall be deemed a waiver by Landlord of
any term, covenant or condition of this Lease or the acceptance by Landlord of
such assignee, subtenant, occupant or user as tenant hereunder absent Landlord's
express consent thereto in writing. The consent by Landlord to any assignment,
underletting, occupancy or use shall not relieve Tenant from its obligation to
obtain the express prior consent of Landlord to any further assignment,
underletting, occupancy or use. Tenant shall reimburse Landlord for reasonable
attorneys' fees, charges and disbursements in connection with any proposed
assignment of Tenant's interest in this Lease or any proposed underletting of
the Leased Premises. Neither any assignment of Tenant's interest in this Lease
nor any underletting, occupancy or use of the Leased Premises or any part
thereof by any Person other than Tenant, nor any collection of Rent by Landlord
from any Person other than Tenant as provided in this Section 17.03, nor any
application of any such Rent as provided in this Section 17.03 shall, in any
circumstances, relieve Tenant of its obligations under this Lease on Tenant's
part to be observed and performed and, subsequent to any assignment, Tenant's
liability hereunder shall continue as a guarantor
<PAGE>
notwithstanding any subsequent modification or amendment of or to this Lease or
the release of any subsequent tenant hereunder from any liability, to all of
which Tenant hereby consents in advance. Any Person to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed
without further act or deed to have assumed all of the obligations arising under
this Lease on and after the date of such assignment. Any such assignee shall
execute and deliver to Landlord upon demand an instrument confirming such
assumption.
17.04 If Tenant assumes this Lease and proposes to assign the same
pursuant to the provisions of the Bankruptcy Code to any Person who shall have
made a BONA FIDE offer to accept an assignment of this Lease on terms acceptable
to Tenant, then notice of such proposed assignment shall be given to Landlord by
Tenant no later than twenty (20) days after receipt by Tenant, but in any event
no later than ten (10) days prior to the date that Tenant shall make application
to a court of competent jurisdiction for authority and approval to enter into
such assignment and assumption. Such notice shall set forth the name and address
of such Person, all of the terms and conditions of such offer, and adequate
assurance of future performance by such Person under this Lease, including,
without limitation, the assurance referred to in Section 365(b)(3) of the
Bankruptcy Code. Landlord shall have the prior right and option, to be exercised
by notice to Tenant given at any time prior to the date of application to the
court for approval of such proposed assignment (but not earlier than five (5)
Business Days after Landlord's receipt of Tenant's notice), to accept an
assignment of this Lease upon the same terms and conditions and for the same
consideration, if any, as the BONA FIDE offer made by such Person, less any
brokerage commissions which would otherwise be payable by Tenant out of the
consideration to be paid by such Person in connection with the assignment of
this Lease.
17.05 The term "adequate assurance of future performance" as used
in this Lease shall mean that any proposed assignee shall, among other things,
deposit with Landlord on the assumption of this Lease the greater of the then
Fixed Rent and Additional Rent for the next ensuing twelve (12) month period and
the Security, if any, as security for the faithful performance and observance by
such assignee of the terms, covenants and conditions of this Lease, which sum
shall be held in accordance with the provisions of Article 27, furnish Landlord
with financial statements of such assignee for the prior three (3) fiscal years,
as prepared by a certified public accountant, which financial statements shall
fairly reflect the financial position and condition of such assignee as of the
date of delivery to Landlord and show a net worth of at least four (4) times the
then Fixed Rent for each of such three (3) fiscal years, and provide such other
information or take such action as Landlord, in its reasonable judgment, shall
determine is necessary to provide adequate assurance of the performance by such
assignee of its obligations under this Lease.
17.06 As long as the originally named Tenant herein is Tenant,
Tenant shall have the privilege subject to the terms and conditions hereinafter
set forth, without the consent of Landlord, (i) to assign its interest in this
Lease to an Affiliate of Tenant which is subject to the jurisdiction of the
courts of the City or State of New York or the courts of the United States of
America with respect to any matter arising out of this Lease at least to the
extent that Tenant is subject, or (ii) to underlet or sublease all of the Leased
Premises to an Affiliate of Tenant which is subject to the jurisdiction of the
courts of the City or State of New York or the courts of the United States of
America with respect to any matter arising out of this Lease at least to the
extent that Tenant is subject. Tenant shall, within ten (10) Business Days after
execution thereof, deliver to Landlord (A) if an assignment, a duplicate
original instrument of assignment in form and substance reasonably satisfactory
to Landlord, duly executed by Tenant, (B) if an assignment, an instrument in
form and substance reasonably satisfactory to Landlord, duly executed by the
assignee, in which such assignee shall assume observance and performance of, and
agree to be personally bound by, all of the terms, covenants and conditions of
this Lease on Tenant's part to be observed and performed and (C) if a sublease,
a duplicate original sublease in form and substance reasonably satisfactory to
Landlord, duly executed by Tenant and the subtenant. Such
<PAGE>
assignee or subtenant shall deliver to Landlord a guarantee of the sublease or
lease as the case may be, in the same form as the guarantee annexed hereto as
Exhibit B, executed by a party reasonably satisfactory to Landlord.
17.07 If, at any time after the originally named Tenant may have
assigned Tenant's interest in this Lease, this Lease shall be disaffirmed or
rejected in any proceeding of the types described in paragraph (c) of Section
14.01, or in any similar proceeding, or in the event of termination of this
Lease by reason of any such proceeding or by reason of lapse of time following
notice of termination given pursuant to Article 14 based upon any of the
defaults set forth in Article 14, the originally named Tenant and any successor
tenant, upon request of Landlord given within thirty (30) days next following
any such disaffirmance, rejection or termination (and actual notice thereof to
Landlord in the event of a disaffirmance or rejection or in the event of
termination other than by act of Landlord), shall pay to Landlord all Rent due
and owing to Landlord under this Lease to and including the date of such
disaffirmance, rejection or termination, and as "tenant", enter into a new lease
with Landlord of the Leased Premises for a term commencing on the effective date
of such disaffirmance, rejection or termination and ending on the Expiration
Date, unless sooner terminated as in such lease provided, at the same Rent and
upon the then executory terms, covenants and conditions as are contained in this
Lease, except that (i) the rights of the originally named Tenant and any
successor tenant under the new lease shall be subject to the possessory rights
of the assignee under this Lease and the possessory rights of any Person
claiming through or under such assignee or by virtue of any statute or of any
order of any court, (ii) such new lease shall require all defaults existing
under this Lease to be cured by the originally named Tenant and any successor
tenant with due diligence, and (iii) such new lease shall require the originally
named Tenant and any successor tenant to pay all Rent reserved in this Lease
which, had this Lease not been so disaffirmed, rejected or terminated, would
have accrued under the provisions of Article 4 after the date of such
disaffirmance, rejection or termination with respect to any period prior
thereto. If the originally named Tenant or any successor tenant shall default in
its obligation to enter into said new lease for a period of ten (10) days next
following Landlord's request therefor, then, in addition to all other rights and
remedies by reason of such default, either at law or in equity, Landlord shall
have the same rights and remedies against the originally named Tenant and any
successor Tenant as if the originally named Tenant and any successor tenant had
entered into such new lease and such new lease had thereafter been terminated as
of the commencement date thereof by reason of the originally named Tenant's or
any successor tenant's default thereunder.
17.08 (a) Notwithstanding the provisions of Section 17.01, if
Landlord shall not exercise its rights pursuant to paragraph (b) of this Section
17.08, Landlord shall not unreasonably withhold or delay its consent to any
underletting of the Leased Premises, provided that:
(i) the Leased Premises shall not, without
Landlord's prior consent, be publicly
advertised for underletting at a rental rate
less than the prevailing rental rate set by
Landlord for space in the Building (the
"Prevailing Rate");
(ii) no material default shall have occurred and be
continuing hereunder;
(iii) the proposed subtenant shall have a financial
standing reasonably satisfactory to Landlord,;
(iv) the underletting shall be expressly subject to
all of the terms, covenants, conditions and
obligations on Tenant's part to be observed
and performed under this Lease and the further
condition and restriction that the
<PAGE>
sublease shall not, directly or indirectly, be
assigned, encumbered or otherwise transferred
or the Leased Premises further underlet by
Tenant in whole or in part, or any part
thereof suffered or permitted by Tenant to be
used or occupied by others, and no interest in
Tenant the transfer of which shall result in a
change in control of Tenant be transferred,
directly or indirectly, without the prior
written consent of Landlord in each instance
(except as specifically provided in Section
17.06);
(v) the underletting shall end no later than one
(1) day before the Expiration Date;
(vi) no underletting shall be for less than the
entire Leased Premises;
(vii) Tenant shall reimburse Landlord on demand for
any costs that may be reasonably incurred by
Landlord in connection with said sublease,
including, without being limited to, any
reasonable attorneys' fees and disbursements
and the costs of making investigations as to
the acceptability of the proposed subtenant;
(viii) the subtenant shall agree to attorn to
Landlord upon the terms and provisions of such
sublease, upon the request of Landlord; and
(ix) the subtenant shall be subject to the
jurisdiction of the courts of the State of New
York and shall not possess (or shall have
lawfully waived any claim of) sovereign
immunity.
(b) At least twenty (20) Business Days prior to any proposed
underletting Tenant shall submit a statement to Landlord (a "Sublease
Statement") containing the following information: (i) the name and address of
the proposed subtenant, (ii) the terms and conditions of the proposed
underletting, including, without limitation, the consideration (including rent)
payable for such underletting, additional consideration for leasehold
improvements, Tenant's property or any other items and Tenant's best estimate of
the cost (including cost, overhead and supervision) of any improvements
(including any demolition to be performed) to the Leased Premises proposed to be
made by Tenant to prepare the Leased Premises for occupancy by such subtenant,
(iii) the nature and character of the business of the proposed subtenant and its
proposed use of the space to be underlet to it, and (iv) any other information
that Landlord may reasonably request. Landlord shall have the right, exercisable
within fifteen (15) Business Days after Landlord's receipt of the Sublease
Statement, to terminate this Lease. If Landlord shall fail to notify Tenant
within said fifteen (15) Business Day period of Landlord's intention to exercise
its rights pursuant to this paragraph (b) or of Landlord's consent or
disapproval of the proposed underletting pursuant to the Sublease Statement as
contemplated by paragraph (a) of this Section 17.08, or have consented to such
underletting as provided in paragraph (a) of this Section 17.08, Tenant shall be
free to sublease that portion of the Leased Premises to such proposed subtenant
on the same terms and conditions set forth in the Sublease Statement, subject to
the terms and conditions of this Lease, including paragraph (a) of this Section
17.08 and Section 17.09. If Tenant shall not enter into such sublease within
sixty (60) days after the delivery of the Sublease Statement to Landlord, then
the provisions of Section 17.01 and this Section 17.08 shall again be applicable
to such proposed underletting.
(c) If Landlord exercises its option to terminate this Lease
in the circumstances set forth in paragraph (b) of this Section 17.08, then this
Lease shall end and expire thirty (30) days after Landlord shall have made such
election to terminate this Lease. If Landlord exercises its option to terminate
<PAGE>
this Lease in the foregoing circumstances, this Lease shall end and expire on
the date on which such proposed sublease was to become effective with the same
effect as if such date were the Expiration Date.
(d) The failure by Landlord to exercise its option under
paragraph (b) of this Section 17.08 with respect to any underletting shall not
be deemed a waiver of such option with respect to any extension of such
underletting or any subsequent underletting of the Leased Premises affected
thereby.
17.09 (a) In connection with ANY underletting of all or any
portion of the Leased Premises, Tenant shall pay to Landlord, subject to
subsection (c) of this Section 17.09, a sum equal to one hundred (100%) percent
of any Net Sublease Proceeds derived therefrom. All sums payable hereunder by
Tenant shall be paid to Landlord, as Additional Rent, within twenty (20)
Business Days after receipt thereof by Tenant.
(b) Net Sublease Proceeds, Sublease Proceeds and/or Sublease
Rent shall be re- calculated from time to time to reflect any corrections in the
subsequent payments received by Tenant, the final adjustment of payments to be
made by Tenant or mistake. Promptly upon the receipt of any such payment, the
making of any such adjustment or the discovery of any such mistake, Tenant shall
submit to Landlord a re-calculation of the Net Sublease Proceeds, Sublease
Proceeds and/or Sublease Rent, and an adjustment shall be made between Landlord
and Tenant, if applicable with respect thereto on account of prior payments made
pursuant to this Section 15.09.
(c) For purposes of this Lease:
(i) "Net Sublease Proceeds" shall mean Sublease
Proceeds less Permitted Expenses amortized
over the term of the sublease.
(ii) "Permitted Expenses" shall mean the aggregate
of (A) reasonable broker commissions and
reasonable legal fees, charges and
disbursements, and advertising expenses
incurred by Tenant in connection with any such
sublease, to the extent actually paid, and (B)
the costs, if any, incurred by Tenant in
preparing the sublease space for occupancy,
including cash allowances IN LIEU thereof.
(iii) "Rent Per Square Foot" shall mean the sum of
the then Fixed Rent and Additional Rent
divided by the rentable square feet of the
Leased Premises.
(iv) "Sublease Proceeds" shall mean the product of
(x) the Sublease Rent Per Square Foot less the
Rent Per Square Foot, multiplied by (y) the
number of rentable square feet constituting
the space being underlet.
(v) "Sublease Rent" shall mean any rent or other
consideration paid to Tenant directly or
indirectly, by any subtenant, or any other
amount received by Tenant from or in
connection with any underletting (including,
but not limited to, sums paid for the sale or
rental, or consideration received on account
of any contribution of Tenant's property or
sums paid in connection with the supply of
electricity or HVAC, but excluding taxes paid
by reason of any services or material
<PAGE>
being supplied, the actual costs of office
supplies (I.E., paper, pens, folders and like
items, excluding furniture, computers,
typewriters, furnishings, equipment and
apparatus) provided by Tenant and the actual
salaries and wages paid to receptionists and
secretaries supplied by Tenant).
(vi) "Sublease Rent per Square Foot" shall mean the
Sublease Rent divided by the rentable square
feet of the space demised under a sublease.
18. CONDITION OF THE LEASED PREMISES.
Neither Landlord nor any of Landlord's agents have made any
representations or promises with respect to the physical condition of the
Building or the Leased Premises, the rents, expenses of operation or any other
matter or thing affecting or related to the Leased Premises except as herein
expressly set forth. Tenant has inspected the Leased Premises and is thoroughly
acquainted with their condition, and subject to the provisions of Article 2
hereof, agrees to take the same "as is" normal wear and tear excepted between
the date hereof and the Commencement Date. Landlord shall not be liable for any
latent defect in or to the Leased Premises.
19. SURRENDER.
19.01 Upon the Expiration Date or other termination of the Term of
this Lease, Tenant shall quit and surrender to Landlord the Leased Premises in
broom-clean condition and in good order, ordinary wear and tear which Tenant is
not required to repair excepted, and Tenant shall remove its property from the
Leased Premises. If Tenant shall not quit and surrender the Leased Premises as
required hereby by the last date of the Term, then it shall upon demand pay to
Landlord as liquidated damages an amount equal to two (2) times the Fixed Rent
and Additional Rent which would have been payable for the period of such
holdover at the rental rate in effect on the last day of the Term. The
calculation of such liquidated damages is deemed by Landlord and Tenant to be a
reasonable one. Tenant hereby waives and agrees not to assert any defense to
such obligation to pay liquidated damages as prescribed in this Section 19.01
based upon such liquidated damages being deemed a penalty, unreasonable,
unconscionable or otherwise against public policy. Tenant's obligation to
observe or perform its covenants shall survive the expiration or earlier
termination of the Term of this Lease. Anything to the contrary notwithstanding,
the acceptance of any Rent paid by Tenant pursuant to this Section 19.01 shall
not preclude Landlord from commencing and prosecuting a holdover or summary
eviction proceeding, and the preceding sentence shall be deemed to be an
"agreement expressly providing otherwise" within the meaning of Section 223-c of
the Real Property Law of the State of New York.
19.02 Subject to the provisions of Section 6.04 of this Lease,
after the expiration or earlier termination of the Term, any alterations,
additions, improvements or personal property remaining in the Leased Premises
shall conclusively be deemed to have been abandoned and Landlord may dispose of
the same in any manner and by any means whatsoever. Landlord shall be under no
obligation to account to Tenant for the disposition of such property or any
proceeds derived therefrom. With respect to any such alterations, additions,
improvements and personal property which pursuant to the terms hereof are to be
removed from the Leased Premises and are not so removed, Tenant shall reimburse
Landlord within thirty (30) days after demand therefor the reasonable cost of
disposing or removing any or all such alterations, additions, improvements and
personal property by the means selected by Landlord or such costs as may be
imposed on Landlord by Landlord for disposing of the same. Tenant's obligation
to observe or perform this covenant shall survive the expiration or earlier
termination of the Term of this Lease.
<PAGE>
20. NO WAIVER.
The failure of Landlord or Tenant to seek redress for violation
of, or to insist upon the strict performance of any covenant or condition of
this Lease shall not prevent a subsequent act which would have originally
constituted a default from having all of the force and effect of an original
default. The receipt by Landlord or the payment by Tenant of Rent with knowledge
of any default on the part of the other shall not be deemed to be a waiver of
such default and no provision of this Lease shall be deemed to have been waived
by Landlord or Tenant unless such waiver is in writing, signed by the party to
be charged. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly amount of Rent due hereunder shall be deemed to be other than on
account of the earliest stipulated Rent nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as Rent be deemed
an accord and satisfaction; and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such Rent or
pursue any other remedy.
21. BROKERAGE.
Landlord and Tenant each represents and warrants to the other that
it dealt with no broker in connection with the Lease, except Jenel Realty
Services. Landlord and Tenant hereby agree to indemnify and hold the other
harmless from and against any claims, costs, expenses (including reasonable
legal fees) and other liabilities incurred by the other by reason of any claim
or action for a commission by any person or broker in connection herewith, with
whom the indemnifying party may have dealt. The provisions of this Article 21
shall survive the expiration or earlier termination of the Term of this Lease.
Landlord shall pay to the aforesaid named broker the commission due to it
pursuant to a separate agreement between Landlord and such broker but this
sentence shall not be construed as benefitting such broker or any other person
not a party to this Lease.
22. NOTICES.
All notices and other communications required to be given under
this Lease shall be in writing, signed by the party serving the notice or other
communication, and sent by overnight courier service (such as Federal Express,
UPS, DHL), registered or certified United States mail, return receipt requested
(except that Rent bills (as distinguished from notices under Section 14.01)
which may be sent by first class mail), or by personal delivery to the address
of the party to whom given as set forth below; or to such other address as
either party may designate in writing in the manner herein prescribed. All such
notices and other communications shall be deemed effective upon receipt. All
such notices shall be sent to each party at the following addresses:
To Landlord:
24 West 40th St. LLC
c/o Jenel Management Corp.
275 Madison Avenue, Suite 702
New York, New York 10016
Attention: Michael Hirschhorn
To Tenant:
Hotjobs.com, Ltd.
24 West 40th Street
<PAGE>
New York, New York 10018
Attention: Legal Department
Receipt by a person authorized generally to accept or receive mail, deliveries
or service of process for either Landlord or Tenant of any notice hereunder
shall be deemed sufficient and effective delivery of any such notice. If either
party refuses to accept delivery of any notice, receipt of such notice shall be
deemed to have occurred upon such refusal.
23. CERTIFICATES.
Tenant and Landlord shall, within thirty (30) days after demand,
but not more frequently than six times per year, furnish to the other a
certificate, duly acknowledged, certifying (1) that this Lease is in full force
and effect, (2) that the certifying party knows of no default hereunder on the
part of the other, or if it has reason to believe that such a default exists,
the nature thereof in reasonable detail, (3) the amount of the Rent being paid,
(4) that this Lease has not been modified, or if it has been modified, setting
forth the terms and dates of such modifications, and (5) to such other matters
as may be reasonably requested by the other party.
24. ACCESS TO LEASED PREMISES.
Landlord and Landlord's agents and designees shall have a right
(but shall not be obligated) to enter upon the Leased Premises, in an emergency
at any time (provided Landlord attempts to first notify Tenant or its principals
by telephone, provided such telephone numbers have been supplied to Landlord),
and in other cases at reasonable times, after reasonable notice, to examine the
same and make such repairs and replacements to the Leased Premises or to any
other portion of the Building as may be required under the terms hereof.
Throughout the Term, Landlord shall have the right to enter the Leased Premises
at reasonable hours for the purpose of showing the same to prospective
purchasers or mortgagees of the Building, and during the last six months of the
Term, for the purpose of showing the same to prospective tenants.
25. QUIET ENJOYMENT.
Subject to the terms and provisions of this Lease, Landlord
covenants and agrees with Tenant that upon Tenant paying the Rent due hereunder
and observing and performing all of the other terms, covenants and conditions on
Tenant's part to be performed under this Lease, Landlord shall not interfere
(nor allow its agents and employees to interfere) with Tenant's quiet enjoyment
of the Leased Premises.
26. FORCE MAJEURE
26.01 Neither Landlord nor Tenant shall be liable for any failure,
delay or interruption in performing its obligations hereunder due to causes or
conditions beyond its control but nothing shall excuse the failure to make any
payment of Rent within the time heretofore prescribed for such payment nor limit
the liability of Tenant to Landlord pursuant hereto if, for any reason, Tenant
fails to perform any obligation hereunder which results in liability of Landlord
to any third party.
26.02 No abatement, diminution or reduction of the Rent (or any
other charges) payable by Tenant shall be claimed by or allowed to Tenant for
any inconvenience, interruption, cessation or loss of business or other loss
caused directly or indirectly, by any present or future laws, rules,
requirements, orders, directions, ordinances or regulations of the United States
of America, or of the state, county or city governments or any other municipal,
governing, lawful authority whatsoever, or by priorities, rationing or
curtailment of
<PAGE>
labor or materials or by war or any matter or thing resulting therefrom, or by
any cause or condition beyond the control of Landlord, nor shall this Lease be
affected by any such causes or conditions.
26.03 If there shall be imposed upon Landlord or the Leased
Premises any form of limitation on the amount of Rent it may charge (or collect
from) Tenant by virtue of any statute, code or local ordinance or any rule,
regulation, program or policy promulgated thereunder, so that Landlord shall not
be entitled to collect all of the Rent reserved hereunder and to be paid by
Tenant, then this Lease shall continue in full force and effect and Tenant shall
pay to Landlord the maximum amount which may be paid as Rent, in accordance with
law; provided, however, that if and when any such law, code, local ordinance,
rule, regulation, program or policy shall terminate or expire, then Tenant
shall, forthwith, pay to Landlord the difference between (1) the amount of Rent
which would have been paid hereunder but for such law, code, ordinance, rule,
regulation, policy or program, and (2) the actual amount of Rent paid during the
duration of such Rent restriction.
27. SECURITY.
Tenant has deposited with Landlord the sum of nine thousand one
hundred twenty-five and no/100 ($9,125.00) dollars as security (the "Security")
for the faithful performance and observance by Tenant of the terms, provisions
and conditions of this Lease. In the event that Tenant defaults in respect of
any of the terms, provisions and conditions of this Lease, including, but not
limited to, the payment of Rent, Landlord may use, apply or retain the whole or
any part of the Security to the extent required for the payment of any Rent or
any sum as to which Tenant is in default or for any sum which Landlord may
expend or may be required to expend by reason of Tenant's default hereunder,
including but not limited to, any damages or deficiency in the re-letting of the
Leased Premises. In the event that Tenant shall fully and faithfully comply with
all of the terms, provisions, covenants and conditions of this Lease, the
Security shall be returned to Tenant after the Expiration Date (or sooner
termination of the Term in accordance with the provisions set forth herein) and
after delivery of the entire possession of the Leased Premises to Landlord. In
the event of a sale of the Building, Landlord shall have the right to transfer
the Security to the vendee and Landlord shall thereupon be released by Tenant
from all liability for the return of the Security and Tenant agrees to look to
the new Landlord solely for the return of the Security. Tenant covenants that it
will not assign or encounter or attempt to assign or encumber the Security and
that neither Landlord nor its successors or assigns shall be bound by any such
assignment or encumbrance.
28. TERMINATION RIGHT.
Landlord and Tenant shall each have the right to terminate this
Lease effective any time after July 31, 1999 upon ninety (90) days' written
notice to the other party (the "Termination Notice"). Upon the exercise of this
termination right by either party, this Lease and the estate demised hereunder
shall be deemed terminated effective ninety (90) days after receipt of the
Termination Notice by the non-exercising party, and this Lease shall be of no
further force and effect.
29. MISCELLANEOUS.
29.01 If any of the terms and provisions hereof are in violation
of or prohibited by any law, statute or ordinance of the State or City of New
York, or such term or provision is found to be unenforceable by any court of
competent jurisdiction, then such term or provisions shall be of no force and
effect; provided, however, that all of the other terms and provisions of this
Lease shall continue in full force and effect.
<PAGE>
29.02 Tenant irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of this Lease may be brought
in a court of the State of New York situated in New York County or the United
States District Court for the Southern District of New York; (ii) consents to
the jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have that the venue should not lie in a
court described in clause (i) above. Tenant further agrees that it has, by the
execution of this Lease, waived any claim to sovereign immunity or that any of
the aforesaid courts lack jurisdiction with respect to any matter arising under
this Lease.
29.03 The captions or headings of each Article hereof are inserted
only as a matter of convenience and for reference and shall in no way define,
limit or describe the scope of this Lease or of any Article or section hereof or
the intent of any provision hereof.
29.04 This Lease shall inure to the benefit of and be binding upon
the respective successors and assigns of Landlord and Tenant; provided, however,
that no violations of the provisions of Article 17 shall operate to vest any
rights in any successor or assignee of Tenant.
29.05 This Lease shall be governed by and construed in accordance
with the laws of the State of New York without regard to conflicts of law
principles.
29.06 This Lease contains the entire agreement between Landlord
and Tenant with respect to the Leased Premises and may not be terminated orally
or amended, except by an instrument executed by both parties.
29.07 Landlord and any successor in interest to Landlord shall be
under no personal liability with respect to any of the provisions of this Lease,
and if Landlord or any successor in interest to Landlord is in breach or default
with respect to its obligations under this Lease, Tenant shall look solely to
the equity of Landlord or such successor in interest in the Land and Building of
which the Leased Premises form a part for the satisfaction of Tenant's remedies
and in no event shall Tenant attempt to secure any personal judgment against
Landlord or against any successor in interest to Landlord or against any
partner, member, principal (disclosed or undisclosed), employee or agent of
Landlord or any successor in interest to Landlord by reason of such default by
Landlord or any successor in interest to Landlord.
29.08 If any of the Fixed Rent or Additional Rent payable under
the terms and provisions of this Lease shall be or become uncollectible, reduced
or required to be refunded because of any act or law enacted by a governmental
authority, Tenant shall enter into such agreement(s) and take such other steps
(without additional expense to Tenant) as Landlord may request and as may be
legally permissible to permit Landlord to collect the maximum rents which from
time to time during the continuance of such legal rent restriction may be
legally permissible (and not in excess of the amounts reserved therefor under
this Lease). Upon the termination of such legal rent restriction, (i) the Fixed
Rent and/or Additional Rent shall become and thereafter be payable in accordance
with the amounts reserved herein for the periods following such termination, and
(ii) Tenant shall pay to Landlord promptly upon being billed, to the maximum
extent legally permissible, an amount equal to (x) the Fixed Rent and/or
Additional Rent which would have been paid pursuant to this Lease but for such
legal rent restriction less (y) the rents paid by Tenant during the period such
legal rent restriction was in effect.
<PAGE>
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease to be
executed as of the day and year first above written.
24 WEST 40TH ST. L.L.C.
By /s/
------------------------------
Name:
Title:
HOTJOBS.COM, LTD.
By /s/
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
DIAGRAM OF LEASED PREMISES
Not included
<PAGE>
EXHIBIT B
FORM OF GUARANTEE
GUARANTEE made this ____ day of March, 1999, jointly and
severally, by OTEC, INC., a New Jersey corporation ("OTEC") having an office for
the conduct of business at 24 West 40th Street, New York, New York 10018, and
RBL AGENCY, LTD., a New York corporation ("RBL") having an office for the
conduct of business at 24 West 40th Street, New York, New York 10018. OTEC and
RBL shall be collectively referred to as the "Guarantors" and individually, as a
"Guarantor".
W I T N E S S E T H :
24 West 40th St. LLC (hereinafter referred to as "Landlord") and
Hotjobs.com, Ltd. (hereinafter referred to as "Tenant") have entered into that
certain Lease Agreement dated March ___, 1999 (hereinafter referred to as the
"Lease") for the 14th and 16th floors of the building located at 24 West 40th
Street, New York, New York. As an inducement to Landlord's agreeing to enter
into such Lease, the Guarantors agreed to guarantee unconditionally the
performance by Tenant of certain of Tenant's obligations under the Lease,
including the payment by Tenant of all Rent thereunder.
Terms not otherwise defined herein shall have the meanings given
such terms in the Lease.
NOW, THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by the Guarantors, the Guarantors, jointly and severally, covenant,
agree, represent and warrant to Landlord as follows:
1. REPRESENTATIONS AND WARRANTIES.
1.1 REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor represents and warrants to Landlord, that:
(a) The Guarantor has the power to enter into and perform
this Guarantee.
(b) Neither this Guarantee nor the execution, delivery and
performance hereof shall violate any statute, ordinance, regulation, court order
or decree or order or decree of any other governmental authority or agency or
any other agreement to which the Guarantor is subject.
(c) The Guarantor is not and by the execution and delivery
hereof shall not then become insolvent as defined under Section 101(32) of the
Federal Bankruptcy Code (11 U.S.C. Sections 101(32)).
(d) This Guarantee constitutes a valid and binding obligation
of the Guarantor and is enforceable in accordance with its terms.
(e) No governmental approvals or consents are required to be
obtained to authorize the execution, delivery or performance of the Guarantor's
obligations pursuant to this Guarantee.
<PAGE>
(f) 100% of the outstanding shares of OTEC are owned
collectively by the two largest shareholders of Tenant; 100% of the outstanding
shares of RBL are owned collectively by the two largest shareholders of Tenant.
(g) All representations and warranties made to Landlord
herein are factually correct and there has been no omission of any fact which by
its inclusion in any representation or warranty would materially alter the
accuracy, truthfulness or meaning of any such representation or warranty.
1.2 MATERIALITY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Guarantors herein is deemed to be
material to inducing Landlord to enter into the Lease and to perform Landlord's
obligations thereunder. The Guarantors acknowledge that Landlord by virtue of
entering into the Lease and performing its obligations thereunder has acted and
changed and shall hereafter act and change its position in reliance of this
Guarantee and the Guarantors' representations and warranties made herein.
2. GUARANTEE OF TENANT'S OBLIGATIONS.
2.1 OBLIGATIONS GUARANTEED.
(a) The Guarantors hereby irrevocably, absolutely and
unconditionally, jointly and severally, guarantee to Landlord the full and
timely payment when due of all Rent and other payments due to Landlord under the
Lease. Such other payments shall include, without limitation, (i) the cost of
discharging of record any mechanic's, materialman's or other liens, charges or
orders for the payment of money filed against the Building or the Leased
Premises because of any act or omission (or alleged act or omission) of Tenant
or any contractor, subcontractor, employee or agent of Tenant, and (ii)
Landlord's unamortized costs of (x) any brokerage commissions actually paid by
Landlord in connection with the Lease and (y) the free rent period granted to
Tenant under the Lease.
(b) Without limiting the Guarantors' obligations pursuant to
paragraph (a) of this Section 2.1, the Guarantors further irrevocably,
absolutely and unconditionally, jointly and severally, guarantee to Landlord the
full and timely performance of the following obligations under the Lease (the
"Guaranteed Obligations"):
(i) Tenant's obligation to vacate the Leased Premises
upon the expiration or earlier termination of the term of the Lease; and
(ii) Tenant's obligation, upon Tenant's vacating of the
Leased Premises, to remove Tenant's property therefrom and to surrender the
Leased Premises to Landlord in the condition specified in Article 19 and Section
6.04 of the Lease.
(c) Each and every default in the payment of Rent or in the
performance of any of the Guaranteed Obligations shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as the
cause of action arises.
2.2 GUARANTEE UNCONDITIONAL, IRREVOCABLE, ABSOLUTE AND
CONTINUING. The obligations of the Guarantors under this Guarantee shall be
unconditional, irrevocable and absolute and shall continue and remain in full
force and effect until all of the Guaranteed Obligations and the payment of all
Rent under the
<PAGE>
Lease, have been satisfied in their entirety and all other sums due to Landlord
pursuant to this Guarantee have been paid in full.
2.3 CONTINUED VALIDITY OF THIS GUARANTEE. To the fullest extent
permitted by law, the obligations of the Guarantors hereunder shall be valid and
enforceable under all circumstances whatsoever and in furtherance but not in
limitation thereof, shall not be affected, modified, released, or impaired by
any state of facts or the happening from time to time of any event, including,
without limitation, any one or more of the following whether or not with notice
to or the consent of the Guarantors:
(a) The irregularity, illegality or unenforceability of, or
any defect in the Lease.
(b) Any present or future law or order of any government (de
jure or de facto) or of any agency thereof purporting to reduce, amend or
otherwise affect the Lease.
(c) The compromise, settlement, release, extension,
indulgence, change, modification, amendment (including any increase in Rent or
extension of the term thereof) of any or all of the obligations, covenants or
agreements of Tenant pursuant to the Lease; provided, however, that if Tenant's
interest in and to the Lease is assigned to any person or entity in accordance
with the terms and provisions of the Lease or with Landlord's consent, then
unless otherwise agreed to by the Guarantors, the obligations of the Guarantors
shall not extend to (i) the payment of any rent in excess of the Rent calculated
under the terms of the Lease as the same may have been modified while Tenant or
another person or entity related to the Guarantors was Tenant thereunder or (ii)
the performance of any other obligation beyond the stated expiration date of the
term of the Lease or the expiration of any renewal thereof pursuant to the terms
of the Lease as the same may have been modified while Tenant or another person
or entity related to the Guarantors was Tenant thereunder.
(d) The failure to give notice to the Guarantors of the
occurrence of any default under the terms and provisions of the Lease.
(e) The actual or purported assignment of any of the
obligations, covenants and agreements contained in this Guarantee, except an
assignment consented to by Landlord.
(f) The waiver of the payment, performance or observance by
Tenant of any of the obligations, conditions, covenants or agreements or any or
all of them contained in the Lease, including the obligation to pay Rent.
(g) The receipt and acceptance by Landlord of any sums on
account of Rent irrespective of any dispute which may then be or theretofore had
been ensuing between Landlord and Tenant.
(h) The extension of the time for payment of any Rent.
(i) Any failure, omission, delay or lack of action on the
part of Landlord or any other person to enforce, assert or exercise any right,
power or remedy conferred upon it under the Lease.
(j) The voluntary commencement or the existence of an
involuntary case or proceeding under the United States Bankruptcy Code or under
any state or foreign bankruptcy, insolvency or similar statute affecting Tenant;
the liquidation, dissolution, merger, consolidation, sale or other disposition
of all or substantially all the assets of Tenant; the marshaling of Tenant's
assets and liabilities; any receivership, insolvency, assignment for the benefit
of creditors, reorganization, arrangement, composition with creditors or
readjustment of debts in respect of Tenant in its capacity as a debtor or
obligor; or other similar events or
<PAGE>
proceedings affecting Tenant or any allegation or contest of the validity of
this Guarantee or the Lease in any such proceeding; it being specifically
understood, consented and agreed to that this Guarantee shall remain and
continue in full force and effect and shall be enforceable against the
Guarantors to the same extent and with the same force and effect as if such
events and proceedings had not been instituted; and it is the intent and purpose
of this Guarantee that the Guarantors shall and do hereby waive all rights and
benefits which might accrue to the Guarantors by reason of any such proceedings.
(k) Any impairment, whether by negligence or otherwise, of
any rights of subrogation of the Guarantors which may be found to exist.
(l) The release, substitution or replacement, whether or not
in accordance with the terms of the Lease, of any property subject thereto or
any re-delivery, repossession, surrender or destruction of any such property, in
whole or in part.
(m) The lawful termination of the Lease by act of Landlord
due to a default thereunder by Tenant or by operation of law or the exercise of
any other right or remedy under the Lease by Landlord.
2.4 WAIVER OF NOTICE OF ACCEPTANCE. The Guarantors hereby
expressly waive notice from Landlord of its acceptance and reliance on this
Guarantee. This Guarantee shall become effective immediately upon delivery of an
executed counterpart hereof to Landlord.
3. WAIVERS AND RESTRICTIONS IMPOSED UPON THE GUARANTORS.
3.1 WAIVER OF TRIAL BY JURY. EACH GUARANTOR HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION BETWEEN LANDLORD AND THE
GUARANTORS (OR EITHER OF THEM) IN RESPECT OF ANY MATTER ARISING OUT OF THIS
GUARANTEE.
3.2 RESTRICTIONS ON THE GUARANTORS. Each Guarantor agrees not to
dispose of any substantial part of his property, business or assets remaining
after the execution and delivery of this Guarantee without fair consideration.
Each Guarantor agrees not to seek contribution from any other Guarantor until
all the obligations hereunder have been fully satisfied. If any amount shall
nevertheless be paid to a Guarantor by Tenant or another Guarantor, such amount
shall be held in trust for the benefit of Landlord and shall forthwith be paid
to Landlord to be credited and applied to the obligations of Tenant, whether
matured or unmatured. The provisions of this Section 3.2 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4. MISCELLANEOUS PROVISIONS.
4.1 PREFERENCES, ETC. If after receipt of any payment hereunder
applied (or intended to be applied) to the payment of, all or any part of any
sums guaranteed hereunder, Landlord is compelled to surrender such payment or
proceeds to any person because such payment or application of proceeds is or may
be avoided, invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, fraudulent conveyance, impermissible set off or a
diversion of trust funds, then the obligations or part thereof intended to be
satisfied shall be reinstated and continue and this Guarantee shall continue in
full force as if such payment or proceeds had not been received by Landlord,
notwithstanding any revocation thereof or the cancellation of the Lease, any
note or other instrument evidencing any obligation of Tenant or otherwise; and
<PAGE>
the Guarantors shall be liable to pay to Landlord, and hereby indemnify Landlord
and hold Landlord harmless for, the amount of such payment or proceeds so
surrendered and all expenses (including all reasonable attorneys' fees, court
costs and expenses attributable thereto) incurred by Landlord in the defense of
any claim made against Landlord that any payment or proceeds received by
Landlord in respect of all or any part of such sums guaranteed hereunder must be
surrendered, unless Tenant pays to Landlord the amount which Landlord is
compelled to surrender and such payment is not similarly subject to being
avoided, invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, fraudulent conveyance, impermissible set off or a
diversion of trust funds and Landlord is not compelled to surrender the amount
of Tenant's payment. The provisions of this Section 4.1 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4.2 EXPENSES. The Guarantors agree to pay all reasonable costs,
fees, commissions and expenses (including, without limitation, all reasonable
attorneys' fees and disbursements) which may be incurred by Landlord in
enforcing or attempting to enforce this Guarantee following any default on the
part of either of the Guarantors hereunder, whether the same shall be enforced
by suit or otherwise.
4.3 REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other available remedy
given under this Guarantee or hereafter existing at law or in equity. No delay
or failure to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
4.4 NO ORAL AMENDMENT OR TERMINATION. The liability of the
Guarantors hereunder shall be unconditional and shall not be in any manner
affected by any indulgence whatsoever granted or consented to by the holder
hereof, including, but not limited to any extension of time, renewal, waiver or
other modification. Any failure of Landlord to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time thereafter. Landlord or any holder
may accept partial payments, even though marked "payment in full" or containing
words of similar import or other conditions, without waiving any of its rights.
No amendment, modification or waiver of any provision of this Guarantee shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Landlord, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Guarantee cannot be changed or terminated orally or by estoppel or
waiver or by any alleged oral modification regardless of any claimed partial
performance referable thereto.
4.5 SEVERABILITY. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or sections of this Guarantee shall not
affect the validity or enforceability of the remaining portions of this
Guarantee, or any part thereof.
4.6 JOINT AND SEVERAL LIABILITY. Notwithstanding anything to the
contrary contained herein, the representations, warranties, covenants and
agreements made by the Guarantors herein, and the liability of Guarantors
hereunder, are joint and several.
4.7 APPLICABLE LAW. This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles.
4.8 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon,
and be enforceable against the Guarantors and their respective heirs and legal
representatives and shall inure to the benefit of Landlord, its successors or
assigns.
<PAGE>
4.9 HEADINGS AND CAPTIONS. The existence herein of article and
section headings or captions is for convenience only and no such headings or
captions will be used for the purposes of interpreting or construing the meaning
of any term or provision hereof.
4.10 ENTIRE AGREEMENT. This Guarantee sets forth the entire
agreement and obligations of the Guarantors to Landlord and supersedes any and
all other understandings (whether oral or written) between them.
<PAGE>
IN WITNESS WHEREOF, the Guarantors have executed this Guarantee as
of the date first above written.
OTEC, INC.
By:
--------------------------------
RBL AGENCY, LTD.
By:
--------------------------------
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this day of March, 1999, before me personally came
______________, to me known and who, being by me duly sworn, did depose and say
that s/he is the __________________ of OTEC, INC., the corporation described in
and which executed the above instrument; and that s/he executed the foregoing
instrument by order of the Board of Directors of said corporation.
---------------------------------
Notary Public
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this day of March, 1999, before me personally came
_____________________, to me known and who, being by me duly sworn, did depose
and say that s/he is the __________________ of RBL AGENCY, LTD., the company
described in and which executed the above instrument, and that s/he executed the
foregoing instrument on behalf of said company.
---------------------------------
Notary Public
<PAGE>
Exhibit 10.10
GUARANTEE
GUARANTEE made this 16th day of April, 1999, jointly and
severally, by OTEC, INC., a New Jersey corporation ("OTEC") having an office for
the conduct of business at 24 West 40th Street, New York, New York 10018, and
RBL AGENCY, LTD., a New York corporation ("RBL") having an office for the
conduct of business at 24 West 40th Street, New York, New York 10018. OTEC and
RBL shall be collectively referred to as the "Guarantors" and individually, as a
"Guarantor".
W I T N E S S E T H :
24 West 40th St. LLC (hereinafter referred to as "Landlord") and
Hotjobs.com, Ltd. (hereinafter referred to as "Tenant") have entered into that
certain Lease Agreement dated April 16, 1999 (hereinafter referred to as the
"Lease") for the 10th floor of the building located at 24 West 40th Street, New
York, New York. As an inducement to Landlord's agreeing to enter into such
Lease, the Guarantors agreed to guarantee unconditionally the performance by
Tenant of certain of Tenant's obligations under the Lease, including the payment
by Tenant of all Rent thereunder.
Terms not otherwise defined herein shall have the meanings given
such terms in the Lease.
NOW, THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by the Guarantors, the Guarantors, jointly and severally, covenant,
agree, represent and warrant to Landlord as follows:
1. REPRESENTATIONS AND WARRANTIES.
1.1 REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor represents and warrants to Landlord, that:
(a) The Guarantor has the power to enter into and perform
this Guarantee.
(b) Neither this Guarantee nor the execution, delivery and
performance hereof shall violate any statute, ordinance, regulation, court order
or decree or order or decree of any other governmental authority or agency or
any other agreement to which the Guarantor is subject.
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<PAGE>
(c) The Guarantor is not and by the execution and delivery
hereof shall not then become insolvent as defined under Section 101(32) of the
Federal Bankruptcy Code (11 U.S.C. Section 101(32)).
(d) This Guarantee constitutes a valid and binding obligation
of the Guarantor and is enforceable in accordance with its terms.
(e) No governmental approvals or consents are required to be
obtained to authorize the execution, delivery or performance of the Guarantor's
obligations pursuant to this Guarantee.
(f) 100% of the outstanding shares of OTEC are owned
collectively by the two largest shareholders of Tenant; 100% of the outstanding
shares of RBL are owned collectively by the two largest shareholders of Tenant.
(g) All representations and warranties made to Landlord
herein are factually correct and there has been no omission of any fact which by
its inclusion in any representation or warranty would materially alter the
accuracy, truthfulness or meaning of any such representation or warranty.
1.2 MATERIALITY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Guarantors herein is deemed to be
material to inducing Landlord to enter into the Lease and to perform Landlord's
obligations thereunder. The Guarantors acknowledge that Landlord by virtue of
entering into the Lease and performing its obligations thereunder has acted and
changed and shall hereafter act and change its position in reliance of this
Guarantee and the Guarantors' representations and warranties made herein.
2. GUARANTEE OF TENANT'S OBLIGATIONS.
2.1 OBLIGATIONS GUARANTEED.
(a) The Guarantors hereby irrevocably, absolutely and
unconditionally, jointly and severally, guarantee to Landlord the full and
timely payment when due of all Rent and other payments due to Landlord under the
Lease. Such other payments shall include, without limitation, (i) the cost of
discharging of record any mechanic's, materialman's or other liens, charges or
orders for the payment of money filed against the Building or the Leased
Premises because of any act or omission (or alleged act or omission) of Tenant
or any contractor, subcontractor, employee or agent of Tenant, and (ii)
Landlord's unamortized costs of (x) any brokerage commissions actually paid by
Landlord in connection with the Lease and (y) the free rent period granted to
Tenant under the Lease.
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<PAGE>
(b) Without limiting the Guarantors' obligations pursuant to
paragraph (a) of this Section 2.1, the Guarantors further irrevocably,
absolutely and unconditionally, jointly and severally, guarantee to Landlord the
full and timely performance of the following obligations under the Lease (the
"Guaranteed Obligations"):
(i) Tenant's obligation to vacate the Leased Premises
upon the expiration or earlier termination of the term of the Lease; and
(ii) Tenant's obligation, upon Tenant's vacating of the
Leased Premises, to remove Tenant's property therefrom and to surrender the
Leased Premises to Landlord in the condition specified in Article 19 and Section
6.04 of the Lease.
(c) Each and every default in the payment of Rent or in the
performance of any of the Guaranteed Obligations shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as the
cause of action arises.
2.2 GUARANTEE UNCONDITIONAL, IRREVOCABLE, ABSOLUTE AND
CONTINUING. The obligations of the Guarantors under this Guarantee shall be
unconditional, irrevocable and absolute and shall continue and remain in full
force and effect until all of the Guaranteed Obligations and the payment of all
Rent under the Lease, have been satisfied in their entirety and all other sums
due to Landlord pursuant to this Guarantee have been paid in full.
2.3 CONTINUED VALIDITY OF THIS GUARANTEE. To the fullest extent
permitted by law, the obligations of the Guarantors hereunder shall be valid and
enforceable under all circumstances whatsoever and in furtherance but not in
limitation thereof, shall not be affected, modified, released, or impaired by
any state of facts or the happening from time to time of any event, including,
without limitation, any one or more of the following whether or not with notice
to or the consent of the Guarantors:
(a) The irregularity, illegality or unenforceability of, or
any defect in the Lease.
(b) Any present or future law or order of any government (de
jure or de facto) or of any agency thereof purporting to reduce, amend or
otherwise affect the Lease.
(c) The compromise, settlement, release, extension,
indulgence, change, modification, amendment (including any increase in Rent or
extension of the term thereof) of any or all of the obligations, covenants or
agreements of Tenant pursuant to the Lease; provided, however, that if Tenant's
interest in and to the Lease is assigned to any person or entity in accordance
with the terms and provisions of the Lease or with Landlord's consent, then
unless otherwise agreed to by the Guarantors, the obligations of the Guarantors
shall not extend to (i) the payment of any rent in excess of the Rent calculated
under the terms of the Lease as the same
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<PAGE>
may have been modified while Tenant or another person or entity related to the
Guarantors was Tenant thereunder or (ii) the performance of any other obligation
beyond the stated expiration date of the term of the Lease or the expiration of
any renewal thereof pursuant to the terms of the Lease as the same may have been
modified while Tenant or another person or entity related to the Guarantors was
Tenant thereunder.
(d) The failure to give notice to the Guarantors of the
occurrence of any default under the terms and provisions of the Lease.
(e) The actual or purported assignment of any of the
obligations, covenants and agreements contained in this Guarantee, except an
assignment consented to by Landlord.
(f) The waiver of the payment, performance or observance by
Tenant of any of the obligations, conditions, covenants or agreements or any or
all of them contained in the Lease, including the obligation to pay Rent.
(g) The receipt and acceptance by Landlord of any sums on
account of Rent irrespective of any dispute which may then be or theretofore had
been ensuing between Landlord and Tenant.
(h) The extension of the time for payment of any Rent.
(i) Any failure, omission, delay or lack of action on the
part of Landlord or any other person to enforce, assert or exercise any right,
power or remedy conferred upon it under the Lease.
(j) The voluntary commencement or the existence of an
involuntary case or proceeding under the United States Bankruptcy Code or under
any state or foreign bankruptcy, insolvency or similar statute affecting Tenant;
the liquidation, dissolution, merger, consolidation, sale or other disposition
of all or substantially all the assets of Tenant; the marshaling of Tenant's
assets and liabilities; any receivership, insolvency, assignment for the benefit
of creditors, reorganization, arrangement, composition with creditors or
readjustment of debts in respect of Tenant in its capacity as a debtor or
obligor; or other similar events or proceedings affecting Tenant or any
allegation or contest of the validity of this Guarantee or the Lease in any such
proceeding; it being specifically understood, consented and agreed to that this
Guarantee shall remain and continue in full force and effect and shall be
enforceable against the Guarantors to the same extent and with the same force
and effect as if such events and proceedings had not been instituted; and it is
the intent and purpose of this Guarantee that the Guarantors shall and do hereby
waive all rights and benefits which might accrue to the Guarantors by reason of
any such proceedings.
4
<PAGE>
(k) Any impairment, whether by negligence or otherwise, of
any rights of subrogation of the Guarantors which may be found to exist.
(l) The release, substitution or replacement, whether or not
in accordance with the terms of the Lease, of any property subject thereto or
any re-delivery, repossession, surrender or destruction of any such property, in
whole or in part.
(m) The lawful termination of the Lease by act of Landlord
due to a default thereunder by Tenant or by operation of law or the exercise of
any other right or remedy under the Lease by Landlord.
2.4 WAIVER OF NOTICE OF ACCEPTANCE. The Guarantors hereby
expressly waive notice from Landlord of its acceptance and reliance on this
Guarantee. This Guarantee shall become effective immediately upon delivery of an
executed counterpart hereof to Landlord.
3. WAIVERS AND RESTRICTIONS IMPOSED UPON THE GUARANTORS.
3.1 WAIVER OF TRIAL BY JURY. EACH GUARANTOR HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION BETWEEN LANDLORD AND THE
GUARANTORS (OR EITHER OF THEM) IN RESPECT OF ANY MATTER ARISING OUT OF THIS
GUARANTEE.
3.2 RESTRICTIONS ON THE GUARANTORS. Each Guarantor agrees not to
dispose of any substantial part of his property, business or assets remaining
after the execution and delivery of this Guarantee without fair consideration.
Each Guarantor agrees not to seek contribution from any other Guarantor until
all the obligations hereunder have been fully satisfied. If any amount shall
nevertheless be paid to a Guarantor by Tenant or another Guarantor, such amount
shall be held in trust for the benefit of Landlord and shall forthwith be paid
to Landlord to be credited and applied to the obligations of Tenant, whether
matured or unmatured. The provisions of this Section 3.2 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4. MISCELLANEOUS PROVISIONS.
4.1 PREFERENCES, ETC. If after receipt of any payment hereunder
applied (or intended to be applied) to the payment of, all or any part of any
sums guaranteed hereunder, Landlord is compelled to surrender such payment or
proceeds to any person because such payment or application of proceeds is or may
be avoided, invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, fraudulent conveyance, impermissible set off or a
diversion of trust funds, then the obligations or part thereof intended to be
satisfied shall be reinstated and continue and this Guarantee shall continue in
full force as if such payment
5
<PAGE>
or proceeds had not been received by Landlord, notwithstanding any revocation
thereof or the cancellation of the Lease, any note or other instrument
evidencing any obligation of Tenant or otherwise; and the Guarantors shall be
liable to pay to Landlord, and hereby indemnify Landlord and hold Landlord
harmless for, the amount of such payment or proceeds so surrendered and all
expenses (including all reasonable attorneys' fees, court costs and expenses
attributable thereto) incurred by Landlord in the defense of any claim made
against Landlord that any payment or proceeds received by Landlord in respect
of all or any part of such sums guaranteed hereunder must be surrendered,
unless Tenant pays to Landlord the amount which Landlord is compelled to
surrender and such payment is not similarly subject to being avoided,
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, fraudulent conveyance, impermissible set off or a diversion of
trust funds and Landlord is not compelled to surrender the amount of Tenant's
payment. The provisions of this Section 4.1 shall survive the termination of
this Guarantee, and any satisfaction and discharge of Tenant by virtue of any
payment, court order or any federal or state law.
4.2 EXPENSES. The Guarantors agree to pay all reasonable costs,
fees, commissions and expenses (including, without limitation, all reasonable
attorneys' fees and disbursements) which may be incurred by Landlord in
enforcing or attempting to enforce this Guarantee following any default on the
part of either of the Guarantors hereunder, whether the same shall be enforced
by suit or otherwise.
4.3 REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other available remedy
given under this Guarantee or hereafter existing at law or in equity. No delay
or failure to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
4.4 NO ORAL AMENDMENT OR TERMINATION. The liability of the
Guarantors hereunder shall be unconditional and shall not be in any manner
affected by any indulgence whatsoever granted or consented to by the holder
hereof, including, but not limited to any extension of time, renewal, waiver or
other modification. Any failure of Landlord to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time thereafter. Landlord or any holder
may accept partial payments, even though marked "payment in full" or containing
words of similar import or other conditions, without waiving any of its rights.
No amendment, modification or waiver of any provision of this Guarantee shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Landlord, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Guarantee cannot be changed or terminated orally or by estoppel or
waiver or by any alleged oral modification regardless of any claimed partial
performance referable thereto.
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<PAGE>
4.5 SEVERABILITY. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or sections of this Guarantee shall not
affect the validity or enforceability of the remaining portions of this
Guarantee, or any part thereof.
4.6 JOINT AND SEVERAL LIABILITY. Notwithstanding anything to the
contrary contained herein, the representations, warranties, covenants and
agreements made by the Guarantors herein, and the liability of Guarantors
hereunder, are joint and several.
4.7 APPLICABLE LAW. This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles.
4.8 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon,
and be enforceable against the Guarantors and their respective heirs and legal
representatives and shall inure to the benefit of Landlord, its successors or
assigns.
4.9 HEADINGS AND CAPTIONS. The existence herein of article and
section headings or captions is for convenience only and no such headings or
captions will be used for the purposes of interpreting or construing the meaning
of any term or provision hereof.
4.10 ENTIRE AGREEMENT. This Guarantee sets forth the entire
agreement and obligations of the Guarantors to Landlord and supersedes any and
all other understandings (whether oral or written) between them.
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<PAGE>
IN WITNESS WHEREOF, the Guarantors have executed this Guarantee as
of the date first above written.
OTEC, INC.
By: /s/
--------------------------------
Name:
Title:
RBL AGENCY, LTD.
By: /s/
--------------------------------
Name:
Title:
8
<PAGE>
ACKNOWLEDGMENT FOR OTEC, INC.
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On the _____ day of April, 1999, before me, the undersigned, a Notary
Public in and for said State, personally appeared Richard Johnson, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
/s/
--------------------------------------------
Notary Public
ACKNOWLEDGMENT FOR RBL AGENCY, LTD.
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On the _____ day of April, 1999, before me, the undersigned, a Notary
Public in and for said State, personally appeared Richard Johnson, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
/s/
--------------------------------------------
Notary Public
9
<PAGE>
Exhibit 10.11
LEASE AGREEMENT
24 WEST 40TH ST. LLC,
LANDLORD
AND
HOTJOBS.COM, LTD.
TENANT
DATE: APRIL 16, 1999
LEASED PREMISES: ENTIRE TENTH (10TH) FLOOR
24 WEST 40TH STREET
NEW YORK, NEW YORK
<PAGE>
LEASE AGREEMENT DATED APRIL 16, 1999
BETWEEN
24 WEST 40 ST. LLC, LANDLORD
AND
HOTJOBS.COM, LTD., TENANT
CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
Recitals...........................................................................................................1
1. Certain Definitions.......................................................................................1
2. Demise....................................................................................................2
3. Use.......................................................................................................2
4. Rent......................................................................................................3
5. Term......................................................................................................5
6. Alterations...............................................................................................5
7. Repairs...................................................................................................7
8. Compliance With Law; Floor Loads..........................................................................7
9. Liens.....................................................................................................7
10. Insurance and Indemnity...................................................................................8
11. Property Loss; Damage; Reimbursement.....................................................................10
12. Fire; Casualty; and Condemnation.........................................................................10
13. Electricity and Other Services...........................................................................12
14. Defaults; Landlord's Remedies............................................................................15
15. Subordination and Attornment.............................................................................17
16. Guarantee................................................................................................17
17. Assignment and Subletting................................................................................17
<PAGE>
<S> <C>
18. Condition of the Leased Premises.........................................................................22
19. Surrender................................................................................................22
20. No Waiver................................................................................................23
21. Brokerage................................................................................................23
22. Notices..................................................................................................23
23. Certificates.............................................................................................24
24. Access to Leased Premises................................................................................24
25. Quiet Enjoyment..........................................................................................24
26. FORCE MAJEURE............................................................................................25
27. Security.................................................................................................25
28. Termination Right........................................................................................25
29. Miscellaneous............................................................................................26
Signatures........................................................................................................28
</TABLE>
<PAGE>
EXHIBITS
A. Diagram of Leased Premises
B. Form of Term Commencement Agreement
C. Form of Guarantee
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT made this 16th day of April, 1999, by and
between 24 WEST 40TH ST. L.L.C. ("Landlord"), having an office c/o Jenel
Management Corp., 275 Madison Avenue, Suite 702, New York, New York 10016, and
HOTJOBS.COM, LTD., a Delaware corporation ("Tenant"), having an office at 24
West 40th Street, New York, New York 10018.
W I T N E S S E T H:
Landlord is the owner of the building located at 24 West 40th
Street, New York, New York 10018 (the "Building"). Tenant desires to lease from
Landlord the entire tenth (10th) floor of the Building, and Landlord desires to
lease to Tenant such premises, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
1.01 The following terms shall have the meanings hereinafter
ascribed to them:
(a) "Additional Rent" shall mean all sums of money
payable under this Lease by Tenant to Landlord other than Fixed Rent. All
Additional Rent payable hereunder shall be treated as rent payable in
consideration for the granting of the leasehold estate created hereby and the
non-payment of any Additional Rent shall be treated in the same manner and
shall give rise to the same rights and remedies in favor of Landlord as if
the same were the non-payment of Fixed Rent.
(b) "Affiliate" shall mean any person or entity who
controls, is controlled by it is under common control with Tenant. For the
purposes of this definition, control means ownership, directly or indirectly,
of not less than fifty (50%) percent of the voting interests, capital or
profits of an entity.
(c) "Bankruptcy Code" means the Federal Bankruptcy
Code, 11 U.S.C.ss.ss. 101 ET SEQ., as the same has been or may be amended, or
any successor statute thereto.
(d) "Business Days" means all days, excluding
Saturdays, Sundays and all days observed by either the State of New York, the
Federal Government or the labor unions servicing the Building as legal
holidays.
(e) "Business Hours" means the hours of 8:00 a.m.
through 6:00 p.m. on Business Days and the hours of 8:00 a.m. through 2:00
p.m. on Saturdays.
(f) "Commencement Date" shall mean the date Landlord
delivers exclusive possession of the Leased Premises to Tenant in the
condition prescribed by Article 2 hereof.
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(g) "Default Rate" shall mean the lesser of two (2)
percentage points in excess of the average "prime rate" from time to time
published in THE WALL STREET JOURNAL (Eastern Edition) and the highest legal
rate(s), in effect during the relevant period for which such Default Rate
shall be applicable in accordance with the terms and provisions hereof,
adjusted on a daily for each change in such prime or lower highest legal rate.
(h) "Expiration Date" shall mean March 31, 2004.
(i) "Fixed Rent" shall mean the rental payable by
Tenant to Landlord pursuant to Section 4.01 hereof.
(j) "Lease Year" shall mean each consecutive 12-month
period during the Term of this Lease commencing on the Commencement Date and
expiring on the day immediately preceding the anniversary of the Commencement
Date; provided, that if the Commencement Date is not the first day of a
month, then the first Lease Year shall expire on the last day of the month
immediately preceding the month in which the first anniversary of the
Commencement Date occurs and each Lease Year thereafter shall commence on the
anniversary of the first day of the month in which the Commencement Date
occurred; and further provided, that the last Lease Year shall expire on the
Expiration Date.
(k) "Leased Premises" shall mean the entire tenth
(10th) floor of the Building as shown on Exhibit A annexed hereto and made
part hereof.
(l) "Person" shall mean a natural person, governmental
entity or agency, mission or department, corporation, partnership (general,
limited or limited liability), limited liability company, trust, pension
fund, union, association, organization or any other artificial person.
(m) "Rent" shall mean any or all Fixed Rent and
Additional Rent payable by Tenant to Landlord pursuant to the terms of this
Lease.
(n) "Rent Commencement Date" shall mean thirty (30)
days after the Commencement Date.
(o) "Tenant's Proportionate Share" shall mean 6.0%.
(p) "Term" shall mean the Term of this Lease
prescribed by Article 5 of this Lease.
1.02 As used in this Lease, the words "hereof," "hereto",
"hereunder" and similar words shall refer to this Lease as a whole and not to
the particular sentence, paragraph, Section or Article in which such word
appears. The words "include" and "including" shall be read to mean include or
including without limitation.
2. DEMISE.
Landlord hereby demises unto Tenant for the Term hereinafter
set forth, and Tenant hereby accepts and hires from Landlord the Leased Premises
in their "as is" condition on the date hereof, normal wear and tear excepted and
subject to Article 18 hereof.
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<PAGE>
3. USE.
(a) Tenant may use the Leased Premises for executive
and general office purposes only, and for no other purposes whatsoever.
(b) Tenant shall not at any time use or occupy the
Leased Premises or the Building, or suffer or permit anyone to use or occupy
the Leased Premises, or do anything in the Leased Premises or the Building,
or suffer or permit anything to be done in, brought into or kept on the
Leased Premises, which in any manner in the reasonable judgment of Landlord
(i) constitutes a violation of the laws and requirements of any public
authorities or the requirements of insurance bodies; (ii) impairs the
character, reputation or appearance of the Building; or (iii) discharges
objectionable fumes, vapors or odors into the Building's flues or vents or
otherwise in such manner as Landlord, in the exercise of its reasonable
judgment, concludes may offend other tenants or occupants of the Building.
(c) Tenant shall not use, or suffer or permit anyone
to use, the Leased Premises or any part thereof, for (i) an agency,
department or bureau of the United States Government, any state or
municipality within the United States or any foreign government, or any
political subdivision of any of them, or any other entity subject to
diplomatic or sovereign immunity, (ii) an employment agency (except that
Tenant will be permitted to operate an internet recruiting site at the Leased
Premises), (iii) any charitable, religious, union or other not-for-profit
organization, or (iv) any tax exempt entity within the meaning of Section
168(h)(2)(A) of the Internal Revenue Code of 1986, as amended, or any
successor or substitute statute, or rule or regulation applicable thereto, as
same may be amended.
(d) If any governmental license or permit (other than
a certificate of occupancy for the entire Building) shall be required for the
proper and lawful conduct of Tenant's business in the Leased Premises or any
part thereof, Tenant, at its expense and prior to conducting business in the
Leased Premises, shall duly procure and thereafter maintain such license or
permit and submit the same to Landlord for inspection. Tenant shall at all
times comply with the terms and conditions of each such license or permit.
4. RENT.
4.01 (a) There is herein reserved to Landlord the entire Fixed
Rent payable pursuant to this Section 4.01. Fixed Rent shall be paid in equal
monthly installments, at the following annual rates, in the lawful currency of
the United States of America, without notice, demand, abatement, deduction or
set-off:
(i) for the period from the Rent Commencement Date
through the day preceding the one year anniversary of the Commencement Date,
sixty thousand and no/100 ($60,000.00) dollars ($5,000.00 per month);
(ii) for the period from the one year anniversary of
the Commencement Date through the day preceding the two year anniversary of the
Commencement Date, sixty-two thousand four hundred and no/100 ($62,400.00)
dollars ($5,200.00 per month);
(iii) for the period from the two year anniversary of
the Commencement Date through the day preceding the three year anniversary of
the Commencement Date, sixty-four thousand eight hundred ninety-six and no/100
($64,896.00) dollars ($5,408.00 per month);
3
<PAGE>
(iv) for the period from the three year anniversary
of the Commencement Date through the day preceding the four year anniversary of
the Commencement Date, sixty-seven thousand four hundred ninety-one and 84/100
($67,491.84) dollars ($5,624.32 per month); and
(v) for the period from the four year anniversary of
the Commencement Date through the Expiration Date, seventy thousand one hundred
ninety-one and 51/100 ($70,191.51) dollars ($5,849.29 per month).
(b) Monthly installments of Fixed Rent shall be paid
on the first day of each month during the Term hereof, except that the first
monthly installment of Fixed Rent shall be paid upon the Commencement Date to
be applied to the first month for which Fixed Rent is due. If the Rent
Commencement Date is not the first day of a month, then the first such
installment of Fixed Rent payable on the first day of the first month
following the Rent Commencement Date shall be prorated on a per diem basis to
account for the number of days of such month covered by the installment of
Fixed Rent paid upon the execution hereof.
4.02 (a) In addition to the Fixed Rent reserved hereunder as
set forth in Section 4.01, Tenant shall pay as Additional Rent during the Term,
escalations in Taxes in accordance with this Section 4.02.
(b) The terms defined below shall for the purposes of
this Lease have the meanings herein specified:
(i) "Taxes" shall mean all real estate taxes, sewer
rents, water frontage charges and other assessments, special or otherwise,
levied, assessed or imposed by the City of New York or any other taxing
authority upon or with respect to the Building and the land thereunder (the
"Land") and any charge, fee or imposition resulting from the Land or the
Building being located within a business improvement district, and all taxes
assessed or imposed with respect to the rentals payable hereunder other than
general income, gross receipts and excess profits taxes (except that general
income, gross receipts and excess profits taxes shall be included if covered by
the provisions of the following sentence). Taxes shall also include any taxes,
charges or assessments levied, assessed or imposed by any taxing authority in
addition to or in lieu of the present method of real estate taxation, provided
such additional or substitute taxes, charges and assessments are computed as if
the Building were the sole property of Landlord subject to said additional or
substitute tax, charge or assessment. With respect to any Tax Year, all
expenses, including legal fees, experts' and other witnesses' fees, incurred in
contesting the validity or amount of any Taxes or in obtaining a refund of
Taxes, shall be considered as part of the Taxes for such Tax Year.
Notwithstanding the foregoing, Taxes shall not include franchise taxes, gift
taxes, capital stock taxes, inheritance taxes or estate taxes. Tenant hereby
waives any right to institute or join in tax certiorari proceedings or other
similar proceedings contesting the amount or validity of any Taxes.
(ii) "Tax Year" shall mean the twelve (12) month
period from July 1 through June 30 (or such other period as hereafter may be
duly adopted by the City of New York as its fiscal year for real estate tax
purposes) during the Term commencing July 1, 2000.
(iii)"Tax Statement" shall mean an instrument or
instruments setting forth the amount payable by Tenant for a specified Tax Year
pursuant to this Section. If any Tax Statement is not accompanied by a copy of
the tax bill, Landlord shall furnish the same to Tenant promptly after
Landlord's receipt of notice from Tenant requesting the same.
(iv) "Base Taxes" shall mean the Taxes payable for
the Tax Year
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commencing July 1, 1999.
(c) If the Taxes payable for any Tax Year shall exceed
the Base Taxes, Tenant shall pay to Landlord, as Additional Rent for such Tax
Year, an amount (herein called the "Tax Payment") equal to Tenant's
Proportionate Share of the amount by which the Taxes payable by Landlord for
such Tax Year are greater than the Base Taxes.
(d) The Tax Payment for each Tax Year shall be due and
payable in installments in the same manner that Taxes for such Tax Year are
due and payable to the City of New York, except that Tenant shall pay
Tenant's Proportionate Share of each such installment to Landlord at least
thirty (30) days prior to the date such installment first becomes due to the
City of New York. Landlord's failure to render a Tax Statement with respect
to any Tax Year shall not prejudice Landlord's right thereafter to render a
Tax Statement with respect to any such Tax Year nor shall the rendering of a
Tax Statement prejudice Landlord's right thereafter to render a corrected Tax
Statement for that Tax Year.
(e) In the event Taxes for any Tax Year or part
thereof shall be reduced after Tenant shall have paid Tenant's Tax Payment in
respect of such Tax Year, Landlord shall set forth in the first Tax Statement
thereafter submitted to Tenant the amount of such refund and, provided that
Tenant is not then in default beyond any applicable notice and cure period
under this Lease, Tenant shall receive a credit against the installment or
installments of Tenant's Tax Payment next falling due equal to Tenant's
Proportionate Share of such refund, but in no event shall the credit exceed
the amount of the Additional Rent paid by Tenant with respect to Taxes for
said Tax Year. If the Taxes comprising the Base Taxes are reduced as a result
of an appropriate proceeding or otherwise, the Taxes as so reduced shall for
all purposes be deemed to be Taxes for the Base Taxes, and Landlord shall
give notice to Tenant of the amount by which the Tax Payments previously made
were less than the Tax Payments required to be made under this Section 4.02,
and Tenant shall pay the amount of the deficiency within ten (10) days after
demand therefor.
(f) The expiration or termination of this Lease during
any Tax Year for any part or all of which there is a Tax Payment or refund
due under this Section 4.02 shall not affect the rights or obligations of the
parties hereto respecting such Tax Payment or refund and any Tax Statement
relating to such Tax Payment may, on a pro-rata basis, be sent to Tenant
subsequent to, and all such rights and obligations shall survive, any such
expiration or termination. Any such payment shall be (i) calculated based on
a year of 365 days and paid based on the actual number of days elapsed and
(ii) shall be payable within thirty (30) days after such statement is sent to
Tenant.
4.03 Tenant agrees to pay the following amounts to Landlord as
Additional Rent hereunder:
(a) Tenant shall pay to Landlord for water and sewer
rental charges one hundred eighty (180) dollars per year ($15 per month) in
equal monthly installments in advance on the first day of each month during
the Term (pro rated for partial months);
(b) Tenant shall pay to Landlord as a sprinkler
service charge two hundred forty ($240) dollars per year ($20 per month), in
equal monthly installments in advance on the first day of each month during
the Term (pro rated for partial months).
5. TERM.
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The Term of this Lease shall commence on the Commencement Date
and expire at noon on the Expiration Date, unless terminated earlier as
hereinafter provided. Landlord and Tenant shall execute a supplemental Term
Commencement Agreement in the form annexed hereto and made part hereof as
Exhibit B whereby they shall, INTER ALIA, confirm the date on which the
Commencement Date occurs. The failure of either party to execute such Term
Commencement Agreement shall not affect its obligations hereunder, including
Tenant's obligation to pay Rent.
6. ALTERATIONS.
6.01 (a) Tenant shall not make any alterations or
installations (including air-conditioning units, partitions and fixtures),
additions or improvements in or to the Leased Premises without first obtaining
the written consent of Landlord. If any such consent to alterations,
installations, additions or improvements is given by Landlord, then, whether or
not any such consent contains the same, it shall be a condition of such consent
that all approved alterations, installations, additions and improvements shall
be done in a first-class, workmanlike manner, in accordance with plans and
specifications first approved by Landlord and in accordance with all laws,
statutes, ordinances, rules and regulations applicable to the Leased Premises.
(b) Notwithstanding the foregoing Tenant may make
purely decorative changes to the Leased Premises, such as painting, carpeting,
changing wall covers, hanging pictures, without the consent of Landlord.
Landlord shall not unreasonably withhold or delay its consent to any
non-structural changes, alterations, installations, additions or improvements
(collectively, "Tenant's Work"), provided such Tenant's Work is performed only
by contractors or mechanics selected by Tenant and reasonably satisfactory to
Landlord, and such Tenant's Work, in the sole opinion of Landlord, shall not (i)
adversely affect the proper functioning of the Building's mechanical,
electrical, sanitary plumbing, heating, air-conditioning, ventilating, utility
or any other service systems, (ii) result in a violation of, or require a change
in, any certificate of occupancy applicable to the Leased Premises or the
Building, (iii) affect in any way the outside appearance, usefulness or
rentability of the Building or any part thereof, (iv) weaken or impair
(temporarily or permanently) the structure of the Leased Premises or the
Building either in the course of the making of such Tenant's Work or upon its
completion, or (v) physically affect any part of the Building outside of the
Leased Premises.
6.02 Prior to commencing any work for any alterations,
installations, additions or improvements in or to the Leased Premises, Tenant
shall submit construction plans and specifications therefor (which plans and
specifications, if required by law to be so filed, shall be (i) in form suitable
for filing and (ii) filed with the New York City Building Department) and obtain
all permits, licenses, and approvals required by law for such work. Upon
completion of any such work for alterations, installations, additions or
improvements, Tenant shall arrange for and obtain all inspections, certificates
and permits as may be required by law for the maintenance, use, operation or
existence of such alterations, installations, additions and improvements.
6.03 Tenant shall indemnify Landlord and hold Landlord
harmless from and against all claims, liens and costs (including, without
limitation, reasonable attorneys' fees), arising out of or due to the
performance or construction of such alterations, installations, additions or
improvements. The provisions of the preceding sentence shall survive the
expiration or earlier termination of the Term of this Lease. Tenant shall carry
and shall cause its general contractor (or if there is no general contractor,
then its major subcontractors) to carry, during the course of any such work,
workers' compensation insurance, general liability insurance, personal and
property damage insurance as required by law and as Landlord may reasonably
require. All such insurance for bodily injury and property damage shall name
Landlord as an additional insured thereunder. All such insurance shall be
written by insurance companies qualified to do business in the State of New York
rated
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in Best's Insurance Guide, or any successor thereto (or if there is none, an
organization having a national reputation) as having a "Best's Rating" of B+ and
a "Financial Size Category" of at least IX, or if such ratings are not then in
effect, their equivalent. Before proceeding with the work, certificates of such
insurance shall be furnished to Landlord and shall name Landlord and such other
parties as Landlord may prescribe as additional insureds as their interests may
appear at no additional cost to Landlord.
6.04 All fixtures and all paneling, partitions, railings and
like installations, installed in the Leased Premises at any time, either by
Tenant or by Landlord on Tenant's behalf, shall, upon installation, become the
property of Landlord and shall remain upon and be surrendered with the Leased
Premises unless Landlord by notice to Tenant not later than twenty (20) days
prior to the Expiration Date, elects to relinquish Landlord's right thereto and
to have them removed by Tenant, in which event the same shall be removed from
the Leased Premises by Tenant at Tenant's expense prior to the Expiration Date.
Nothing in this Section shall be construed to give Landlord title to or to
prevent Tenant's removal of trade fixtures, movable office furniture and
equipment, but upon removal of any such items from the Leased Premises or upon
removal of other installations as may be required by Landlord, Tenant shall
immediately and at its expense repair and restore the Leased Premises to the
condition existing prior to the installation and repair any damage to the Leased
Premises or the Building due to such removal.
7. REPAIRS.
7.01 Tenant shall, throughout the Term, (i) make all
nonstructural repairs to the Leased Premises and the fixtures, equipment and
appurtenances therein as and when needed to preserve the Leased Premises in good
working order and condition, except for reasonable wear and tear and damage for
which Tenant is not responsible pursuant to this Lease, and (ii) replace
scratched or damaged doors, signs and glass (other than exterior window glass)
in and about the Leased Premises. Without limiting the foregoing, all damage to
the Leased Premises or to any other part of the Building, or to any fixtures,
equipment, sprinkler system and/or appurtenances thereof, whether requiring
structural or nonstructural repairs, caused by or resulting from any act,
omission, neglect or improper conduct of, or alterations made by, or the moving
of Tenant's fixtures, furniture or equipment, including machinery and heavy
equipment, into, within or out of the Leased Premises by Tenant, shall be
repaired at Tenant's expense. Such repairs shall be made by (A) Tenant, at
Tenant's expense if the required repairs are nonstructural in nature and do not
affect any Building system or any portion of the Building outside of the Leased
Premises, or (B) Landlord, at Tenant's expense, if the required repairs are
structural in nature, involve replacement of exterior window glass (if damaged
by Tenant), or affect any Building system or any portion of the Building outside
of the Leased Premises. Tenant shall give Landlord prompt notice of any
defective condition of which Tenant is aware in any structural element or any
Building system located in, servicing or passing through the Leased Premises.
All Tenant repairs shall be of a quality at least equal to the original work or
construction using new construction materials, and shall be made in accordance
with this Lease.
7.02 There shall be no allowance to Tenant for diminution of
rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord or any
other person or entity making or failing to make repairs, alterations,
installations, additions or improvements in or to any portion of the Building or
the Leased Premises or to any fixtures, appurtenances or equipment thereof.
7.03 Landlord shall operate, maintain and, except as set forth
in Section 7.01, make all necessary repairs (both structural and nonstructural)
to (i) the Building systems, (ii) the public portions of the Building, and (iii)
the structural elements of the Building, both exterior and interior, including
the roof,
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foundation and curtain wall, in conformance with standards applicable to office
buildings of comparable age and quality in midtown Manhattan.
8. COMPLIANCE WITH LAW; FLOOR LOADS.
8.01 During the Term hereof, with respect to the Leased
Premises only and such wiring, cabling, signage and other property of Tenant
maintained and/or installed outside the Leased Premises, Tenant shall comply
with all laws, orders and regulations of Federal, State, County and Municipal
authorities and with all directions, pursuant to law, of all public officers,
and with all applicable rules, orders, regulations and requirements of the New
York Board of Fire Underwriters and the New York Fire Insurance Rating
Organization or any similar body.
8.02 Tenant shall not place a load upon any floor of the
Leased Premises exceeding the floor load per square foot area which such floor
was designed to carry and which is allowed by law.
9. LIENS.
Tenant shall not suffer or permit any mechanic's,
materialman's or other liens, charges or orders for the payment of money to be
filed against the Building or the Leased Premises. If, because of any act or
omission (or alleged act or omission) of Tenant or any contractor,
subcontractor, employee or agent of Tenant, any lien, charge or order for the
payment of money shall be filed against the Building or the Leased Premises
(whether or not such lien, charge or order is valid or enforceable as such),
then Tenant shall, at its sole cost and expense, cause the same to be discharged
of record (which may be accomplished by bonding), within forty-five (45) days
after receipt by Tenant of actual notice of the filing of the notice of lien.
The obligations of Tenant under this Article 9 shall survive the expiration or
sooner termination of the Term of this Lease.
10. INSURANCE AND INDEMNITY.
10.01 (a) In addition to the insurance required to be
maintained under Article 6 of this Lease, Tenant, at its expense, shall obtain
and keep in full force and effect a policy of commercial general liability
insurance under which Tenant is named as the insured and Landlord, Landlord's
managing agent and any lessors under underlying leases and the holders of any
mortgages encumbering the Building (whose names shall have been furnished to
Tenant) are named as additional insureds, and which shall contain a contractual
liability endorsement insuring Tenant from and against all cost, expense and/or
liability arising out of or based upon any and all claims, accidents, injuries,
costs, liabilities and damages referred to in paragraph (b) below. Such policy
shall be primary insurance for all additional insureds and contain a provision
that no act or omission of Tenant shall affect or limit the obligation of the
insurance company to pay the amount of any loss sustained and that the policy
shall be non-calculable with respect to Landlord and such underlying lessors and
mortgagees nor shall the amount thereof shall not be reduced or terminated
unless thirty (30) days' written notice shall have first been given to Landlord
by certified mail, return receipt requested, which notice shall contain the
policy number and the names of the insured and additional insureds. The minimum
limits of liability shall be a combined single limit with respect to each
occurrence in amounts of not less than one million and no/100 ($1,000,000.00)
dollars for injury (or death) or damage to property arising from any one
occurrence and five million and no/100 ($5,000,000.00) dollars from the
aggregate of all occurrences within each policy year. All insurance required to
be carried by Tenant pursuant to the terms of this lease shall be effected under
valid and enforceable policies issued by reputable and independent insurers
permitted to do business in the State of New York, and rated in Best's Insurance
Guide, or any successor thereto (or if there is none, an organization having a
national reputation) as having a "Best's Rating" of "B+" and a "Financial Size
Category"
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of at least "IX" or if such ratings are not then in effect, their equivalent.
(b) Tenant covenants and agrees that it shall procure
and maintain in full force and effect, at its sole expense, an "all-risk"
policy of property insurance covering Tenant's personal property in an amount
equal to the actual replacement cost thereof as may be determined for
insurance purposes from time to time. Tenant shall have no obligation to name
Landlord as a beneficiary or additional insured under such policy of property
insurance.
(c) On the Commencement Date (or such earlier date as
Landlord may allow Tenant entry into the Leased Premises for any purpose),
Tenant shall deliver to Landlord appropriate certificates of insurance
stating that the appropriate insurance policy has been issued and permitting
the certificate holder to rely on the fact insurance has been issued and is
in full force and effect, including evidence of waivers of subrogation
required to be carried pursuant to this Article 10. Evidence of each renewal
or replacement of a policy shall be delivered by Tenant to Landlord at least
thirty (30) days prior to the expiration of such policy. Notwithstanding
anything to the contrary contained herein, Tenant agrees that it waives its
right of recovery against Landlord for any damage caused to Tenant's property
and for any loss suffered by Tenant due to interruption of Tenant's business.
(d) Tenant shall cause each insurance policy carried
by Tenant and insuring the Leased Premises, its fixtures, contents and the
other Tenant's property against loss, to be written in a manner so as to,
provide that the insurance company waives all right of recovery by way of
subrogation against Landlord in connection with any loss or damage covered by
any such policies. Landlord agrees to obtain in its insurance policies
insuring the Building a waiver of the insurer's right of subrogation against
Tenant, provided the inclusion of such waiver provision does not subject
Landlord to additional fees, charge or premiums by the insurer; if such
waiver is not obtainable without additional charge, Landlord shall so notify
Tenant, and Tenant shall then have the right to pay the additional charge for
the inclusion of the waiver provision in Landlord's insurance policies.
10.02 Tenant shall (i) take or cause to be taken all action,
and incur and be responsible for the payment of any and all expenses incident to
undertaking any action that may be required by a governmental agency having
jurisdiction, to clean up and remove from and about, and remediate any damage
caused by the release or presence in or about the Building, of all hazardous
substances which may be introduced into the Building during or after the Term as
a result of the acts or omissions of Tenant, its agents, contractors, employees
or invitees; provided, however, to the extent any such hazardous substances
existed prior to the date hereof, Tenant shall have no liability unless the same
shall have been disturbed by Tenant or must be removed or otherwise abated in
connection with work to be performed by or on behalf of Tenant and not part of
the initial work to be performed in connection with Tenant's preparation to make
the Leased Premises suitable for Tenant's initial occupancy thereof; and (ii)
defend, indemnify and hold Landlord and Landlord's partners, members, directors,
officers, agents and employees harmless from and against any and all claims,
demands, actions, proceedings, judgments, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and disbursements) suffered or
incurred by Landlord or Landlord's partners, members, directors, officers,
agents and employees as a result of Tenant's failure to perform the actions
required to be performed by it pursuant to this Section. Without in any way
limiting the generality of the foregoing, Tenant covenants and agrees that the
amount for which it shall be liable to Landlord under this Section shall include
all fines, penalties and judgments, including interest thereon, which may be
imposed upon or incurred by Landlord incident to any violation by Tenant of any
provision of any statute, rule, regulation, order or decree. Excluded from the
definition of hazardous substances with respect to Tenant's indemnity are those
substances typically found in an office environment such as, but not limited to,
photocopier inks and cleaning fluids, provided that they are kept
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at the Leased Premises in commercially reasonable quantities consistent with
office use and stored, managed, used and transported in accordance with all
applicable governmental requirements.
10.03 (a) Tenant shall indemnify and hold harmless Landlord
and Landlord's partners, directors, officers, agents and employees from and
against any and all claims arising from or in connection with (i) the conduct or
management of the Leased Premises or of any business therein, or any work or
thing whatsoever done, or any condition created (other than by Landlord) in or
about the Leased Premises during the Term or during the period of time, if any,
prior to the Commencement Date that Tenant may have been given access to the
Leased Premises; (ii) any act, omission or negligence of Tenant or any of its
subtenants or licensees or its or their partners, directors, officers, agents,
employees or contractors; (iii) any accident, injury or damage whatever (unless
caused solely by Landlord's negligence) occurring in, at or upon the Leased
Premises; and (iv) any breach or default by Tenant in the full and prompt
payment and performance of Tenant's obligations under this Lease; together with
all costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
reasonable attorneys' fees and expenses. In case any action or proceeding be
brought against Landlord and/or its partners, directors, officers, agents and/or
employees by reason of any such claim, Tenant, upon notice from Landlord, shall
resist and defend such action or proceeding (by counsel reasonably satisfactory
to Landlord).
(b) Landlord shall indemnify and hold harmless Tenant
and its partners, directors, officers, agents and employees from and against
any and all claims arising from or in connection with (i) any act, omission
or negligence of Landlord or its partners, directors, officers, agents,
employees or contractors and (ii) any breach or default by Landlord in the
full and prompt performance of Landlord's obligations under this Lease;
together with all costs, expenses and liabilities incurred in or in
connection with each such claim or action or proceeding brought thereon,
including, without limitation, reasonable attorneys' fees and expenses. In
case any action or proceeding be brought against Tenant and/or its partners,
directors, officers, agents and/or employees by reason of such claim,
Landlord, upon notice from Tenant, shall resist and defend such action or
proceeding (by counsel reasonably satisfactory to Tenant).
10.04 Landlord shall take or cause to be taken all action, and
incur and be responsible for the payment of any and all expenses incident to
undertaking any action that may be required by a governmental agency having
jurisdiction, to clean up and remove from and about, and remediate any damage
caused by the release or presence in or about the Building, of all hazardous
substances which may be present or released in or about the Building prior to,
during or after the Term as a result of the acts or omissions of Landlord, its
agents, contractors, employees or invitees.
10.05 The indemnity obligations of Tenant and Landlord
pursuant to this Article 10 shall survive the expiration or earlier termination
of the Term of this Lease.
11. PROPERTY LOSS; DAMAGE; REIMBURSEMENT.
Landlord and its agents shall not be liable for any damage to
property of Tenant or of others entrusted to Landlord, its employees, or
employees of the Building, nor for the loss or damage to any property of Tenant
by theft or otherwise. Landlord and its agents shall not be liable for any
injury or damage to persons or property resulting from any cause whatsoever
except to the extent caused by Landlord's or its agents' wilful misconduct or
gross negligence, nor shall Landlord and its agents be liable for any such
damage caused by other tenants of Landlord or persons in the Building; nor,
except to the extent caused by Landlord's or its agents' wilful misconduct or
negligence, caused by operations in construction, renovation, alterations,
improvements,
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additions and installations to any other space in the Building. Notwithstanding
anything herein set forth to the contrary, Tenant shall look first for the
recovery of any damage or injury to any insurance in its favor before making any
claim against Landlord.
12. FIRE; CASUALTY; AND CONDEMNATION.
12.01 If the Leased Premises or any part thereof shall be
damaged by fire or other catastrophe, Tenant shall give prompt written notice
thereof to Landlord. Landlord shall, subject to Sections 12.03 and 12.04 hereof,
proceed with reasonable diligence to repair or cause the Leased Premises to be
repaired to the condition they were in prior to such fire or catastrophe (for
the elements thereof which Landlord is required to insure as herein specified).
If the Leased Premises, or any part thereof, shall be rendered untenantable by
reason of such damage or if Tenant is deprived of access to the Leased Premises,
the Rent hereunder shall be apportioned according to the area of the Leased
Premises so rendered untenantable or inaccessible for the period from the date
of such damage to the date when the damage shall have been repaired as
aforesaid. Such Rent apportionment shall apply whether or not Landlord or Tenant
cancels this Lease pursuant to Section 12.03 or Section 12.04 below. Tenant
shall cooperate with Landlord and any mortgagee of the Building in their efforts
to collect insurance proceeds (including rent insurance proceeds) payable to
such parties.
12.02 Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from damage from fire or other catastrophe or the repair thereof, except as
provided in Section 12.01. Tenant understands that Landlord shall not carry
insurance of any kind on Tenant's alterations (except as hereinabove provided)
or any of Tenant's property and that Landlord shall not be obligated to repair
any damage thereto or replace the same.
12.03 Notwithstanding the above Sections,
(a) If the Building shall be so damaged by such fire
or other casualty that reconstruction (which may include an alteration)
reasonably estimated to cost at least seventy-five (75%) percent of the
replacement value of the Building shall be required (whether or not the
Leased Premises shall have been damaged by such fire or other casualty) and
Landlord shall have terminated leases covering all or substantially all of
the rentable area of the Building; or
(b) If there is any damage to the Leased Premises
within the last two (2) years of the Term wherein Landlord's cost of repair
exceeds an amount equal to the aggregate of Fixed Rent payable for the final
eighteen (18) calendar months of the Term of this Lease, then Landlord or
Tenant may terminate this Lease and the Term and estate hereby granted, by
notifying the other party, in writing, of such termination, within ninety
(90) days after the date of such damage. In the event that such a notice of
termination shall be given, this Lease and the Term and estate hereby granted
shall expire as of the date of termination specified in such notice of
termination with the same effect as if that were the date hereinbefore set
for the expiration of the Term of this Lease, and the Rent hereunder shall be
apportioned as of such date.
12.04 If the Leased Premises shall be so damaged by fire or
other casualty as to render at least seventy-five (75%) percent of the rentable
area of the Leased Premises (using any combination or portions of floors
excluding basement space, if any) which together constitutes the equivalent
floor area of seventy-five (75%) percent of the rentable area of the Leased
Premises (excluding basement space, if any) untenantable or inaccessible,
Landlord shall within sixty (60) days give Tenant a written notice stating
whether said damage which Landlord is obligated to repair can, in the opinion of
an independent construction consultant retained by
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Landlord (the "Casualty Consultant") be restored within twelve (12) months. If
Landlord's notice states that such damage cannot, in the Casualty Consultant's
opinion, be restored within twelve (12) months, Tenant may elect to cancel this
Lease by written notice to Landlord given within sixty (60) days after the date
of Landlord's notice, time being of the essence. In the event that such notice
of termination shall be given, this Lease and the Term and estate hereby granted
shall expire sixty (60) days after the date of such notice, with the same effect
as if such sixtieth (60th) day was the Expiration Date of the Term of this Lease
and the Rent hereunder shall be apportioned as of the date of such damage. If
Tenant does not elect to cancel this Lease, as aforesaid, or if the Casualty
Consultant's opinion is that the damage can be restored within said twelve (12)
month period, then Section 12.01 shall apply, and Landlord shall have no
additional liability to Tenant if for any reason the damage shall not be
restored within the twelve (12) month period, but Tenant shall be entitled to
abatement of Rent as therein provided.
12.05 Except as may be specifically provided elsewhere in this
Lease, nothing herein contained shall relieve Landlord or Tenant from any
liability to the other party, or to its insurers, in connection with any damage
to the Leased Premises or the Building by fire or other catastrophe if either
party shall be legally liable in such respect.
12.06 This Lease shall be considered an "express agreement to
the contrary" governing any case of damage to or destruction of the Building or
any part thereof by fire or other casualty under Section 227 of the Real
Property Law of the State of New York and any other law of like import now or
hereafter in force and neither said Section 227 or any other law shall have any
application in such case.
12.07 If the whole of the Leased Premises shall be lawfully
condemned or taken in any manner for any public or QUASI-public use, this Lease
and the Term and estate hereby granted shall forthwith cease and terminate as of
the date of vesting of title. If only a part of the Leased Premises shall be so
condemned or taken, then, effective as of the date of vesting of title, the Rent
hereunder shall be abated in an amount thereof apportioned according to the area
of the Leased Premises so condemned or taken. If only a part of the Building
shall be so condemned or taken and the Building or the Leased Premises, or any
substantial part of either, in Landlord's reasonable judgment requires
substantial reconstruction or is no longer economically suitable for leasing
(whether or not the Leased Premises be affected), and if Landlord shall have
terminated leases covering all or substantially all of the rentable area of the
Building, then (i) Landlord may, at Landlord's option, terminate this Lease and
the Term and estate hereby granted by notifying Tenant in writing of such
termination within sixty (60) days following the date on which Landlord shall
have received notice of vesting of title, such termination to be effective on
the date specified in such notice of Landlord, which date shall be no later than
sixty (60) days after the date of such notice, and (ii) if such condemnation or
taking shall (A) deprive Tenant of access to the Leased Premises and Landlord
shall not have provided or undertaken steps to provide other means of access
thereto, or (B) reduce the rentable area of the Leased Premises (excluding
basement space, if any) physically occupied by Tenant (and not by any sublessee
of Tenant) by more than seventy-five (75%) percent and the remaining portion
thereof shall not be reasonably utilizable by Tenant, Tenant may, at Tenant's
option, by delivery of notice in writing to Landlord within sixty (60) days
following the date on which Tenant shall have received notice of vesting of
title, terminate this Lease and the term and estate hereby granted, such
termination to be effective on the date specified in such notice, which date
shall be no later than sixty (60) days after the date of such notice. If neither
Landlord nor Tenant elects to terminate this Lease, as aforesaid, this Lease
shall be and remain unaffected by such condemnation or taking, except that the
Rent shall be abated to the extent, if any, hereinbefore provided in this
Section 12.07. If only a part of the Leased Premises shall be so condemned or
taken and this Lease and the Term and estate hereby granted are not terminated
as hereinbefore provided, Landlord shall, with reasonable diligence and at its
expense, restore the remaining portion of the Leased Premises as nearly as
practicable to the same condition as it was in prior to
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such condemnation or Taking.
12.08 In the event of any Taking hereinbefore mentioned of all
or a part of the Building or the Leased Premises, Landlord shall be entitled to
receive the entire award in the condemnation proceeding, including any award
made for the value of the estate vested by this Lease in Tenant, and Tenant
hereby expressly assigns to Landlord any and all right, title and interest of
Tenant now or hereafter arising in or to any such award or any part thereof, and
Tenant shall be entitled to receive no part of such award.
12.09 If all or any portion of the Leased Premises shall be
taken by the exercise of the right of eminent domain for occupancy for a limited
period, this Lease shall continue in full force and effect and Tenant shall
continue to pay in full the Rent and other charges herein reserved, without
reduction or abatement, and Tenant shall be entitled to receive, for itself, so
much of any award or payment made for such use as is equal to actual payments
made by Tenant to Landlord during such temporary Taking, except as hereinafter
provided, and any balance of any award or payment shall be paid to Landlord. If
the taking is for a period not extending beyond the Term of this Lease and if
such award or payment is made in a lump sum, Landlord shall receive such lump
sum, and out of such lump sum an amount equal to the total of the Rent and other
charges due to Landlord or to be paid by Tenant under the terms of this Lease
for the period of such Taking (including the cost of restoration and the fees,
costs and expenses referred to in the last sentence of this Section 12.09),
shall be held by Landlord as a trust fund which Landlord shall apply from time
to time to the payments due to Landlord from Tenant under the terms of this
Lease, and the balance of such sum shall be paid to Landlord. If the taking is
for a period extending beyond the Term of this Lease, and if such award or
payment is made in a lump sum, such award or payment shall be paid to Landlord,
and apportioned between Landlord and Tenant as of the stated Expiration Date of
the Term and Tenant's share thereof shall then be paid and applied in accordance
with the preceding sentence. If such Taking results in changes or alterations to
the Leased Premises which would necessitate an expenditure to restore the Leased
Premises to its former condition and such taking shall be for a period extending
beyond the Term of this Lease, and (i) if an award shall be made for the cost of
restoration, such award shall be paid to, and shall be the sole property of,
Landlord, and (ii) if no such award shall be made, Landlord shall retain from
any other award made in respect of such Taking, an amount equal to the cost of
such restoration and the balance of such award shall be apportioned between
Landlord and Tenant as set forth above.
13. ELECTRICITY AND OTHER SERVICES.
13.01 SUBMETERED ELECTRICITY. Landlord shall redistribute or
furnish electricity to or for the use of Tenant in the Leased Premises for the
operation of Tenant's electrical systems and equipment in the Leased Premises,
at a level sufficient to accommodate a demand load of 4 watts per usable square
foot of office space in the Leased Premises (the "Permitted Capacity"). Tenant
shall pay to Landlord, on demand from time to time but no more frequently than
monthly, for its consumption of electricity at the Leased Premises, a sum equal
to 110% of the product obtained by multiplying (i) the Cost Per Kilowatt Hour,
by (ii) the actual number of kilowatt hours of electric current consumed by
Tenant in such billing period. "Cost Per Kilowatt Hour" means the actual total
cost incurred by Landlord to provide electricity to the Building during a
particular billing period, including energy charges, demand charges, surcharges,
time-of-day charges, fuel adjustment charges, rate adjustment charges, taxes
(regardless of whether included in the utility company's charges or paid
separately by Landlord), rebates and any other factors used by the utility
company in computing its charges to Landlord, divided by the total kilowatt
hours purchased by Landlord to provide electricity to the Building during such
period. If any tax is imposed upon Landlord's receipts from the sale or resale
of electricity to Tenant, Tenant shall reimburse Landlord for such tax, if and
to the extent permitted by law. Landlord shall
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install a meter or meters, at Landlord's expense, to measure Tenant's
consumption of electricity in the Leased Premises, which meter shall be
maintained by Landlord at Landlord's expense; provided, however, if repairs to
the meter are required because of any acts or omissions of Tenant, such repairs
shall be made at Tenant's expense. Where more than one meter measures Tenant's
consumption of electricity in the Premises, the electricity measured by each
meter shall be computed and billed separately in accordance with the provisions
set forth above. Bills for such amounts shall be rendered to Tenant at such
times as Landlord may elect.
13.02 USE OF ELECTRICITY. Tenant shall at all times comply
with the rules and regulations of the utility company supplying electricity to
the Building. Tenant shall not use any electrical equipment which, in Landlord's
reasonable judgment, would exceed the Permitted Capacity or interfere with
electrical service to other tenants of the Building. Tenant shall not make or
perform, or permit the making or performance of, any alterations to wiring
installations or other electrical facilities in or serving the Leased Premises,
or make any additions to the office equipment or other appliances in the Leased
Premises which utilize electrical energy (other than ordinary small office
equipment) without the prior consent of Landlord, in each instance, and in
compliance with this Lease.
13.03 SERVICE DISRUPTION. Landlord shall not be liable in any
way to Tenant for any failure, defect or interruption of, or change in the
supply, character and/or quantity of, electric service furnished to the Leased
Premises for any reason except if attributable to the gross negligence or
willful misconduct of Landlord, nor shall there be any allowance to Tenant for a
diminution of rental value, nor shall the same constitute an actual or
constructive eviction of Tenant, in whole or in part, or relieve Tenant from any
of its Lease obligations, and no liability shall arise on the part of Landlord
by reason of inconvenience, annoyance or injury to business, whether electricity
is provided by public or private utility or by any electricity generation system
owned and operated by Landlord. Landlord shall use reasonable efforts to
minimize interference with Tenant's use and occupancy of the Leased Premises as
a result of any such failure, defect or interruption of, or change in the
supply, character and/or quantity of, electric service, provided that Landlord
shall have no obligation to employ contractors or labor at overtime or other
premium pay rates or to incur any other overtime costs or additional expenses
whatsoever.
13.04 DISCONTINUANCE OF ELECTRIC SERVICE. Landlord reserves
the right to discontinue furnishing electricity to Tenant in the Leased Premises
on not less than 30 days notice to Tenant, if Landlord is required to do so
under applicable law. If Landlord is compelled to discontinue furnishing
electricity to Tenant, this Lease shall continue in full force and effect and
shall be unaffected thereby except that from and after the effective date of
such discontinuance, Landlord shall not be obligated to furnish electricity to
Tenant hereunder. If Landlord so discontinues furnishing electricity, Tenant
shall arrange to obtain electricity directly from any utility company or other
electricity provider serving the Leased Premises to the extent available,
suitable and safe for such purposes. All equipment which may be required to
obtain electricity of substantially the same quantity, quality and character
shall be installed by Landlord at the sole cost and expense of (i) Landlord, if
Landlord voluntarily discontinues such service, or (ii) Tenant, if (A) Landlord
is compelled to discontinue such service by the utility company or pursuant to
applicable law, or (B) such discontinuance arises out of the acts or omissions
of Tenant. Landlord will not voluntarily discontinue furnishing electricity to
Tenant until Tenant is able to receive electricity directly from the utility
company or other company servicing the Building, unless the utility company or
other company is not prepared to furnish electricity to the Leased Premises on
the date required as a result of Tenant's delay or negligence in arranging for
service, Tenant's refusal to provide the utility company or other company with a
deposit or other security requested by the utility company, or Tenant's refusal
to take any other action requested by the utility company or other company.
13.05 ELEVATORS. Landlord shall provide passenger elevator
service to the Leased Premises
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during Business Hours, with at least one elevator being subject to call at all
other times. In addition, Landlord shall make available to Tenant at least one
freight elevator serving the Leased Premises upon Tenant's prior request, on a
non-exclusive "first come, first serve" basis with other Building tenants, on
all Business Days from 8:00 a.m. to 12:00 noon, and from 1:00 p.m. to 5:00 p.m.
13.06 HEAT. Landlord shall furnish heat to the Leased Premises
during Business Hours throughout the Term.
13.07 OVERTIME BUILDING SERVICES. The Rent does not reflect or
include any charge to Tenant for the furnishing of any building services such as
freight elevator service or heat other than to the extent described in this
Article 13. Landlord shall not be required to furnish any building services at
any times ("OVERTIME PERIODS") other than the times specifically described in
this Lease for the provision of such building services unless Tenant delivers
notice to Landlord's property management office serving the Building requesting
such services at least 24 hours prior to the time at which such services are to
be provided, but Landlord shall use reasonable efforts (without obligation to
incur any additional cost) to arrange for building services during Overtime
Periods on such shorter notice as Tenant shall provide. If Landlord furnishes
freight elevator service or any other building service to the Leased Premises
during Overtime Periods, Tenant shall pay to Landlord Landlord's then
established rates for supplying such overtime building services in the Building.
13.08 WATER. Landlord, at Landlord's expense, shall provide
cold water for drinking, cleaning and lavatory purposes. If Tenant requires or
uses water or steam for any additional purposes, Landlord may install a meter to
measure the water or steam furnished. Tenant shall pay the cost of such
installation, and for all maintenance, repairs and replacements thereto, and for
the reasonable charges of Landlord for the water or steam furnished. Tenant
shall also pay Landlord's reasonable charge for any required pumping or heating
thereof, and any sewer rent, tax and/or charge now or hereafter assessed or
imposed upon the Leased Premises or the Land pursuant to any applicable law.
13.09 BUILDING DIRECTORY. Landlord shall, at the request of
Tenant, maintain up to four (4) listings on the directory in the Building lobby
of the names of Tenant and any officers or employees of Tenant. Tenant shall
deliver to Landlord, on or prior to the Commencement Date, a list of the names
to be included in the directory. Tenant may deliver revised listings to Landlord
from time to time throughout the Term (but Landlord shall not be obligated to
revise the directory more often than once a month), and Tenant shall pay
Landlord's actual costs incurred therefor.
13.10 CLEANING; REFUSE AND RUBBISH REMOVAL. (a) Tenant, at
Tenant's sole cost and expense, shall (i) cause the Leased Premises to be
cleaned, in a manner satisfactory to Landlord, (ii) cause the Leased Premises to
be exterminated with such frequency and in such manner as to prevent the
existence of vermin or other infestation, (iii) cause all portions of the Leased
Premises used for the storage, preparation or consumption of food or beverages
to be cleaned daily in a manner satisfactory to Landlord, and (iv) cause
Tenant's garbage and other refuse to be removed from the Leased Premises, at
such times and from such place as Landlord shall designate, by Landlord's
designated cartage service, and until removed, shall be kept in a neat and
orderly condition, properly bagged or in the case of packing boxes and cartons,
securely tied, in such place designated by Landlord. Tenant shall cause its
employees, agents, contractors and business visitors to observe such additional
rules and regulations regarding rubbish removal and/or recycling as Landlord
may, from time to time, reasonably impose. The aforementioned services shall be
performed by contractors designated by Landlord or by contractors approved by
Landlord. Tenant may place its dry paper garbage in the Building's compactor at
no charge.
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14. DEFAULTS; LANDLORD'S REMEDIES.
14.01 Each of the following shall constitute a default by
Tenant under the Lease:
(a) Failure to make any payment of Rent to Landlord
within five (5) days after notice that any such payment was not paid when
first due;
(b) Failure of Tenant to remove any lien, charge or
order for the payment of money, against the Building, the Leased Premises, or
any leasehold estate, arising out of Tenant's acts or omissions or alleged
acts or omissions, within the time period specified by Article 9 for the
removal of such a lien, charge or order;
(c) There having been commenced by Tenant a voluntary
case under the federal bankruptcy laws, as now constituted or as hereafter
amended or replaced, or under any other applicable federal or state
bankruptcy, insolvency or other similar law; or the entry of a decree or
order of relief by a court having jurisdiction in respect of Tenant in any
involuntary case under the federal bankruptcy laws, as now constituted or as
hereafter amended or replaced, or under any other applicable federal or state
bankruptcy, insolvency or other similar law; or the appointment of a
receiver, liquidator, custodian, trustee, sequestrator, conservator or
similar official of Tenant; or the making by Tenant of any assignment for the
benefit of creditors.
(d) Any assignment of this Lease by Tenant or the
subletting of the Leased Premises or any part or parts thereof, except as
specifically permitted hereunder;
(e) The failure of Tenant to deliver the Security
referred to in Article 27 hereof in a timely fashion and for ten (10) days
after notice of such failure;
(f) If there shall occur a default under any guarantee
of Tenant's obligations hereunder;
(g) If there shall occur a default by the tenant under
any other lease between Landlord and Tenant (or an entity related to or
affiliated with Tenant) of any space in the Building other than the Leased
Premises;
(h) The failure of Tenant to perform any covenant or
obligation of Tenant under this Lease (not heretofore referred to in this
Section 14.01) within thirty (30) days after the giving of any notice by
Landlord of such failure; or if such covenant or obligation is not of the
nature that it can be completely performed within such thirty (30) day
period, if Tenant shall have failed to commence to perform such covenant or
obligation within such thirty (30) day period and shall have failed to pursue
the performance of the same diligently thereafter.
14.02 (a) If there shall occur any default under Section
14.01, then, at the option of Landlord in its sole and absolute discretion,
Landlord may re-enter the Leased Premises, terminate the Term of this Lease
and/or dispossess Tenant from the Leased Premises by summary or other proceeding
as may be permitted by law and Tenant shall forthwith remove its effects from
the Leased Premises and surrender the same. Tenant hereby waives service of
notice of intention to re-enter or institute legal proceedings to that end
(except as may be required as a predicate to the institution of a summary
proceeding for the non-payment of rent).
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(b) If a court of competent jurisdiction shall
determine that notwithstanding the provisions of paragraph (a) of this
Section 14.02 and Article 17 hereof, the Term of this Lease shall not have
been terminated and that a trustee (or Tenant) in a proceeding or case under
Title 11 of the United States Code (or any successor statute of like import
or substance) has the right to assign this Lease under the conditions
specified in Section 365(f) of the Bankruptcy Code (or any successor
provision or statute of like import or substance) and if there is an
assignment by such trustee or Tenant pursuant to Section 365(f) of the
Bankruptcy Code (or any successor provision or statute of like import or
substance), or otherwise as authorized by court order in such a proceeding or
case, then all proceeds and other consideration received by the trustee (or
Tenant) from, in connection with, or attributable to the assignment of this
Lease shall constitute the property of, and be turned over upon receipt to,
Landlord. It is agreed that none of the proceeds of any such assignment shall
become the property of the debtor's estate created by Section 541 of the
Bankruptcy Code (or any successor provision or statute of like import or
substance). Furthermore, as one element (but not the exclusive element) of
the adequate assurance that such a trustee must provide Landlord for the
future performance of any such assignee of Tenant's obligations under this
Lease, there shall be deposited with Landlord the amount of at least one (1)
full year's Fixed Rent and Additional Rent (at the then current level of
Fixed and Additional Rent on the effective date of such assignment) as
further security to secure the full and faithful performance of the
obligations of Tenant hereunder.
14.03 In the case of any default as specified in Section
14.01, re-entry, termination or dispossess: (1) the excess (discounted to
present value at 6% PER ANNUM) of all accrued and future Rent over the rental
value of the Leased Premises over the balance of the Term shall at the option of
Landlord, in its sole and absolute discretion, become due immediately thereupon
and be paid upon the time of such reentry, termination and/or dispossess,
together with such expenses as Landlord may incur for attorney's fees, brokerage
and/or putting the Leased Premises in good order and/or preparing the same for
re-rental and interest thereon at the Default Rate until payment is made
(whether before or after entry of a judgment against Tenant); or (2) Landlord
may (A) re-let the Leased Premises or any part or parts thereof, in the name of
Landlord or otherwise, for a term or terms, which may, at Landlord's option, be
less than or exceed the period which would otherwise have constituted the
balance of the term of this Lease and (B) grant concessions or free rent or
charge a lower or higher rental than that of this Lease, and Tenant, or its
legal representative, shall also pay to Landlord as liquidated damages for the
failure of Tenant to observe and perform Tenant's covenants and obligations
hereunder, any deficiency between the Rent hereby reserved and/or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
Lease of the Leased Premises for each month of the period which would otherwise
have constituted the balance of the Term of this Lease. Landlord shall be under
no obligation to re-let the Leased Premises or to mitigate its damages, either
before or after a termination of this Lease. The failure of Landlord to re-let
the Leased Premises, or any part or parts thereof, or to mitigate its damages,
either before or after a termination of this Lease, shall not release Tenant or
affect its liability for damages. In computing such liquidated damages, there
may be added to said deficiency such expenses as Landlord may incur in
connection with the re-letting, such as attorney's fees, brokerage, advertising,
and for keeping the Leased Premises in good order and for preparing the same for
re-letting and interest on such sums computed at the Default Rate. Any such
liquidated damages shall be paid in monthly installments on the dates specified
for the payment of Fixed Rent hereunder. Without limiting the rights and
remedies of Landlord herein set forth, if Tenant shall default in any of its
obligations hereunder and Landlord shall re-enter the Leased Premises, Landlord
shall consider leasing the Leased Premises for the then remainder of the Term
hereof to such proposed tenant as Tenant may propose to Landlord. Under no
circumstances shall Landlord be required to lease the Leased Premises or any
portion thereof to such proposed tenant and Landlord may refuse to do so for any
reason or no reason whatsoever in its sole and arbitrary discretion. Refusal or
failure of Landlord to lease the Leased Premises to any such proposed tenant
shall not form the basis of any defense, set-off or counterclaim to any action
for rent or damages commenced by Landlord against Tenant and Tenant hereby
expressly waives
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any such defense, set-off or counterclaim.
14.04 If Tenant shall default in the observance or performance
of any term or covenant on Tenant's part to be observed, then Landlord may,
after notice to Tenant, but shall not be obligated to, perform the same on
behalf of Tenant. The cost of observing or performing any such term or covenant,
and all other expenses, including, but not limited to, reasonable attorney's
fees, which Landlord may have incurred, shall be repaid to Landlord with
interest at the Default Rate, as Additional Rent hereunder, upon demand. If any
payment of Rent is accepted more than ten (10) days late, Tenant shall also pay
interest at the Default Rate on such late payment from the date when such Rent
was first due.
14.05 Whether or not specifically set forth herein, in any
case where Landlord is entitled to recover interest from Tenant at the Default
Rate, such rate of interest shall be applicable until all sums to which such
rate applies are fully paid, even if such payment is made after the entry of any
judgment with respect thereto against Tenant. If a higher rate of interest would
otherwise be permitted, it shall not be argued nor shall it be construed that
the statutory judgment rate of interest is the highest rate of interest
permitted by law.
14.06 All of Landlord's remedies under this Lease shall be
deemed to be cumulative and no remedy on behalf of Landlord shall be deemed in
lieu of any other remedy as may be available to Landlord under this Lease, at
law or in equity.
14.07 It is mutually agreed by Landlord and Tenant that they
do hereby waive trial by jury in any action, proceeding or counterclaim brought
by either of them, to the extent permitted by law. It is further agreed by
Tenant that in any summary proceedings or other proceedings for possession of
all or any part of the Leased Premises, Tenant shall not interpose any
counterclaim of whatever nature or description.
15. SUBORDINATION AND ATTORNMENT.
15.01 This Sublease is subject to and subordinate to all
ground or underlying leases and to all mortgages, which may now or hereafter
affect this Lease or the Building, and to all renewals, modifications,
consolidations, replacements and extensions of any such mortgages, ground or
underlying leases. The provisions of this Article 15 shall be self-operative
and no further instrument of subordination shall be required to effect such
subordination. Notwithstanding the foregoing, Tenant shall execute promptly
any certificate or other instrument of subordination which may reasonably be
requested to confirm or further effect such subordination.
15.02 If at any time, and for any reason, any mortgage
affecting the Building, or this Lease is foreclosed, or any ground or underlying
lease to which this Lease is subordinate is terminated, then within ten (10)
Business Days after demand of the mortgage holder or ground or underlying lessor
or Landlord (or any person claiming by, through or under any of them), Tenant
shall attorn, from time to time, to any such mortgage holder, ground or
underlying lessor or Landlord (or any person claiming by, through or under any
of them) upon the executory terms of this Lease for the remainder of the Term.
16. GUARANTEE.
Tenant is simultaneously herewith delivering to Landlord a
guarantee of this Lease made, jointly and severally, by OTEC, Inc. and
RBL Agency Ltd. in the form annexed hereto as Exhibit C.
17. ASSIGNMENT AND SUBLETTING.
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17.01 Except as expressly permitted herein, Tenant, without
the prior consent of Landlord in each instance, shall not (i) assign its rights
or delegate its duties under this Lease (whether by operation of law, transfers
of interests in Tenant or otherwise), mortgage or encumber its interest in this
Lease in whole or in part, (ii) underlet, or permit the underletting of, the
Leased Premises or any part thereof, or (iii) permit the Leased Premises or any
part thereof to be occupied, or used for desk space, mailing privileges or
otherwise, by any Person other than Tenant. Tenant acknowledges and agrees that
the transfer in one or more transactions or series of transactions of more than
fifty (50%) percent of the record or beneficial ownership (whether direct or
indirect) of the capital stock, equity interests in, right to participate in
distributions, earnings, profits or losses or capital of Tenant shall be deemed
to be an assignment of this Lease. Notwithstanding the foregoing, transfers of
stock in a corporation whose shares are traded in the "over-the-counter" market
or any recognized national securities exchange shall not constitute an
assignment for the purposes of this Lease, provided that the principal purpose
of such transfer or transfers is not to avoid the restrictions on assignment
otherwise applicable under this Article 17. Any subtenant or assignee of Tenant
shall deliver to Landlord a guarantee of the sublease or lease, as the case may
be, in the same form as the guarantee annexed hereto as Exhibit C, executed by a
party reasonably satisfactory to Landlord.
17.02 If this Lease is assigned to any Person pursuant to the
provisions of the Bankruptcy Code, any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be
paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or other
consideration constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and shall be promptly paid to or turned over to Landlord.
17.03 If Tenant's interest in this Lease is assigned in
violation of the provisions of this Article 17, such assignment shall be void
and of no force and effect against Landlord; provided, however, that Landlord
may collect an amount equal to the then Fixed Rent plus any other item of
Additional Rent from the assignee as a fee for its use and occupancy. If the
Leased Premises or any part thereof are underlet to, or occupied or used by, any
Person other than Tenant, whether or not in violation of this Article 17,
Landlord, after default by Tenant under this Lease, may collect any item of rent
or other sums paid by the subtenant, user or occupant as a fee for its use and
occupancy, and shall apply the net amount (I.E., the amount remaining after
costs of collection, including legal fees, charges and disbursements whether or
not a legal action is commenced) collected to the Rent reserved in this Lease.
No underletting, occupancy or use, whether with or without Landlord's prior
consent, nor any such collection or application of Rent or fee for use and
occupancy, shall be deemed a waiver by Landlord of any term, covenant or
condition of this Lease or the acceptance by Landlord of such subtenant,
occupant or user as tenant hereunder. No such collection or application of rent
or fee for use and occupancy from any assignee, subtenant, occupant or user
shall be deemed a waiver by Landlord of any term, covenant or condition of this
Lease or the acceptance by Landlord of such assignee, subtenant, occupant or
user as tenant hereunder absent Landlord's express consent thereto in writing.
The consent by Landlord to any assignment, underletting, occupancy or use shall
not relieve Tenant from its obligation to obtain the express prior consent of
Landlord to any further assignment, underletting, occupancy or use. Tenant shall
reimburse Landlord for reasonable attorneys' fees, charges and disbursements in
connection with any proposed assignment of Tenant's interest in this Lease or
any proposed underletting of the Leased Premises. Neither any assignment of
Tenant's interest in this Lease nor any underletting, occupancy or use of the
Leased Premises or any part thereof by any Person other than Tenant, nor any
collection of Rent by Landlord from any Person other than Tenant as provided in
this Section 17.03, nor any application of any such Rent as provided in this
Section 17.03 shall, in any circumstances, relieve Tenant of its obligations
under this Lease on Tenant's part to be observed
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and performed and, subsequent to any assignment, Tenant's liability hereunder
shall continue as a guarantor notwithstanding any subsequent modification or
amendment of or to this Lease or the release of any subsequent tenant hereunder
from any liability, to all of which Tenant hereby consents in advance. Any
Person to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed without further act or deed to have assumed all
of the obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall execute and deliver to Landlord upon demand
an instrument confirming such assumption.
17.04 If Tenant assumes this Lease and proposes to assign the
same pursuant to the provisions of the Bankruptcy Code to any Person who shall
have made a BONA FIDE offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of such proposed assignment shall be given to
Landlord by Tenant no later than twenty (20) days after receipt by Tenant, but
in any event no later than ten (10) days prior to the date that Tenant shall
make application to a court of competent jurisdiction for authority and approval
to enter into such assignment and assumption. Such notice shall set forth the
name and address of such Person, all of the terms and conditions of such offer,
and adequate assurance of future performance by such Person under this Lease,
including, without limitation, the assurance referred to in Section 365(b)(3) of
the Bankruptcy Code. Landlord shall have the prior right and option, to be
exercised by notice to Tenant given at any time prior to the date of application
to the court for approval of such proposed assignment (but not earlier than five
(5) Business Days after Landlord's receipt of Tenant's notice), to accept an
assignment of this Lease upon the same terms and conditions and for the same
consideration, if any, as the BONA FIDE offer made by such Person, less any
brokerage commissions which would otherwise be payable by Tenant out of the
consideration to be paid by such Person in connection with the assignment of
this Lease.
17.05 The term "adequate assurance of future performance" as
used in this Lease shall mean that any proposed assignee shall, among other
things, deposit with Landlord on the assumption of this Lease the greater of the
then Fixed Rent and Additional Rent for the next ensuing twelve (12) month
period and the Security, if any, as security for the faithful performance and
observance by such assignee of the terms, covenants and conditions of this
Lease, which sum shall be held in accordance with the provisions of Article 27,
furnish Landlord with financial statements of such assignee for the prior three
(3) fiscal years, as prepared by a certified public accountant, which financial
statements shall fairly reflect the financial position and condition of such
assignee as of the date of delivery to Landlord and show a net worth of at least
four (4) times the then Fixed Rent for each of such three (3) fiscal years, and
provide such other information or take such action as Landlord, in its
reasonable judgment, shall determine is necessary to provide adequate assurance
of the performance by such assignee of its obligations under this Lease.
17.06 As long as the originally named Tenant herein is Tenant,
Tenant shall have the privilege subject to the terms and conditions hereinafter
set forth, without the consent of Landlord, (i) to assign its interest in this
Lease to an Affiliate of Tenant which is subject to the jurisdiction of the
courts of the City or State of New York or the courts of the United States of
America with respect to any matter arising out of this Lease at least to the
extent that Tenant is subject, or (ii) to underlet or sublease all of the Leased
Premises to an Affiliate of Tenant which is subject to the jurisdiction of the
courts of the City or State of New York or the courts of the United States of
America with respect to any matter arising out of this Lease at least to the
extent that Tenant is subject. Tenant shall, within ten (10) Business Days after
execution thereof, deliver to Landlord (A) if an assignment, a duplicate
original instrument of assignment in form and substance reasonably satisfactory
to Landlord, duly executed by Tenant, (B) if an assignment, an instrument in
form and substance reasonably satisfactory to Landlord, duly executed by the
assignee, in which such assignee shall assume observance and performance of, and
agree to be personally bound by, all of the terms, covenants and conditions of
this Lease on Tenant's part to be observed and performed and (C) if a sublease,
a duplicate original sublease
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in form and substance reasonably satisfactory to Landlord, duly executed by
Tenant and the subtenant. Such assignee or subtenant shall deliver to Landlord a
guarantee of the sublease or lease as the case may be, in the same form as the
guarantee annexed hereto as Exhibit C, executed by a party reasonably
satisfactory to Landlord.
17.07 If, at any time after the originally named Tenant may
have assigned Tenant's interest in this Lease, this Lease shall be disaffirmed
or rejected in any proceeding of the types described in paragraph (c) of Section
14.01, or in any similar proceeding, or in the event of termination of this
Lease by reason of any such proceeding or by reason of lapse of time following
notice of termination given pursuant to Article 14 based upon any of the
defaults set forth in Article 14, the originally named Tenant and any successor
tenant, upon request of Landlord given within thirty (30) days next following
any such disaffirmance, rejection or termination (and actual notice thereof to
Landlord in the event of a disaffirmance or rejection or in the event of
termination other than by act of Landlord), shall pay to Landlord all Rent due
and owing to Landlord under this Lease to and including the date of such
disaffirmance, rejection or termination, and as "tenant", enter into a new lease
with Landlord of the Leased Premises for a term commencing on the effective date
of such disaffirmance, rejection or termination and ending on the Expiration
Date, unless sooner terminated as in such lease provided, at the same Rent and
upon the then executory terms, covenants and conditions as are contained in this
Lease, except that (i) the rights of the originally named Tenant and any
successor tenant under the new lease shall be subject to the possessory rights
of the assignee under this Lease and the possessory rights of any Person
claiming through or under such assignee or by virtue of any statute or of any
order of any court, (ii) such new lease shall require all defaults existing
under this Lease to be cured by the originally named Tenant and any successor
tenant with due diligence, and (iii) such new lease shall require the originally
named Tenant and any successor tenant to pay all Rent reserved in this Lease
which, had this Lease not been so disaffirmed, rejected or terminated, would
have accrued under the provisions of Article 4 after the date of such
disaffirmance, rejection or termination with respect to any period prior
thereto. If the originally named Tenant or any successor tenant shall default in
its obligation to enter into said new lease for a period of ten (10) days next
following Landlord's request therefor, then, in addition to all other rights and
remedies by reason of such default, either at law or in equity, Landlord shall
have the same rights and remedies against the originally named Tenant and any
successor Tenant as if the originally named Tenant and any successor tenant had
entered into such new lease and such new lease had thereafter been terminated as
of the commencement date thereof by reason of the originally named Tenant's or
any successor tenant's default thereunder.
17.08 (a) Notwithstanding the provisions of Section 17.01, if
Landlord shall not exercise its rights pursuant to paragraph (b) of this Section
17.08, Landlord shall not unreasonably withhold or delay its consent to any
underletting of the Leased Premises, provided that:
(i) the Leased Premises shall not, without
Landlord's prior consent, be publicly
advertised for underletting at a rental rate
less than the prevailing rental rate set by
Landlord for space in the Building (the
"Prevailing Rate");
(ii) no material default shall have occurred and
be continuing hereunder;
(iii) the proposed subtenant shall have a
financial standing reasonably satisfactory
to Landlord,;
(iv) the underletting shall be expressly subject
to all of the terms, covenants, conditions
and obligations on Tenant's part to be
observed and performed
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under this Lease and the further condition
and restriction that the sublease shall not,
directly or indirectly, be assigned,
encumbered or otherwise transferred or the
Leased Premises further underlet by Tenant
in whole or in part, or any part thereof
suffered or permitted by Tenant to be used
or occupied by others, and no interest in
Tenant the transfer of which shall result in
a change in control of Tenant be
transferred, directly or indirectly, without
the prior written consent of Landlord in
each instance (except as specifically
provided in Section 17.06);
(v) the underletting shall end no later than one
(1) day before the Expiration Date;
(vi) no underletting shall be for less than the
entire Leased Premises;
(vii) Tenant shall reimburse Landlord on demand
for any costs that may be reasonably
incurred by Landlord in connection with said
sublease, including, without being limited
to, any reasonable attorneys' fees and
disbursements and the costs of making
investigations as to the acceptability of
the proposed subtenant;
(viii) the subtenant shall agree to attorn to
Landlord upon the terms and provisions of
such sublease, upon the request of Landlord;
and
(ix) the subtenant shall be subject to the
jurisdiction of the courts of the State of
New York and shall not possess (or shall
have lawfully waived any claim of) sovereign
immunity.
(b) At least twenty (20) Business Days prior to any
proposed underletting Tenant shall submit a statement to Landlord (a
"Sublease Statement") containing the following information: (i) the name and
address of the proposed subtenant, (ii) the terms and conditions of the
proposed underletting, including, without limitation, the consideration
(including rent) payable for such underletting, additional consideration for
leasehold improvements, Tenant's property or any other items and Tenant's
best estimate of the cost (including cost, overhead and supervision) of any
improvements (including any demolition to be performed) to the Leased
Premises proposed to be made by Tenant to prepare the Leased Premises for
occupancy by such subtenant, (iii) the nature and character of the business
of the proposed subtenant and its proposed use of the space to be underlet to
it, and (iv) any other information that Landlord may reasonably request.
Landlord shall have the right, exercisable within fifteen (15) Business Days
after Landlord's receipt of the Sublease Statement, to terminate this Lease.
If Landlord shall fail to notify Tenant within said fifteen (15) Business Day
period of Landlord's intention to exercise its rights pursuant to this
paragraph (b) or of Landlord's consent or disapproval of the proposed
underletting pursuant to the Sublease Statement as contemplated by paragraph
(a) of this Section 17.08, or have consented to such underletting as provided
in paragraph (a) of this Section 17.08, Tenant shall be free to sublease that
portion of the Leased Premises to such proposed subtenant on the same terms
and conditions set forth in the Sublease Statement, subject to the terms and
conditions of this Lease, including paragraph (a) of this Section 17.08 and
Section 17.09. If Tenant shall not enter into such sublease within sixty (60)
days after the delivery of the Sublease Statement to Landlord, then the
provisions of Section 17.01 and this Section 17.08 shall again be applicable
to such proposed underletting.
(c) If Landlord exercises its option to terminate this
Lease in the circumstances set forth in paragraph (b) of this Section 17.08,
then this Lease shall end and expire thirty (30) days after
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Landlord shall have made such election to terminate this Lease. If Landlord
exercises its option to terminate this Lease in the foregoing circumstances,
this Lease shall end and expire on the date on which such proposed sublease was
to become effective with the same effect as if such date were the Expiration
Date.
(d) The failure by Landlord to exercise its option
under paragraph (b) of this Section 17.08 with respect to any underletting
shall not be deemed a waiver of such option with respect to any extension of
such underletting or any subsequent underletting of the Leased Premises
affected thereby.
17.09 (a) In connection with ANY underletting of all or any
portion of the Leased Premises, Tenant shall pay to Landlord, subject to
subsection (c) of this Section 17.09, a sum equal to one hundred (100%) percent
of any Net Sublease Proceeds derived therefrom. All sums payable hereunder by
Tenant shall be paid to Landlord, as Additional Rent, within twenty (20)
Business Days after receipt thereof by Tenant.
(b) Net Sublease Proceeds, Sublease Proceeds and/or
Sublease Rent shall be re- calculated from time to time to reflect any
corrections in the subsequent payments received by Tenant, the final
adjustment of payments to be made by Tenant or mistake. Promptly upon the
receipt of any such payment, the making of any such adjustment or the
discovery of any such mistake, Tenant shall submit to Landlord a
re-calculation of the Net Sublease Proceeds, Sublease Proceeds and/or
Sublease Rent, and an adjustment shall be made between Landlord and Tenant,
if applicable with respect thereto on account of prior payments made pursuant
to this Section 15.09.
(c) For purposes of this Lease:
(i) "Net Sublease Proceeds" shall mean
Sublease Proceeds less Permitted
Expenses amortized over the term of
the sublease.
(ii) "Permitted Expenses" shall mean the
aggregate of (A) reasonable broker
commissions and reasonable legal
fees, charges and disbursements,
and advertising expenses incurred
by Tenant in connection with any
such sublease, to the extent
actually paid, and (B) the costs,
if any, incurred by Tenant in
preparing the sublease space for
occupancy, including cash
allowances IN LIEU thereof.
(iii) "Rent Per Square Foot" shall mean
the sum of the then Fixed Rent and
Additional Rent divided by the
rentable square feet of the Leased
Premises.
(iv) "Sublease Proceeds" shall mean the
product of (x) the Sublease Rent
Per Square Foot less the Rent Per
Square Foot, multiplied by (y) the
number of rentable square feet
constituting the space being
underlet.
(v) "Sublease Rent" shall mean any rent
or other consideration paid to
Tenant directly or indirectly, by
any subtenant, or any other amount
received by Tenant from or in
connection with any underletting
(including, but not limited to,
sums paid for the sale or rental,
or consideration received on
account of any contribution of
Tenant's property or sums paid in
connection with the supply of
electricity or
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HVAC, but excluding taxes paid by
reason of any services or material
being supplied, the actual costs of
office supplies (I.E., paper, pens,
folders and like items, excluding
furniture, computers, typewriters,
furnishings, equipment and
apparatus) provided by Tenant and
the actual salaries and wages paid
to receptionists and secretaries
supplied by Tenant).
(vi) "Sublease Rent per Square Foot"
shall mean the Sublease Rent
divided by the rentable square feet
of the space demised under a
sublease.
18. CONDITION OF THE LEASED PREMISES.
(a) Neither Landlord nor any of Landlord's agents have made
any representations or promises with respect to the physical condition of the
Building or the Leased Premises, the rents, expenses of operation or any other
matter or thing affecting or related to the Leased Premises except as herein
expressly set forth. Tenant has inspected the Leased Premises and is thoroughly
acquainted with their condition, and subject to the provisions of Article 2
hereof, agrees to take the same "as is" normal wear and tear excepted between
the date hereof and the Commencement Date. Landlord shall not be liable for any
latent defect in or to the Leased Premises.
(b) Notwithstanding the foregoing, Landlord covenants and
agrees that the heating, ventilation and air conditioning system serving the
Leased Premises and the bathrooms in the Leased Premises will be in good working
order on the Rent Commencement Date.
19. SURRENDER.
19.01 Upon the Expiration Date or other termination of the
Term of this Lease, Tenant shall quit and surrender to Landlord the Leased
Premises in broom-clean condition and in good order, ordinary wear and tear
which Tenant is not required to repair excepted, and Tenant shall remove its
property from the Leased Premises. If Tenant shall not quit and surrender the
Leased Premises as required hereby by the last date of the Term, then it shall
upon demand pay to Landlord as liquidated damages an amount equal to two (2)
times the Fixed Rent and Additional Rent which would have been payable for the
period of such holdover at the rental rate in effect on the last day of the
Term. The calculation of such liquidated damages is deemed by Landlord and
Tenant to be a reasonable one. Tenant hereby waives and agrees not to assert any
defense to such obligation to pay liquidated damages as prescribed in this
Section 19.01 based upon such liquidated damages being deemed a penalty,
unreasonable, unconscionable or otherwise against public policy. Tenant's
obligation to observe or perform its covenants shall survive the expiration or
earlier termination of the Term of this Lease. Anything to the contrary
notwithstanding, the acceptance of any Rent paid by Tenant pursuant to this
Section 19.01 shall not preclude Landlord from commencing and prosecuting a
holdover or summary eviction proceeding, and the preceding sentence shall be
deemed to be an "agreement expressly providing otherwise" within the meaning of
Section 223-c of the Real Property Law of the State of New York.
19.02 Subject to the provisions of Section 6.04 of this Lease,
after the expiration or earlier termination of the Term, any alterations,
additions, improvements or personal property remaining in the Leased Premises
shall conclusively be deemed to have been abandoned and Landlord may dispose of
the same in any manner and by any means whatsoever. Landlord shall be under no
obligation to account to Tenant for the disposition of such property or any
proceeds derived therefrom. With respect to any such alterations, additions,
improvements and personal property which pursuant to the terms hereof are to be
removed from the Leased
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Premises and are not so removed, Tenant shall reimburse Landlord within thirty
(30) days after demand therefor the reasonable cost of disposing or removing any
or all such alterations, additions, improvements and personal property by the
means selected by Landlord or such costs as may be imposed on Landlord by
Landlord for disposing of the same. Tenant's obligation to observe or perform
this covenant shall survive the expiration or earlier termination of the Term of
this Lease.
20. NO WAIVER.
The failure of Landlord or Tenant to seek redress for
violation of, or to insist upon the strict performance of any covenant or
condition of this Lease shall not prevent a subsequent act which would have
originally constituted a default from having all of the force and effect of an
original default. The receipt by Landlord or the payment by Tenant of Rent with
knowledge of any default on the part of the other shall not be deemed to be a
waiver of such default and no provision of this Lease shall be deemed to have
been waived by Landlord or Tenant unless such waiver is in writing, signed by
the party to be charged. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly amount of Rent due hereunder shall be deemed to be other
than on account of the earliest stipulated Rent nor shall any endorsement or
statement of any check or any letter accompanying any check or payment as Rent
be deemed an accord and satisfaction; and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
Rent or pursue any other remedy.
21. BROKERAGE.
Landlord and Tenant each represents and warrants to the other
that it dealt with no broker in connection with the Lease, except Jenel Realty
Services. Landlord and Tenant hereby agree to indemnify and hold the other
harmless from and against any claims, costs, expenses (including reasonable
legal fees) and other liabilities incurred by the other by reason of any claim
or action for a commission by any person or broker in connection herewith, with
whom the indemnifying party may have dealt. The provisions of this Article 21
shall survive the expiration or earlier termination of the Term of this Lease.
Landlord shall pay to the aforesaid named broker the commission due to it
pursuant to a separate agreement between Landlord and such broker but this
sentence shall not be construed as benefitting such broker or any other person
not a party to this Lease.
22. NOTICES.
All notices and other communications required to be given
under this Lease shall be in writing, signed by the party serving the notice or
other communication, and sent by overnight courier service (such as Federal
Express, UPS, DHL), registered or certified United States mail, return receipt
requested (except that Rent bills (as distinguished from notices under Section
14.01) which may be sent by first class mail), or by personal delivery to the
address of the party to whom given as set forth below; or to such other address
as either party may designate in writing in the manner herein prescribed. All
such notices and other communications shall be deemed effective upon receipt.
All such notices shall be sent to each party at the following addresses:
To Landlord:
24 West 40th St. LLC
c/o Jenel Management Corp.
275 Madison Avenue, Suite 702
New York, New York 10016
Attention: Michael Hirschhorn
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To Tenant:
Hotjobs.com, Ltd.
24 West 40th Street
New York, New York 10018
Attention: Legal Department
Receipt by a person authorized generally to accept or receive mail, deliveries
or service of process for either Landlord or Tenant of any notice hereunder
shall be deemed sufficient and effective delivery of any such notice. If either
party refuses to accept delivery of any notice, receipt of such notice shall be
deemed to have occurred upon such refusal.
23. CERTIFICATES.
Tenant and Landlord shall, within thirty (30) days after
demand, but not more frequently than six times per year, furnish to the other a
certificate, duly acknowledged, certifying (1) that this Lease is in full force
and effect, (2) that the certifying party knows of no default hereunder on the
part of the other, or if it has reason to believe that such a default exists,
the nature thereof in reasonable detail, (3) the amount of the Rent being paid,
(4) that this Lease has not been modified, or if it has been modified, setting
forth the terms and dates of such modifications, and (5) to such other matters
as may be reasonably requested by the other party.
24. ACCESS TO LEASED PREMISES.
Landlord and Landlord's agents and designees shall have a
right (but shall not be obligated) to enter upon the Leased Premises, in an
emergency at any time (provided Landlord attempts to first notify Tenant or its
principals by telephone, provided such telephone numbers have been supplied to
Landlord), and in other cases at reasonable times, after reasonable notice, to
examine the same and make such repairs and replacements to the Leased Premises
or to any other portion of the Building as may be required under the terms
hereof. Throughout the Term, Landlord shall have the right to enter the Leased
Premises at reasonable hours for the purpose of showing the same to prospective
purchasers or mortgagees of the Building, and during the last six months of the
Term, for the purpose of showing the same to prospective tenants.
25. QUIET ENJOYMENT.
Subject to the terms and provisions of this Lease, Landlord
covenants and agrees with Tenant that upon Tenant paying the Rent due hereunder
and observing and performing all of the other terms, covenants and conditions on
Tenant's part to be performed under this Lease, Landlord shall not interfere
(nor allow its agents and employees to interfere) with Tenant's quiet enjoyment
of the Leased Premises.
26. FORCE MAJEURE
26.01 Neither Landlord nor Tenant shall be liable for any
failure, delay or interruption in performing its obligations hereunder due to
causes or conditions beyond its control but nothing shall excuse the failure to
make any payment of Rent within the time heretofore prescribed for such payment
nor limit the liability of Tenant to Landlord pursuant hereto if, for any
reason, Tenant fails to perform any obligation hereunder which results in
liability of Landlord to any third party.
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26.02 No abatement, diminution or reduction of the Rent (or
any other charges) payable by Tenant shall be claimed by or allowed to Tenant
for any inconvenience, interruption, cessation or loss of business or other loss
caused directly or indirectly, by any present or future laws, rules,
requirements, orders, directions, ordinances or regulations of the United States
of America, or of the state, county or city governments or any other municipal,
governing, lawful authority whatsoever, or by priorities, rationing or
curtailment of labor or materials or by war or any matter or thing resulting
therefrom, or by any cause or condition beyond the control of Landlord, nor
shall this Lease be affected by any such causes or conditions.
26.03 If there shall be imposed upon Landlord or the Leased
Premises any form of limitation on the amount of Rent it may charge (or collect
from) Tenant by virtue of any statute, code or local ordinance or any rule,
regulation, program or policy promulgated thereunder, so that Landlord shall not
be entitled to collect all of the Rent reserved hereunder and to be paid by
Tenant, then this Lease shall continue in full force and effect and Tenant shall
pay to Landlord the maximum amount which may be paid as Rent, in accordance with
law; provided, however, that if and when any such law, code, local ordinance,
rule, regulation, program or policy shall terminate or expire, then Tenant
shall, forthwith, pay to Landlord the difference between (1) the amount of Rent
which would have been paid hereunder but for such law, code, ordinance, rule,
regulation, policy or program, and (2) the actual amount of Rent paid during the
duration of such Rent restriction.
27. SECURITY.
Tenant has deposited with Landlord the sum of five thousand
and no/100 ($5,000.00) dollars as security (the "Security") for the faithful
performance and observance by Tenant of the terms, provisions and conditions of
this Lease. In the event that Tenant defaults in respect of any of the terms,
provisions and conditions of this Lease, including, but not limited to, the
payment of Rent, Landlord may use, apply or retain the whole or any part of the
Security to the extent required for the payment of any Rent or any sum as to
which Tenant is in default or for any sum which Landlord may expend or may be
required to expend by reason of Tenant's default hereunder, including but not
limited to, any damages or deficiency in the re-letting of the Leased Premises.
In the event that Tenant shall fully and faithfully comply with all of the
terms, provisions, covenants and conditions of this Lease, the Security shall be
returned to Tenant after the Expiration Date (or sooner termination of the Term
in accordance with the provisions set forth herein) and after delivery of the
entire possession of the Leased Premises to Landlord. In the event of a sale of
the Building, Landlord shall have the right to transfer the Security to the
vendee and Landlord shall thereupon be released by Tenant from all liability for
the return of the Security and Tenant agrees to look to the new Landlord solely
for the return of the Security. Tenant covenants that it will not assign or
encounter or attempt to assign or encumber the Security and that neither
Landlord nor its successors or assigns shall be bound by any such assignment or
encumbrance.
28. TERMINATION RIGHT.
Landlord and Tenant shall each have the right to terminate
this Lease effective any time after July 31, 1999 upon ninety (90) days' written
notice to the other party (the "Termination Notice"). Upon the exercise of this
termination right by either party, this Lease and the estate demised hereunder
shall be deemed terminated effective ninety (90) days after receipt of the
Termination Notice by the non-exercising party, and this Lease shall be of no
further force and effect.
29. MISCELLANEOUS.
29.01 If any of the terms and provisions hereof are in
violation of or prohibited by any law, statute or ordinance of the State or City
of New York, or such term or provision is found to be unenforceable by
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any court of competent jurisdiction, then such term or provisions shall be of no
force and effect; provided, however, that all of the other terms and provisions
of this Lease shall continue in full force and effect.
29.02 Tenant irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of this Lease may be
brought in a court of the State of New York situated in New York County or the
United States District Court for the Southern District of New York; (ii)
consents to the jurisdiction of each such court in any such suit, action or
proceeding, and (iii) waives any objection which it may have that the venue
should not lie in a court described in clause (i) above. Tenant further agrees
that it has, by the execution of this Lease, waived any claim to sovereign
immunity or that any of the aforesaid courts lack jurisdiction with respect to
any matter arising under this Lease.
29.03 The captions or headings of each Article hereof are
inserted only as a matter of convenience and for reference and shall in no way
define, limit or describe the scope of this Lease or of any Article or section
hereof or the intent of any provision hereof.
29.04 This Lease shall inure to the benefit of and be binding
upon the respective successors and assigns of Landlord and Tenant; provided,
however, that no violations of the provisions of Article 17 shall operate to
vest any rights in any successor or assignee of Tenant.
29.05 This Lease shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
law principles.
29.06 This Lease contains the entire agreement between
Landlord and Tenant with respect to the Leased Premises and may not be
terminated orally or amended, except by an instrument executed by both parties.
29.07 Landlord and any successor in interest to Landlord shall
be under no personal liability with respect to any of the provisions of this
Lease, and if Landlord or any successor in interest to Landlord is in breach or
default with respect to its obligations under this Lease, Tenant shall look
solely to the equity of Landlord or such successor in interest in the Land and
Building of which the Leased Premises form a part for the satisfaction of
Tenant's remedies and in no event shall Tenant attempt to secure any personal
judgment against Landlord or against any successor in interest to Landlord or
against any partner, member, principal (disclosed or undisclosed), employee or
agent of Landlord or any successor in interest to Landlord by reason of such
default by Landlord or any successor in interest to Landlord.
29.08 If any of the Fixed Rent or Additional Rent payable
under the terms and provisions of this Lease shall be or become uncollectible,
reduced or required to be refunded because of any act or law enacted by a
governmental authority, Tenant shall enter into such agreement(s) and take such
other steps (without additional expense to Tenant) as Landlord may request and
as may be legally permissible to permit Landlord to collect the maximum rents
which from time to time during the continuance of such legal rent restriction
may be legally permissible (and not in excess of the amounts reserved therefor
under this Lease). Upon the termination of such legal rent restriction, (i) the
Fixed Rent and/or Additional Rent shall become and thereafter be payable in
accordance with the amounts reserved herein for the periods following such
termination, and (ii) Tenant shall pay to Landlord promptly upon being billed,
to the maximum extent legally permissible, an amount equal to (x) the Fixed Rent
and/or Additional Rent which would have been paid pursuant to this Lease but for
such legal rent restriction less (y) the rents paid by Tenant during the period
such legal rent restriction was in effect.
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IN WITNESS WHEREOF, the parties have caused this Lease to be
executed as of the day and year first above written.
24 WEST 40TH ST. L.L.C.
By /s/
----------------------------------
Name:
Title:
HOTJOBS.COM, LTD.
By /s/
----------------------------------
Name:
Title:
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EXHIBIT A
DIAGRAM OF LEASED PREMISES
Not included herein.
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EXHIBIT B
FORM OF TERM COMMENCEMENT AGREEMENT
-----------------------------------
, 1999
Re: Lease Agreement, dated March __, 1999 between 24 West
40th St. LLC as Landlord, and Hotjobs.com, Ltd., as
Tenant;
PREMISES: TENTH (10TH) FLOOR, 24 WEST 40TH
STREET, NEW YORK, NEW YORK
Dear Sirs and Mesdames:
This agreement is being entered into pursuant to Article 5 of the
above-referenced Lease Agreement (the "Lease"). It is agreed that the
Commencement Date of the Lease is , 1999.
Hotjobs.com, Ltd. (the "Tenant") acknowledges and represents that:
(a) Exclusive possession of the Leased Premises (as defined in
the Lease) has been delivered to Tenant in the condition
prescribed by Article 2 and Article 18 of the Lease;
(b) 24 West 40th St. LLC has performed all of its obligations
under the Lease which have accrued or which were to have been
performed through the date hereof; and
(c) The Lease is in full force and effect in accordance with
its terms and provisions.
Very truly yours,
HOTJOBS.COM, LTD.
By:
--------------------------
ACCEPTED AND AGREED TO BY:
24 WEST 40TH ST. LLC
By:
--------------------------
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EXHIBIT C
FORM OF GUARANTEE
GUARANTEE made this ____ day of March, 1999, jointly and
severally, by OTEC, INC., a New Jersey corporation ("OTEC") having an office for
the conduct of business at 24 West 40th Street, New York, New York 10018, and
RBL AGENCY, LTD., a New York corporation ("RBL") having an office for the
conduct of business at 24 West 40th Street, New York, New York 10018. OTEC and
RBL shall be collectively referred to as the "Guarantors" and individually, as a
"Guarantor".
W I T N E S S E T H :
24 West 40th St. LLC (hereinafter referred to as "Landlord")
and Hotjobs.com, Ltd. (hereinafter referred to as "Tenant") have entered into
that certain Lease Agreement dated March ___, 1999 (hereinafter referred to as
the "Lease") for the 10th floor of the building located at 24 West 40th Street,
New York, New York. As an inducement to Landlord's agreeing to enter into such
Lease, the Guarantors agreed to guarantee unconditionally the performance by
Tenant of certain of Tenant's obligations under the Lease, including the payment
by Tenant of all Rent thereunder.
Terms not otherwise defined herein shall have the meanings
given such terms in the Lease.
NOW, THEREFORE, in consideration of the premises herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged by the Guarantors, the Guarantors, jointly and severally,
covenant, agree, represent and warrant to Landlord as follows:
1. REPRESENTATIONS AND WARRANTIES.
1.1 REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor represents and warrants to Landlord, that:
(a) The Guarantor has the power to enter into and
perform this Guarantee.
(b) Neither this Guarantee nor the execution, delivery
and performance hereof shall violate any statute, ordinance, regulation,
court order or decree or order or decree of any other governmental authority
or agency or any other agreement to which the Guarantor is subject.
(c) The Guarantor is not and by the execution and
delivery hereof shall not then become insolvent as defined under Section
101(32) of the Federal Bankruptcy Code (11 U.S.C. ss.101(32)).
(d) This Guarantee constitutes a valid and binding
obligation of the Guarantor and is enforceable in accordance with its terms.
(e) No governmental approvals or consents are required
to be obtained to authorize the execution, delivery or performance of the
Guarantor's obligations pursuant to this Guarantee.
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(f) 100% of the outstanding shares of OTEC are owned
collectively by the two largest shareholders of Tenant; 100% of the
outstanding shares of RBL are owned collectively by the two largest
shareholders of Tenant.
(g) All representations and warranties made to
Landlord herein are factually correct and there has been no omission of any
fact which by its inclusion in any representation or warranty would
materially alter the accuracy, truthfulness or meaning of any such
representation or warranty.
1.2 MATERIALITY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Guarantors herein is deemed to be
material to inducing Landlord to enter into the Lease and to perform Landlord's
obligations thereunder. The Guarantors acknowledge that Landlord by virtue of
entering into the Lease and performing its obligations thereunder has acted and
changed and shall hereafter act and change its position in reliance of this
Guarantee and the Guarantors' representations and warranties made herein.
2. GUARANTEE OF TENANT'S OBLIGATIONS.
2.1 OBLIGATIONS GUARANTEED.
(a) The Guarantors hereby irrevocably, absolutely and
unconditionally, jointly and severally, guarantee to Landlord the full and
timely payment when due of all Rent and other payments due to Landlord under
the Lease. Such other payments shall include, without limitation, (i) the
cost of discharging of record any mechanic's, materialman's or other liens,
charges or orders for the payment of money filed against the Building or the
Leased Premises because of any act or omission (or alleged act or omission)
of Tenant or any contractor, subcontractor, employee or agent of Tenant, and
(ii) Landlord's unamortized costs of (x) any brokerage commissions actually
paid by Landlord in connection with the Lease and (y) the free rent period
granted to Tenant under the Lease.
(b) Without limiting the Guarantors' obligations
pursuant to paragraph (a) of this Section 2.1, the Guarantors further
irrevocably, absolutely and unconditionally, jointly and severally, guarantee
to Landlord the full and timely performance of the following obligations
under the Lease (the "Guaranteed Obligations"):
(i) Tenant's obligation to vacate the Leased
Premises upon the expiration or earlier termination of the term of the Lease;
and
(ii) Tenant's obligation, upon Tenant's vacating
of the Leased Premises, to remove Tenant's property therefrom and to
surrender the Leased Premises to Landlord in the condition specified in
Article 19 and Section 6.04 of the Lease.
(c) Each and every default in the payment of Rent or
in the performance of any of the Guaranteed Obligations shall give rise to a
separate cause of action hereunder, and separate suits may be brought
hereunder as the cause of action arises.
2.2 GUARANTEE UNCONDITIONAL, IRREVOCABLE, ABSOLUTE AND
CONTINUING. The obligations
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of the Guarantors under this Guarantee shall be unconditional, irrevocable and
absolute and shall continue and remain in full force and effect until all of the
Guaranteed Obligations and the payment of all Rent under the Lease, have been
satisfied in their entirety and all other sums due to Landlord pursuant to this
Guarantee have been paid in full.
2.3 CONTINUED VALIDITY OF THIS GUARANTEE. To the fullest
extent permitted by law, the obligations of the Guarantors hereunder shall be
valid and enforceable under all circumstances whatsoever and in furtherance but
not in limitation thereof, shall not be affected, modified, released, or
impaired by any state of facts or the happening from time to time of any event,
including, without limitation, any one or more of the following whether or not
with notice to or the consent of the Guarantors:
(a) The irregularity, illegality or unenforceability
of, or any defect in the Lease.
(b) Any present or future law or order of any
government (de jure or de facto) or of any agency thereof purporting to
reduce, amend or otherwise affect the Lease.
(c) The compromise, settlement, release, extension,
indulgence, change, modification, amendment (including any increase in Rent
or extension of the term thereof) of any or all of the obligations, covenants
or agreements of Tenant pursuant to the Lease; provided, however, that if
Tenant's interest in and to the Lease is assigned to any person or entity in
accordance with the terms and provisions of the Lease or with Landlord's
consent, then unless otherwise agreed to by the Guarantors, the obligations
of the Guarantors shall not extend to (i) the payment of any rent in excess
of the Rent calculated under the terms of the Lease as the same may have been
modified while Tenant or another person or entity related to the Guarantors
was Tenant thereunder or (ii) the performance of any other obligation beyond
the stated expiration date of the term of the Lease or the expiration of any
renewal thereof pursuant to the terms of the Lease as the same may have been
modified while Tenant or another person or entity related to the Guarantors
was Tenant thereunder.
(d) The failure to give notice to the Guarantors of
the occurrence of any default under the terms and provisions of the Lease.
(e) The actual or purported assignment of any of the
obligations, covenants and agreements contained in this Guarantee, except an
assignment consented to by Landlord.
(f) The waiver of the payment, performance or
observance by Tenant of any of the obligations, conditions, covenants or
agreements or any or all of them contained in the Lease, including the
obligation to pay Rent.
(g) The receipt and acceptance by Landlord of any sums
on account of Rent irrespective of any dispute which may then be or
theretofore had been ensuing between Landlord and Tenant.
(h) The extension of the time for payment of any Rent.
(i) Any failure, omission, delay or lack of action on
the part of Landlord or any other person to enforce, assert or exercise any
right, power or remedy conferred upon it under the Lease.
(j) The voluntary commencement or the existence of an
involuntary case or proceeding under the United States Bankruptcy Code or
under any state or foreign bankruptcy, insolvency or similar statute
affecting Tenant; the liquidation, dissolution, merger, consolidation, sale
or other disposition of
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all or substantially all the assets of Tenant; the marshaling of Tenant's assets
and liabilities; any receivership, insolvency, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors or
readjustment of debts in respect of Tenant in its capacity as a debtor or
obligor; or other similar events or proceedings affecting Tenant or any
allegation or contest of the validity of this Guarantee or the Lease in any such
proceeding; it being specifically understood, consented and agreed to that this
Guarantee shall remain and continue in full force and effect and shall be
enforceable against the Guarantors to the same extent and with the same force
and effect as if such events and proceedings had not been instituted; and it is
the intent and purpose of this Guarantee that the Guarantors shall and do hereby
waive all rights and benefits which might accrue to the Guarantors by reason of
any such proceedings.
(k) Any impairment, whether by negligence or
otherwise, of any rights of subrogation of the Guarantors which may be found
to exist.
(l) The release, substitution or replacement, whether
or not in accordance with the terms of the Lease, of any property subject
thereto or any re-delivery, repossession, surrender or destruction of any
such property, in whole or in part.
(m) The lawful termination of the Lease by act of
Landlord due to a default thereunder by Tenant or by operation of law or the
exercise of any other right or remedy under the Lease by Landlord.
2.4 WAIVER OF NOTICE OF ACCEPTANCE. The Guarantors hereby
expressly waive notice from Landlord of its acceptance and reliance on this
Guarantee. This Guarantee shall become effective immediately upon delivery of an
executed counterpart hereof to Landlord.
3. WAIVERS AND RESTRICTIONS IMPOSED UPON THE GUARANTORS.
3.1 WAIVER OF TRIAL BY JURY. EACH GUARANTOR HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION BETWEEN LANDLORD AND THE
GUARANTORS (OR EITHER OF THEM) IN RESPECT OF ANY MATTER ARISING OUT OF THIS
GUARANTEE.
3.2 RESTRICTIONS ON THE GUARANTORS. Each Guarantor agrees not
to dispose of any substantial part of his property, business or assets remaining
after the execution and delivery of this Guarantee without fair consideration.
Each Guarantor agrees not to seek contribution from any other Guarantor until
all the obligations hereunder have been fully satisfied. If any amount shall
nevertheless be paid to a Guarantor by Tenant or another Guarantor, such amount
shall be held in trust for the benefit of Landlord and shall forthwith be paid
to Landlord to be credited and applied to the obligations of Tenant, whether
matured or unmatured. The provisions of this Section 3.2 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4. MISCELLANEOUS PROVISIONS.
4.1 PREFERENCES, ETC. If after receipt of any payment
hereunder applied (or intended to be applied) to the payment of, all or any part
of any sums guaranteed hereunder, Landlord is compelled to surrender such
payment or proceeds to any person because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference,
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<PAGE>
fraudulent conveyance, impermissible set off or a diversion of trust funds, then
the obligations or part thereof intended to be satisfied shall be reinstated and
continue and this Guarantee shall continue in full force as if such payment or
proceeds had not been received by Landlord, notwithstanding any revocation
thereof or the cancellation of the Lease, any note or other instrument
evidencing any obligation of Tenant or otherwise; and the Guarantors shall be
liable to pay to Landlord, and hereby indemnify Landlord and hold Landlord
harmless for, the amount of such payment or proceeds so surrendered and all
expenses (including all reasonable attorneys' fees, court costs and expenses
attributable thereto) incurred by Landlord in the defense of any claim made
against Landlord that any payment or proceeds received by Landlord in respect of
all or any part of such sums guaranteed hereunder must be surrendered, unless
Tenant pays to Landlord the amount which Landlord is compelled to surrender and
such payment is not similarly subject to being avoided, invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
fraudulent conveyance, impermissible set off or a diversion of trust funds and
Landlord is not compelled to surrender the amount of Tenant's payment. The
provisions of this Section 4.1 shall survive the termination of this Guarantee,
and any satisfaction and discharge of Tenant by virtue of any payment, court
order or any federal or state law.
4.2 EXPENSES. The Guarantors agree to pay all reasonable
costs, fees, commissions and expenses (including, without limitation, all
reasonable attorneys' fees and disbursements) which may be incurred by Landlord
in enforcing or attempting to enforce this Guarantee following any default on
the part of either of the Guarantors hereunder, whether the same shall be
enforced by suit or otherwise.
4.3 REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other available remedy
given under this Guarantee or hereafter existing at law or in equity. No delay
or failure to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
4.4 NO ORAL AMENDMENT OR TERMINATION. The liability of the
Guarantors hereunder shall be unconditional and shall not be in any manner
affected by any indulgence whatsoever granted or consented to by the holder
hereof, including, but not limited to any extension of time, renewal, waiver or
other modification. Any failure of Landlord to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time thereafter. Landlord or any holder
may accept partial payments, even though marked "payment in full" or containing
words of similar import or other conditions, without waiving any of its rights.
No amendment, modification or waiver of any provision of this Guarantee shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Landlord, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Guarantee cannot be changed or terminated orally or by estoppel or
waiver or by any alleged oral modification regardless of any claimed partial
performance referable thereto.
4.5 SEVERABILITY. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or sections of this Guarantee shall not
affect the validity or enforceability of the remaining portions of this
Guarantee, or any part thereof.
4.6 JOINT AND SEVERAL LIABILITY. Notwithstanding anything to
the contrary contained herein, the representations, warranties, covenants and
agreements made by the Guarantors herein, and the liability of Guarantors
hereunder, are joint and several.
4.7 APPLICABLE LAW. This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles.
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4.8 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding
upon, and be enforceable against the Guarantors and their respective heirs and
legal representatives and shall inure to the benefit of Landlord, its successors
or assigns.
4.9 HEADINGS AND CAPTIONS. The existence herein of article and
section headings or captions is for convenience only and no such headings or
captions will be used for the purposes of interpreting or construing the meaning
of any term or provision hereof.
4.10 ENTIRE AGREEMENT. This Guarantee sets forth the entire
agreement and obligations of the Guarantors to Landlord and supersedes any and
all other understandings (whether oral or written) between them.
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IN WITNESS WHEREOF, the Guarantors have executed this
Guarantee as of the date first above written.
OTEC, INC.
By:
-------------------------------
RBL AGENCY, LTD.
By:
-------------------------------
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this day of March, 1999, before me personally came
______________, to me known and who, being by me duly sworn, did depose and say
that s/he is the __________________ of OTEC, INC., the corporation described in
and which executed the above instrument; and that s/he executed the foregoing
instrument by order of the Board of Directors of said corporation.
----------------------------------
Notary Public
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this day of March, 1999, before me personally came
_____________________, to me known and who, being by me duly sworn, did depose
and say that s/he is the __________________ of RBL AGENCY, LTD., the company
described in and which executed the above instrument, and that s/he executed the
foregoing instrument on behalf of said company.
----------------------------------
Notary Public
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Exhibit 10.12
GUARANTEE
GUARANTEE made this 16th day of April, 1999, jointly and
severally, by OTEC, INC., a New Jersey corporation ("OTEC") having an office for
the conduct of business at 24 West 40th Street, New York, New York 10018, and
RBL AGENCY, LTD., a New York corporation ("RBL") having an office for the
conduct of business at 24 West 40th Street, New York, New York 10018. OTEC and
RBL shall be collectively referred to as the "Guarantors" and individually, as a
"Guarantor".
W I T N E S S E T H :
24 West 40th St. LLC (hereinafter referred to as "Landlord") and
Hotjobs.com, Ltd. (hereinafter referred to as "Tenant") have entered into that
certain Lease Agreement dated April 16, 1999 (hereinafter referred to as the
"Lease") for the 14th and 16th floors of the building located at 24 West 40th
Street, New York, New York. As an inducement to Landlord's agreeing to enter
into such Lease, the Guarantors agreed to guarantee unconditionally the
performance by Tenant of certain of Tenant's obligations under the Lease,
including the payment by Tenant of all Rent thereunder.
Terms not otherwise defined herein shall have the meanings given
such terms in the Lease.
NOW, THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by the Guarantors, the Guarantors, jointly and severally, covenant,
agree, represent and warrant to Landlord as follows:
1. REPRESENTATIONS AND WARRANTIES.
1.1 REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor represents and warrants to Landlord, that:
(a) The Guarantor has the power to enter into and perform
this Guarantee.
(b) Neither this Guarantee nor the execution, delivery and
performance hereof shall violate any statute, ordinance, regulation, court order
or decree or order or decree of any other governmental authority or agency or
any other agreement to which the Guarantor is subject.
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(c) The Guarantor is not and by the execution and delivery
hereof shall not then become insolvent as defined under Section 101(32) of the
Federal Bankruptcy Code (11 U.S.C. Section 101(32)).
(d) This Guarantee constitutes a valid and binding obligation
of the Guarantor and is enforceable in accordance with its terms.
(e) No governmental approvals or consents are required to be
obtained to authorize the execution, delivery or performance of the Guarantor's
obligations pursuant to this Guarantee.
(f) 100% of the outstanding shares of OTEC are owned
collectively by the two largest shareholders of Tenant; 100% of the outstanding
shares of RBL are owned collectively by the two largest shareholders of Tenant.
(g) All representations and warranties made to Landlord
herein are factually correct and there has been no omission of any fact which by
its inclusion in any representation or warranty would materially alter the
accuracy, truthfulness or meaning of any such representation or warranty.
1.2 MATERIALITY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Guarantors herein is deemed to be
material to inducing Landlord to enter into the Lease and to perform Landlord's
obligations thereunder. The Guarantors acknowledge that Landlord by virtue of
entering into the Lease and performing its obligations thereunder has acted and
changed and shall hereafter act and change its position in reliance of this
Guarantee and the Guarantors' representations and warranties made herein.
2. GUARANTEE OF TENANT'S OBLIGATIONS.
2.1 OBLIGATIONS GUARANTEED.
(a) The Guarantors hereby irrevocably, absolutely and
unconditionally, jointly and severally, guarantee to Landlord the full and
timely payment when due of all Rent and other payments due to Landlord under the
Lease. Such other payments shall include, without limitation, (i) the cost of
discharging of record any mechanic's, materialman's or other liens, charges or
orders for the payment of money filed against the Building or the Leased
Premises because of any act or omission (or alleged act or omission) of Tenant
or any contractor, subcontractor, employee or agent of Tenant, and (ii)
Landlord's unamortized costs of (x) any brokerage commissions actually paid by
Landlord in connection with the Lease and (y) the free rent period granted to
Tenant under the Lease.
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(b) Without limiting the Guarantors' obligations pursuant to
paragraph (a) of this Section 2.1, the Guarantors further irrevocably,
absolutely and unconditionally, jointly and severally, guarantee to Landlord the
full and timely performance of the following obligations under the Lease (the
"Guaranteed Obligations"):
(i) Tenant's obligation to vacate the Leased Premises
upon the expiration or earlier termination of the term of the Lease; and
(ii) Tenant's obligation, upon Tenant's vacating of the
Leased Premises, to remove Tenant's property therefrom and to surrender the
Leased Premises to Landlord in the condition specified in Article 19 and Section
6.04 of the Lease.
(c) Each and every default in the payment of Rent or in the
performance of any of the Guaranteed Obligations shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as the
cause of action arises.
2.2 GUARANTEE UNCONDITIONAL, IRREVOCABLE, ABSOLUTE AND
CONTINUING. The obligations of the Guarantors under this Guarantee shall be
unconditional, irrevocable and absolute and shall continue and remain in full
force and effect until all of the Guaranteed Obligations and the payment of all
Rent under the Lease, have been satisfied in their entirety and all other sums
due to Landlord pursuant to this Guarantee have been paid in full.
2.3 CONTINUED VALIDITY OF THIS GUARANTEE. To the fullest extent
permitted by law, the obligations of the Guarantors hereunder shall be valid and
enforceable under all circumstances whatsoever and in furtherance but not in
limitation thereof, shall not be affected, modified, released, or impaired by
any state of facts or the happening from time to time of any event, including,
without limitation, any one or more of the following whether or not with notice
to or the consent of the Guarantors:
(a) The irregularity, illegality or unenforceability of, or
any defect in the Lease.
(b) Any present or future law or order of any government (de
jure or de facto) or of any agency thereof purporting to reduce, amend or
otherwise affect the Lease.
(c) The compromise, settlement, release, extension,
indulgence, change, modification, amendment (including any increase in Rent or
extension of the term thereof) of any or all of the obligations, covenants or
agreements of Tenant pursuant to the Lease; provided, however, that if Tenant's
interest in and to the Lease is assigned to any person or entity in accordance
with the terms and provisions of the Lease or with Landlord's consent, then
unless otherwise agreed to by the Guarantors, the obligations of the Guarantors
shall not extend to (i)
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the payment of any rent in excess of the Rent calculated under the terms of the
Lease as the same may have been modified while Tenant or another person or
entity related to the Guarantors was Tenant thereunder or (ii) the performance
of any other obligation beyond the stated expiration date of the term of the
Lease or the expiration of any renewal thereof pursuant to the terms of the
Lease as the same may have been modified while Tenant or another person or
entity related to the Guarantors was Tenant thereunder.
(d) The failure to give notice to the Guarantors of the
occurrence of any default under the terms and provisions of the Lease.
(e) The actual or purported assignment of any of the
obligations, covenants and agreements contained in this Guarantee, except an
assignment consented to by Landlord.
(f) The waiver of the payment, performance or observance by
Tenant of any of the obligations, conditions, covenants or agreements or any or
all of them contained in the Lease, including the obligation to pay Rent.
(g) The receipt and acceptance by Landlord of any sums on
account of Rent irrespective of any dispute which may then be or theretofore had
been ensuing between Landlord and Tenant.
(h) The extension of the time for payment of any Rent.
(i) Any failure, omission, delay or lack of action on the
part of Landlord or any other person to enforce, assert or exercise any right,
power or remedy conferred upon it under the Lease.
(j) The voluntary commencement or the existence of an
involuntary case or proceeding under the United States Bankruptcy Code or under
any state or foreign bankruptcy, insolvency or similar statute affecting Tenant;
the liquidation, dissolution, merger, consolidation, sale or other disposition
of all or substantially all the assets of Tenant; the marshaling of Tenant's
assets and liabilities; any receivership, insolvency, assignment for the benefit
of creditors, reorganization, arrangement, composition with creditors or
readjustment of debts in respect of Tenant in its capacity as a debtor or
obligor; or other similar events or proceedings affecting Tenant or any
allegation or contest of the validity of this Guarantee or the Lease in any such
proceeding; it being specifically understood, consented and agreed to that this
Guarantee shall remain and continue in full force and effect and shall be
enforceable against the Guarantors to the same extent and with the same force
and effect as if such events and proceedings had not been instituted; and it is
the intent and purpose of this Guarantee that the Guarantors shall and do hereby
waive all rights and benefits which might accrue to the Guarantors by reason of
any such proceedings.
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<PAGE>
(k) Any impairment, whether by negligence or otherwise, of
any rights of subrogation of the Guarantors which may be found to exist.
(l) The release, substitution or replacement, whether or not
in accordance with the terms of the Lease, of any property subject thereto or
any re-delivery, repossession, surrender or destruction of any such property, in
whole or in part.
(m) The lawful termination of the Lease by act of Landlord
due to a default thereunder by Tenant or by operation of law or the exercise of
any other right or remedy under the Lease by Landlord.
2.4 WAIVER OF NOTICE OF ACCEPTANCE. The Guarantors hereby
expressly waive notice from Landlord of its acceptance and reliance on this
Guarantee. This Guarantee shall become effective immediately upon delivery of an
executed counterpart hereof to Landlord.
3. WAIVERS AND RESTRICTIONS IMPOSED UPON THE GUARANTORS.
3.1 WAIVER OF TRIAL BY JURY. EACH GUARANTOR HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY LITIGATION BETWEEN LANDLORD AND THE
GUARANTORS (OR EITHER OF THEM) IN RESPECT OF ANY MATTER ARISING OUT OF THIS
GUARANTEE.
3.2 RESTRICTIONS ON THE GUARANTORS. Each Guarantor agrees not
to dispose of any substantial part of his property, business or assets remaining
after the execution and delivery of this Guarantee without fair consideration.
Each Guarantor agrees not to seek contribution from any other Guarantor until
all the obligations hereunder have been fully satisfied. If any amount shall
nevertheless be paid to a Guarantor by Tenant or another Guarantor, such amount
shall be held in trust for the benefit of Landlord and shall forthwith be paid
to Landlord to be credited and applied to the obligations of Tenant, whether
matured or unmatured. The provisions of this Section 3.2 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4. MISCELLANEOUS PROVISIONS.
4.1 PREFERENCES, ETC. If after receipt of any payment hereunder
applied (or intended to be applied) to the payment of, all or any part of any
sums guaranteed hereunder, Landlord is compelled to surrender such payment or
proceeds to any person because such payment or application of proceeds is or may
be avoided, invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, fraudulent conveyance, impermissible set off or a
diversion of trust funds, then the obligations or part thereof intended to be
satisfied
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shall be reinstated and continue and this Guarantee shall continue in full force
as if such payment or proceeds had not been received by Landlord,
notwithstanding any revocation thereof or the cancellation of the Lease, any
note or other instrument evidencing any obligation of Tenant or otherwise; and
the Guarantors shall be liable to pay to Landlord, and hereby indemnify Landlord
and hold Landlord harmless for, the amount of such payment or proceeds so
surrendered and all expenses (including all reasonable attorneys' fees, court
costs and expenses attributable thereto) incurred by Landlord in the defense of
any claim made against Landlord that any payment or proceeds received by
Landlord in respect of all or any part of such sums guaranteed hereunder must be
surrendered, unless Tenant pays to Landlord the amount which Landlord is
compelled to surrender and such payment is not similarly subject to being
avoided, invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, fraudulent conveyance, impermissible set off or a
diversion of trust funds and Landlord is not compelled to surrender the amount
of Tenant's payment. The provisions of this Section 4.1 shall survive the
termination of this Guarantee, and any satisfaction and discharge of Tenant by
virtue of any payment, court order or any federal or state law.
4.2 EXPENSES. The Guarantors agree to pay all reasonable costs,
fees, commissions and expenses (including, without limitation, all reasonable
attorneys' fees and disbursements) which may be incurred by Landlord in
enforcing or attempting to enforce this Guarantee following any default on the
part of either of the Guarantors hereunder, whether the same shall be enforced
by suit or otherwise.
4.3 REMEDIES NOT EXCLUSIVE. No remedy herein conferred upon or
reserved to Landlord is intended to be exclusive of any other available remedy
given under this Guarantee or hereafter existing at law or in equity. No delay
or failure to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
4.4 NO ORAL AMENDMENT OR TERMINATION. The liability of the
Guarantors hereunder shall be unconditional and shall not be in any manner
affected by any indulgence whatsoever granted or consented to by the holder
hereof, including, but not limited to any extension of time, renewal, waiver or
other modification. Any failure of Landlord to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time thereafter. Landlord or any holder
may accept partial payments, even though marked "payment in full" or containing
words of similar import or other conditions, without waiving any of its rights.
No amendment, modification or waiver of any provision of this Guarantee shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Landlord, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. This Guarantee cannot be changed or terminated orally or by estoppel or
waiver or by any alleged oral modification regardless of any claimed partial
performance referable thereto.
6
<PAGE>
4.5 SEVERABILITY. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or sections of this Guarantee shall not
affect the validity or enforceability of the remaining portions of this
Guarantee, or any part thereof.
4.6 JOINT AND SEVERAL LIABILITY. Notwithstanding anything to the
contrary contained herein, the representations, warranties, covenants and
agreements made by the Guarantors herein, and the liability of Guarantors
hereunder, are joint and several.
4.7 APPLICABLE LAW. This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflicts of laws principles.
4.8 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon,
and be enforceable against the Guarantors and their respective heirs and legal
representatives and shall inure to the benefit of Landlord, its successors or
assigns.
4.9 HEADINGS AND CAPTIONS. The existence herein of article and
section headings or captions is for convenience only and no such headings or
captions will be used for the purposes of interpreting or construing the meaning
of any term or provision hereof.
4.10 ENTIRE AGREEMENT. This Guarantee sets forth the entire
agreement and obligations of the Guarantors to Landlord and supersedes any and
all other understandings (whether oral or written) between them.
7
<PAGE>
IN WITNESS WHEREOF, the Guarantors have executed this Guarantee as
of the date first above written.
OTEC, INC.
By: /s/
------------------------------
Name:
Title:
RBL AGENCY, LTD.
By: /s/
------------------------------
Name:
Title:
8
<PAGE>
ACKNOWLEDGMENT FOR OTEC, INC.
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On the _____ day of April, 1999, before me, the undersigned, a Notary
Public in and for said State, personally appeared Richard Johnson, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
/s/
--------------------------------------------
Notary Public
ACKNOWLEDGMENT FOR RBL AGENCY, LTD.
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On the _____ day of April, 1999, before me, the undersigned, a Notary
Public in and for said State, personally appeared Richard Johnson, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
/s/
--------------------------------------------
Notary Public
9
<PAGE>
EXHIBIT 10.14
THE DIME SAVINGS BANK
OF NEW YORK, FSB
October 13, 1998
HOTJOBS.COM, LTD.
24 West 40th Street
New York, New York 10018
Re: LINE OF CREDIT
Gentlemen:
We are pleased to advise you that we have approved a line of credit of
up to $500,000, outstanding at any one time (the "Line of Credit") for
HOTJOBS.COM, LTD. (the "Borrower"). The terms "we", "us", "our",
"undersigned" or "Bank" as used herein shall mean The Dime Savings Bank of
New York FSB and its successors and assigns. The following general terms and
conditions will apply:
I. TERM AND PAYMENTS: On Demand
INTEREST AND RATE: Reference Rate (as defined in the Demand Grid Note)
plus one percent (1%).
INDIVIDUAL GUARANTORS: Richard Johnson and Bennett Carroccio.
CORPORATE GUARANTORS: OTEC Consulting, Inc. RBL Agency, Ltd.
and OTEC, Inc.
COLLATERAL: See attached Exhibit A
AVAILABILITY: Up to Eighty (80%) percent of Eligible Receivables
(as defined below).
LOAN DOCUMENTS: See Section VI below. The Loan Documents provide
requirements for covenants, representations and
warranties and for the granting of liens and
security interests in the Collateral in our favor.
LINE OF CREDIT: At no time shall the principal
<PAGE>
amount of the loans to Borrower exceed $500,000.
As used herein, "Eligible Receivables" shall mean all accounts
receivable which arise in each Borrower's ordinary course of business, are
not more than ninety (90) days past due, and are not subject to any dispute,
offset, defines or counterclaim and represent credit worthy account debtors
which are satisfactory to us at all times, in our sole discretion.
II. Borrowings under the Line of Credit shall be evidenced by a Demand Grid
Note executed by the Borrower. Under the Line of Credit, borrowings may be
made from time to time and shall be repayable on demand, but may be prepaid
in whole or in part with accrued interest to the date of prepayment. Any
amounts outstanding shall bear interest, payable monthly in arrears, at a
variable rate per annum equal to our Reference Rate plus one percent (1%),
all as more fully set forth in the Demand Grid Note.
III. This letter constitutes an expression of our intent only based upon
information the Borrower, the Corporate Guarantors and the Individual
Guarantors have submitted to us. Any obligation to lend will arise only upon
the satisfactory preparation, execution and delivery of documentation in
form and substance satisfactory to us, including, but not limited to, the
terms set forth and below.
THE CONTINUING AVAILABILITY OF THE LINE OF CREDIT IS AT ALL TIMES
SUBJECT TO OUR CONTINUING SATISFACTION, AS DETERMINED BY US IN OUR SOLE AND
ABSOLUTE DISCRETION, WITH THE FINANCIAL CONDITION OF THE BORROWER AND ITS
COMPLIANCE, AND THAT OF EACH OTHER PARTY EXECUTING AND DELIVERING DOCUMENTS
TO US HEREUNDER OR OTHERWISE IN CONNECTION WITH THE LINE OF CREDIT, WITH THE
TERMS AND PROVISIONS OF THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS
REFERRED TO HEREIN.
IV. In addition, the continuing availability of the Line of Credit is
subject to the Borrower's furnishing to us: (i) within one hundred twenty
(120) days after the end of each fiscal year the annual financial statements
for Borrower prepared by the regular accountants of the Borrower on a review
basis as at the end of such annual period, including a balance sheet and
related income and cash flows statements; (ii) within one hundred twenty
(120) days after the end of each calendar year, a personal financial
statement of each Individual Guarantor (on an individual basis or jointly
with his or her spouse as the case may be); (iii) within fifteen (15) days
after the end of each calendar month, a statement prepared by the management
of the Borrower showing the aging of the accounts receivable of Borrower; and
(iv) such other information, including interim financial statements and
projections, as we may request from time to time. All statements and reports
shall be in form, scope and substance satisfactory to us and shall be
accompanied by a certification of Borrower's president or chief financial
-2-
<PAGE>
officer that all statements and reports are true, correct and complete.
The Borrower hereby agrees that we shall at any time during each
calendar year be permitted to make one or more field audits of Borrowers'
business, the Collateral and its locations, which shall be paid for by the
Borrowers at the per diem rate of $750 per person.
V. All payments of principal, interest and fees payable by the Borrower
under the Line of Credit shall be made in immediately available funds at our
office at 589 Fifth Avenue, New York, New York 10017 and may be charged at
our discretion to any account of the Borrower maintained with us.
VI. The extension of the Line of Credit to the Borrower, on the terms set
forth herein, is further subject to our receipt in form, scope and substance
satisfactory to us of (a) signature cards for the authorized signatories of
Borrower; (b) an executed copy of our Demand Grid Note executed by the
Borrower; (c) an executed copy of our standard form of Continuing General
Security Agreement by the Borrower covering the Collateral owned by Borrower,
together with signed copies of such UCC financing statements as we may
require; (d) executed copies of a Guaranty and Security Agreement by each
Corporate Guarantor; (e) executed copies of a Guaranty and Security Agreement
by each of the Individual Guarantors; (f) certified copies of resolutions or
other authorization of the Borrower authorizing the execution, delivery and
performance of all of the Loan Documents and other related documentation and
the transactions contemplated herein; (g) certified copies of the
organizational documents of the Borrower, as amended; (h) evidence that we
have been added as a loss payee and additional insured on all policies of
insurance of the Borrower; and (i) such other documentation as we shall
require.
VII. NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT
OR ANY LOAN DOCUMENT, NOR CONSENT TO ANY DEPARTURE BY US THEREFROM SHALL BE
EFFECTIVE, IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME SHALL BE IN
WRITING AND SIGNED BY US AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE
ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.
VIII. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York. To the extent any of the terms or
provisions of this Agreement conflict with those contained in the Demand Grid
Note or any of the Loan Documents, the terms and provisions of such Demand
Grid Note and of such other Loan Document shall govern, except for the
provisions of Section VII of this Agreement.
IX. THE BORROWER AND EACH GUARANTOR AND WE AGREE THAT ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
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<PAGE>
AGREEMENT, THE DEMAND GRID NOTE OR ANY OTHER LOAN DOCUMENT RELATING TO THE
LINE OF CREDIT, MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL
COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK.
THE BORROWER AND EACH GUARANTOR FURTHER AGREE THAT ANY ACTION, DISPUTE,
PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG ANY OF THEM AND US WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT
OUR ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE
COMMENCEMENT OF A JUDICIAL PROCEEDING BY US, OR IN THE EVENT OF A JUDICIAL
PROCEEDING INSTITUTED BY ANY OF THEM AT ANY TIME PRIOR TO THE LAST DAY TO
ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY ANY OF THEM, BE
RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION IX AND SHALL, AT OUR ELECTION, INCLUDE ALL
DISPUTES-ARISING OUT OF OR IN CONNECTION WITH (A) THIS AGREEMENT, THE DEMAND
GRID NOTE, OR ANY OTHER LOAN DOCUMENT OR OTHER INSTRUMENT, (B) ALL PAST,
PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES (C) ANY-TRANSACTION
CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING
THE PARTIES AND (D) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP
OF THE PARTIES. We may elect to require arbitration of any Dispute with us
without thereby being required to arbitrate all Disputes between the parties.
Any such Dispute shall be resolved by binding arbitration in accordance with
Article 75 of the New York Civil Practice Law and Rules and the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). In the
event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any
arbitration proceeding under this Section IX. In any arbitration proceeding
subject to these provisions, the arbitration panel (the "arbitrator") is
specifically empowered to decide (by documents only, or with a hearing, at
the arbitrator's sole discretion) pre-hearing motions which are substantially
similar to prehearing motions to dismiss and motions for summary
adjudication. In any such arbitration proceeding, the arbitrator shall not
have the power or authority to award punitive damages to any party. Judgment
upon the award rendered may be entered in any court having jurisdiction.
Whenever an arbitration is required, the parties shall select an arbitrator
in the manner provided in this Section IX. No provision of, nor the exercise
of any rights under, this Section IX shall limit the right of any party (i)
to foreclose against any real or personal property collateral through judicial
foreclosure, by the exercise of a power of sale under a deed of trust,
mortgage or other security agreement or instrument, pursuant to applicable
provisions of the Uniform Commercial Code, or otherwise pursuant to
applicable law, (ii) to exercise self help remedies including but not limited
to setoff and repossession, or (iii) to request and obtain from a court
having jurisdiction before, during or after the pendency of any arbitration,
provisional or ancillary remedies and relief including but not limited to
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<PAGE>
injunctive or mandatory relief or the appointment of a receiver. The
institution and maintenance of an action or judicial proceeding for, or
pursuit of, provisional or ancillary remedies or exercise of self help
remedies shall not constitute a waiver of our right, even if we are the
plaintiff, to submit the Dispute to arbitration if we would otherwise have
such right. We may require arbitration of any Dispute(s) concerning the
lawfulness, unconscionableness, propriety, or reasonableness of any exercise
by us of our right to take or dispose of any collateral or our exercise of
any other right in connection with collateral including, without limitation,
judicial foreclosures, exercising a power of sale under a deed of trust or
mortgage, obtaining or executing a writ of attachment, taking or disposing of
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code or otherwise as permitted by applicable law,
notwithstanding any such exercise by us. Whenever an arbitration is required
under this Section IX, the arbitrator shall be selected, except as otherwise
herein provided, in accordance with the Commercial Arbitration Rules of the
AAA. A single arbitrator shall decide any claim of $100,000 or less and he or
she shall be an attorney with at least five years' experience representing
commercial banks. Where the claim of any party exceeds $100,000, the Dispute
shall be decided by a majority vote of three arbitrators, at least two of whom
shall be attorneys (at least one of whom shall have not less than five years'
experience representing commercial banks). In the event of any Dispute
governed by this Section IX, each of the parties shall, subject to the award
of the arbitrator, pay an equal share of the arbitrator's fees. The
arbitrator shall have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees, arbitrator's fees, and court
costs) to the prevailing party.
X. ANYTHING IN THIS AGREEMENT, THE DEMAND GRID NOTE OR ANY OTHER LOAN
DOCUMENT RELATING TO THE LINE OF CREDIT TO THE CONTRARY NOTWITHSTANDING, THE
ENUMERATION IN THIS AGREEMENT, THE DEMAND GRID NOTE OR IN SUCH OTHER LOAN
DOCUMENT OF SPECIFIC OBLIGATIONS TO US, EVENTS OF DEFAULT AND/OR CONDITIONS TO
THE AVAILABILITY OF THIS LINE OF CREDIT AND THE LOANS TO BE MADE PURSUANT TO
THE DEMAND GRID NOTE SHALL NOT BE CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE
LIMIT OUR RIGHT, POWER OR ABILITY, AT ANY TIME, UNDER APPLICABLE LAW, TO MAKE
DEMAND FOR PAYMENT OF THE ENTIRE OUTSTANDING PRINCIPAL OF AND INTEREST DUE
UNDER THE LINE OF CREDIT AND THE DEMAND GRID NOTE OR OUR RIGHT NOT TO MAKE ANY
EXTENSION OF CREDIT UNDER THIS LINE OF CREDIT FOR ANY REASON OR NO REASON AND
BORROWER AGREES THAT ITS BREACH OF OR DEFAULT UNDER ANY SUCH ENUMERATED
OBLIGATIONS OR CONDITIONS IS NOT THE ONLY BASIS FOR DEMAND TO BE MADE, AS
BORROWERS' OBLIGATION TO MAKE PAYMENT SHALL AT ALL TIMES REMAIN A DEMAND
OBLIGATION, OR FOR A REQUEST FOR AN EXTENSION OF CREDIT TO BE DENIED.
XI. BORROWER AND WE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
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<PAGE>
PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS
WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT, THE DEMAND GRID NOTE OR ANY OTHER LOAN DOCUMENT
RELATING TO THE LINE OF CREDIT. EACH BORROWER ALSO HEREBY WAIVES THE RIGHT
TO INTERPOSE ANY DEFENSE OF ANY NATURE OR DESCRIPTION, WHETHER OR NOT BASED
UPON ANY CLAIM OF LACHES, AND BORROWER HEREBY WAIVES ANY SET-OFF OR
COUNTERCLAIM, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY
CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
If this Agreement is acceptable to you, please sign and return to us one
fully executed copy of this letter.
We look forward to a pleasant relationship.
Very truly yours,
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/
----------------------------------
Title:
---------------------------
HOTJOBS.COM,LTD.
By: /s/
------------------------------
Title:
-----------------------
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<PAGE>
Exhibit 10.15
October 13, 1998
OTEC Consulting, Inc.
RBL Agency, Ltd.
OTEC, Inc.
24 West 40th Street
New York, New York 10018
Re: LINE OF CREDIT
Gentlemen:
We are pleased to advise you that we have approved a line of credit
of up to a combined aggregate amount of $3,500,000, outstanding at any one
time (the "Line of Credit") for OTEC Consulting, Inc. (f/k/a/ RBL Consulting,
Inc.) ("Consulting"), RBL Agency, Inc. ("Agency") and OTEC, Inc. ("OTEC"),
(Consulting, Agency and OTEC are hereinafter sometimes referred to
individually as a "Borrower" and collectively as the "Borrowers"). The terms
"we", "us", "our", "undersigned" or "Bank" as used herein shall mean The Dime
Savings Bank of New York FSB and its successors and assigns. The following
general terms and conditions will apply:
I. TERM AND PAYMENTS: On Demand
INTEREST RATE: Reference Rate (as defined in the Demand Grid Note)
plus one percent (1%).
INDIVIDUAL GUARANTORS: Richard Johnson and Bennett Carroccio
CORPORATE GUARANTOR: HOTJOBS.COM, LTD.
COLLATERAL: See attached Exhibit A
AVAILABILITY: Up to Eighty (80%) percent of Eligible Receivables
(as defined below).
LOAN DOCUMENTS: See Section VI below. The Loan Documents provide
requirements for covenants, representations and
warranties and for the granting of
<PAGE>
liens and security interests in the Collateral in
our favor.
LINE OF CREDIT: At no time shall the combined aggregate principal
amount of the loans to the Borrowers exceed
$3,500,000.
All Borrowers shall be jointly and severally liable
for all obligations under the Line of Credit and
each Borrower shall execute and deliver a Guaranty
and Security Agreement with respect to the
obligations of the other Borrowers under the Line
of Credit.
As used herein, "Eligible Receivables" shall mean all accounts
receivable which arise in each Borrower's ordinary course of business, are
not more than ninety (90) days past due, and are not subject to any dispute,
offset, defense or counterclaim and represent credit worthy account debtors
which are satisfactory to us at all times, in our sole discretion.
II. Borrowings under the Line of Credit shall be evidenced by a Demand
Grid Note executed, jointly and severally, by all of the Borrowers. Under the
Line of Credit, borrowings may be made from time to time and shall be
repayable on demand, but may be prepaid in whole or in part with accrued
interest to the date of prepayment. Any amounts outstanding shall bear
interest, payable monthly in arrears, at a variable rate per annum equal to
our Reference Rate plus one percent (1%), all as more fully set forth in the
Demand Grid Note. The Borrowers hereby irrevocably appoint OTEC Consulting,
Inc., as agent (the "Agent") for the purpose of receiving all notices under
the Loan Documents, which notices shall be sent to the address indicated
above and the Agent shall accept any service of legal process on behalf of
all of the Borrowers.
III. This letter constitutes an expression of our intent only based upon
information the Borrowers and the Individual Guarantors have submitted to us.
Any obligation to lend will arise only upon the satisfactory preparation,
execution and delivery of documentation in form and substance satisfactory to
us, including, but not limited to, the terms set forth and below.
THE CONTINUING AVAILABILITY OF THE LINE OF CREDIT IS AT ALL TIMES
SUBJECT TO OUR CONTINUING SATISFACTION, AS DETERMINED BY US IN OUR SOLE AND
ABSOLUTE DISCRETION, WITH THE FINANCIAL CONDITION OF THE BORROWER AND ITS
COMPLIANCE, AND THAT OF EACH OTHER PARTY EXECUTING AND DELIVERING DOCUMENTS
TO US HEREUNDER OR OTHERWISE IN CONNECTION WITH THE LINE OF CREDIT, WITH THE
TERMS AND PROVISIONS OF THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS
REFERRED TO HEREIN.
-2-
<PAGE>
IV. In addition, the continuing availability of the Line of Credit is
subject to the Borrower's furnishing to us: (i) within one hundred twenty
(120) days after the end of each fiscal year the annual financial statements
for each Borrower and on a combined basis for all Borrowers prepared by the
regular accountants of the Borrowers on a review basis as at the end of such
annual period, including a balance sheet and related income and cash flow
statements; (ii) within one hundred twenty (120) days after the end of each
calendar year, a personal financial statement of each Individual Guarantor
(on an individual basis or jointly with his or her spouse as the case may
be); (iii) within fifteen (15) days after the end of each calendar month, a
statement prepared by the management of the Borrowers showing the aging of
the accounts receivable of each Borrower; and (iv) such other information,
including interim financial statements and projections, as we may request
from time to time. All statements and reports shall be in form, scope and
substance satisfactory to us and shall be accompanied by a certification of
each Borrower's president or chief financial officer that all statements and
reports are true, correct and complete.
The Borrowers hereby agree that we shall at any time during each
calendar year be permitted to make one or more field audits of Borrower's
business, the Collateral and its locations, which shall be paid for by the
Borrowers at the per diem rate of $750 per person.
V. All payments of principal, interest and fees payable by the
Borrowers under the Line of Credit shall be made in immediately available
funds at our office at 589 Fifth Avenue, New York, New York 10017 and may be
charged at our discretion to the account of the Agent or any account of the
Borrowers maintain with us.
VI. The extension of the Line of Credit to the Borrowers, on the terms
set forth herein, is further subject to out receipt in form, scope and
substance satisfactory to us of (a) signature cards for the authorized
signatories of each Borrower; (b) an executed copy of our Demand Grid Note
executed by each of the Borrowers; (c) an executed copy of our standard form
of Continuing General Security Agreement by each of the Borrowers covering
the Collateral owned by each Borrower, together with signed copies of such
UCC financing statements as we may require; (d) executed copies of a Guaranty
and Security by each Borrower with respect to the other Borrowers; (e)
executed copies of a Guaranty and Security Agreement by each of the
Individual Guarantors; (f) an option of counsel for the Borrowers; (g)
certified copies of resolutions or other authorization of each of the
Borrowers authorizing the execution, delivery and performance of all of the
Loan Documents and other related documentation and the transactions
contemplated herein; (h) certified copies of the organizational documents of
each of the Borrowers, each as amended; (i) evidence that we have been added
as a loss payee and additional insured on all policies of insurance of
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<PAGE>
the Borrowers; and (j) such other documentation as we shall require.
VII. As a further condition to the extension of the Line of Credit and so
long as the Line of Credit or any obligation of the Borrowers or any of them
shall remain outstanding the Borrowers shall not permit:
a. Combined Tangible Net Worth at any time to be less than
$3,000,000. The term "Tangible Net Worth" is defined at any date as (i)
in the aggregate amount at which such assets of the Borrowers on a
combined basis would be shown on a balance sheet at such date after
deducting capitalized research and development costs, capitalized
interest, debt discount and expenses, goodwill, patents, trademarks,
copyrights, franchises, licenses and such other assets as are properly
classified as "intangible assets" LESS (ii) the aggregate amount of all
indebtedness and liabilities (including tax and other accruals) and
reserves of each Borrower, all on a combined basis; and
b. the ratio of Combined Total Liabilities to Combined Tangible Net
Worth at any time to exceed 1.0 to 1.0. The term "Combined Total Liabilities"
is defined at any date as, the sum of all liabilities of the Borrowers on a
combined basis which would properly appear on the liability side of a balance
sheet other than capital stock, capital surplus, retained earnings, minority
interests, deferred credits, indebtedness subordinated to the obligations of
the Borrowers under the Line of Credit and contingency reserves.
The determination of Combined Tangible Net Worth and Combined Total
Liabilities shall made in accordance with generally accepted accounting
principles consistently applied. The provisions of this Section VII shall
survive the execution of this Agreement and the making of the initial loan(s)
under the Line of Credit.
VIII. NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS
AGREEMENT OR ANY LOAN DOCUMENT, NOR CONSENT TO ANY DEPARTURE BY US THEREFROM
SHALL BE EFFECTIVE, IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME
SHALL BE IN WRITING AND SIGNED BY US AND THEN SUCH WAIVER OR CONSENT SHALL BE
EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR
WHICH GIVEN.
IX. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York. To the extent any of the terms or
provisions of this Agreement conflict with those contained in the Demand Grid
Note or any of the Loan Documents, the terms and provisions of such Demand
Grid Note and of such other Loan Document shall govern, except for the
provisions of Section VII of this Agreement.
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<PAGE>
X. THE BORROWER AND EACH INDIVIDUAL GUARANTOR AND WE AGREE THAT ANY
ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT,
THE DEMAND GRID NOTE OR ANY OTHER LOAN DOCUMENT RELATING TO THE LINE OF
CREDIT, MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS
THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK.
THE BORROWERS AND EACH INDIVIDUAL GUARANTOR FURTHER AGREE THAT ANY
ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG ANY OF
THEM AND US WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR
"DISPUTES") SHALL, AT OUR ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME
PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY US, OR IN THE EVENT OF
A JUDICIAL PROCEEDING INSTITUTED BY ANY OF THEM AT ANY TIME PRIOR TO THE LAST
DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY ANY OF
THEM, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE
PROVISIONS OF THIS SECTION X AND SHALL, AT OUR ELECTION, INCLUDE ALL
DISPUTES-ARISING OUT OF OR IN CONNECTION WITH (A) THIS AGREEMENT, THE DEMAND
GRID NOTE, OR ANY OTHER LOAN DOCUMENT OR OTHER INSTRUMENT; (B) ALL PAST,
PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES (C) ANY-TRANSACTION
CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING
THE PARTIES AND (D) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF
THE PARTIES. We may elect to require arbitration of any Dispute with us
without thereby being required to arbitrate all Disputes between the parties.
Any such Dispute shall be resolved by binding arbitration in accordance with
Article 75 of the New York Civil Practice Law and Rules and the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). In the
event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any
arbitration proceeding under this Section X. In any arbitration proceeding
subject to these provisions, the arbitration panel (the "arbitrator") is
specifically empowered to decide (by documents only, or with a hearing, at
the arbitrators sole discretion) pre-hearing motions which are substantially
similar to prehearing motions to dismiss and motions for summary
adjudication. In any such arbitration proceeding, the arbitrator shall not
have the power or authority to award punitive damages to any party. Judgement
upon the award rendered may be entered in any court having jurisdiction.
Whenever an arbitration is required, the parties shall select an arbitrator
in the manner provided in this Section X. No provision of, nor the exercise
of any rights under, this Section X. shall limit the right of any party (i)
to foreclose against any real or personal property collateral through
judicial foreclosure, by the exercise of a power of sale under a deed of
trust, mortgage or other security agreement or instrument, pursuant to
applicable provisions of the Uniform Commercial Code, or otherwise pursuant
to applicable law, (ii) to exercise self help remedies including but not
limited to setoff and repossession, or (iii) to request and obtain from a
court having jurisdiction
-5-
<PAGE>
before, during or after the pendency of any arbitration, provisional or
ancillary remedies and relief including but not limited to injunctive or
mandatory relief or the appointment of a receiver. The institution and
maintenance of an action or judicial proceeding for, or pursuit of,
provisional or ancillary remedies or exercise of self help remedies shall not
constitute a waiver of our right, even if we are the plaintiff, to submit the
Dispute to arbitration if we would otherwise have such right. We may require
arbitration of any Dispute(s) concerning the lawfulness, unconscionableness,
propriety, or reasonableness of any exercise by us of our right to take or
dispose of any collateral or our exercise of any other right in connection
with collateral including, without limitation, judicial foreclosures,
exercising a power of sale under a deed of trust or mortgage, obtaining or
executing a writ of attachment, taking or disposing of property with or
without judicial process pursuant to Article 9 of the Uniform Commercial Code
or otherwise as permitted by applicable law, notwithstanding any such
exercise by us. Whenever an arbitration is required under this Section X, the
arbitrator shall be selected, except as otherwise herein provided, in
accordance with the Commercial Arbitration Rules of the AAA. A single
arbitrator shall decide any claim of $100,000 or less and he or she shall be
an attorney with at least five years' experience representing commercial
banks. Where the claim of any party exceeds $100,000, the Dispute shall be
decided by a majority vote of three arbitrators, at least two of whom shall
be attorneys (at least one of whom shall have not less than five years'
experience representing commercial banks). In the event of any Dispute
governed by this Section X, each of the parties shall, subject to the award
of the arbitrator, pay an equal share of the arbitrator's fees. The
arbitrator shall have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees, arbitrator's fees, and court
costs) to the prevailing party.
XI. ANYTHING IN THIS AGREEMENT, THE DEMAND GRID NOTE OR ANY OTHER LOAN
DOCUMENT RELATING TO THE LINE OF CREDIT TO THE CONTRARY NOTWITHSTANDING, THE
ENUMERATION IN THIS AGREEMENT, THE DEMAND GRID NOTE OR IN SUCH OTHER LOAN
DOCUMENT OF SPECIFIC OBLIGATIONS TO US, EVENTS OF DEFAULT AND/OR CONDITIONS
TO THE AVAILABILITY OF THIS LINE OF CREDIT AND THE LOANS TO BE MADE PURSUANT
TO THE DEMAND GRID NOTE SHALL NOT BE CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE
LIMIT OUR RIGHT, POWER OR ABILITY, AT ANY TIME, UNDER APPLICABLE LAW, TO MAKE
DEMAND FOR PAYMENT OF THE ENTIRE OUTSTANDING PRINCIPAL OF AND INTEREST DUE
UNDER THE LINE OF CREDIT AND THE DEMAND GRID NOTE OR OUR RIGHT NOT TO MAKE ANY
EXTENSION OF CREDIT UNDER THIS LINE OF CREDIT FOR ANY REASON OR NO REASON AND
BORROWER AGREES THAT ITS BREACH OF OR DEFAULT UNDER ANY SUCH ENUMERATED
OBLIGATIONS OR CONDITIONS IS NOT THE ONLY BASIS FOR DEMAND TO BE MADE, AS
BORROWERS' OBLIGATION TO MAKE PAYMENT SHALL AT ALL TIMES REMAIN A DEMAND
OBLIGATION, OR FOR A REQUEST FOR AN EXTENSION OF CREDIT TO BE DENIED.
-6-
<PAGE>
XII. EACH BORROWER AND WE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS
WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS AGREEMENT, THE DEMAND GRID NOTE OR ANY OTHER LOAN DOCUMENT RELATING
TO THE LINE OF CREDIT. EACH BORROWER ALSO HEREBY WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE OF ANY NATURE OR DESCRIPTION, WHETHER OR NOT BASED UPON
ANY CLAIM OF LACHES, AND BORROWER HEREBY WAIVES ANY SET-OFF OR COUNTERCLAIM,
ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
If this Agreement is acceptable to the Borrowers, each of them should
sign and return to us one fully executed copy of this letter.
We look forward to a pleasant relationship.
Very truly yours,
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/
----------------------------------
Title:
---------------------------
OTEC CONSULTING, INC.
By: /s/
-----------------------------
Title:
----------------------
RBL AGENCY, LTD.
By: /s/
-----------------------------
Title:
----------------------
OTEC, INC.
By: /s/
-----------------------------
Title:
----------------------
-7-
<PAGE>
Exhibit 10.16
EMPLOYMENT AGREEMENT
BETWEEN
HOTJOBS.COM, LTD.
AND
GEORGE J. NASSEF, JR.
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
the 18th day of June, 1999 by and between HOTJOBS.COM, LTD. a Delaware
corporation having its principal place of business at 24 West 40th Street, New
York, NY 10018 (the "Corporation") and GEORGE J. NASSEF, JR., an individual
residing at 20 West 64th Street, #18A, New York, NY 10023 (the "Executive").
WITNESSETH THAT:
WHEREAS, the Corporation desires to employ the Executive on
the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive desires to be employed by the
Corporation on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I. EMPLOYMENT TERM AND DUTIES
SECTION I.1 EMPLOYMENT. The Corporation hereby agrees to employ the
Executive, and the Executive hereby agrees to accept such employment, upon the
terms and conditions herein contained.
SECTION I.2 TERM. The term of employment under this Agreement (the
"Employment
<PAGE>
Term") shall commence on June 18, 1999 (the "Effective Date"), and shall
continue until terminated by either party. Both parties understand and agree
that the Executive's employment with the Corporation is for an unspecified
duration and constitutes "at-will" employment. Both parties acknowledge that
this employment relationship may be terminated at any time, with or without
cause, at the option of the Corporation or the Executive, with or without
notice.
SECTION I.3 DUTIES. During the Employment Term, the Executive shall
serve as Chief Information Officer of the Corporation. The Executive shall
perform such duties as are reasonable and customary for an individual holding
such office and such other duties as are set forth in the Bylaws of the
Corporation or as may be agreed to from time to time by the Executive including,
without limitation, responsibility for development, implementation and
maintenance of the technological aspects of the business of the Corporation
including, without limitation, systems engineering and network operations. The
Executive shall devote his full and exclusive professional time and attention to
performing his obligations hereunder. The Executive shall report directly to the
President and CEO of the Corporation.
ARTICLE II. COMPENSATION
SECTION II.1 BASIC COMPENSATION. During the Employment Term, the
Corporation shall pay to the Executive an annual base salary (which shall accrue
proportionately from day to day and shall be payable bi-monthly) of $175,000
(the "Basic Compensation").
SECTION II.2 ANNUAL BONUS. In addition to Basic Compensation, the
Executive may
<PAGE>
also receive other bonus or incentive compensation and salary increases as shall
be determined by the Board of Directors of the Corporation (the "Board") in
accordance with applicable Corporation policies in effect at such time. The
Executive shall be eligible to receive an annual year-end bonus which will be
contingent upon achievement of certain performance goals, which shall be set
annually for the relevant performance period by the Board in its sole discretion
and upon employment by the Corporation at the time the bonus is scheduled to be
paid.
SECTION II.3 BENEFITS. During the Employment Term, Executive shall be
entitled to participate in all benefit plans, if any, provided to other
similarly situated senior executives of the Corporation. The Corporation shall
be entitled to obtain key-man life insurance on the life of Executive with the
benefits thereof payable solely to the Corporation or its assigns, as the
Corporation shall determine, and Executive shall promptly submit to examinations
by medical personnel reasonably acceptable to Executive as the Corporation may
request to assist it in obtaining the key-man life insurance and shall otherwise
reasonably cooperate should the Corporation decide to obtain such insurance.
SECTION II.4 VACATION. During the Employment Term, the Executive shall
be entitled to two weeks paid vacation which may be increased but not decreased
in the sole discretion of the Board.
SECTION II.5 STOCK OPTIONS.
(a) GRANT. The Corporation hereby grants to
Executive a non-qualified stock option ("NQSO") to purchase 7,500 shares of the
Corporation's Common Stock ("NQSO Shares") at a per-share price based on the
Corporation's fair market value as at June 18,
<PAGE>
1999 (as determined by an independent valuation company reasonably acceptable to
the Corporation and the Executive). This NQSO is granted subject to the terms
and conditions set forth below and in the Corporation's Stock Award Plan.
(b) VESTING TERM. The NQSO shall be exercisable
for a period of 10 years from the date of this Agreement and shall become
exercisable as to the number of NQSO Shares over the term at the times indicated
below:
<TABLE>
<CAPTION>
Number of Shares On or After
- ---------------- -----------
<S> <C>
208 July 18, 1999
208 August 18, 1999
208 September 18, 1999
208 October 18, 1999
208 November 18, 1999
208 December 18, 1999
208 January 18, 2000
208 February 18, 2000
208 March 18, 2000
208 April 18, 2000
210 May 18, 2000
210 June 18, 2000
2,500 June 18, 2001
2,500 June 18, 2002;
</TABLE>
Provided, that if prior to June 18, 2000 there shall be a
closing of a firm commitment underwritten registered public offering of the
Corporation's Common Stock, all of the NQSO Shares that are due to vest on or
before June 18, 2000 plus 1,250 of the NQSO Shares due to vest on June 18, 2001
shall vest as of the date of such closing.
<PAGE>
(c) REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS
OF THE EXECUTIVE UPON EXERCISE OF NQSO. The Executive agrees that in the event
that the Corporation and the Corporation's counsel deem it necessary or
advisable in the exercise of their discretion, the issuance of NQSO Shares may
be conditioned upon the Executive's making certain representations, warranties,
covenants and acknowledgments relating to compliance with applicable securities
laws.
(d) SHAREHOLDERS AGREEMENT. The Executive acknowledges and
agrees that upon exercise of this NQSO, in whole or in part, the NQSO Shares
will be subject to that certain Amended and Restated Shareholders Agreement
dated as of May 11, 1999 (as the same may be amended, supplemented and/or
superseded, the "Shareholders Agreement"), a copy of which is on file at the
Corporation's corporate office (to the extent it may then be in effect
generally). Accordingly the Executive agrees to be bound by the Shareholders
Agreement upon exercise of this NQSO, as if signatory thereto.
(e) EXPIRATION UPON A TERMINATION.
(i) If the Executive's employment with the
Corporation is terminated by the Corporation for "Cause" during the Employment
Term, the term of the NQSO shall be deemed to have automatically expired
immediately upon such termination of the Executive for "Cause" as defined in
Section 3.1(c).
(ii) If the Executive's employment with the
Corporation is terminated without Cause, for Good Reason, as defined in Section
3.1(d), or upon the Executive's death, the
<PAGE>
Executive or his successors or heirs shall be entitled to exercise the NQSO
granted hereunder, to the extent the right to so exercise had accrued at the
date of termination and had not been previously exercised, for a period of
thirty days after such termination date, subject to all other provisions hereof.
(f) NON TRANSFERABILITY. The NQSO shall not be transferable by
the Executive otherwise than by will or the applicable laws of descent and
distribution and shall be exercisable during the Executive's lifetime only by
the Executive.
(g) TAX OBLIGATIONS. The Executive acknowledges that the
transfer of any NQSO Shares in accordance with this Agreement may have federal,
state or local tax implications for the Executive and the Executive understands
that the Corporation is not undertaking to bear any obligation of the Executive
so created. The Executive acknowledges and agrees that any and all such tax
obligations shall be the sole responsibility of the Executive and the
Corporation makes no warranties regarding the income tax consequences or any
other aspect of the NQSO.
(h) STOCK CERTIFICATES' RESTRICTIVE LEGENDS. Stock
certificates evidencing NQSO Shares may bear such restrictive legends as the
Corporation and Corporation's counsel deem necessary or advisable.
(i) NO TAX OR OTHER ADVICE. The Executive acknowledges that
he has not relied on, and none of the Corporation or any of its representatives
has given, any representations or warranties, or any advice, with respect to the
income tax or other consequences of the
<PAGE>
transactions contemplated by this Agreement. The Executive represents that he
has sufficient knowledge, and or has consulted his own advisors, with respect to
such consequences.
ARTICLE III. TERMINATION OF EMPLOYMENT
SECTION III.1 EVENTS OF TERMINATION.
(a) DEATH. The Executive's employment shall terminate
automatically upon the Executive's death.
(b) WITHOUT CAUSE. Notwithstanding any other provision
hereunder, the Corporation shall have the right to terminate the Executive's
employment hereunder without "Cause" (as defined in Section 3.1(c)) at any time
during the Employment Term for any reason in the sole discretion of the
Corporation.
(c) CAUSE. The Corporation may terminate the Executive's
employment during the Employment Term for Cause. For purposes of this Agreement,
"Cause" shall mean: (i) gross negligence or willful misconduct of the Executive
in the performance of any of his duties under this Agreement, (ii) the failure
by the Executive to perform his duties hereunder; (iii) any embezzlement or
misappropriation of funds or property or intellectual property of the
Corporation; (iv) any conviction or plea of guilty or NOLO CONTENDERE in
connection with fraud or any crime that constitutes a felony in the jurisdiction
involved; and (v) any material breach by the Executive of the terms of this
Agreement, which is not cured within thirty (30) days of notice of the breach
given by the Corporation.
(d) GOOD REASON. The Executive may terminate his employment
during the
<PAGE>
Employment Term for Good Reason within ninety (90) days of the date Executive
becomes aware of the occurrence of any of the events specified below. For
purposes of this Agreement, "Good Reason" shall mean the occurrence, without the
Executive's express written consent, of any one or more of the following events:
(i) A material change in the Executive's titles or
duties described in Section 1.3, or any removal of the Executive from, or any
failure to re-elect the Executive to, any of such positions;
(ii) A failure by the Corporation to pay Executive's
Basic Compensation, not caused by Executive, which
failure to pay is not cured within 30 days after written notice from Executive;
(iii) The filing of a voluntary or involuntary
petition of bankruptcy by or against the Corporation or
the insolvency of the Corporation;
(iv) A Change of Control as defined in Section 3.2
below;
(v) The Corporation breaches any material term
hereof, after an opportunity to cure.
SECTION III.2 CHANGE OF CONTROL DEFINITION. A "Change of Control" shall
have occurred if:
(i) any "person" within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the
Corporation, a subsidiary of the Corporation, any employee benefit plan
sponsored by the Corporation or any subsidiary of the
<PAGE>
Corporation, Richard Johnson or an underwriter who has acquired securities for
the purpose of distributing them in a firmly underwritten public offering,
becomes the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of 49% or more of the combined voting power of the
securities of the Corporation entitled to vote in an election of directors to
the Board; or
(ii) a merger or equivalent combination occurs after
which 49% or more of the voting stock of the surviving corporation is held by
persons other than former stockholders of the Corporation; or
(iii) the sale, assignment, transfer or other
disposition of assets of the Corporation having a value
in excess of 49% of the total assets of the Corporation.
SECTION III.3 OBLIGATIONS OF THE CORPORATION ON TERMINATION.
(a) TERMINATION UPON DEATH. If the Executive's employment is
terminated upon his death, the Corporation shall immediately pay the Executive's
successors or heirs in cash the amount of Basic Compensation previously earned
but not yet paid.
(b) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If
Executive's employment is terminated without Cause or for Good Reason:
(i) IN GENERAL. The Corporation shall immediately
pay the Executive in cash the amount of Basic Compensation previously earned but
not yet paid.
(ii) SEVERANCE BENEFITS. The Corporation shall pay
the Executive his Basic Compensation (based on the Basic Compensation in effect
on the date of the termination of
<PAGE>
the Executive's employment) for a period of 6 months from the date of
termination payable in accordance with the Corporation's regular payroll
practice.
(c) TERMINATION FOR CAUSE OR TERMINATION WITHOUT GOOD REASON.
In case of a Termination for Cause or Termination without Good Reason, the
Executive shall be entitled to his Basic Compensation accrued to the date of
termination. Except as otherwise provided in this Agreement or under any
employee benefit plan maintained by the Corporation, the Corporation shall have
no further obligations to the Executive.
<PAGE>
ARTICLE IV. PURPOSE
SECTION IV.1 PURPOSE. The Corporation recognizes that the Executive is
a key executive of the Corporation and is expected to be a factor in the growth
and success of the Corporation. The Corporation also recognizes that the
continued success of the Corporation depends, to a significant degree, upon the
effective performance of the Executive's duties as set forth in this Agreement.
Therefore, one of the primary purposes of this Agreement is to provide for the
long-term financial security of the Executive and his family so that he will be
better able to direct his undivided attention to the successful performance of
his duties on behalf of the Corporation.
SECTION IV.2 NON-COMPETE AND CONFIDENTIALITY. Except as to such actions
within the ordinary course of the Executive's employment by the Corporation
which the Executive in good faith believes to be in the best interests of the
Corporation, the Executive shall not at any time during the Employment Term or
two years thereafter, without the prior written consent of the Corporation: (i)
request or advise any supplier, or other person, firm, partnership, association,
corporation or business organization, entity or enterprise having business
dealings with the Corporation or any subsidiary or affiliate of the Corporation
to withdraw, curtail or cancel such business dealings; (ii) disclose to any
third party including, but not limited to, any competitor or potential
competitor of the Corporation or any subsidiary or affiliate of the Corporation
any trade secret, know-how or knowledge relating to costs, products, equipment,
merchandising and marketing methods, business plans, or research results used
by, or useful to, the Corporation or
<PAGE>
any subsidiary or affiliate of the Corporation or other confidential information
of the Corporation (the "Confidential Information"); (iii) induce or attempt to
influence any executive of the Corporation or any subsidiary or affiliate of the
Corporation to terminate, or in any way violate the terms of, his or her
employment; or (iv) engage directly or engage indirectly in any business in
competition with the business of the Corporation or its subsidiaries, provided,
however, that the ownership by Executive of not more than 5% of the equity
securities of any company or similar business venture shall not be deemed a
violation of this Section 4.2(iv). For purposes of this Section 4.2,
Confidential Information shall not include: (a) information that is in the
public domain; provided that Executive was not responsible for the disclosure to
the public; (b) information that was already known to Executive prior to his
employment by the Corporation; and (c) information required to be disclosed in
connection with any judicial or administrative proceeding or inquiry; provided
that Executive shall notify the Corporation as promptly as practicable of such
proceeding or inquiry and cooperate with the Corporation in taking legally
available steps to resist or narrow the required disclosure.
ARTICLE V. MISCELLANEOUS
SECTION V.1 ENFORCEABILITY. If the scope of any provision of this
Agreement is too broad to permit enforcement of such provision to its fullest
extent, then such provision shall be enforced to the maximum extent permitted by
applicable law, and, if necessary, the scope of any such provision may be
judicially modified (to the extent necessary in any proceeding brought to
enforce such provision) and thereafter fully enforced.
<PAGE>
SECTION V.2 WORKS FOR HIRE. Executive agrees that all improvements in
the Corporation's method of conducting its business as well as all inventions
conceived of or developed by Executive related directly to the Corporation's
business during the Employment Term, the negotiation thereof or the period of
six months after the expiration or termination of this Agreement, regardless of
the time and place made, and all proprietary rights therein, shall belong
exclusively to the Corporation as works-for-hire, having been specially
commissioned by the Corporation, and Executive will promptly disclose such work
product to the Chairman of the Board of the Corporation. To the extent necessary
to supplement the foregoing, Executive hereby transfers and assigns to the
Corporation the proprietary rights in perpetuity in all such work product and
all rights therein of any kind in all media now or hereafter known. In addition
to the rights granted to the Corporation in this Section 5.2, Executive agrees
that all patents related directly or indirectly to the Corporation's business
obtained by or issued in the name of Executive during the Employment Term are
property of the Corporation. Executive further agrees to assign any such patents
to the Corporation without payment of any additional compensation other than the
compensation specified in Article II above.
SECTION V.3 REMEDIES. The parties acknowledge that the remedy at law
for any breach of any party's obligations hereunder would be inadequate and
consent to the granting of temporary and permanent injunctive relief in any
proceeding brought to enforce any of such provisions without the necessity of
proof of actual damages; provided, however, that the foregoing shall not be
construed to limit any other right or remedy available to the Corporation or the
Executive at law or in equity, and all such rights and remedies shall be
cumulative to the
<PAGE>
extent permitted by applicable law, and the exercise of any one or more of such
rights or remedies shall be without prejudice to the exercise of any other such
right or remedy.
SECTION V.4 ASSIGNMENT BY THE EXECUTIVE; SUCCESSORS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) Except as is otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the Corporation, its
successors and assigns, and upon the Executive, his spouse, heirs, executors and
administrators, provided, however, that the obligations of the Executive
hereunder shall not be delegated.
(c) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, "Corporation" shall mean
Corporation as hereinbefore defined and any successor to its business or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
SECTION V.5 WAIVER. Failure of either party hereto to insist upon
strict compliance by the other party with any term, covenant or condition hereof
shall not be deemed a waiver of such
<PAGE>
term, covenant or condition, nor shall any waiver or relinquishment or failure
to insist upon strict compliance with any right or power hereunder at any one
time or more times be deemed a waiver or relinquishment of such right or power
at any other time or times.
SECTION V.6 SURVIVAL. Notwithstanding the expiration or termination of
this Agreement, Sections 4.2 and 5.2 shall survive.
SECTION V.7 NOTICE. Any notice required or desired to be given pursuant
to this Agreement shall be sufficient if in writing sent by registered or
certified mail to the addresses set forth above or to such other address as any
party hereto may designate in writing, transmitted by hand delivery or by
registered or certified mail to the other; provided, the failure by the
Executive to observe the notice provisions hereof shall not in any way limit,
reduce or effect the Executive's rights and benefits hereunder.
SECTION V.8 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to any otherwise applicable choice of law rules.
SECTION V.9 TAXES. The Corporation may deduct from all amounts paid
under this Agreement all federal, state, local and other taxes required by law
to be withheld with respect to such payments.
SECTION V.10 ENTIRE AGREEMENT. The parties hereto agree that this
Agreement (together with, to the extent benefits or rights are otherwise
affected by this Agreement, any employee benefit plan maintained or sponsored by
the Corporation) contains the entire understanding and
<PAGE>
agreement between them and supersedes all previous agreements and arrangements,
if any, relating to the employment of the Executive. This Agreement shall not be
amended, modified or supplemented in any respect except by an agreement in
writing signed by the Executive and the Corporation.
SECTION V.11 COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, and all of which, taken
together shall be deemed to be one instrument.
IN WITNESS WHEREOF, the Corporation and the Executive have
duly executed this Agreement as of the day and the year first above written.
HOTJOBS.COM, LTD. EXECUTIVE
By: /s/ /s/
---------------------------- -----------------------------
Name: Richard Johnson George J. Nassef, Jr.
Title: President and
Chief Executive Officer
<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 10, 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
July 19, 1999
