-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G8TYCz63Kxofsrht1vZQi7JlcAQgSkQvZbfih/i1aLSIgmzv6OguPlnIDQIkgeqh R9LIov2kmXKx4S5BTtwzLQ== 0000912057-99-009862.txt : 19991221 0000912057-99-009862.hdr.sgml : 19991221 ACCESSION NUMBER: 0000912057-99-009862 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19991220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TMP WORLDWIDE INC CENTRAL INDEX KEY: 0001020416 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 133906555 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-93065 FILM NUMBER: 99777198 BUSINESS ADDRESS: STREET 1: 1633 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2129774200 MAIL ADDRESS: STREET 1: 1633 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1999 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- TMP WORLDWIDE INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3906555 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization)
-------------------------- 1633 BROADWAY NEW YORK, NEW YORK 10019 (212) 977-4200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------------ ANDREW J. MCKELVEY CHAIRMAN OF THE BOARD AND CEO TMP WORLDWIDE INC. 1633 BROADWAY NEW YORK, NEW YORK 10019 (212) 977-4200 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------------ Copies of all communications, including all communications sent to the agent for service, should be sent to: GREGG BERMAN, ESQ. DEANNA L. KIRKPATRICK, ESQ. FULBRIGHT & JAWORSKI L.L.P. DAVIS POLK & WARDWELL 666 FIFTH AVENUE 450 LEXINGTON AVENUE NEW YORK, NEW YORK 10103 NEW YORK, NEW YORK 10017 (212) 318-3000 (212) 450-4000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / - ------------------ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / - ------------------ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE REGISTRATION FEE Common Stock, $.001 par value per share 4,600,000 $131.00 $602,600,000 $159,086.40
(1) The price per unit is estimated in accordance with Rule 457(c) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee and is $131.00, the average of the high and low prices of the common stock of TMP Worldwide Inc. as reported by The Nasdaq Stock Market on December 16, 1999. ------------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. PROSPECTUS (SUBJECT TO COMPLETION) ISSUED DECEMBER 20, 1999 4,000,000 SHARES [LOGO] COMMON STOCK -------------- TMP WORLDWIDE INC. IS OFFERING 4,000,000 SHARES OF ITS COMMON STOCK. ------------------- THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "TMPW." ON DECEMBER 16, 1999, THE LAST SALE PRICE OF THE COMMON STOCK WAS $130 PER SHARE. ------------------- INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 9. ------------------- PRICE $ A SHARE -------------------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS COMPANY -------- ------------- ----------- PER SHARE..................................... $ $ $ TOTAL......................................... $ $ $
TMP WORLDWIDE INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN ADDITIONAL 600,000 SHARES OF COMMON STOCK TO COVER OVER-ALLOTMENTS. THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES OF COMMON STOCK TO PURCHASERS ON JANUARY , 2000. ------------------- MORGAN STANLEY DEAN WITTER GOLDMAN, SACHS & CO. SALOMON SMITH BARNEY DEUTSCHE BANC ALEX. BROWN PAINEWEBBER INCORPORATED U.S. BANCORP PIPER JAFFRAY , 2000 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. PROSPECTUS (SUBJECT TO COMPLETION) [INTERNATIONAL COVER PAGE] ISSUED DECEMBER 20, 1999 4,000,000 SHARES [LOGO] COMMON STOCK -------------- TMP WORLDWIDE INC. IS OFFERING 4,000,000 SHARES OF ITS COMMON STOCK. ------------------- THE COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "TMPW." ON DECEMBER 16, 1999, THE LAST SALE PRICE OF THE COMMON STOCK WAS $130 PER SHARE. ------------------- INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 9. ------------------- PRICE $ A SHARE -------------------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC COMMISSIONS COMPANY -------- ------------- ----------- PER SHARE..................................... $ $ $ TOTAL......................................... $ $ $
TMP WORLDWIDE INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN ADDITIONAL 600,000 SHARES OF COMMON STOCK TO COVER OVER-ALLOTMENTS. THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES OF COMMON STOCK TO PURCHASERS ON JANUARY , 2000. ------------------- MORGAN STANLEY DEAN WITTER GOLDMAN SACHS INTERNATIONAL SALOMON SMITH BARNEY INTERNATIONAL DEUTSCHE BANK PAINEWEBBER INTERNATIONAL U.S. BANCORP PIPER JAFFRAY , 2000 Photo Page A collage of pictures of the Monster.com(SM) home pages (U.S. and international versions) will appear on the inside front cover. A collage of stills from our Monster Talent Market promotion will appear on the inside back cover. A collage of stills from Monster.com(SM)'s recent advertising campaign will appear on the outside back cover. TABLE OF CONTENTS
PAGE -------- Prospectus Summary.................... 4 Special Note Regarding Forward-Looking Information......................... 9 Risk Factors.......................... 9 Use of Proceeds....................... 16 Dividend Policy....................... 16 Price Range of Common Stock........... 16 Capitalization........................ 17 Selected Consolidated Financial Information......................... 18
Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 20
PAGE -------- Business.............................. 37 Material U.S. Federal Income Tax Considerations for Non-U.S. Holders............................. 48 Underwriters.......................... 51 Legal Matters......................... 53 Experts............................... 53 Where You Can Find More Information... 53
You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. 3 PROSPECTUS SUMMARY THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. AS USED IN THIS PROSPECTUS, "GROSS BILLINGS" REFERS TO BILLINGS FOR ADVERTISING PLACED ON THE INTERNET, ON OUR CAREER WEB SITES, IN NEWSPAPERS AND IN TELEPHONE DIRECTORIES BY OUR CLIENTS, AND ASSOCIATED FEES FOR RELATED SERVICES AND FEES FOR SEARCH AND SELECTION AND TEMPORARY CONTRACTING SERVICES. WE EARN COMMISSIONS BASED ON A PERCENTAGE OF THE BILLING FOR MEDIA ADVERTISING PURCHASED IN TRADITIONAL MEDIA AS WELL AS ON THIRD PARTY WEB SITES AT A RATE ESTABLISHED BY THE RELATED PUBLISHER AND ASSOCIATED FEES FOR RELATED SERVICES. AS A RESULT, THE TRENDS IN OUR GROSS BILLINGS DIRECTLY AFFECT OUR COMMISSIONS AND FEES. ALL AMOUNTS REFERRED TO BELOW REFLECT THE AMOUNTS DISCLOSED IN OUR SUPPLEMENTAL CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND OUR SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN OUR CURRENT REPORT ON FORM 8-K DATED DECEMBER 1, 1999. "WE," "US" AND "OUR," WHEN USED IN THIS PROSPECTUS, REFER TO TMP WORLDWIDE INC. OUR COMPANY We have built Monster.com(SM) (http://www.monster.com) into the Internet's leading career destination portal. We are also one of the world's largest recruitment advertising agencies and one of the world's largest executive search and selection firms. In addition to offering these career solutions, we are the world's largest yellow page advertising agency. We have more than 31,000 clients, including over 90 of the Fortune 100 and over 450 of the Fortune 500 companies. Job seekers look to manage their careers through us by posting their resumes on Monster.com(SM), by searching Monster.com's(SM) database of over 260,000 paid job postings, either directly or through the use of customized job search agents, and by utilizing our extensive career resources. In addition, employers, who are our clients, look to us to help them find the right employee, whether they are searching for an entry level candidate or a CEO, which we refer to as our "intern to CEO" strategy. We believe the Internet offers a substantial opportunity for us to grow our revenue. We believe our growth will primarily come from strengthening our leadership position in the online recruitment market, which is estimated by Forrester Research to grow from $105 million in 1998 to $1.7 billion in 2003, with additional revenue growth opportunities from the $8 billion executive search and selection market, the $13 billion global recruitment advertising market, the $130 billion temporary staffing market and the more than $100 billion which third parties estimate corporations spend on unassisted recruiting activities. Our strategies to address this opportunity are to: - continue to promote the Monster.com(SM) brand through online and traditional advertising and select affiliations - leverage our more than 5,100 client service, marketing and creative personnel to expand Monster.com(SM) - continue to pursue strategic acquisitions OUR SERVICES MONSTER.COM(SM). Monster.com(SM) (http://www.monster.com), the flagship of our Internet properties, is the nucleus of our intern to CEO strategy. In October 1999: - Neilson I/Pro reported that Monster.com(SM) attracted more than 10 million visitors who spent an average of over 14 minutes per visit - Media Metrix reported that 4.3% of the U.S. Internet population visited Monster.com(SM), reaching almost twice as many unique visitors as its closest competitor, and that an average of 31.3 unique pages were viewed by each visitor 4 - Based on Media Metrix statistics, Monster.com(SM) reported a power ranking of 134.6 (reach of 4.3 multiplied by average page views of 31.3), compared to 37.7 for its closest competitor and 91.1 for its six closest competitors combined We believe that the power ranking is significant because, by taking into account reach and page views, it indicates the products' recognition among and usefulness to job seekers. Through Monster.com(SM), our clients have access to over 2.0 million unique resumes of which 1.6 million are active, and our resume database is growing by an average of more than 6,000 resumes daily. To attract job seekers to Monster.com(SM), we continue to refine and refresh the site by introducing value-added features. For example, we have 1.6 million job search agents, which allow our job seekers to express their specific job preferences and receive e-mail notification of job matches, and 5.0 million job seeker accounts, which allow our job seekers to manage their careers online. We have also recently introduced Monster Talent Market, which allows independent professionals to offer their services to the highest bidder. We believe our clients have recognized the value of online recruitment, as evidenced by the more than 260,000 paid job postings currently on Monster.com(SM). Although Monster.com(SM) had 1.0 million more unique visitors than its nearest competitor in October 1999, as reported by Media Metrix, we continually look for ways to drive and retain site traffic. To that end, in December 1999, we entered into a content and marketing agreement with America Online, Inc. whereby, for the payment of $100 million over four years, Monster.com(SM) will be the exclusive provider for four years in the United States and Canada of career search services to 21 million AOL users across seven AOL brands: AOL, AOL Canada, Compuserve, ICQ, AOL.com, Netscape and Digital City. We also customize Monster.com(SM), in both language and content, for other countries. Currently, local versions of Monster.com(SM) operate in Canada, the United Kingdom, the Netherlands, Australia, Belgium, France, Singapore and New Zealand. For the nine months ended September 30, 1999, Monster.com(SM) generated approximately $66.9 million in gross billings and $66.2 million in commissions and fees. Our total Internet gross billings and Internet commissions and fees for this period were $93.7 million and $83.0 million, respectively, reflecting the inclusion of amounts from Internet related services from our traditional recruitment and yellow page advertising clients, as well as from searches for permanent employees and temporary contracting services identified and screened through the Internet, which were $8.5 million, $3.2 million, $4.0 million and $0.9 million, respectively. RECRUITMENT ADVERTISING. We prospect talent for our clients through recruiting programs that sell, market and brand employers to job seekers searching for entry level positions to positions paying up to $100,000, annually. We provide a broad range of recruitment advertising services including: - planning and producing advertising campaigns - media research, planning and buying in both traditional media and on the Internet - planning and executing on-campus recruitment programs SEARCH AND SELECTION. We offer an advanced and comprehensive range of search and selection services aimed at identifying the appropriate professional or executive from mid-level to CEO for our clients. Executive search identifies senior executives who typically earn in excess of $250,000 annually, while selection identifies mid-level professionals or executives, who typically earn between $70,000 and $150,000, annually. We entered the executive search field in 1998 because recruitment and online advertising traditionally did not target the senior executive candidate. Our specialized search and selection services include: - identification of candidates - competence measurement - assessment of candidate/company cultural fit 5 - transaction negotiation and closure With the addition of our executive search services, we believe that we can now accommodate all of our clients' employee recruitment needs. We also believe that our search and selection services will help to broaden the universe of both job seekers and employers who utilize Monster.com(SM). YELLOW PAGE ADVERTISING. We develop yellow page marketing programs for national accounts, which are clients who sell products or services in multiple markets. The national segment of the U.S. yellow page advertising market was approximately $1.9 billion in 1998. During the period of 1990 through 1998, the market grew at a compound annual rate of approximately 6.2%. Yellow page advertising is a complex process involving the creation of effective imagery and message, and the development of media plans which evaluate approximately 7,000 yellow page directories, of which our larger accounts utilize over 2,000. Coordinating the placement of advertisements in this number of directories requires an extensive effort at the local level, and our yellow page sales, marketing and customer service staff of approximately 850 people provides an important competitive advantage in marketing and executing yellow page advertising programs. We take a proactive approach to yellow page advertising by undertaking original research on the efficacy of the medium, and by working to quantify the effectiveness of individual advertising campaigns. We also have a rigorous quality assurance program designed to ensure client satisfaction. We believe that this program has enabled us to maintain a yellow page client retention rate, year to year, in excess of 90%. For the year ended December 31, 1998 and the nine months ended September 30, 1999, respectively, our gross billings were $1.7 billion and $1.4 billion, total commissions and fees were $657.5 million and $561.5 million, net income (loss) was $20.5 million and $(4.9) million and EBITDA was $79.1 million and $32.6 million. Our executive offices are located at 1633 Broadway, New York, New York 10019, our telephone number is (212) 977-4200 and our Internet address is http://www.tmpw.com. THE OFFERING Common stock offered by TMP.................. 4,000,000 Common stock to be outstanding after this offering................................... 44,604,263 shares Use of proceeds.............................. Repayment of indebtedness and general corporate purposes. See "Use of Proceeds." Nasdaq National Market Symbol................ TMPW
The number of shares of common stock to be outstanding after this offering excludes 5,856,194 shares of common stock subject to outstanding stock options. This number also assumes that the underwriters' over-allotment option to purchase up to 600,000 shares will not be exercised. If the underwriters do exercise this option in full there will be 45,204,263 shares of common stock outstanding following this offering. 6 SUMMARY CONSOLIDATED FINANCIAL INFORMATION
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, ------------------------------------ ----------------------- 1996 1997 1998 1998 1999 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Commissions & fees.......................................... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481 ---------- ---------- ---------- ---------- ---------- Operating expenses: Salaries and related costs................................ 232,249 310,168 382,689 288,045 327,046 Office and general expenses............................... 115,191 152,824 190,204 136,639 173,053 Merger & integration costs................................ -- -- 22,412 9,577 46,262 Restructuring charges..................................... -- -- 3,543 -- 2,789 Amortization of intangibles............................... 4,732 6,866 10,185 7,394 8,564 Special compensation and special CEO bonus................ 52,019 1,500 1,250 1,125 -- ---------- ---------- ---------- ---------- ---------- Total operating expenses.................................. 404,191 471,358 610,283 442,780 557,714 ---------- ---------- ---------- ---------- ---------- Operating income (loss)................................... (5,152) 70,470 47,203 54,092 3,767 ---------- ---------- ---------- ---------- ---------- Other expense: Interest expense, net..................................... (14,358) (8,443) (9,828) (7,035) (6,272) Other, net................................................ (370) 821 (2,042) (932) (851) ---------- ---------- ---------- ---------- ---------- Total other expense, net................................ (14,728) (7,622) (11,870) (7,967) (7,123) ---------- ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes, minority interests and equity in income (losses) of affiliates..... (19,880) 62,848 35,333 46,125 (3,356) Provision for income taxes.................................. 11,058 20,565 14,367 16,637 1,154 ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and equity in income (losses) of affiliates.................................... (30,938) 42,283 20,966 29,488 (4,510) Minority interests.......................................... 1,017 296 28 (18) 107 Equity in income (losses) of affiliates..................... 114 (33) (396) (297) (300) ---------- ---------- ---------- ---------- ---------- Net income (loss)........................................... (31,841) 41,954 20,542 29,209 (4,917) Preferred stock dividend and redemption premium............. (210) (123) -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) applicable to common and Class B common stockholders.............................................. $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917) ========== ========== ========== ========== ========== Net income (loss) per common and Class B common share: Basic....................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12) ========== ========== ========== ========== ========== Diluted..................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12) ========== ========== ========== ========== ========== Weighted average shares outstanding: Basic....................................................... 30,954 36,333 38,736 38,696 39,611 Diluted..................................................... 30,954 36,954 39,639 39,802 39,611
SEPTEMBER 30, 1999 ------------------------- ACTUAL AS ADJUSTED(1) -------- -------------- (IN THOUSANDS) BALANCE SHEET DATA: Current assets.............................................. $529,878 $ 947,206 Current liabilities......................................... 505,869 505,869 Total assets................................................ 883,684 1,301,012 Long-term debt, less current portion........................ 101,198 16,426 Total stockholders' equity.................................. 260,045 762,145
- ------------------------------ (1) Adjusted to give effect to our sale of 4,000,000 shares of common stock at a public offering price of $130.00 per share and the application of the net proceeds as described in "Use of Proceeds." 7
NINE MONTHS YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, ------------------------------------ ----------------------- 1996 1997 1998 1998 1999 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT NUMBER OF EMPLOYEES AND OFFICES) OTHER DATA: Gross billings: Internet.................................................. $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734 Recruitment advertising................................... 369,979 642,872 849,563 646,141 615,488 Search & selection........................................ 194,848 244,153 277,304 215,630 221,699 Temporary contracting..................................... 29,210 41,285 46,989 33,027 44,866 Yellow page advertising................................... 466,230 497,848 520,129 406,349 413,692 ---------- ---------- ---------- ---------- ---------- Total gross billings........................................ $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479 ========== ========== ========== ========== ========== Number of employees......................................... 3,910 5,651 6,278 6,270 6,412 Number of offices........................................... 161 213 254 254 247
8 SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION This prospectus includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by our use of the words "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates," and similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements in this prospectus, particularly under the heading "Risk Factors," that we believe could cause our actual results to differ materially from the forward-looking statements that we make. The forward-looking statements do not reflect the potential impact of any future acquisitions, mergers or dispositions. We do not assume any obligation to update any forward-looking statement we make. RISK FACTORS BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK. WE MAY NOT BE ABLE TO MANAGE OUR GROWTH Our business has grown rapidly in recent periods. As an example, we completed 80 mergers and acquisitions from January 1, 1996 through October 31, 1999. We entered the executive search field in 1998 and we believe that our recent acquisition of LAI Worldwide, Inc. has made us one of the largest executive search firms in the world. This growth of our business has placed a significant strain on our management and operations. Our expansion has resulted, and is expected in the future to result, in substantial growth in the number of our employees. In addition, this growth is expected to result in increased responsibility for both existing and new management personnel and incremental strain on our existing operations, financial and management information systems. Our success depends to a significant extent on the ability of our executive officers and other members of senior management to operate effectively both independently and as a group. If we are not able to manage existing or anticipated growth, our business, financial condition and operating results will be materially adversely affected. OUR SUCCESS DEPENDS ON THE VALUE OF OUR BRANDS, PARTICULARLY MONSTER.COM(SM) Our success depends on our brands and their value. Our business would be adversely affected if we were unable to adequately protect our brand names particularly Monster.com(SM). We are also susceptible to others imitating our products, particularly Monster.com(SM), and infringing our intellectual property rights. We may not be able to successfully protect our intellectual property rights, upon which we are materially dependent. In addition, the laws of many foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Imitation of our products, particularly Monster.com(SM), or infringement of our intellectual property rights could diminish the value of our brands or otherwise adversely affect our revenues. WE DEPEND ON TRADITIONAL MEDIA A substantial portion of our total commissions and fees comes from designing and placing recruitment advertisements in traditional media such as newspapers and trade publications. This business constituted approximately 27.0% and 24.0% of our total commissions and fees for the year ended December 31, 1998 and the nine months ended September 30, 1999, respectively. We also receive a substantial portion of our commissions and fees from placing advertising in yellow page directories. This business constituted approximately 16.2% and 14.2% of total commissions and fees for the year ended December 31, 1998 and the nine months ended September 30, 1999, respectively. We cannot assure you that the total commissions 9 and fees we receive in the future will equal the total commissions and fees which we have received in the past. In addition, new media, like the Internet, may cause yellow page directories and other forms of traditional media to become less desirable forms of advertising media. If we are not able to generate Internet advertising fees to offset any decrease in commissions from traditional media, our business, financial condition and operating results will be materially adversely affected. WE FACE RISKS RELATING TO DEVELOPING TECHNOLOGY, INCLUDING THE INTERNET The market for Internet products and services is characterized by rapid technological developments, frequent new product introductions and evolving industry standards. The emerging character of these products and services and their rapid evolution will require our continuous improvement in performance, features and reliability of our Internet content, particularly in response to competitive offerings. We cannot assure you that we will be successful in responding quickly, cost effectively and sufficiently to these developments. In addition, the widespread adoption of new Internet technologies or standards could require us to make substantial expenditures to modify or adapt our Web sites and services. This could affect our business, financial condition and operating results. New Internet services or enhancements which we have offered or may offer in the future may contain design flaws or other defects that could require expensive modifications or result in a loss of client confidence. Any disruption in Internet access or in the Internet generally could have a material adverse effect on our business, financial condition and operating results. WE ARE VULNERABLE TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS BROUGHT AGAINST US BY OTHERS Successful intellectual property infringement claims against us could result in monetary liability or a material disruption in the conduct of our business. We cannot be certain that our products, content and brand names do not or will not infringe valid patents, copyrights or other intellectual property rights held by third parties. We expect that infringement claims in our markets will increase in number as more participants enter the markets. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. We may incur substantial expenses in defending against these third party infringement claims, regardless of their merit. COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS Computer viruses may cause our systems to incur delays or other service interruptions and could damage our reputation and have a material adverse effect on our business, financial condition and operating results. The inadvertent transmission of computer viruses could expose us to a material risk of loss or litigation and possible liability. Moreover, if a computer virus affecting our system is highly publicized, our reputation could be materially damaged and our visitor traffic may decrease. THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN Use of the Internet by consumers is at an early stage of development, and market acceptance of the Internet as a medium for information, entertainment, commerce and advertising remains subject to a high level of uncertainty. Most of our clients have only limited experience with the Internet as an advertising medium and have not devoted a significant portion of their advertising budgets to Internet-based advertising in the past. There can be no assurance that advertisers will allocate or continue to allocate portions of their budgets to Internet-based advertising. If Internet-based advertising is not widely accepted by our clients, our business, financial condition and operating results, including our expected rate of commissions and fees growth, will be materially adversely affected. Although we generated Internet gross billings of $56.7 million and commissions and fees of $50.2 million for the year ended December 31, 1998 and Internet gross billings of $93.7 million and commissions and fees of $82.9 million for the nine months 10 ended September 30, 1999, we cannot assure you that we will continue to generate substantial Internet-based commissions and fees in the future. INTERNET USERS MAY NOT ACCEPT OUR INTERNET CONTENT Our future growth depends in part on our ability to attract Internet users who are valuable to our advertising clients. This in turn depends on our ability to deliver original and compelling services to these Internet users. We cannot assure you that our content will be attractive to enough Internet users to generate material advertising commissions and fees. We also cannot assure you that we will be able to anticipate, monitor and successfully respond to rapidly changing consumer tastes and preferences to continue to attract a sufficient number of Internet users to our Web sites. Internet users can freely navigate and instantly switch among a large number of Web sites, many of which offer original content. It is difficult for us to distinguish our content and attract users. In addition, many other Web sites offer very specific, highly targeted content. These sites could have greater appeal than our sites to particular groups within our target audience. WE FACE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY We expect our growth to continue, in part, by acquiring businesses. The success of this strategy depends upon several factors, including: - the continued availability of financing; - our ability to identify and acquire businesses on a cost-effective basis; - our ability to integrate acquired personnel, operations, products and technologies into our organization effectively; and - our ability to retain and motivate key personnel and to retain the clients of acquired firms. We cannot assure you that financing for acquisitions will be available on terms we find acceptable, or that we will be able to identify or consummate new acquisitions, or manage and integrate our recent or future expansions successfully. Any inability to do so would materially adversely affect our business, financial condition and operating results. We also cannot assure you that we will be able to sustain the rates of growth that we have experienced in the past. OUR MARKETS ARE HIGHLY COMPETITIVE The markets for our services are highly competitive. They are characterized by pressures to: - reduce prices; - incorporate new capabilities and technologies; and - accelerate job completion schedules. Furthermore, we face competition from a number of sources. These sources include: - national and regional advertising agencies; - Internet portals; - specialized and integrated marketing communication firms; - traditional media companies; - executive search firms; and - search and selection firms. In addition, many advertising agencies and publications have started either to internally develop or acquire new media capabilities, including Internet. We are also competing with established companies that provide integrated specialized services like Web advertising services or Web site design, and are 11 technologically proficient. Many of our competitors or potential competitors have long operating histories, and some may have greater financial, management, technological development, sales, marketing and other resources than we do. In addition, our ability to maintain our existing clients and attract new clients depends to a large degree on the quality of our services and our reputation among our clients and potential clients. We have no significant proprietary technology that would preclude or inhibit competitors from entering the online advertising, executive search, recruitment advertising, or yellow page advertising markets. We cannot assure you that existing or future competitors will not develop or offer services and products which provide significant performance, price, creative or other advantages over our services. This could have a material adverse effect on our business, financial condition and operating results. OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER Our quarterly operating results have fluctuated in the past and may fluctuate in the future. These fluctuations are a result of a variety of factors, including: - the timing of acquisitions; - the timing of yellow page directory closings, the largest number of which currently occur in the third quarter; and - the receipt of additional commissions, from yellow page publishers for achieving a specified volume of advertising, which are typically reported in the fourth quarter. Generally our quarterly commissions and fees earned from recruitment advertising tend to be highest in the first quarter and lowest in the fourth quarter. Additionally, recruitment advertising commissions and fees tend to be more cyclical than yellow page commissions and fees. To the extent that a significant percentage of our commissions and fees are derived from recruitment advertising, our operating results may be subject to increased cyclicality. EFFECT OF GLOBAL ECONOMIC FLUCTUATIONS Demand for our services is significantly affected by the general level of economic activity in the regions and industries in which we operate. When economic activity slows, many companies hire fewer permanent employees. Therefore, a significant economic downturn, especially in regions or industries where our operations are heavily concentrated, could have a material adverse effect on our business, financial condition and operating results. Further, we may face increased pricing pressures during such periods. There can be no assurance that during these periods our results of operations will not be adversely affected. WE DEPEND ON OUR CONSULTANTS The success of our executive search business depends upon our ability to attract and retain consultants who possess the skills and experience necessary to fulfill our clients' executive search needs. Competition for qualified consultants is intense. We believe that we have been able to attract and retain highly qualified, effective consultants as a result of our reputation and our performance-based compensation system. Consultants have the potential to earn substantial bonuses based on the amount of revenue they generate by: - obtaining executive search assignments; - executing search assignments; and - assisting other consultants to obtain or complete executive search assignments. Bonuses represent a significant proportion of consultants' total compensation. Any diminution of our reputation could impair our ability to retain existing or attract additional qualified consultants. Our inability to attract and retain qualified consultants could have a material adverse effect on our executive search business, financial condition and operating results. 12 OUR CONSULTANTS MAY DEPART WITH EXISTING EXECUTIVE SEARCH CLIENTS The success of our executive search business depends upon the ability of our consultants to develop and maintain strong, long-term relationships with clients. Usually, one or two consultants have primary responsibility for a client relationship. When a consultant leaves an executive search firm and joins another, clients that have established relationships with the departing consultant may move their business to the consultant's new employer. The loss of one or more clients is more likely to occur if the departing consultant enjoys widespread name recognition or has developed a reputation as a specialist in executing searches in a specific industry or management function. Historically, we have not experienced significant problems in this area. However, a failure to retain our most effective consultants or maintain the quality of service to which our clients are accustomed could have a material adverse effect on our business, financial condition and operating results. Also, the ability of a departing consultant to move business to his or her new employer could have a material adverse effect on our business, financial condition and operating results. WE FACE RISKS MAINTAINING OUR PROFESSIONAL REPUTATION AND BRAND NAME Our ability to secure new executive search engagements and hire qualified professionals is highly dependent upon our overall reputation and brand name recognition as well as the individual reputations of our professionals. We obtain a majority of our new engagements from existing clients or from referrals by existing clients. Therefore, the dissatisfaction of any client could have a disproportionate, adverse impact on our ability to secure new engagements. Any factor that diminishes our reputation or the reputation of any of our personnel could make it more difficult for us to compete successfully for both new engagements and qualified consultants. This could have an adverse effect on our executive search business, financial condition and operating results. WE FACE RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS Either by agreement with clients or for marketing or client relationship purposes, executive search firms frequently refrain, for a specified period of time, from recruiting certain employees of a client, and possibly other entities affiliated with such client, when conducting executive searches on behalf of other clients. This is known as a "blocking" arrangement. Blocking arrangements generally remain in effect for one or two years following completion of an assignment. The actual duration and scope of any blocking arrangement, including whether it covers all operations of a client and its affiliates or only certain divisions of a client, generally depends on such factors as: - the length of the client relationship; - the frequency with which the executive search firm has been engaged to perform executive searches for the client; and - the number of assignments the executive search firm has generated or expects to generate from the client. Some of our executive search clients are recognized as industry leaders and/or employ a significant number of qualified executives who are potential candidates for other companies in that client's industry. Blocking arrangements with a client of this nature, or the awareness by a client's competitors of such an arrangement, may make it difficult for us to obtain executive search assignments from, or to fulfill executive search assignments for, competitors while employees of that client may not be solicited. As our client base grows, particularly in our targeted business sectors, blocking arrangements increasingly may impede our growth or ability to attract and serve new clients. This could have an adverse effect on our executive search business, results of operations and financial condition. 13 WE FACE RISKS RELATING TO OUR FOREIGN OPERATIONS We conduct operations in various foreign countries, including Australia, Belgium, Canada, France, Germany, Japan, the Netherlands, New Zealand, Singapore, Spain and the United Kingdom. In 1998 and the nine months ended September 30, 1999, approximately 44.0% and 46.0% of our total commissions and fees were earned outside of the United States. Such amounts are collected in the local currency. In addition, we generally pay operating expenses in the corresponding local currency. Therefore, we are at risk for exchange rate fluctuations between such local currencies and the dollar. We do not conduct any significant hedging activities. We are also subject to taxation in foreign jurisdictions. In addition, transactions between us and our foreign subsidiaries may be subject to United States and foreign withholding taxes. Applicable tax rates in foreign jurisdictions differ from those of the United States, and change periodically. The extent, if any, to which we will receive credit in the United States for taxes we pay in foreign jurisdictions will depend upon the application of limitations set forth in the Internal Revenue Code of 1986, as well as the provisions of any tax treaties which may exist between the United States and such foreign jurisdictions. Other risks inherent in transacting foreign operations include changes in applicable laws and regulatory requirements, tariffs and other trade barriers and political instability. WE DEPEND ON OUR KEY PERSONNEL Our continued success will depend to a significant extent on our senior management, including Andrew J. McKelvey, our Chairman of the Board and CEO. The loss of the services of Mr. McKelvey or of one or more key employees could have a material adverse effect on our business, financial condition and operating results. In addition, if one or more key employees join a competitor or form a competing company, the resulting loss of existing or potential clients could have a material adverse effect on our business, financial condition and operating results. If we were to lose a key employee, we cannot assure you that we would be able to prevent the unauthorized disclosure or use of our procedures, practices, new product development or client lists. WE ARE CONTROLLED BY A PRINCIPAL STOCKHOLDER Following completion of this offering, Andrew J. McKelvey will beneficially own all of our outstanding Class B common stock and 10,944,580 shares of our common stock, which together represent approximately 53% of the combined voting power of all classes of our voting stock. Mr. McKelvey can direct the election of all of the members of our board. He can also exercise a controlling influence over our business and affairs. This includes any determinations with respect to mergers or other business combinations, the acquisition or disposition of our assets, whether or not we incur indebtedness, the issuance of any additional common stock or other equity securities and the payment of dividends with respect to common stock. Similarly, Mr. McKelvey may determine matters submitted to a vote of our stockholders without the consent of our other stockholders and he has the power to prevent a change of control. EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT OUR ACQUISITION Some of the provisions of our certificate of incorporation, bylaws and Delaware law could, together or separately: - discourage potential acquisition proposals; - delay or prevent a change in control; and - limit the price that investors might be willing to pay in the future for shares of our common stock. In particular, our board of directors may issue up to 800,000 shares of preferred stock with rights and privileges that might be senior to our common stock, without the consent of the holders of the common 14 stock. Our certificate of incorporation and bylaws provide, among other things, for advance notice of stockholder proposals and director nominations. THERE MAY BE VOLATILITY IN OUR STOCK PRICE The market for our common stock has, from time to time, experienced extreme price and volume fluctuations. Factors such as announcements of variations in our quarterly financial results and fluctuations in advertising commissions and fees, including the percentage of our commissions and fees derived from Internet-based services and products could cause the market price of our common stock to fluctuate significantly. Further, due to the volatility of the stock market generally, the price of our common stock could fluctuate for reasons unrelated to our operating performance. The market price of our common stock is based in large part on professional securities analysts' expectations that our business will continue to grow and that we will achieve certain levels of net income. If our financial performance in a particular quarter does not meet the expectations of securities analysts, this may adversely affect the views of those securities analysts concerning our growth potential and future financial performance. If the securities analysts who regularly follow our common stock lower their ratings of our common stock or lower their projections for our future growth and financial performance, the market price of our common stock is likely to drop significantly. WE FACE RISKS ASSOCIATED WITH GOVERNMENT REGULATION As an advertising agency which creates and places print and Internet advertisements, we are subject to Sections 5 and 12 of the U.S. Federal Trade Commission Act. These sections regulate advertising in all media, including the Internet, and require advertisers and advertising agencies to have substantiation for advertising claims before disseminating advertisements. The FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair advertising, and grants the Federal Trade Commission enforcement powers to impose and seek civil penalties, consumer redress, injunctive relief and other remedies upon advertisers and advertising agencies which disseminate prohibited advertisements. Advertising agencies like us are subject to liability under the FTC Act if the agency actively participated in creating the advertisement, and knew or had reason to know that the advertising was false or deceptive. In the event that any advertising that we have created is found to be false, deceptive or misleading, the FTC Act could potentially subject us to liability. The fact that the FTC has recently brought several actions charging deceptive advertising via the Internet, and is actively seeking new cases involving advertising via the Internet, indicates that the FTC Act could pose a somewhat higher risk of liability to the advertising distributed via the Internet. The FTC has never brought any actions against us. In addition, we cannot assure you that other current or new government laws and regulations, or the application of existing laws and regulations will not: - subject us to significant liabilities; - significantly dampen growth in Internet usage; - prevent us from offering certain Internet content or services; or - otherwise have a material adverse effect on our business, financial condition and operating results. WE HAVE NEVER PAID DIVIDENDS We currently intend to retain earnings, if any, to support our growth strategy. We do not anticipate paying dividends on our stock in the foreseeable future. In addition, payment of dividends on our stock is restricted by our financing agreement. 15 USE OF PROCEEDS Our net proceeds from the sale of the 4,000,000 shares of common stock, assuming a public offering price of $130.00 per share, are estimated to be $502.1 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We will use approximately $120 million of the net proceeds to repay debt held by our primary lender, which was approximately $110 million at September 30, 1999, including $25 million which is reflected as a reduction of accounts receivable. The interest rate on the debt is the higher of (a) the prime rate or (b) the Federal Funds rate less 0.5% or (c) LIBOR plus a margin determined by the ratio of debt to EBITDA. At September 30, 1999, this margin was 0.75%. At September 30, 1999, we were paying interest at the rate of approximately 6.15%, annually. Our financing agreement provides for borrowings of up to $185 million at any time outstanding and expires November 4, 2003. The remaining net proceeds will be used for general corporate purposes, including working capital. Pending such use, the net proceeds will be invested in short term, interest bearing, investment grade securities. DIVIDEND POLICY We have never declared or paid any cash dividends on our stock. We currently anticipate that we will retain all future earnings to support our growth strategy. Accordingly, we do not anticipate paying cash dividends on our stock for the foreseeable future. Currently, our financing agreement restricts the payment of dividends on our stock. The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon, among other things, future earning, operations, capital requirements, our general financial condition, contractual restrictions and general business conditions. PRICE RANGE OF COMMON STOCK Our common stock is quoted on the Nasdaq National Market under the ticker symbol "TMPW." The following table sets forth for the periods indicated the high and low reported closing sale prices per share for our common stock as reported by Nasdaq.
YEAR ENDED DECEMBER 31, 1999 HIGH LOW - ---------------------------- -------- -------- First Quarter........................................... $ 69.88 $39.00 Second Quarter.......................................... 89.38 43.00 Third Quarter........................................... 65.63 44.13 Fourth Quarter (through December 16, 1999).............. 131.25 50.00 YEAR ENDED DECEMBER 31, 1998 HIGH LOW - ---------------------------- -------- -------- First Quarter. $ 32.62 $ 21.25 Second Quarter.......................................... 34.88 25.50 Third Quarter........................................... 38.88 27.88 Fourth Quarter.......................................... 42.00 20.50 YEAR ENDED DECEMBER 31, 1997 HIGH LOW - ---------------------------- -------- -------- First Quarter. $ 21.00 $ 12.88 Second Quarter.......................................... 24.25 17.00 Third Quarter........................................... 25.00 20.00 Fourth Quarter.......................................... 28.50 15.00
There were approximately 1,400 stockholders of record of our common stock on December 16, 1999. On December 16, 1999, the last reported sale price of our common stock as reported by Nasdaq was $130.00. 16 CAPITALIZATION The following table sets forth our capitalization as of September 30, 1999, (i) on a historical basis and (ii) on a historical basis, as adjusted, to give effect to our sale of 4,000,000 shares of common stock at an assumed offering price of $130.00 per share, assuming the underwriters' over-allotment option is not exercised, and our application of the net proceeds. The table set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the consolidated financial statements and notes thereto incorporated by reference in this prospectus.
AS OF SEPTEMBER 30, 1999 ------------------------- AS ACTUAL ADJUSTED --------- ---------- (IN THOUSANDS) Current portion of long-term debt........................... $ 8,898 $ 8,898 ======== ======== Long-term debt, less current portion........................ $101,198 $ 16,426 -------- -------- Stockholders' equity: Preferred stock, $.001 par value. Authorized--800,000 shares; issued and outstanding--none actual and as adjusted.................................. -- -- Common stock, $.001 par value. Authorized--200,000,000 shares; issued and outstanding-- actual 37,788,761 and as adjusted 41,788,761............ 38 42 Class B common stock, $.001 par value. Authorized--39,000,000 shares; issued and outstanding-- actual 2,381,000 and as adjusted 2,381,000.............. 2 2 Additional paid-in capital................................ 300,413 802,509 Other comprehensive loss.................................. (4,363) (4,363) Deficit................................................... (36,045) (36,045) -------- -------- Total stockholders' equity.............................. 260,045 762,145 -------- -------- Total capitalization................................ $361,243 $778,571 ======== ========
17 SELECTED CONSOLIDATED FINANCIAL INFORMATION The following selected consolidated financial information with respect to our financial position as of December 31, 1996, 1997 and 1998 and our results of operations for each of the years ended December 31, 1996, 1997 and 1998 have been derived from our audited consolidated financial statements which are incorporated by reference in this prospectus. The selected consolidated financial information with respect to the results of our operations for the nine months ended September 30, 1998 and 1999 and with respect to our financial position as of September 30, 1998 and 1999 have been derived from the unaudited consolidated financial statements which, in the opinion of our management, have been prepared on the same basis as the audited financial statements and include all normal and recurring adjustments necessary for a fair presentation of the information set forth therein. The results for the nine months ended September 30, 1999 are not necessarily indicative of future results. The selected consolidated financial information presented below should be read in conjunction with our supplemental consolidated financial statements and our supplemental consolidated condensed financial statements and notes thereto, incorporated by reference in this prospectus, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. The Other Data presented below has not been audited.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------ ----------------------- 1996 1997 1998 1998 1999 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Commissions & fees........................................ $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481 ---------- ---------- ---------- ---------- ---------- Operating expenses: Salaries and related costs.............................. 232,249 310,168 382,689 288,045 327,046 Office and general expenses............................. 115,191 152,824 190,204 136,639 173,053 Merger & integration costs.............................. -- -- 22,412 9,577 46,262 Restructuring charges................................... -- -- 3,543 -- 2,789 Amortization of intangibles............................. 4,732 6,866 10,185 7,394 8,564 Special compensation and special CEO bonus.............. 52,019(1) 1,500 1,250 1,125 -- ---------- ---------- ---------- ---------- ---------- Total operating expenses................................ 404,191 471,358 610,283 442,780 557,714 ---------- ---------- ---------- ---------- ---------- Operating income (loss)................................. (5,152) 70,470 47,203 54,092 3,767 ---------- ---------- ---------- ---------- ---------- Other expense: Interest expense, net................................... (14,358) (8,443) (9,828) (7,035) (6,272) Other, net.............................................. (370) 821 (2,042) (932) (851) ---------- ---------- ---------- ---------- ---------- Total other expense, net.............................. (14,728) (7,622) (11,870) (7,967) (7,123) ---------- ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes, minority interests and equity in income (losses) of affiliates... (19,880) 62,848 35,333 46,125 (3,356) Provision for income taxes................................ 11,058 20,565 14,367 16,637 1,154 ---------- ---------- ---------- ---------- ---------- Income (loss) before minority interests and equity in income (losses) of affiliates........................... (30,938) 42,283 20,966 29,488 (4,510) Minority interests........................................ 1,017 296 28 (18) 107 Equity in income (losses) of affiliates................... 114 (33) (396) (297) (300) ---------- ---------- ---------- ---------- ---------- Net income (loss)......................................... (31,841) 41,954 20,542 29,209 (4,917) Preferred stock dividend and redemption premium........... (210) (123) -- -- -- ---------- ---------- ---------- ---------- ---------- Net income (loss) applicable to common and Class B common stockholders............................................ $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917) ========== ========== ========== ========== ========== Net income (loss) per common and Class B common share: Basic..................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12) ========== ========== ========== ========== ========== Diluted................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12) ========== ========== ========== ========== ========== Weighted average shares outstanding: Basic..................................................... 30,954 36,333 38,736 38,696 39,611 Diluted................................................... 30,954 36,954 39,639 39,802 39,611
18
DECEMBER 31, SEPTEMBER 30, ------------------------------ ------------------- 1996 1997 1998 1998 1999 -------- -------- -------- -------- -------- (IN THOUSANDS) BALANCE SHEET DATA: Current assets.............................................. $321,761 $444,144 $475,082 $522,240 $529,878 Current liabilities......................................... 320,038 414,278 431,443 447,827 505,869 Total assets................................................ 475,519 721,066 802,535 825,312 883,684 Long-term debt, less current portion........................ 78,151 130,011 123,106 133,745 101,198 Minority interests.......................................... 3,705 431 509 431 -- Total stockholders' equity.................................. 65,257 166,445 228,750 231,639 260,045
- ------------------------------ (1) For 1996, special compensation of $52.0 million consists of a non-cash, non-recurring charge that reflects the value of shares issued in connection with the acquisition of the minority interests in our predecessors because the stockholders had received such shares for nominal or no consideration and, accordingly, were not considered to have made a substantive investment for their shares. The value of such shares was based on the per share initial public offering price of $14.00 for our common stock.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------ ----------------------- 1996 1997 1998 1998 1999 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT NUMBER OF EMPLOYEES AND OFFICES) OTHER DATA: Gross billings: Internet................................................ 6,939 20,553 56,666 36,077 93,734 Recruitment advertising................................. $ 369,979 $ 642,872 $ 849,563 $ 646,141 $ 615,488 Search & selection...................................... 194,848 244,153 277,304 215,630 221,699 Temporary contacting.................................... 29,210 41,285 46,989 33,027 44,866 Yellow page advertising................................. 466,230 497,848 520,129 406,349 413,692 ---------- ---------- ---------- ---------- ---------- Total gross billings...................................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479 ========== ========== ========== ========== ========== Number of employees....................................... 3,910 5,651 6,278 6,270 6,412 Number of offices......................................... 161 213 254 254 247
19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW A substantial part of our growth in recruitment advertising and yellow page advertising has been achieved through acquisitions. For the period January 1, 1996 through September 30, 1999, we completed 58 acquisitions which were accounted for under the purchase method and which had estimated annual gross billings of approximately $662.7 million, based on annual gross billings for the fiscal year immediately preceding the respective acquisition. Given the significant number of acquisitions in each of the periods presented, the results of operations from period to period may not necessarily be comparable. In addition, for the period May 1, 1998 through October 31, 1999, we completed 20 mergers which were accounted for as poolings of interests. Of the pooling of interests mergers, the seven completed prior to April 1, 1999 are Johnson, Smith & Knisely Inc. ("JSK"), TASA Holding AG ("TASA"), Stackig, Inc. ("Stackig"), Recruitment Solutions Inc., Sunquest L.L.C. d.b.a. The SMART Group and The Consulting Group (International) Limited ("TCG"), in 1998 (the "1998 Mergers"), and Morgan & Banks Limited ("M&B") in January 1999 (the "M&B Merger"). In connection with these mergers, we issued approximately 8.7 million shares of our common stock in exchange for all of the outstanding common stock of these seven companies. From April 1, 1999 through June 30, 1999, we completed pooling of interests mergers (the "Second Quarter 1999 Mergers"), with six companies, Interquest, Pty. Limited ("Interquest"), LIDA Advertising Inc. ("LIDA"), Maes & Lunau ("M&L"), IN2, Inc. ("IN2"), Lemming & LeVan, Inc. ("L&L"), and Yellow Pages Unlimited, Inc. ("YPU"), (the "Second Quarter 1999 Pooled Companies"). In connection with the Second Quarter 1999 Mergers we issued a total of approximately 0.9 million shares of our common stock in exchange for all of the outstanding stock of the Second Quarter 1999 Pooled Companies. From July 1, 1999 through September 30, 1999, we completed pooling of interests mergers (the "Third Quarter 1999 Mergers"),with the five companies, Cameron-Newell Advertising, Inc. ("CNA"), Brook Street Bureau (QLD) Pty Ltd ("Brook St."), LAI Worldwide, Inc. ("LAI"), Fox Advertising Inc. ("Fox") and Lampen Group Limited ("Lampen") (the "Third Quarter 1999 Pooled Companies"). In connection with the Third Quarter 1999 Mergers we issued a total of approximately 2.2 million shares of our common stock in exchange for all of the outstanding stock of the Third Quarter 1999 Pooled Companies. Furthermore, from October 1, 1999 through November 19, 1999, we completed mergers with the two companies listed below (the "Fourth Quarter 1999 Pooled Companies"), which provided for the exchange of all of the outstanding stock of such companies for a total of 758,613 shares of our common stock and which were accounted for as poolings of interests (the "Fourth Quarter 1999 Mergers").
NATURE OF REGION OF NUMBER OF TMP ENTITY OPERATIONS OPERATIONS ACQUISITION DATE SHARES ISSUED - ------ ------------------ -------------------- ---------------- ------------- Highland Search Group L.L.C. ("Highland")....... Search & selection North America October 21, 1999 699,333 TMC S.r.l. ("Amrop Italy")............ Search & selection Continental Europe October 27, 1999 59,280
Accordingly, the following discussion reflects the foregoing mergers which were accounted for as poolings of interest. Gross billings refer to billings for advertising placed on the Internet, in newspapers and telephone directories by our clients, and associated fees for related services, fees earned for search and selection and related services, and net fees from temporary contracting services. Gross billings for recruitment advertising and yellow page advertising are not included in our consolidated financial statements, because they include a substantial amount of funds that are collected from our clients but passed through to publishers 20 for advertisements. However, the trends in gross billings in these businesses directly impact the commissions and fees earned because, for recruitment and yellow page advertising, we earn commissions based on a percentage of the media advertising purchased at a rate established by the related publisher. We also earn associated fees for related services. Publishers and third party Web sites typically bill us for the advertising purchased on the website and we in turn bill our clients for this amount. Generally, the payment terms with yellow page clients require payment to us prior to the date payment is due to publishers. The payment terms with recruitment advertising clients typically require payment when payment is due to publishers. Historically, we have not experienced substantial problems with unpaid accounts. Commissions and fees related to our Internet business are derived from: - recruitment advertising and related services placed on the Internet, primarily our own Web site, Monster.com(SM), - searches for permanent employees and temporary contracting services conducted through the Internet, - services provided to our yellow page clients and - the providing of interactive advertising services and technologies, which allow advertisers to measure and track sales, repeat traffic and other key statistics to enable such advertisers to greatly reduce costs, while driving only the most qualified users to their websites. For recruitment advertising placements in the U.S., publisher commissions historically average 15% of recruitment advertising gross billings. We also earn fees from related services such as campaign development and design, retention and referral programs, brochures and other collateral services, research and other creative and administrative services. Outside of the U.S., where, collectively, we derive the majority of our recruitment advertising commissions and fees, our commission rates for recruitment advertising vary, historically ranging from approximately 10% in Australia to 15% in Canada and the United Kingdom. Through our search and selection services, we identify and screen candidates for hiring by clients based on criteria established by such clients. We entered the executive search business in 1998 by acquiring JSK, the 12th largest executive search firm in the U.S. according to Kennedy Publications, an official ranking service for the search industry, TASA, an international executive search firm, both of which were accounted for as poolings of interests, and five regional European firms, including TCG, whose acquisition was accounted for as a pooling of interests. In the first quarter of 1999 we merged with M&B, the largest search and selection firm in Australia, in a pooling of interests transaction and acquired two European search and selection firms (one with operations in eastern Europe and one in Belgium). In the second quarter of 1999, in pooling of interests transactions, we merged with three companies with search and selection operations, M&L in the Netherlands, L&L in the United States and Interquest in Australia. In the third quarter of 1999, in a pooling of interests transaction, we merged with LAI, the 5th largest executive search firm in the U.S. (according to Hunt-Scanlon Publishing, Inc., a publication that follows the executive search industry). In the fourth quarter of 1999, in pooling of interests transactions, we merged with Highland, based in the United States, and Amrop Italy. We provide executive search services on a retained basis whereby we are generally paid a contractually agreed-to fee. In addition, we expanded our temporary contracting services in Australia, New Zealand and the United Kingdom with the additions of Brook St. and Lampen, which also have selection operations in those regions. In general, we bill our temporary contracting clients for the cost of the temporary contract employees plus a margin for providing the service. Commissions and fees for temporary contracting however are reported in our financial statements after deducting the costs of the temporary contractors. We design and execute yellow page advertising programs, receiving an effective commission rate from directory publishers which historically approximated 20% of yellow page gross billings. However, due to reductions in commission rates by the publishers and higher discounts granted by us to clients, the rate has 21 declined and for 1999 is approximately 19% and is expected to decline to approximately 18% by the middle of 2000. In general, publishers consider orders renewed unless formally canceled. In addition to base commissions, certain yellow pages publishers pay increased commissions for volume placement by advertising agencies. We typically recognize this additional commission, if any, in the fourth quarter when it is certain that such commission has been earned. The amounts reported in the fourth quarters of 1998, 1997 and 1996 were $0.9 million, $2.2 million and $3.5 million, respectively. Internet commissions and fees increased from $6.9 million in 1996 to $50.2 million in 1998 reflecting an increase in the acceptance of our Internet products by existing and new clients and the effect of increased sales and marketing activities. Recruitment advertising commissions and fees increased from $76.6 million in 1996 to $177.8 million in 1998 as a result of acquisitions made from January 1, 1996 through December 31, 1998 and which are included in our financial statements using the purchase method of accounting from their respective dates of acquisition. Search and selection commissions and fees grew from $185.4 million in 1996 to $276.1 million in 1998 primarily as a result of increased demand for these services by new and existing clients. Temporary contracting commissions and fees increased from $29.2 million in 1996 to $47.0 million in 1998 reflecting a greater demand for executive and information technology temporary contract personnel. Yellow page advertising commissions and fees increased from $100.9 million in 1996 to $106.5 million in 1998, as a result of acquisitions made from January 1, 1996 through December 31, 1998 and which are included in the financial statements using the purchase method of accounting. We are continuously monitoring the marketplace for opportunities to expand our presence in recruitment advertising on the Internet, search and selection, temporary contracting and yellow page advertising, and intend to continue our acquisition strategy to supplement our internal growth and the expansion of our businesses. Based on our consolidated results for the years ended December 31, 1998, 1997 and 1996, 44%, 42%, and 40%, respectively, of our consolidated commissions and fees were attributable to clients outside the U.S. Our total operating expenses have increased significantly since 1996 primarily as a result of acquisitions and added expenses to support gross billings growth for our Internet and recruitment businesses and marketing for our Internet business. Salaries and related costs increased $150.5 million to $382.7 million for the year ended December 31, 1998 from $232.2 million for the year ended December 31, 1996, a 64.8% increase, supporting a $683.4 million or a 64.0% increase in gross billings over the same period. When measured as a percent of gross billings, salaries and related costs for the year ended December 31, 1998 were 21.9%, up slightly from 21.8% for the comparable 1996 period. Salaries and related costs include total payroll and associated benefits as well as payroll taxes, sales commissions, recruitment fees and training costs. Office and general expenses increased $75.0 million to $190.2 million for the year ended December 31, 1998 from $115.2 million for the year ended December 31, 1996, a 65.1% increase. This increase is due primarily to increased costs needed to support the increased gross billings, the expansion of recruitment and search and selection offices through acquisitions in the U.S. and foreign markets, and expansion of our infrastructure and marketing costs to promote the growth of our Internet business. When measured as a percent of gross billings, office and general expenses for the year ended December 31, 1998 were 10.9%, a slight increase from 10.8% for the comparable 1996 period. This cost category includes expenses for office operations, business promotion, market research, advertising, professional fees and fees paid to our primary lending institution for its services in the processing and collection of payments for accounts receivable, gains or losses from the sale of operating assets, and costs associated with legal settlements. Merger and integration costs are expenses incurred in connection with business combinations accounted for under the pooling of interests method of accounting. In general, these costs are comprised of transaction costs (such as advisory, legal and accounting fees, printing costs and costs incurred for the subsequent registration of shares in connection with the transactions), stay bonuses, costs to eliminate 22 redundant facilities and personnel, costs to integrate operations of the pooled entities and acceleration of benefits and separation pay in accordance with pre-existing contractual change in control provisions. For the year ended December 31, 1998, we expensed merger and integration costs of $22.4 million in connection with the 1998 Mergers and the M&B Merger. These costs consist of (1) $11.9 million of non-cash employee stay bonuses, (2) $1.5 million of stay bonuses paid as cash to key personnel of the 1998 Pooled Companies and (3) $9.0 million of transaction related costs, including legal, accounting and advisory fees and the costs incurred for the subsequent registration of shares issued in the mergers. For the nine months ended September 30, 1999, we expensed merger and integration costs of $46.3 million compared with $9.6 million for the same period in 1998 an increase of $36.7 million or 383.1%. These costs are related to the 1998 Mergers, the M&B Merger, the Second Quarter 1999 Mergers, and the Third Quarter 1999 Mergers. The increase of $36.7 million primarily resulted from the pooling of interests transactions that occurred in the quarter ended September 30, 1999 and the planned integration of such companies. The increase is due to: (1) $4.8 million for separation pay and accelerated vesting of employee stock and stock option grants, both in accordance with pre-existing contractual change in control provisions, (2) $7.8 million more of transaction related costs, which include legal, accounting, printing and advisory fees and the costs incurred for the subsequent registration of shares issued in the transactions and (3) $25.2 million of office integration costs, which include the closing of excess leased facilities, the write-off of fixed assets which will not be used in the future and a reserve for the effect, after reduction for related compensation, of uncollectible search fees recorded as a result of a loss of executive search consultants, partially offset by $4.4 million less for employee stay bonuses paid with our shares and options to certain key personnel of the merged companies. Approximately $18.5 million of the $46.3 million are non-cash charges. The after tax effect of these charges on diluted earnings per share is $(0.73) and $(0.16) for the nine months ended September 30, 1999 and 1998, respectively. We expect to incur additional integration costs in connection with the Third Quarter 1999 Mergers in future periods. These costs will be primarily related to severance and will be recorded when the associated integration plans are finalized. Furthermore, we will incur merger and integration costs associated with the Fourth Quarter 1999 Mergers, including amortization of the cost of 160,120 shares of our common stock that were issued as stay bonuses to certain key employees of Highland and that will vest one year from the date of grant. Restructuring costs for the year ended December 31, 1998 were $3.5 million or, on an after tax basis, $(0.05) per diluted share. These charges relate to LAI's closing of its London office, and include the write-off of leasehold improvements and fixed assets, severance benefits and costs for consolidation of facilities related to the restructuring. Amortization of intangibles includes amortization of acquisition related charges, including the costs in excess of fair market value of net assets of business acquisitions accounted for under the purchase method and capitalized costs for non-compete arrangements with the principals of acquired companies. This acquisition related amortization was $10.2 million, $6.9 million and $4.7 million for the years ended December 31, 1998, 1997 and 1996, respectively and $8.6 million and $7.4 million for the nine months ended September 30, 1999 and 1998, respectively. The special CEO bonus for the years ended December 31, 1998 and 1997 of $1.3 million and $1.5 million reflects a non-cash charge, recorded in compliance with Staff Accounting Bulletin No. 79 ("SAB 79"), for a bonus mandated by Andrew J. McKelvey's employment contract, even though such bonus was irrevocably waived. The contractual obligation to pay such bonus was eliminated as of November 1998. The special compensation for the year ended December 31, 1996, reflects a non-cash, non-recurring charge of approximately $52.0 million resulting from the issuance of approximately 3.6 million shares of our common stock to stockholders of our predecessor companies in exchange for their shares in those companies. This charge was incurred because these stockholders had received such shares for nominal or no consideration as employees or as management of such companies and, accordingly, were not considered to have made substantive investments for their shares. 23 Net interest expense includes interest: (i) on loans made by our primary lender under our financing agreement with such lender, (ii) to certain vendors, (iii) on capitalized lease obligations, (iv) on net amounts payable to the holders of seller financed notes and (v) on a term loan related to the purchase of certain transportation equipment. In addition, 1996 net interest expense includes a non-recurring charge of approximately $2.6 million to reflect, upon exercise of the warrant issued in connection with our financing agreement, the difference between the value of the stock issued at the initial public offering price of $14.00 per share and the value recorded for the warrant when it was originally issued. RESULTS OF OPERATIONS The following table sets forth our gross billings, commissions and fees, commissions and fees as a percentage of gross billings, EBITDA and cash flow information.
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------ ----------------------- 1996 1997 1998 1998 1999 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) GROSS BILLINGS: Internet(1)........................ $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734 Recruitment advertising............ 369,979 642,872 849,563 646,141 615,488 Search & selection................. 194,848 244,153 277,304 215,630 221,699 Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866 Yellow page advertising............ 466,230 497,848 520,129 406,349 413,692 ---------- ---------- ---------- ---------- ---------- Total billings..................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479 ========== ========== ========== ========== ========== COMMISSIONS & FEES: Internet(1)........................ $ 6,939 $ 19,470 $ 50,158 $ 32,688 $ 82,952 Recruitment advertising............ 76,601 134,291 177,774 133,858 134,928 Search & selection................. 185,406 242,841 276,110 214,765 219,213 Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866 Yellow page advertising............ 100,883 103,941 106,455 82,534 79,522 ---------- ---------- ---------- ---------- ---------- Total commissions & fees........... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481 ========== ========== ========== ========== ========== COMMISSIONS AND FEES AS A PERCENTAGE OF GROSS BILLINGS: Internet........................... 100.0% 94.7% 88.5% 90.6% 88.5% Recruitment advertising............ 20.7 20.9 20.9 20.7 21.9 Search & selection................. 95.2 99.5 99.6 99.6 98.9 Temporary contracting.............. 100.0 100.0 100.0 100.0 100.0 Yellow page advertising............ 21.6 20.9 20.5 20.3 19.2 Total commissions & fees........... 37.4 37.5 37.6 37.2 40.4 EBITDA(3).......................... $ 7,755 $ 92,420 $ 79,075 $ 77,492 $ 32,591 Cash provided by operating activities....................... 37,097 51,251 63,617 32,686 55,846 Cash used in investing activities....................... (46,401) (89,726) (66,519) (79,985) (31,952) Cash provided by (used in) financing activities............. 13,368 65,524 20,093 32,680 (28,782) Effect of exchange rate changes on cash............................. (151) (298) (7) (56) (648)
- ------------------------ (1) Represents fees earned in connection with recruitment advertising placed on the Internet, primarily Monster.com(SM), searches for permanent employees and temporary contracting services conducted through the Internet, Internet services provided to yellow page clients and from providing interactive advertising services and technologies. (2) Amounts for temporary contracting are reported after deducting the costs of the temporary contractors. (3) Earnings before interest, income taxes, depreciation and amortization ("EBITDA") is presented to provide additional information about our ability to meet our future debt service, capital expenditures 24 and working capital requirements and is one of the measures which determines our ability to borrow under our credit facility. EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of our profitability or liquidity. EBITDA for the indicated periods is calculated as follows:
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------- ------------------- 1996 1997 1998 1998 1999 -------- -------- -------- -------- -------- (IN THOUSANDS) Net income (loss)........................... $(31,841) $41,954 $20,542 $29,209 $(4,917) Interest expense, net....................... 14,358 8,443 9,828 7,035 6,272 Income tax expense.......................... 11,058 20,565 14,367 16,637 1,154 Depreciation and amortization............... 14,180 21,458 34,338 24,611 30,082 -------- ------- ------- ------- ------- EBITDA...................................... $ 7,755 $92,420 $79,075 $77,492 $32,591 ======== ======= ======= ======= =======
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1998 Gross billings for the nine months ended September 30, 1999 were $1,389.5 million, a net increase of $52.3 million or 3.9% from $1,337.2 million for the nine months ended September 30, 1998. Commissions and fees for the nine months ended September 30, 1999 were $561.5 million, an increase of $64.6 million or 13.0% from $496.9 million in the first nine months of 1998. Internet commissions and fees for the nine months ended September 30, 1999 were $83.0 million, an increase of 153.8% or $50.3 million as compared with $32.7 million for the nine months ended September 30, 1998. This increase in Internet commissions and fees is due to: (i) an increasing acceptance of our Internet services and products from existing clients, new clients and Internet users, (ii) the benefits of Monster.com(SM)'s marketing campaign, (iii) increases in the services and content available on our Websites, (iv) expansion into certain European markets and (v) price increases on certain products. Recruitment commissions and fees were $134.9 million for the nine months ended September 30, 1999 compared with $133.9 million for the nine months ended September 30, 1998, an increase of $1.0 million or 0.8% due primarily to lower discounts to clients and increased ancillary services in North America offset, in part, by a loss of business in the Asia\Pacific Region which was ameliorated by an increase in business in Europe. Search and selection commissions and fees were $219.2 million, an increase of $4.4 million or 2.1% from $214.8 million for the comparable nine months of 1998, due primarily to acquisitions and growth in Continental Europe offset by a decline in executive search due to a loss of consultants, as anticipated, at LAI and TASA, which resulted from the merger and integration of these companies. Temporary contracting commissions and fees were $44.9 million, up $11.9 million or 35.8% from $33.0 million for the period ended September 30, 1998. Our temporary contracting operations are primarily conducted in Australia and New Zealand. The 35.8% increase reflects an increase in the number of contractors placed, particularly information technology personnel and executives, which have higher margins than general and support staff. Yellow page commissions and fees were $79.5 million for the nine months ended September 30, 1999, a decrease of $3.0 million or 3.6% from $82.5 million in the first nine months of 1998 primarily due to increased discounts to clients and lower commissions paid by publishers offset, in part by higher gross billings from internal growth and acquisitions. Operating expenses for the nine months ended September 30, 1999 were $557.7 million compared with $442.8 million for the same period in 1998. The increase of $114.9 million or 25.9% is due to an increase of $36.7 million in merger and integration costs related to mergers accounted for as poolings of interests, acquisitions accounted for as purchases, higher operating and marketing costs to support our expanding Internet operations and $2.8 million in restructuring expenses resulting from the closings of LAI's Hong Kong and London offices. 25 Salaries and related costs for the nine months ended September 30, 1999 were $327.0 million or 58.2% of total commissions and fees, compared with $288.0 million or 58.0% of total commissions and fees for the same period in 1998. The increase of $39.0 million or 13.5% is primarily due to increased staff for Internet operations additions and acquisitions in search and selection. Office and general expenses for the nine months ended September 30, 1999 were $173.1 million or 30.8% of total commissions and fees, compared with $136.6 million or 27.5% of commissions and fees for the same period in 1998. The increase of $36.5 million or 26.6% is primarily due to acquisitions and higher costs for our Internet operations, partially offset by reductions in expenses for the yellow page advertising and recruitment advertising businesses, due to improved efficiencies. Included in the increase for Internet was $15.9 million more in marketing costs for Monster.com and $13.8 million for search related Internet services at LAIcompass and Highland. The higher ratio of 30.8% compared to 27.5% is due primarily to marketing costs for search related Internet services, a slight increase in costs at LAI and a decline in commissions and fees. Merger and integration costs for the nine months ended September 30, 1999 were $46.3 million compared with $9.6 million for the same period in 1998 an increase of $36.7 million or 383.1%. This increase primarily resulted from the pooling of interests transactions that occurred in the quarter ended September 30, 1999 and the planned integration of such companies and is due to: (1) $4.8 million for separation pay and accelerated vesting of employee stock and stock option grants, both in accordance with pre-existing contractual change in control provisions, (2) $7.8 million more of transaction related costs, which include legal, accounting, printing and advisory fees and the costs incurred for the subsequent registration of shares issued in the transactions and (3) $25.2 million of office integration costs, which include the closing of excess leased facilities, the write-off of fixed assets which will not be used in the future and a reserve for the effect, after reduction for related compensation, of uncollectible search fees recorded as a result of a loss of executive search consultants, partially offset by $4.4 million less for employee stay bonuses paid with our shares and options to certain key personnel of the merged companies. Approximately $18.5 million of the $46.3 million are non-cash charges. The after tax effect of these charges on diluted earnings per share is $(0.73) and $(0.16) for the nine months ended September 30, 1999 and 1998, respectively. Restructuring charges for the nine months ended September 30, 1999 were $2.8 million or, on an after tax basis, $(0.04) per diluted share. These charges relate to LAI's closing of its London and Hong Kong offices, and include $0.5 million for the write-off of leasehold improvements and fixed assets, $1.3 million for severance benefits payable to 24 employees and $1.0 million for consolidation of facilities related to the restructuring. As a result of the above, operating income for the nine months ended September 30, 1999 decreased $50.3 million or 91.7% to $3.8 million from $54.1 million for the comparable period last year. Net interest expense for the nine months ended September 30, 1999 was $6.3 million, a decrease of $0.7 million or 10.8% from $7.0 million for the same period in 1998, reflecting lower interest rates and borrowing costs resulting from the amended and restated financing agreement entered into by the Company on November 5, 1998, partially offset by increased borrowings. Taxes on income for the nine months ended September 30, 1999 were $1.2 million on a $2.7 million pretax loss, resulting in an effective tax rate of (43.4)% compared with a tax expense of $16.6 million on a $46.1 million pretax profit, resulting in an effective tax rate of 36.1% for the same period last year. The negative effective tax rate for the 1999 period is caused by expenses that are not tax deductible. Such expenses are primarily related to merger costs from pooling of interests transactions and amortization of intangible assets. For both periods the effective tax rate is benefited by profits from Highland which were not taxed at the corporate level prior to our merger. 26 As a result of the above, the net loss applicable to common and Class B common stockholders for the nine months ended September 30, 1999 was $(0.12) per diluted share, a decrease of $0.85 per diluted share or 116.4% from the $0.73 per diluted share for the comparable 1998 period. YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997 Gross billings for the year ended December 31, 1998 were $1,750.7 million, a $304.0 million or 21.0% increase when compared to gross billings of $1,446.7 million for the year ended December 31, 1997. This increase in gross billings resulted primarily from acquisitions in recruitment advertising, growth in our Internet business and growth in our temporary contracting business. Total commissions and fees for the year ended December 31, 1998 were $657.5 million, an increase of $115.7 million or 21.3% from $541.8 million for the year ended December 31, 1997. Internet commissions and fees for the year ended December 31, 1998 were $50.2 million, an increase of 157.6% or $30.7 million from $19.5 million for the year ended December 31, 1997. The increase in Internet commissions and fees is due to (i) an increasing acceptance of our Internet services and products from existing clients and Internet users, (ii) the benefits of Monster.com(SM)'s marketing campaign, (iii) increases in the service and content available on our Websites, (iv) expansion into certain European markets and (v) price increases on certain products. Recruitment advertising commissions and fees were $177.8 million for the year ended December 31, 1998 compared with $134.3 million for the year ended December 31, 1997, an increase of $43.5 million or 32.4%. This increase was primarily due to acquisitions, which contributed approximately $25.1 million, and approximately $21.4 million from increased client spending and new clients partially offset by client losses and a decrease in foreign currency translation rates, which had a negative effect of approximately $3.0 million. Search and selection commissions and fees were $276.1 million compared with $242.8 million for the year ended December 31, 1997, an increase of $33.3 million or 13.7%, due primarily to acquisitions and increased business from existing clients and new clients. Temporary contracting commissions and fees increased to $47.0 million from $41.3 million, an increase of $5.7 million or 13.8%. This increase is primarily due to a greater number of temporary contract workers placed during 1998 as compared with the prior period, and reflects growth in the executive temporary contracting business, and to a lesser extent growth for clerical and support staff. Yellow page commissions and fees were $106.5 million for the year ended December 31, 1998 compared with $103.9 million for the year ended December 31, 1997, an increase of 2.4% or $2.6 million due primarily to acquisitions. Total operating expenses for the year ended December 31, 1998 were $610.3 million, compared with $471.4 million for 1997. The increase of $138.9 million or 29.5% is due primarily to acquisitions and internal growth, together with the addition of $22.4 million for merger and integration costs related to pooling of interests transactions and $3.5 million in restructuring charges for the closing of LAI's London, England office. Salaries and related costs for the year ended December 31, 1998 were $382.7 million or 58.2% of total commissions and fees, compared with $310.2 million or 57.2% of total commissions and fees for the same period in 1997, representing an increase of $72.5 million or 23.4%. This increase reflects acquisitions in search and selection and recruitment advertising and growth in Internet operations. Office and general expenses increased $37.4 million to $190.2 million for the year ended December 31, 1998, as compared with $152.8 million for the prior period primarily due to acquisitions and added marketing and other expenses to grow our Internet businesses. As a percent of total commissions and fees, office and general expenses increased to 28.9% for the year ended December 31, 1998 from 28.2% for the year ended December 31, 1997. Restructuring charges for the year ended December 31, 1998 were $3.5 million or, on an after tax basis, $(0.05) per diluted share and relate to LAI's plan to close its international office in London, England. These charges include $1.1 million for severance, and $2.4 million for the write-off of leasehold improvements and other costs to close these facilities. 27 In connection with the 1998 Mergers and the M&B Merger, we expensed merger and integration costs of $22.4 million for the year ended December 31, 1998, consisting of (1) $11.9 million of non-cash employee stay bonuses, which included (a) $3.6 million for the amortization for our shares set aside for key personnel of JSK and TCG, who must remain employees for a full year in order to earn such shares and (b) $8.3 million for our shares to key personnel of TASA and Stackig as employee stay bonuses, (2) $1.5 million of stay bonuses paid as cash to key personnel of one of the companies merged in 1998 and (3) $9.0 million of transaction related costs, including fees for legal, accounting and advisory services and the costs incurred for the subsequent registration of shares issued in the acquisitions. The after tax effect of this charge is $16.7 million or $(0.43) per diluted share. (See Notes 1 and 5 to our Supplemental Consolidated Financial Statements as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998 incorporated by reference in this prospectus.) Amortization of intangibles was $10.2 million for the year ended December 31, 1998 compared to $6.9 million for the year ended December 31, 1997. The increase is due to our continued growth through acquisitions. As a percentage of total commissions and fees, amortization of intangibles was 1.5% and 1.3% for the year ended December 31, 1998 and 1997, respectively. As a result of all of the above, operating income decreased $23.3 million to $47.2 million for the year ended December 31, 1998 as compared with operating income of $70.5 million for the year ended December 31, 1997 and, as a percent of total commissions and fees, operating income decreased to 7.2% from 13.0%. Net interest expense increased $1.4 million to $9.8 million for the year ended December 31, 1998 as compared to $8.4 million for the year ended December 31, 1997, reflecting a net increase in debt as a result of acquisitions and capital expenditures. In addition, our effective interest rate was 10.8% for the year ended December 31, 1998 compared with 10.4% for the year ended December 31, 1997. Taxes on income decreased $6.2 million to $14.4 million for the year ended December 31, 1998 from $20.1 million for the year ended December 31, 1997 primarily due to lower pre-tax income. The effective tax rate for the year ended December 31, 1998 was 40.7% compared with 32.7% for the year ended December 31, 1997. The higher effective rate in 1998 reflects the inability to deduct for tax, certain costs associated with the 1998 Mergers and the M&B Merger. For the year ended December 31, 1998, equity in losses of affiliates was $396,000, reflecting losses at our minority owned real estate advertising affiliate, as compared with a $33,000 loss for the same period in 1997. Minority interests in consolidated earnings for the year ended December 31, 1998 were $28,000 compared with $296,000 for the year ended December 31, 1997. As a result of all of the above, the net income applicable to common and Class B common stockholders was $20.5 million for the year ended December 31, 1998, or $0.52 per diluted share, compared with net income of $41.8 million, or $1.13 per diluted share for the year ended December 31, 1997. YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996 Gross billings for the year ended December 31, 1997 were $1,446.7 million, a $379.5 million or 35.6% increase when compared to gross billings of $1,067.2 million for the year ended December 31, 1996. The growth is primarily due to acquisitions in recruitment advertising, rate increases in yellow page advertising, increased clients and higher client spending for search and selection, and a growing acceptance of our Internet products. Total commissions and fees increased to $541.8 million for the year ended December 31, 1997 from $399.0 million for the year ended December 31, 1996, an increase of $142.8 million or 35.8%. This reflects increases, as compared to the prior year period, in commissions and fees for (a) Internet of $12.5 million or 180.6%, (b) recruitment advertising of $57.6 million or 75.3%, (c) search and selection of $57.4 million 28 or 31.0%, (d) temporary contracting of $12.1 million or 41.3% and (e) yellow page advertising of $3.1 million or 3.0%. Fees derived from Internet were generated from job searches and recruitment advertising placed on the Internet, primarily on our wholly owned Web sites Monster.com(SM) and occ.com, and reflects the continued customer acceptance of our Internet products both from our existing clients as well as new clients and price increases on certain products. A substantial portion of the increase in commissions and fees for recruitment advertising was due to acquisitions, including $15.5 million from Austin Knight, acquired in August 1997, and the remainder was due to higher client spending and new clients. The increase in commissions and fees for search and selection was primarily due to the healthy economy and related employment markets in the U.S. The increase in temporary contracting commissions and fees is due to expansion of the temporary contracting market in Australia. The increase in commissions and fees for yellow page advertising was due primarily to increased rates by the yellow page publishers and an acquisition, substantially offset by lower publisher incentives and the full year effect of accounts lost and resigned in 1996. Salaries and related costs increased $77.9 million to $310.2 million for the year ended December 31, 1997 but as a percent of total commissions and fees, salaries and related costs decreased to 57.2% for the year ended December 31, 1997 from 58.2% for the year ended December 31, 1996. This $77.9 million increase was primarily due to additional staff required to service increased recruitment advertising billings, increased sales staffing for Internet, and generally higher salaries and related costs for search and selection operations. Office and general expenses increased $37.6 million to $152.8 million for the year ended December 31, 1997 as compared with $115.2 million for the prior period. The increase was primarily due to growth across all lines of business. However, as a percent of total commissions and fees, office and general expenses decreased to 28.2% for the year ended December 31, 1997 from 28.9% for the year ended December 31, 1996. This decrease was primarily due to (1) consolidation of offices, which slowed the growth of office related expenses, (2) increased growth in recruitment advertising commissions and fees combined with the relatively fixed nature of some of these expenses and (3) increased temporary contracting operations which have relatively stable office and general expenses. Amortization of intangibles was $6.9 million for the year ended December 31, 1997 compared to $4.7 million for the year ended December 31, 1996. The increase is due to our continued growth through acquisitions. As a percentage of total commissions and fees, amortization of intangibles was 1.3% and 1.2%, respectively, for the years ended December 31, 1997 and 1996. For 1996, special compensation of $52.0 million consists of a non-cash, non-recurring charge that reflects the value of shares issued in connection with the acquisition of the minority interests in our predecessors because the stockholders had received such shares for nominal or no consideration and, accordingly, were not considered to have made a substantive investment for their shares. The value of such shares was based on the per share initial public offering price of $14.00 for our common stock. As a result of the above, operating income for the year ended December 31, 1997 increased $75.7 million to $70.5 million as compared with an operating loss of $5.2 million for the year ended December 31, 1996 and as a percent of total commissions and fees increased to 13.0% from (1.3)% for the year ended December 31, 1996. Net interest expense decreased $5.9 million to $8.4 million for the year ended December 31, 1997 as compared to $14.3 million for the year ended December 31, 1996. This decrease in interest expense is due primarily to the repayment of a portion of the debt with the net cash proceeds of our initial public and supplemental offerings. In addition, in 1996 there was a $2.6 million non-cash, non-recurring charge to reflect, upon exercise of a warrant issued in connection with our financing agreement, the value of the stock issued at our initial public offering price of $14.00 per share and the value recorded for the warrant when it was originally issued. Our effective interest rate was 10.4% for the year ended December 31, 1997 compared with 15.8% for the year ended December 31, 1996. 29 Taxes on income increased $9.5 million to $20.6 million for the year ended December 31, 1997 from $11.1 million for the year ended December 31, 1996 primarily due to higher pre-tax income. The effective tax rate for the year ended December 31, 1997 was 32.7% compared with (55.6)% for the year ended December 31, 1996. The effective tax rate for 1997 was lower than the U.S. Federal statutory rate of 34.0% primarily due to profits of pooled entities taxed directly to owners, partially offset by nondeductible expenses of approximately $2.9 million and state taxes of $1.1 million. The effective tax rate for 1996 reflects the non-deductability of a non-cash special compensation charge of $52.0 million, non-cash interest expense of $2.6 million and state taxes of $0.4 million, as well as our inability to offset profits at certain subsidiaries with losses incurred by others. As a result of all of the above, the net income applicable to common and Class B common stockholders was $41.8 million for the year ended December 31, 1997, or $1.13 per diluted share, compared with net loss of $32.1 million, or $(1.04) per diluted share for the year ended December 31, 1996. LIQUIDITY AND CAPITAL RESOURCES Our principal capital requirements have been to fund (i) acquisitions, (ii) working capital, (iii) capital expenditures and (iv) marketing and development of our Internet business. Our working capital requirements are generally higher in the quarters ending March 31 and June 30 during which payments to the major yellow page directory publishers are at their highest levels. We have met our liquidity needs over the last three years through (a) funds provided by operating activities, (b) equity offerings, (c) long-term borrowings, (d) capital leases and (e) vendor financing in 1996. In December 1996, we completed our initial public offering of an aggregate of 4,147,408 shares of common stock at a purchase price of $14.00 per share in an underwritten public offering managed by Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Ladenburg Thalmann & Co. Inc. In the initial public offering, certain stockholders sold an additional aggregate of 652,592 shares of common stock. The net proceeds that we received from the initial public offering of $50.8 million were used to repay debt and, in early 1997, to pay down accounts payable and to redeem preferred stock. In September 1997, we completed a second public offering of an aggregate of 2,400,000 shares of common stock at a purchase price of $23.00 per share in an underwritten public offering managed by Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co., BT Alex Brown Incorporated, Montgomery Securities and Ladenburg Thalmann & Co. Inc. In addition, certain stockholders sold an aggregate of 1,600,000 shares of common stock in such offering. Our net proceeds from this offering of $63.4 million, including net repayment of borrowings of $12.2 million, paid to us by certain stockholders were used to repay debt. In 1998, LAI received $41.4 million in net proceeds from its second public offering. Such proceeds were used to support its international expansion, support enhancements to its technology-based infrastructure, acquire two search and selection companies and provide additional working capital. Net cash provided by operating activities for the nine months ended September 30, 1999 was $55.8 million compared with $32.7 million provided by operating activities for the nine months ended September 30, 1998, an increase of $23.1 million. This increase was primarily due to (a) the net increase in funds from a $23.5 million greater increase in deferred revenue for the 1999 period over the 1998 period, related mostly to Internet operations, (b) an $18.0 million increase in cash from work-in-process and prepaid and other assets, (c) $6.2 million more from tax benefits from the exercise of employee stock options, (d) a $3.8 million effect from inclusion of losses from companies accounted for as poolings of interests, in both the current period and the previous year, because of overlapping reporting periods and (e) a $0.3 million net increase in the use of funds from increases in accounts receivable over increases in accounts payable and accrued expenses for the 1999 period over the 1998 period, reduced by a $28.6 million decline in earnings after adjusting for non-cash items. EBITDA was $32.6 million for the nine months ended September 30, 1999, a decrease of $44.9 million or 57.9% from $77.5 million for the nine months ended September 30, 1998. The decrease primarily reflects, for the 1999 period, a $50.3 million 30 decrease in operating profits partially offset by $5.5 million more in depreciation and amortization costs. As a percentage of commissions and fees, EBITDA decreased to 5.8% for the nine months ended September 30, 1999 as compared with 15.6% for the nine months ended September 30, 1998. The lower percent reflects the increase in merger and integration and restructuring costs, which were 8.7% and 1.9% of commissions and fees for the 1999 and 1998 periods, respectively. Our investing activities for the nine months ended September 30, 1999 used cash of $32.0 million, which is $48.0 million less than the $80.0 million for the nine months ended September 30, 1998. This decrease was primarily due to the use in 1998 of $33.4 million more in investments by a pooled company and $2.0 million more used for business acquisitions combined with $9.8 million received from the sale of fixed assets, primarily our plane, in the 1999 period. We estimate that our expenditures for computer equipment and software, furniture and fixtures and leasehold improvements will be approximately $30 million for the year ended 1999 and $60 million for the year ended 2000. Our financing activities include borrowings and repayments under our bank financing agreements and issuance of and payments against installment notes used principally to finance acquisitions and equipment. Our financing activities for the nine months ended September 30, 1999 used net cash of $28.8 million but provided $32.7 million for the nine months ended September 30, 1998. The change of $61.5 million resulted primarily from $41.4 million in proceeds from a common stock offering by LAI in the 1998 period and net repayments in the 1999 period of $29.9 million against credit facilities and capitalized lease obligations compared with a net borrowing of $1.5 million in the prior year period, offset in part by a $6.8 million increase in cash received from the exercise of employee stock options and a $4.3 million decline in dividends paid by pooled companies in the 1999 period from the 1998 period. Net cash provided by operating activities for the years ended December 31, 1998, 1997 and 1996 was $63.6 million, $51.3 million and $37.1 million, respectively. The increase in cash of $12.3 million from operating activities for 1998 over 1997 was primarily due to an increase of $17.9 million in accounts payable, accrued expenses and other current liabilities, a $12.9 million increase in depreciation and amortization costs, $8.3 million for the utilization of our common stock to pay bonuses, a decrease of $7.3 million in accounts receivable and a $3.2 million increase in deferred revenue, partially offset by decreases in net income of $21.4 million, $8.1 million in deferred income taxes and $10.7 million in prepaid and other assets. In addition, in 1998 we paid approximately $13.6 million for restructuring. Such amount was applied against a reserve set up during 1997 in connection with acquisitions accounted for using the purchase method. This reserve was increased in 1998 by a $3.5 million charge to earnings and by $10.1 million, with a corresponding increase to intangible assets, and reduced by payments of $13.6 million, leaving a restructuring reserve at December 31, 1998 of $16.7 million. (See Note 5 to our Supplemental Consolidated Financial Statements as of December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998 incorporated by reference in this prospectus.) The increase in cash from operating activities for 1997 over 1996 was primarily due to increased net income, after adding back the effect of non-cash charges in 1996, partially offset by higher payments of accounts payable, including amounts to substantially repay vendor financed payables. EBITDA was $79.1 million for the year ended December 31, 1998, a decrease of $13.3 million from $92.4 million for the year ended December 31, 1997. As a percentage of total commissions and fees, EBITDA decreased to 12.0% for the year ended December 31, 1998 from 17.1% for the year ended December 31, 1997. The decrease resulted primarily from the $18.0 million charge for merger costs ($22.4 million less $4.4 million in amortization of deferred compensation), which was 2.7% of total commissions and fees for the year ended December 31, 1998, offset, in part, by increased depreciation and amortization of $12.9 million. For the year ended December 31, 1997, EBITDA was $92.4 million, an increase of $84.6 million from $7.8 million for the year ended December 31, 1996. As a percent of total commissions & fees, EBITDA increased to 17.1% for the year ended December 31, 1997 as compared to 31 1.9% for the year ended December 31, 1996 due to a higher operating profit. For the year ended December 31, 1996, EBITDA was $7.8 million primarily due to the $52.0 million non-cash special compensation charge. Net cash used in investing activities for the years ended December 31, 1998, 1997 and 1996 was $66.5 million, $89.7 million and $46.4 million, respectively. The $23.2 million decrease in 1998 as compared with 1997 was primarily due to $34.1 million less in payments for acquisitions, reflecting the use of company stock to make acquisitions of businesses, offset in part by $0.4 million more in capital expenditures and during 1997 our receipt of a net $11.4 million from Andrew J. McKelvey and certain other stockholders, who repaid borrowings with funds received primarily from their sale of shares included with our second public offering. Payments for businesses acquired using the purchase method of accounting, excluding $5.5 million in our stock, were $32.8 million in 1998, $66.9 million in 1997, of which $47.2 million was for Austin Knight, and $31.3 million in 1996. Capital expenditures, primarily for computer equipment and furniture and fixtures, were $31.9 million, $31.6 million and $15.4 million for the years ended December 31, 1998, 1997 and 1996, respectively. In addition, in 1997, we acquired certain transportation equipment and made capital improvements for a total of $6.8 million, replacing the transportation equipment sold during 1996 for $6.1 million, and simultaneously entered into a $7.8 million financing agreement to fund the purchase and provide additional operating funds. In December 1996, we sold certain transportation equipment for $6.1 million receiving a note for $2.7 million and retained $1.2 million in cash, after payment of related debt. Our financing activities include equity offerings, borrowings and repayments under our financing agreement and payments on (i) installment notes, principally to finance acquisitions, and (ii) capital leases. In the fourth quarter of 1996, we completed our initial public offering of 4,147,408 shares of common stock for net proceeds of $50.8 million and in the third quarter of 1997, we completed our second public offering of 2,400,000 shares of common stock for net proceeds of $51.2 million. With a portion of the proceeds received from our initial public offering, in January 1997, we redeemed all of the shares of the cumulative preferred stock issued by a subsidiary, reported as a minority interest, and our previously issued preferred stock for approximately $3.1 million and $2.1 million, respectively. Such redemptions included approximately $100,000 each of premiums. Our financing activities provided net cash of $20.1 million, $65.5 million and $13.4 million in 1998, 1997 and 1996, respectively. In November, 1998 and 1997 we amended our financing agreement with our primary lender to provide for borrowings, under a revolving credit facility, of a minimum of $175 million. In May 1999 we increased this amount to $185 million. This facility is used to finance our acquisitions and for working capital requirements. As of December 31, 1998, there was $97.7 million outstanding and approximately $77.3 million available under such facility. Our current interest rate under the agreement is LIBOR plus 75 basis points. In addition, we had secured lines of credit aggregating $49.0 million for LAI and our operations in Australia, France, Belgium and the Netherlands of which approximately $42.5 million was unused at December 31, 1998. Upon consummation of LAI's merger with us, we eliminated LAI's $25.0 million line of credit. We believe we will be able to fund our short-term cash needs through funds from operations, our credit facilities in the United States, the United Kingdom, Canada and Australia and, to a lesser extent, equipment leases. The borrowings are secured by a lien on substantially all of our assets. In addition, the financing agreement contains certain covenants which restrict, among other things, our ability to borrow, pay dividends, acquire businesses, guarantee debts of others and lend funds to affiliated companies and contains criteria on the maintenance of certain financial statement amounts and ratios. At September 30, 1999, we had a $185 million committed line of credit from our primary lender pursuant to a revolving credit agreement expiring June 30, 2001. Of such line, at September 30, 1999, approximately $58.2 million was unused and accounts receivable as defined in the agreement is sufficient to allow draw down of the entire amount. In addition, we have lines of credit aggregating $20.6 million for our operations in Australia, New Zealand, France, Belgium and the Netherlands of which approximately $12.0 million was unused at September 30, 1999. 32 Cash and cash equivalents at September 30, 1999 were $68.0 million, an increase of $26.4 million from $41.6 million at September 30, 1998. Part of our acquisition strategy is to pay, over time, a portion of the purchase price of certain acquisitions through seller financed notes. Accordingly, such notes are included in long-term debt, are generally payable over five years and totaled approximately $13.8 million at December 31, 1998. We intend to continue our acquisition strategy and marketing and promotion of our Internet business through the use of operating profits, borrowings against our long-term debt facility and seller financed notes. We believe that our anticipated cash flow from operations, as well as the availability of funds under our existing financing agreements and access to public equity and debt markets, will provide us with liquidity to meet our current foreseeable cash needs for at least the next year. However, if we determine that conditions are favorable, we would consider additional corporate equity or debt transactions. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivatives and Hedging Activities" ("SFAS No. 133"), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. We do not expect the adoption of this statement to have a significant impact on our results of operations, financial position or cash flows. YEAR 2000 ISSUE Many currently installed computer systems and software products are coded to accept or recognize only two digit entries in the date code field. These systems and software products will need to accept four digit entries to distinguish 21st century dates from 20th century dates. As a result, computer systems and/or software used by many companies and governmental agencies may need to be upgraded to comply with such Year 2000 requirements or risk system failure or miscalculations causing disruptions of normal business activities. STATE OF READINESS. Since early in 1999, we have been working to position ourselves as Year 2000 ready before December 31, 1999. We have developed a comprehensive plan to deal with the Year 2000 issue and have engaged internal and external resources to focus on this effort. It is an evolving plan as we continue to acquire and integrate companies throughout 1999. The plan is intended to achieve three basic objectives: to ensure that computer systems and other equipment function in the same manner after December 31, 1999 as it did before the century date change, to ensure that each business unit follows a consistent approach for assessment renovation, and validation of all IT and non-IT assets, and to track the status of all Year 2000 efforts. In addition to our internal assets, we are assessing and monitoring the Year 2000 readiness of our key vendors and service providers. We are also monitoring the readiness of public infrastructure service providers such as power, communications, and transportation providers. Our Year 2000 task force has conducted an inventory of and has developed testing procedures for all software and other systems that we believe might be affected by Year 2000 issues. Since third parties developed and currently support many of the systems used, a significant part of this effort will be to ensure that these third-party systems are Year 2000 ready. Our plan is to confirm this readiness by obtaining representations by these third parties that their products' are year 2000 ready and through specific testing of these systems. We have substantially completed this process as of the end of the third quarter of 1999 and will fully complete this process by the end of the fourth quarter. Until such testing is completed and such vendors and providers are contacted, we will not be able to completely evaluate whether our systems will need to be revised or replaced. 33 COSTS. During 1999, we expect to incur approximately $3.0 million, globally, in connection with identifying, evaluating and addressing Year 2000 readiness issues. Most of these costs relate to time spent by employees and consultants in making our systems Year 2000 ready. Such costs are not expected to have a material adverse effect on our business, results of operations and financial condition. RISKS. While we are making every effort to address the Year 2000 issue, there are inherent risks. We are not currently aware of any Year 2000 readiness problems relating to our systems that would have a material adverse effect on our business, results of operations and financial condition, without taking into account our efforts to avoid or fix such problems. There can be no assurance that we will not discover Year 2000 readiness problems in our systems and equipment that will require substantial revision. In addition, there can be no assurance that third-party software, hardware or services incorporated into our material systems will not need to be revised or replaced, all of which could be time-consuming and expensive. Our failure to fix or replace our internally developed proprietary software or third-party software, hardware or services on a timely basis could result in lost commissions and fees, increased operating costs, the loss of customers and other business interruptions, any of which could have a material adverse effect on our business, results of operations and financial condition. Moreover, the failure to adequately address Year 2000 readiness issues in our internally developed proprietary software could result in claims of mismanagement, misrepresentation or breach of contract and related litigation, which could be costly and time-consuming to defend. We are heavily dependent on a significant number of third party vendors to provide both network services and equipment. A significant Year 2000 related disruption of the network, services or equipment that third-party vendors provide to us could cause our members and visitors to consider seeking alternate providers or cause an unmanageable burden on our technical support, which in turn could materially and adversely affect our business, financial condition and results of operations. In addition, we cannot assure you that governmental agencies, utility companies, internet access companies, third party service providers and others outside of our control will be Year 2000 ready. The failure by such entities to be Year 2000 ready could result in a systemic failure beyond our control, such as a prolonged Internet, telecommunications or electrical failure, which could also prevent us from delivering our services to our customers, decrease the use of the Internet or prevent users from accessing our websites which could have a material adverse effect on our business, results of operations and financial condition. CONTINGENCY PLAN. Although we believe our systems are Year 2000 ready, we have developed contingency plans for critical systems and equipment in the event of a failure. The results of our Year 2000 simulation testing and the responses received from third-party vendors and service providers have been taken into account in determining the nature and extent to which our contingency plans will be implemented. In addition, we have developed an event planning procedure to monitor the function of our global operations before, during and after the century date change. FLUCTUATIONS OF QUARTERLY RESULTS Our quarterly commissions and fees are affected by the timing of yellow page directory closings which currently have a concentration in the third quarter. Yellow page publishers may change the timing of directory publications which may have an effect on our quarterly results. Our yellow page advertising results are also affected by commissions earned for volume placements for the year, which are typically reported in the fourth quarter. Our quarterly commissions and fees for recruitment advertising are typically highest in the first quarter and lowest in the fourth quarter. However, the cyclicality in the economy and our clients' employment needs have an overriding impact on our quarterly results in recruitment advertising, search and selection and temporary contracting. (See Note 2 to our Supplemental Consolidated Financial Statements incorporated by reference in this prospectus.) 34 The following table sets forth summary quarterly unaudited financial information for the nine months ended September 30, 1999 and the years ended December 31, 1998 and 1997:
1999 QUARTERS ------------------------------------ MARCH 31, JUNE 30, SEPTEMBER 30, --------- -------- ------------- (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Commissions & fees: Internet.................................................... $ 20.5 $ 25.8 $ 36.7 Recruitment advertising..................................... 45.6 46.3 43.0 Search & selection.......................................... 66.3 70.2 82.7 Temporary contracting....................................... 12.8 16.6 15.5 Yellow page advertising..................................... 23.8 27.2 28.5 ------ ------ ------ Total commissions & fees.................................... $169.0 $186.1 $206.4 ====== ====== ====== Operating income (loss)..................................... $ (1.2) $ 7.4 $ (2.4) Net income (loss) applicable to common and Class B common stockholders.............................................. $ (2.3) $ 3.2 $ (5.8) Net income (loss) per common and Class B common share: Basic....................................................... $(0.06) $ 0.08 $(0.15) Diluted..................................................... $(0.06) $ 0.08 $(0.15) Weighted average shares outstanding (in thousands): Basic....................................................... 39,323 39,876 39,992 Diluted..................................................... 39,323 41,596 39,992
1998 QUARTERS --------------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, --------- -------- ------------- ------------ (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Commissions & fees: Internet.......................................... $ 8.0 $ 11.0 $ 13.7 $ 17.5 Recruitment advertising........................... 45.8 45.7 42.3 43.9 Search & selection................................ 69.9 74.0 70.9 61.3 Temporary contracting............................. 5.6 13.6 13.8 14.0 Yellow page advertising........................... 23.3 27.1 32.1 23.9 ------ ------ ------ ------ Total commissions & fees.......................... $152.6 $171.4 $172.8 $160.6 ====== ====== ====== ====== Operating income (loss)........................... $ 17.2 $ 21.2 $ 15.7 $ (6.9) Net income (loss) applicable to common and Class B common stockholders............................. $ 9.7 $ 11.6 $ 7.9 $ (8.7) Net income (loss) per common and Class B common share: Basic............................................. $ 0.25 $ 0.30 $ 0.20 $(0.22) Diluted........................................... $ 0.24 $ 0.29 $ 0.20 $(0.22) Weighted average shares outstanding (in thousands): Basic............................................. 38,421 38,748 38,811 38,857 Diluted........................................... 39,735 39,806 39,970 38,857
35
1997 QUARTERS --------------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, --------- -------- ------------- ------------ (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Commissions & fees: Internet.......................................... $ 4.0 $ 4.7 $ 5.0 $ 5.8 Recruitment advertising........................... 27.7 30.8 35.4 40.4 Search & selection................................ 56.8 63.4 59.6 63.0 Temporary contracting............................. 5.3 24.2 5.8 6.0 Yellow page advertising........................... 21.9 25.1 30.6 26.3 ------ ------ ------ ------ Total commissions & fees.......................... $115.7 $148.2 $136.4 $141.5 ====== ====== ====== ====== Operating income.................................. $ 18.5 $ 19.4 $ 19.9 $ 12.7 Net income applicable to common and Class B common stockholders.................................... $ 11.2 $ 11.9 $ 11.0 $ 7.7 Net income per common and Class B common share: Basic............................................. $ 0.32 $ 0.33 $ 0.31 $ 0.20 Diluted........................................... $ 0.31 $ 0.33 $ 0.30 $ 0.20 Weighted average shares outstanding (in thousands): Basic............................................. 35,355 35,578 36,171 38,257 Diluted........................................... 35,798 36,204 36,847 38,896
Earnings (loss) per share calculations for each quarter include the weighted average effect for the quarter; therefore, the sum of the quarters may not equal the full year earnings (loss) per share amount, which reflects the weighted average effect on an annual basis. In addition, diluted earnings per share calculations for each quarter include the effect of stock options and warrants, when dilutive to the quarter. 36 BUSINESS We provide a comprehensive range of career services and solutions through our flagship Internet property, Monster.com(SM), and through our recruitment advertising and executive search businesses. We are also the world's largest yellow page advertising agency. INDUSTRY OVERVIEW INTERNET. The Internet is an increasingly significant global medium for communications, content and commerce. Growth in Internet usage has been fueled by a number of factors, including the availability of a growing number of useful products and services, the large and growing installed base of personal computers in the workplace and home, advances in the performance and speed of personal computers and modems, improvements in network infrastructure, easier and cheaper access to the Internet and increased awareness of the Internet among businesses and consumers. The increasing functionality, accessibility and overall usage of the Internet and online services have made them an attractive commercial medium. Thousands of companies have created corporate Web sites that feature information about their product offerings and advertise employment opportunities. Through the Web, Internet content providers are able to deliver timely, personalized content in a manner not possible through traditional media. Internet content can be continuously updated, distributed to a large number of consumers on a real-time basis, and accessed by users at any time. Industry publications indicate that the historical and projected adoption of online/Internet services represents a faster rate of penetration than occurred with traditional media, such as radio, broadcast television and cable television. For job seekers, online recruiting can provide the ability to rapidly and more easily build, update and distribute their resumes, conduct job searches and gather information about employers. Online recruiting can also help to reduce the time of a job search by permitting job seekers to define their specific job needs and be contacted automatically when desired jobs become available. Online recruiting is also proving to be attractive to employers because online job advertisements can be accessed by job seekers anywhere in the world at anytime and more cost effectively than print media. Forrester Research estimates that online spending by employers for recruitment will grow from $105 million in 1998 to $1.7 billion in 2003. THE RECRUITMENT ADVERTISING MARKET. Recruitment advertising consists primarily of creating and placing recruitment advertisements in the classified advertising sections of newspapers. While the recruitment advertising market has historically been cyclical, during the period of 1990 through 1997, the U.S. market grew at a compound annual rate of approximately 12%. Classified readership by job seekers has remained constant over the last ten years and approximately 85% of companies use newspapers to attract potential employees. The services provided by recruitment advertising agencies can be complex and range from the design and placement of classified advertisements to the creation of comprehensive image campaigns which internationally "brand" a client as a quality employer. Further, shortages of qualified employees in many industries, particularly in the technology area, have increased the need for recruitment advertising agencies to expand the breadth of their service offerings to effect national and sometimes global recruitment campaigns. For the year ended December 31, 1998, global spending (billings) in the recruitment classified advertisement section of newspapers was approximately $13 billion. Agencies which place recruitment classified advertising are paid commissions generally equal to 15% of recruitment advertising placed in newspapers and earn fees for providing additional recruitment services. THE EXECUTIVE SEARCH AND SELECTION MARKET. The market for executive search firms is generally separated into two broad categories: retained executive search firms and contingency executive search firms. Retained executive search firms service their clients' senior management needs by acting in an ongoing client-consultant relationship to actively identify, evaluate, assess and recommend to the client suitable candidates for senior level positions. Retained search firms are generally engaged on an exclusive basis and paid a contractually agreed-to fee. Contingency executive search firms typically do not focus on the senior executives and are generally paid a percentage of the hired candidate's salary only when a 37 candidate is successfully placed with the client. Contingency firms are generally not hired on an exclusive basis and do not focus on the assessment, evaluation or recommendation of a candidate other than to determine if the candidate's resume qualifies him/her for the position. We provide executive search services on a retained basis. We also provide search services on a retained or a contingency basis to identify for our clients the mid-level executive, those who earn from $70,000 to $150,000, annually. We refer to this as selection. THE TEMPORARY CONTRACTING MARKET. According to the Staffing Industry Report, the United States temporary staffing industry grew from approximately $29 billion in revenue in 1993 to approximately $62 billion in revenue in 1998. In addition, third party sources estimate the worldwide temporary staffing market at more than $130 billion. Our gross revenue for temporary contracting was $258.4 million and $245.0 million for the year ended December 31, 1998 and the nine months ended September 30, 1999, respectively. However, temporary contracting commissions and fees reflect the net of gross revenue reduced by the cost of the temporary contractors. The temporary staffing industry has experienced significant growth in response to the changing work environment. These changes are a result of increasing automation that has resulted and we believe will continue to result in shorter technological cycles, and global competitive pressures. Many employers responded to these challenges by turning to temporary and contract personnel to keep personnel costs variable, achieve maximum flexibility, outsource highly specialized skills, and avoid the negative effect of layoffs. We believe fundamental changes in the employer-employee relationship continue to occur, with employers developing increasingly stringent criteria for permanent employees, while moving toward project-oriented temporary and contract hiring. THE YELLOW PAGE ADVERTISING MARKET. Yellow page directories have been published in the U.S. since at least the 1890's and, traditionally, have been published almost exclusively by telephone utilities. In the early 1980's, due in part to telephone deregulation, independent companies began publishing an increasing number of directories. Currently, approximately 7,000 yellow page directories are published annually by 200 publishers and, in the U.S., many cities with populations in excess of 80,000 are served by multiple directories. The percentage of adults who use the yellow pages has remained relatively constant over the last ten years at over 56%, and such readers consult the yellow pages approximately two times weekly. Accordingly, yellow page directories continue to be a highly effective advertising medium. For the year ended December 31, 1998, total spending on yellow page advertisements in the U.S. was $12.0 billion. Of this amount, approximately $10.1 billion was spent by local accounts and approximately $1.9 billion was spent by national accounts. As those terms are used in the yellow page industry, "local" refers to an advertisement solicited by a yellow page publisher's own sales staff and "national" refers to an advertisement that is placed by an advertising agency and that meets certain criteria specified by the publisher. Local accounts are typically merchants who primarily conduct their business within the geographic area served by the publisher's directories. The national account market consists of companies which sell products or services in multiple markets and is the market in which we compete. Most national accounts use independent advertising agencies to design and implement their yellow page advertising programs to create a consistent brand image and compelling message, to develop an effective media plan and to execute the placement of the advertising at the local level. Agencies which place national yellow page advertising are paid commissions by yellow page publishers. The market has grown each year since 1981. During the period of 1990 through 1998, the market has grown at a compound average rate of approximately 6.2%. STRATEGY Key elements of our strategy are to: CONTINUE BRANDING MONSTER.COM(SM). We believe our superior content and service as well as prior advertising campaigns have already branded Monster.com(SM) (http://www.monster.com) as the leading career destination portal on the Internet. Our goal is for job seekers to view Monster.com(SM) not only as the 38 leading career destination portal, but also as the premier tool with which to manage their careers by posting their resumes and job search agents on the site. To move to this next level of brand recognition and loyalty, we are working on a new advertising campaign which will commence during the 2000 Super Bowl and will focus on building relationships with job seekers. DIRECT AN INCREASING NUMBER OF JOB SEEKERS AND EMPLOYERS TO MONSTER.COM(SM). Our more than 5,100 client service, marketing and creative personnel constantly promote the advantages of Monster.com(SM) as well as the Internet generally. Our traditional recruitment advertising and executive search and selection businesses have already contributed to Monster.com's(SM) job postings and we believe will continue to contribute an increasing number of job postings to Monster.com(SM) particularly as the number of job seekers utilizing Monster.com(SM) continues to grow. In addition, our executive search and selection consultants are driving more job seekers to Monster.com(SM) as a way to broaden the job seekers options. We also look for other ways to expand traffic to Monster.com(SM). An example of this is our recent content and marketing agreement with America Online, Inc. This arrangement provides that for the payment of $100 million over four years Monster.com(SM) will be the exclusive provider of career search services in the United States and Canada for four years to certain AOL properties, thereby driving additional traffic to Monster.com(SM). CONTINUE TO GROW OUR NON-INTERNET BUSINESSES. We plan to continue to grow and enhance our recruitment advertising, executive search and selection and yellow page advertising businesses through acquisitions and internal growth. From January 1, 1996 through October 31, 1999, we completed 80 acquisitions. We intend to pursue additional acquisitions and believe that the fragmented nature of the recruitment advertising and the executive search businesses gives us the opportunity to be a leader in the consolidation of these industries. We also intend to selectively pursue acquisitions in the yellow page advertising business. OUR CAREER SOLUTIONS MONSTER.COM(SM) Monster.com(SM) (http://www.monster.com), the flagship of our Internet properties, is the nucleus of our intern to CEO strategy. For the nine months ended September 30, 1999, gross billings and commissions and fees were $66.9 million and $66.2 million, respectively, and our total Internet gross billings and commissions and fees were $93.7 million and $83.0 million, respectively. Based on experience with our clients, we believe that only 20% to 30% of open job positions are advertised using traditional print media. We also believe that online solutions will significantly expand the recruitment advertising market because of their global reach and continuous availability. Furthermore, online advertising is extremely cost effective when compared to other traditional recruitment methods such as print media. Our Internet recruitment services have been actively marketed since May 1995 and Monster.com(SM) was one of the first 1,000 commercial web sites out of more than 158,000,000 which currently exist. According to Nielson I/PRO, Monster.com(SM) had approximately 10.0 million visits (the gross number of occasions on which a user looked up a site) in October 1999 with the average length of each visit exceeding fourteen minutes. Media Metrix reported that for October 1999, 4.3% of the U.S. Internet population visited Monster.com(SM), almost twice as many unique visitors as its closest competitor. In addition, for this month, an average of 31.3 unique pages were viewed by each visitor, resulting in a power ranking of 134.6 (reach of 4.3 multiplied by average page views of 31.3) compared to 37.7 for its closest competitor and 91.1 for its six closest competitors combined. We believe that the power ranking is significant because, by taking into account reach and page views, it indicates the products usefulness and recognition. Monster.com(SM) allows users to create their own personalized career page--My Monster. Using My Monster, job seekers can store their resume and cover letters and create multiple job searches. They can also track how many times their resume has been viewed by employers. My Monster is at the center of the 39 Monster.com(SM) job seeker experience, with over 5.0 million job seeker accounts as of December 1, 1999. Monster.com's(SM) Job Search Agent continuously seeks to find the desired job for the job seeker. Job seekers can sign up for this free service on the site by creating a simple personal profile indicating the industry and location in which they want to work and any job-specific keywords. The Job Search Agent then continually scans the entire Monster.com(SM) job database for opportunities that match the requirements and delivers the leads to job seekers' desktops--even while they are off-line. As of December 1, 1999, Monster.com(SM) contained over 1.6 million Job Search Agent profiles. In addition, job seekers can post their resume free of charge in a confidential searchable access-restricted database. This database can be searched, using keyword searches, by employers who pay for the service. Monster.com's(SM) resume database currently contains over 2.0 million resumes of which 1.6 million are active, and is growing by an average of more than 6,000 resumes daily. We have also recently introduced Monster Talent Market which allows independent professionals to offer their services to the highest bidder. Job seekers can search Monster.com's(SM) database of employment opportunities by location, job category, industry and/or keyword. Keyword searches allow a user to enter specific keywords to match skills, job titles or other requirements. As of December 1, 1999, Monster.com(SM) listed approximately 260,000 jobs from clients such as Blockbuster Entertainment Inc., McDonald's, Adecco, Procter & Gamble Co., and Dell Computer Corporation. We have developed private label applications of our interactive recruitment products. For example, we adapted Monster.com(SM) technology to create a database of jobs for Fidelity Investments which resides, through a hyper-link, on the Fidelity home page. The search features have the look and ease of use associated with Monster.com(SM) while appearing to the user as a seamless part of the Fidelity site. We intend to continue to market private label products as a way to increase the size of our databases. To attract the maximum amount of volume to our Web sites, we intend to continue to develop additional value-added content, while developing strategic alliances with other on-line content providers. For example, we recently entered into a content and marketing arrangement with America Online, Inc., pursuant to which Monster.com(SM) for the payment of $100 million will be the exclusive provider of career search services in the United States and Canada for four years to 21 million AOL members across seven AOL properties: AOL, AOL Canada, Compuserve, ICQ, AOL.com, Netscape and Digital City. In addition to the U.S., Monster.com(SM) has been customized, in language and content, for Canada, the U.K., the Netherlands, Australia, Belgium, France, Singapore and New Zealand. RECRUITMENT ADVERTISING. We entered the recruitment advertising business in 1993 and have grown both through acquisitions and internally. For the year ended December 31, 1998 and the nine months ended September 30, 1999, we had recruitment advertising gross billings of $849.5 million and $615.5 million, respectively, and recruitment advertising commissions and fees of $177.8 million and $134.9 million, respectively. In addition to our worldwide offices, we maintain relationships with unaffiliated agencies throughout the world to further enhance our ability to reach qualified job candidates. As a full service agency, we offer our clients comprehensive recruitment advertising services including creation and placement of classified advertising, development of employer image campaigns, creation of collateral materials such as recruiting brochures and implementation of alternative recruitment programs such as job fairs, employee referral programs and campus recruiting. We specialize in designing recruitment advertising campaigns for clients in high growth industries and in industries with high employee turnover rates. Further, we believe that as employers find it more difficult to attract qualified employees, they will increasingly seek out agencies that can implement national and, in some cases, global recruitment strategies. CREATING AND PLACING THE ADVERTISEMENT. Our task in formulating and implementing a global recruitment advertising program is to design the creative elements of the campaign and to select the appropriate media and/or other recruitment methods. This is done in the context of the client's staffing 40 parameters which generally include skill requirements, job location and advertising budget. In addition, while executing a given campaign, we will often undertake basic research with respect to demographic profiles of selected geographic areas to assist the client in developing an appropriate overall strategy. We have historically found that the strongest recruitment advertising campaigns "brand" the client's image, demonstrate the client's unique selling points and stress the client's employee benefits and corporate culture. Effectively differentiating one employer from another has become particularly important in the technology and healthcare sectors where there is an acute shortage of qualified job candidates. The success of the campaign may depend on whether an organization is seen as sufficiently distinct from its competitors. After completing the design of an advertisement's creative elements, we develop an appropriate media plan. Typically, a variety of media is used, including newspapers, trade journals, the Internet, billboards, direct mail, radio and television. If we recommend use of newspapers, we may recommend certain newspapers or editions of a particular newspaper which are targeted to a specific demographic segment of the population. We may also recommend a variety of advertisement sizes and vary the frequency with which an advertisement appears. After an advertisement is placed, we conduct extensive customer analysis to assure satisfaction, including monitoring the effectiveness of the chosen media. As an example, for a transportation client, we analyzed cost-per-response, cost-per-application and cost-per-hire data for over a dozen media vehicles running in approximately 30 markets in an effort to determine the return on investment of each media vehicle. Our recruitment advertising division also maintains a quality assurance program for its larger clients which involves formal creative reviews by our clients as well as soliciting client feedback. In the U.S., we receive commissions generally equal to 15% of recruitment advertising gross billings. Outside of the U.S., where, collectively, we derive the majority of our recruitment advertising commissions and fees, our commission rates for recruitment advertising vary, ranging from approximately 10% in Australia to 15% in Canada and the United Kingdom. In the U.S., we also earn fees from value-added services such as design, research and other creative and administrative services which resulted in aggregate commissions and fees equal to approximately 21% and 22% of recruitment advertising gross billings for the year ended December 31, 1998 and the nine months ended September 30, 1999 respectively. SEARCH AND SELECTION. Traditionally, recruitment and online advertising did not target the senior or mid-level executive. Therefore, in order to expand the range of services we offer to our recruitment advertising clients, we entered the executive search field. We currently have 55 executive search offices in 25 countries. We believe that our expansion into the executive search field will enable us to attract and service new major clients because we can now market ourselves as a full service firm that can accommodate all of our clients' employment and recruitment advertising needs. For the nine months ended September 30, 1999, search and selection gross billings and commissions and fees were $221.7 million and $219.2 million, respectively. Our retained executive search process typically targets senior level executives (those earning over $250,000, annually) and includes the following steps: - a TMP executive search consultant interviews the client in order to analyze the senior executive position that needs to be filled, the general environment of the client's work place and the character and quality of candidates that have successfully performed as an executive of the client; - our consultant then prepares a written synopsis of the position to be filled in order to attract a suitable, qualified, successful candidate; - the synopsis is then forwarded to other recruiters in order to assist with the search for a candidate that fits the criteria set forth in the synopsis; - a pool of suitable candidates is gathered and the consultants begin to schedule interviews; 41 - the candidates are then interviewed and analyzed by the consultants on our premises to determine if the candidate meets the requisite experience and potential cultural fit outlined by the consultant and the client; - reports of the most suitable candidates are prepared by the consultant and presented to the client, who then chooses the candidates to be met; - the consultant then organizes a mutually convenient time and place for the client to personally meet and interview such candidates; - the consultant will follow up with the successful candidate to obtain any supplemental information needed or requested by the client, including references and other documentary materials; and - the consultant then assists the client in structuring and negotiating the final compensation package and other benefits for the hired executive based on all relevant factors researched by the consultant, including industry comparisons, the experience levels of the executive and future trends. Candidates for mid-level positions, the search for whom we term "selection," are normally attracted by classified advertising or chosen through a computerized database file search, as opposed to the detailed search process used for senior executives. We screen and interview applicants prior to providing the client with a short list. Upon acceptance of the short list of suitable candidates, the client then proceeds to interview the selected candidates. The next steps in the process include reference checking, negotiation of an offer, confirmation of acceptances and start date, and performance follow-up at the end of one and three months. For assignments involving mid-level executives, we have developed and are introducing the Executive Resourcing process, which is designed to evaluate a person's capacity to perform in a current or future role. It can be used for internal and external candidates and is based on the premise that if the requirements for an individual job are understood, it is possible to develop testing protocols which assess a candidate's ability to succeed in filling the position. Tools and exercises include aptitude testing, job simulations, behavioral and situational interviews, leadership and team exercises, group discussions, role plays and work sample tests. The goals of the Executive Resourcing process are to put the right people in the right job, boosting both individual job satisfaction and productivity. TEMPORARY CONTRACTING. We provide temporary contract employees in Australasia and the United Kingdom ranging from executives to clerical workers. The demand for contract employee services was created by organizations' need for flexible work forces with the types of skills required to meet their particular circumstances in a changing market. For the nine months ended September 30, 1999 gross billings were $44.9 million, commissions and fees were $44.9 million and revenue before deducting the cost of the temporary contractor was $245.0 million. We place qualified executives, professionals, clerical and trade labor in temporary positions, or for specific short term projects. Contractors can be used for emergency support or to complement the skills of a client's core, permanent staff. Contracting can be linked to the permanent placement, with the client employing a "try before you buy" strategy. The period for the contracting assignment can vary from as little as one day to over 12 months. In addition to the more general contracting assignments, we provide executives on a contract basis with our Australian clients, whereby a specific task is managed by us but staffed by contract executives. OUR YELLOW PAGE BUSINESS We entered the yellow page business in 1967 and have grown to become the largest yellow page advertising agency in the world based on yellow page gross billings. For the nine months ended 42 September 30, 1999 we had yellow page gross billings and commissions and fees of $413.7 million and $79.5 million, respectively. CREATING AND PLACING YELLOW PAGE ADVERTISEMENTS. There are currently approximately 7,000 yellow page directories in the U.S. Each has a separate closing date for accepting advertisements and one or more of these closings occur on every working day of the year. The steps involved in placing an advertisement are numerous and can take as long as nine months. The first step in the process is the formulation of the advertising program's creative elements including illustrations, advertising copy, slogans and other elements which are designed to attract a potential customer's attention. To assess the effectiveness of a proposed campaign, we generally undertake extensive research to determine which alternatives best reach the client's target market. This research typically includes focus group testing and the running of split-run advertisements. Focus group testing involves forming groups of potential customers and gauging their reaction to a variety of potential advertisements. Split-run testing measures the results of specific campaigns by placing more than one version of an advertisement in various editions of the same yellow page directory. By using multiple phone numbers and various monitoring methods, we can then determine which advertisements generate the most effective response. After designing an advertising program, we create a media plan which targets client's customer base in a cost-effective manner. We analyze targeted directories to determine circulation, rate of usage and demographic profile. We then recommend advertisements ranging from a full page to as little as a one line listing. For some of our larger yellow page clients, advertisements are placed in over 2,000 directories. To ensure client satisfaction, we maintain an extensive quality control program. Account teams have frequent in-person client contact as well as formal annual creative reviews. We also solicit feedback through client interviews, written surveys and other methods consisting of focus groups made up of yellow page users and yellow page user pollings. The principal aims of this program are client retention and sales growth. We believe our focus on customer service has enabled us to maintain our client retention rate, year to year, in excess of 90%. In addition to traditional advertising, we offer selected yellow page clients a variety of value-added services ranging from managing the maintenance and installation of telephone lines for branch locations to the staffing and operation of fulfillment centers which respond to toll-free calls requesting product brochures and other information. While beyond the typical scope of services provided by an advertising agency, these ancillary services are designed to further integrate us into client processes for the mutual benefit of both parties. CLIENTS. Our yellow page clients generally determine the content of their advertising programs on a centralized basis. Placement of the advertising, however, requires an extensive local selling and quality control effort because many of our clients are franchisors or manufacturers who are dependent upon franchisees or independent dealers for distribution. The participation of franchisees and dealers in the yellow page program is discretionary and must be solicited at the local level. As an example of the scale of this task, in 1998, we visited or had contact with over 570,000 individual store locations. We have a yellow page sales, marketing and customer service staff of approximately 1,000 people to implement this local effort. We believe the size and breadth of this staff, its local client relationships and its databases of client branch locations, franchisors and dealers provide us with a strong competitive advantage in executing the yellow page programs of existing clients. We believe these resources are critical in marketing our services to potential new clients and in marketing and executing our Internet-based service offerings. 43 SALES AND MARKETING At December 1, 1999, we had approximately 5,100 employees focused on our sales, marketing and customer service efforts worldwide. Our sales, marketing and customer service staff is divided into two groups: (i) new business generation (approximately 400 employees) and (ii) existing client relationship maintenance and improvement (approximately 4,700 employees). Within each group, we maintain separate sales and marketing staffs for our recruitment advertising business, yellow page advertising business and Internet business. In addition to specializing by product, each group is accountable for, and incentivized to, cross sell our other products. Our Internet sales staff has targeted our recruitment advertising and yellow page clients to capitalize on the interactivity and additional services that our Internet products can cost effectively provide to such clients. In addition to pursuing cross-selling opportunities within our existing client base, each product sales force also designs targeted selling campaigns for potential new clients. We assign a marketing manager to our clients in order to work closely with the client to develop and design the appropriate marketing and advertising campaign. Our customer service representative works closely with the marketing manager and the client to implement the marketing and advertising campaign, evaluate the effectiveness of the campaign and monitor client satisfaction levels. At December 1, 1999, we had 95 sales, marketing and customer service offices located in the United States and 137 offices in the rest of the world. We also maintained relationships with 16 international recruitment advertising agencies throughout the world, further enhancing our ability to reach qualified job candidates. CLIENTS At December 1, 1999, we had more than 31,000 clients, including more than 90 of the Fortune 100 companies and approximately 450 of the Fortune 500 companies. Our clients include: The Home Depot, Inc., Ford Motor Company, CVS Corporation, Hewlett-Packard Company, Sears, Roebuck and Co., The Allstate Corporation, Sprint Corporation, United Parcel Service, Inc., Mobil Corporation, Merck & Co., Inc., MCI Worldcom, Inc., AT&T Corp., Motorola, Inc., GTE Corporation and Morgan Stanley Dean Witter & Co. No one client accounts for more than 5% of the Company's total annual commissions and fees. COMPETITION The markets for our services and products are highly competitive and are characterized by pressure to reduce prices, incorporate new capabilities and technologies, and accelerate job completion schedules. We face competition from a number of sources. These sources include national and regional advertising agencies, media companies, as well as specialized and integrated marketing communication firms. Many advertising agencies and media companies have started to either internally develop or acquire new media capabilities. New boutique businesses that provide integrated or specialized services (such as advertising services or Web site design) and are technologically proficient, especially in the new media arena, are also competing with us. Many of our competitors or potential competitors have long operating histories, and some have greater financial, management, technological, development, sales, marketing and other resources than do we. In addition, our ability to maintain our existing clients and generate new clients depends to a significant degree on the quality of our services, pricing and our reputation among our clients and potential clients. We believe that our largest competitors in online recruiting are Headhunter.net, HotJobs.com, CareerPath.com, Dice.com, CareerMosaic.com and CareerBuilder.com although, as illustrated below, for the first ten months of 1999, Monster.com(SM) attracted the greatest number of visitors (derived from Media 44 Metrix data) and in October 1999, Monster.com(SM) had the greatest power ranking (reach multiplied by average page views per visitor): MONTHLY VISITOR TRENDS JANUARY TO OCTOBER 1999 (IN THOUSANDS) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CAREERBUILDER.COM CAREERMOSAIC.COM CAREERPATH.COM HEADHUNTER.NET HOTJOBS.COM MONSTER.COM Jan 252 795 917 574 388 1779 Feb 275 882 1019 636 810 2322 Mar 256 965 1111 576 344 2067 Apr 282 753 861 481 258 1739 May 336 790 1052 599 436 2416 Jun 353 808 1585 777 669 2605 Jul 293 800 1115 810 760 2515 Aug 376 742 727 949 882 2457 Sep 326 584 734 1004 687 2582 Oct 471 607 891 654 1668 2737
FOR THE MONTH OF OCTOBER 1999 AVERAGE PAGES PER POWER CAREER SITE REACH VISITOR RANKING* ------------------- --- ---- ----- 1 -- Monster.com 4.3 31.3 134.6 2 -- HeadHunter.net 2.6 14.5 37.7 3 -- HotJobs.com 1.0 15.4 15.4 4 -- CareerPath.com 1.4 9.2 12.9 5 -- Dice.com 0.4 27.7 11.1 6 -- CareerMosaic.com 1.0 8.8 8.8 7 -- CareerBuilder.com 0.7 7.4 5.2 * Source: Media Metrix. (reach multiplied by average page per visitor)
45 We believe that our three largest competitors in the recruitment advertising segment are Bernard Hodes Advertising, Inc., a subsidiary of Omnicom, Nationwide Advertising Service, Inc., controlled by the Gund Brothers, and JWT Specialized Communications, a subsidiary of the WPP Group USA, Inc. We also compete with hundreds of Internet content providers. We believe that our largest competitors in the executive search segment are Korn/Ferry International, Heidrick & Struggles International Inc., Spencer Stuart & Associates and Russell Reynolds Associates, Inc. INTELLECTUAL PROPERTY Our success and ability to compete is dependent in part on the protection of our original content for the Internet and on the goodwill associated with our trademarks, trade names, service marks and other proprietary rights. We rely on copyright laws to protect the original content that we develop for the Internet. In addition, we rely on Federal trademark laws to provide additional protection for the appearance of our Internet sites. A substantial amount of uncertainty exists concerning the application of copyright laws to the Internet, and there can be no assurance that existing laws will provide adequate protection for our original content. In addition, because copyright laws do not prohibit independent development of similar content, there can be no assurance that copyright laws will provide any competitive advantage to us. We also assert common law protection on certain names and marks that we have used in connection with our business activities. We rely on trade secret and copyright laws to protect the proprietary technologies that we have developed to manage and improve our Internet sites and advertising services, but there can be no assurance that such laws will provide sufficient protection to us, that others will not develop technologies that are similar or superior to ours, or that third parties will not copy or otherwise obtain and use our technologies without authorization. We have filed patent applications with respect to certain of our software systems, methods and related technologies, but there can be no assurance that such applications will be granted or that any future patents will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide us with a competitive advantage. In addition, we rely on certain technology licensed from third parties, and may be required to license additional technology in the future, for use in managing our Internet sites and providing related services to users and advertising customers. Our ability to generate fees from Internet commerce may also depend on data encryption and authentication technologies that we may be required to license from third parties. There can be no assurance that these third party technology licenses will be available or will continue to be available to us on acceptable commercial terms or at all. The inability to enter into and maintain any of these technology licenses could have a material adverse effect on our business, financial condition and operating results. Policing unauthorized use of our proprietary technology and other intellectual property rights could entail significant expense and could be difficult or impossible, particularly given the global nature of the Internet and the fact that the laws of other countries may afford us little or no effective protection of our intellectual property. In addition, there can be no assurance that third parties will not bring claims of copyright or trademark infringement against us or claim that our use of certain technologies violates a patent. We anticipate an increase in patent infringement claims involving Internet-related technologies as the number of products and competitors in this market grows and as related patents are issued. Further, there can be no assurance that third parties will not claim that we have misappropriated their creative ideas or formats or otherwise infringed upon their proprietary rights in connection with our Internet content. Any claims of infringement, with or without merit, could be time consuming to defend, result in costly litigation, divert management attention, require us to enter into costly royalty or licensing arrangements or prevent us from using important technologies or methods, any of which could have a material adverse effect on our business, financial condition or operating results. 46 GOVERNMENT REGULATION As an advertising agency which creates and places print and Internet advertisements, we are subject to Sections 5 and 12 of the Federal Trade Commission Act (the "FTC Act") which regulate advertising in all media, including the Internet, and require advertisers and advertising agencies to have substantiation for advertising claims before disseminating advertisements. The FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair advertising, and grants the Federal Trade Commission ("FTC") enforcement powers to impose and seek civil penalties, consumer redress, injunctive relief and other remedies upon advertisers and advertising agencies which disseminate prohibited advertisements. Advertising agencies are subject to liability under the FTC Act if the agency actively participated in creating the advertisement, and knew or had reason to know that the advertising was false or deceptive. In the event that any advertising created by us was found to be false, deceptive or misleading, the FTC Act could potentially subject us to liability. The fact that the FTC has recently brought several actions charging deceptive advertising via the Internet, and is actively seeking new cases involving advertising via the Internet, indicates that the FTC Act could pose a somewhat higher risk of liability to the advertising distributed via the Internet. The FTC has never brought any actions against us. There can be no assurance that other current or new government laws and regulations, or the application of existing laws and regulations, will not subject us to significant liabilities, significantly dampen growth in Internet usage, prevent us from offering certain Internet content or services or otherwise cause a material adverse effect on our business, financial condition or operating results. EMPLOYEES At December 1, 1999, we employed approximately 6,400 people, of whom approximately 3,300 were client services personnel, approximately 400 were sales and marketing personnel, approximately 1,100 were search and selection personnel and approximately 300 were creative and graphics personnel. The remainder of our personnel are information systems, financial and administrative personnel. Our employees are not represented by a labor union or a collective bargaining agreement. We regard our employee relations as generally excellent. 47 MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS The following is a general discussion of the material U.S. federal income and estate tax considerations with respect to the ownership and disposition of common stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is any holder other than - a citizen or resident of the United States - a corporation created or organized in the United States or under the laws of the United States or of any state - an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source - a trust if -- a court within the United States is able to exercise primary supervision over the administration of the trust, and -- one or more U.S. persons have the authority to control all substantial decisions of the trust This discussion is based on current provisions of the Internal Revenue Code, Treasury Regulations promulgated under the Internal Revenue Code, judicial opinions, published positions of the Internal Revenue Service, and all other applicable authorities, all of which are subject to change, possibly with retroactive effect. This discussion does not address all aspects of income and estate taxation or any aspects of state, local, or non U.S. taxes, nor does it consider any specific facts or circumstances that may apply to a particular Non-U.S. Holder that may be subject to special treatment under the U.S. federal income tax laws, such as insurance companies, tax-exempt organizations, financial institutions, brokers, dealers in securities, and U.S. expatriates. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX CONSIDERATIONS OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF COMMON STOCK. DIVIDENDS In general, dividends paid to a Non-U.S. Holder will be subject to U.S. withholding tax at a 30% rate of the gross amount, or a lower rate prescribed by an applicable income tax treaty, unless the dividends are effectively connected with a trade or business carried on by the Non-U.S. Holder within the United States. Dividends effectively connected with such a U.S. trade or business generally will not be subject to U.S. withholding tax if the Non-U.S. holder files the required forms, including Internal Revenue Service Form 4224, or any successor form, with the payor of the dividend, and generally will be subject to U.S. federal income tax on a net income basis, in the same manner as if the Non-U.S. Holder were a resident of the United States. A Non-U.S. Holder that is a corporation may be subject to an additional branch profits tax at a rate of 30%, or such lower rate as may be specified by an applicable income tax treaty, on the repatriation from the United States of its "effectively connected earnings and profits," subject to adjustments. To determine the applicability of a tax treaty providing for a lower rate of withholding under the currently effective Treasury Regulations, the "Current Regulations", and published Internal Revenue Service positions, dividends paid to an address in a foreign country are presumed to be paid to a resident of that country absent knowledge to the contrary. Under Treasury Regulations issued on October 6, 1997, the "Final Regulations", and generally effective for payments made after December 31, 2000, however, a Non-U.S. Holder, including, for some Non-U.S. Holders that are entities, the owner or owners of such entities, will be required to satisfy certification requirements in order to claim a reduced rate of withholding under an applicable income tax treaty. 48 GAIN OR SALE OR OTHER DISPOSITION OF COMMON STOCK In general, a Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of the holder's shares of common stock unless - the gain is effectively connected with a trade or business carried on by the Non-U.S. Holder within the United States, in which case the branch profits tax discussed above may also apply if the Non-U.S. Holder is a corporation - the Non-U.S. Holder is an individual who holds shares of common stock as a capital asset and is present in the United States for 183 days or more in the taxable year of disposition and meets other tests - the Non-U.S. Holder is subject to tax under the provisions of the Internal Revenue Code regarding the taxation of U.S. expatriates, or - we are or have been a U.S. real property-holding corporation for U.S. federal income tax purposes, which we do not believe that we have been, currently are, or will become, at any time within the shorter of the five-year period preceding such disposition and such Non-U.S. Holder's holding period If we were or were to become a U.S. real property holding corporation at any time during this period, gains realized upon a disposition of common stock by a Non-U.S. Holder that did not directly or indirectly own more than 5% of the common stock during this period generally would not be subject to U.S. federal income tax, provided that common stock is "regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code)." ESTATE TAX Common stock owned or treated as owned by an individual who is not a citizen or resident, as defined for U.S. federal estate tax purposes, of the United States at the time of death will be includible in the individual's gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provided otherwise, and therefore may be subject to U.S. federal estate tax. INFORMATION REPORTING, BACKUP WITHHOLDING AND OTHER REPORTING REQUIREMENTS Generally, we must report annually to the Internal Revenue Service and to each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with respect to, each Non-U.S. Holder. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of this information also may be made available under the provisions of a specific treaty or agreement with the tax authorities in the country in which the Non-U.S. Holder resides or is established. Under the Current Regulations, U.S. backup withholding tax, which generally is imposed at the rate of 31% on applicable payments to persons that fail to furnish the information required under the U.S. information reporting requirements, as well as information reporting requirements, other than those discussed in the previous paragraph, generally will not apply to dividends paid on common stock to a Non-U.S. Holder at an address outside the United States. Backup withholding and information reporting generally will apply, however, to dividends paid on shares of common stock to a Non-U.S. Holder at an address in the United States if the holder fails to establish an exemption or to provide other required information to the payor. Under the Current Regulations, the payment of proceeds from the disposition of common stock to or through a U.S. office of a broker will be subject to information reporting and backup withholding, unless the beneficial owner, under penalties of perjury, certifies, among other things, its status as a Non-U.S. Holder or otherwise establishes an exemption. The payment of proceeds from the disposition of common 49 stock to or through a Non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, unless the payee is - A U.S. person - a "controlled foreign corporation" for U.S. federal income tax purposes, or - a foreign person 50% or more of whose gross income from a specified period is effectively connected with a U.S. trade or business, information reporting, but not backup withholding, will apply unless the broker has documentary evidence in its files that the owner is a Non U.S. Holder and other conditions are satisfied, or the beneficial owner otherwise establishes an exemption, and the broker has no actual knowledge to the contrary Under the Final Regulations, generally effective for payments made after December 31, 2000, the payment of dividends or the payment of proceeds from the disposition of our common stock to a Non-U.S. Holder may be subject to information reporting and backup withholding unless the recipient satisfies the certification requirements of the Final Regulations or otherwise establishes an exemption. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. Holder can be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, if any, PROVIDED that the required information is furnished to the Internal Revenue service in a timely manner. THE FOREGOING DISCUSSION OF THESE U.S. FEDERAL INCOME TAX CONSIDERATIONS IS NOT TAX ADVICE AND IS NOT BASED ON AN OPINION OF COUNSEL. ACCORDINGLY, EACH PROSPECTIVE NON-U.S. HOLDER OF COMMON STOCK SHOULD CONSULT THAT HOLDER'S OWN TAX ADVISER WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON STOCK. 50 UNDERWRITERS WITH RESPECT TO THE OFFERING OF SHARES IN THE UNITED STATES AND CANADA, MORGAN STANLEY & CO. INCORPORATED AND GOLDMAN, SACHS & CO. ARE ACTING AS JOINT BOOK-RUNNING MANAGERS AND SALOMON SMITH BARNEY INC. IS ACTING AS CO-LEAD MANAGER. WITH RESPECT TO THE OFFERING OF SHARES OUTSIDE OF THE UNITED STATES AND CANADA, MORGAN STANLEY & CO. INTERNATIONAL LIMITED AND GOLDMAN SACHS INTERNATIONAL ARE ACTING AS JOINT BOOK-RUNNING MANAGERS AND SALOMON BROTHERS INTERNATIONAL LIMITED IS ACTING AS CO-LEAD MANAGER. Under the terms and subject to the conditions contained in the underwriting agreement, dated the date of this prospectus, the U.S. underwriters named below, for whom Morgan Stanley & Co., Incorporated, Goldman, Sachs & Co., Salomon Smith Barney Inc., Deutsche Bank Securities Inc., Paine Webber Incorporated and U.S. Bancorp Piper Jaffray Inc. are acting as U.S. representatives, and the international underwriters named below for whom Morgan Stanley & Co. International Limited, Goldman Sachs International, Salomon Brothers International Limited, Deutsche Bank AG London, PaineWebber International (U.K.) Ltd. and U.S. Bancorp Piper Jaffray Inc. are acting as international representatives, have severally agreed to purchase, and we have agreed to sell to them, the respective number of shares of common stock set forth opposite the names of these underwriters below:
NAME NUMBER OF SHARES - ----------------------------------------------------------------------------------------------- ----------------- U.S. Underwriters: Morgan Stanley & Co. Incorporated............................................................ Goldman, Sachs & Co. ........................................................................ Salomon Smith Barney Inc. ................................................................... Deutsche Bank Securities Inc. ............................................................... PaineWebber Incorporated..................................................................... U.S. Bancorp Piper Jaffray Inc. ............................................................. ----------- Subtotal................................................................................... 3,200,000 ----------- International Underwriters: Morgan Stanley & Co. International Limited................................................... Goldman Sachs International.................................................................. Salomon Brothers International Limited....................................................... Deutsche Bank AG London...................................................................... PaineWebber International (U.K.) Ltd......................................................... U.S. Bancorp Piper Jaffray Inc. ............................................................. ----------- Subtotal................................................................................... 800,000 ----------- Total.................................................................................... 4,000,000 ===========
The U.S. underwriters and the international underwriters, and the U.S. representatives and the international representatives, are collectively referred to as the underwriters and the representatives, respectively. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered in this prospectus are subject to the approval of specified legal matters by their counsel and to other conditions. The underwriters are obligated to take and pay for all the shares of common stock offered hereby, except those shares covered by the U.S. underwriters' over-allotment option described below, if any shares are taken. The underwriters initially propose to offer a portion of the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus and a portion to some dealers at a price that represents a concession not in excess of $ per share under the public offering price. Any underwriter may allow, and these dealers may reallow, a concession not in excess of $ per share to other underwriters or to other dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may be varied by the representatives. 51 We have granted to the U.S. underwriters an option, exercisable for 30 days from the date of this prospectus to purchase up to an aggregate of 600,000 additional shares at the public offering price set forth on the cover page of this prospectus, less underwriting discounts and commissions. The U.S. underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares offered in this prospectus. To the extent this option is exercised, each U.S. underwriter will become obligated, subject to specified conditions, to purchase about the same percentage of additional shares as the number set forth next to the U.S. underwriter's name in the preceding table bears to the total number of shares set forth next to the names of all U.S. underwriters in the preceding table. If the U.S. underwriters' option is exercised in full, the total price to the public for the offering would be $ , the total underwriting discounts and commissions would be $ and the total proceeds to TMP Worldwide Inc. would be $ . We and our directors and executive officers have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, we will not, during the period ending 90 days after the date of this prospectus: - offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into exercisable or exchangeable for common stock or - enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of common stock, whether any of these transactions described above is to be settled by delivery of common stock or any other securities, in cash or otherwise The restrictions described in the preceding list do not apply in a number of circumstances, including: - the exchange of shares of Class B common stock for shares of common stock under the terms of our certificate of incorporation - the granting of options to officers, directors, employees or consultants, PROVIDED that these options are not generally exercisable prior to the end of the lock-up period - the issuance by us of shares of common stock upon the exercise of options or warrants or the conversion of securities outstanding on the date of the underwriting agreement or as of the closing date of this offering, of which the underwriters have been advised in writing - the issuance of up to 2,500,000 shares of common stock in connection with acquisitions - the exercise of options granted pursuant to our stock option plans or - the sale or other transfer of any shares of common stock by the foregoing persons to any associate, as this term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, if this person agrees to be bound by the foregoing provisions. In order to facilitate our offering of common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in common stock for their own account. In addition, to cover over-allotments or to stabilize the price of the common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing common stock in the offering, if the syndicate repurchases previously distributed common stock in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of common stock above independent market levels. The underwriters are not required to engage in these activities, and may end any of these activities at any time. 52 Some of the underwriters engage in transactions with, and perform services for, our company in the ordinary course of business and have engaged and may in the future engage in commercial banking and investment banking transactions with us, for which they receive customary compensation. We have agreed with the underwriters to indemnify each other against some liabilities relating to this offering, including liabilities under the Securities Act of 1933. LEGAL MATTERS The validity of the shares of common stock we are offering will be passed upon for us by Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103. Certain legal matters in connection with this offering will be passed upon for the underwriters by Davis Polk & Wardwell. EXPERTS The consolidated financial statements and schedules of TMP incorporated by reference in this prospectus have been audited by BDO Seidman, LLP, independent certified public accountants, to the extent and for the periods indicated in their reports incorporated in this prospectus by reference, and are incorporated in this prospectus in reliance upon such reports given upon the authority of that firm as experts in accounting and auditing. The consolidated balance sheets of Morgan & Banks Limited as of December 31, 1998 and March 31, 1998 and 1997, the consolidated statements of operations and stockholders' equity for the year ended December 31, 1998 and each of the three years in the period ended March 31, 1998 and the statements of cash flows for the nine months ended December 31, 1998 and the three years in the period ended March 31, 1998, are incorporated by reference in this prospectus in reliance on the report of Pannell Kerr Forster, independent auditors, given upon the authority of that firm as experts in accounting and auditing. The consolidated audited financial statements and schedule of LAI Worldwide, Inc. incorporated by reference in this prospectus and elsewhere in this registration statement, have been audited by Arthur Andersen LLP, independent certified public accountants, as indicated in their reports with respect thereto and are incorporated by reference in reliance upon the authority of said firm as experts in giving said reports. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from our website at http:// www.tmpw.com or at the SEC's website at http://www.sec.gov. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering is finished. This prospectus is part of a registration statement we filed with the SEC (Registration No. 333- ). (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. (b) The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999. 53 (c) The description of the Company's common stock contained in Item 1 of the Company's Registration Statement on Form 8-A, dated October 16, 1996. (d) The Company's Current Report on Form 8-K, dated December 1, 1999, which includes the supplemental consolidated condensed financial statements and the supplemental consolidated financial statements relating to the restatement of the Company's consolidated financial statements as of September 30, 1999 and December 31, 1998 and 1997 and for the nine months ended September 30, 1999 and 1998 and for each of the three years in the period ended December 31, 1998 to reflect the mergers with Highland Search Group L.L.C. on October 21, 1999 and TMC S.r.l. on October 27, 1999, which are being accounted for as poolings of interests. (e) The Company's Current Report on Form 8-K, dated October 21, 1999, relating to the announcement of the acquisition of the Highland Search Group L.L.C. (f) Pages F-1 through F-22 and pages 48-53 of the Company's Registration Statement on Form S-4, file No. 333-82531, filed July 9, 1999 relating to the consolidated financial statements of LAI Worldwide, Inc. as of February 28, 1999 and 1998 and for each of the three years in the period ended February 28, 1999 and the unaudited pro forma condensed combined financial statements relating to the merger with LAI Worldwide, Inc. (g) The Company's Current Report on Form 8-K, dated March 5, 1999, relating to a press release announcing the results of operations of the Company for the year ended December 31, 1998, issued by the Company on March 2, 1999. (h) The Company's Current Report on Form 8-K, dated February 12, 1999, relating to the financial statements of Morgan & Banks Limited as of September 30, 1998 and March 31, 1998 and 1997, for the six months ended September 30, 1998 and 1997 and for each of the three years in the period ended March 31, 1998 and the unaudited pro forma condensed combined financial information relating to the acquisition of Morgan & Banks Limited. (i) The Company's Current Report on Form 8-K, dated February 1, 1999, relating to the announcement of the Morgan & Banks Limited acquisition and the release of the results of the Company's operations for the one month and ten months ended October 31, 1998. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: TMP Worldwide Inc. 1633 Broadway, 33rd Floor, New York, New York 10019 Attention: Investor Relations (Tel. No. (212) 977-4200) The contents of our web sites are not part of this prospectus. This prospectus contains certain of our trademarks and service marks and those of third parties. 54 [LOGO] PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The expenses payable by the Registrant in connection with the issuance and distribution of the securities being registered (other than underwriting discounts and commissions) are estimated to be as follows: SEC filing fee.............................................. $ 159,086.40 NASD filing fee............................................. 30,500.00 Nasdaq National Market Listing Fee.......................... 17,500.00 Printing expenses........................................... * Legal fees and expenses..................................... * Accounting fees and expenses................................ * Blue sky expenses and counsel fees.......................... 5,000.00 Transfer agent and registrar fees........................... * Miscellaneous............................................... * ------------- Total..................................................... $ * =============
- ------------------------ * To be supplied by amendment. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145(a) of the General Corporation Law of the State of Delaware permits indemnification of directors, officers and employees of a corporation under certain conditions and subject to certain limitations. Article VI of the By-Laws of the Registrant contains provision for the indemnification of directors, officers, and employees within the limitations permitted by Section 145. In addition, the Company has entered into Indemnity Agreements with its directors and officers which provide the maximum indemnification allowed by Section 145. The Company's officers and directors are insured against losses arising from any claim against them as such for wrongful acts or omissions, subject to certain limitations. ITEM 16. EXHIBITS 1.1 Form of Underwriting Agreement* 5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality.* 10.1 Amendment No. 2 to Employment Agreement between TMP Worldwide Inc. and James J. Treacy, effective as of October 1, 1999. 10.2 Content License and Interactive Marketing Agreement, dated as of December 1, 1999, between America Online, Inc. and TMP Interactive, Inc. d/b/a Monster.com.+ 23.1 (a) Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1). (b) Consent of BDO Seidman, LLP. (c) Consent of Pannell Kerr Forster. (d) Consent of Arthur Andersen LLP. 24 Power of Attorney (on signature page).
- ------------------------ * To be filed by amendment. + A request for confidential treatment was filed for portions of such document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 406. II-1 ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person of the registrant in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (c) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (d) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on December 17, 1999. TMP WORLDWIDE INC. By: /s/ ANDREW J. MCKELVEY ----------------------------------------- Andrew J. McKelvey CHAIRMAN AND CEO
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew J. McKelvey and James J. Treacy, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and his name, place and stead, and in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to file the same, and any subsequent Registration Statement for the same offering which may be filed under Rule 462(b), with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorneys-in-fact and agents, and each of them, full power and authority to do and perform such and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDREW J. MCKELVEY Chairman, CEO and Director ------------------------------------------- (PRINCIPAL EXECUTIVE December 17, 1999 Andrew J. McKelvey OFFICER) Executive Vice President, /s/ JAMES J. TREACY Chief Operating Officer ------------------------------------------- and December 17, 1999 James J. Treacy Director /s/ BART W. CATALANE Chief Financial Officer ------------------------------------------- (PRINCIPAL FINANCIAL AND December 17, 1999 Bart W. Catalane ACCOUNTING OFFICER) /s/ GEORGE R. EISELE ------------------------------------------- Director December 17, 1999 George R. Eisele /s/ MICHAEL KAUFMAN ------------------------------------------- Director December 17, 1999 Michael Kaufman /s/ JOHN SWANN ------------------------------------------- Director December 17, 1999 John Swann
II-3 INDEX TO EXHIBITS
EXHIBITS - ---------------------
1.1 Form of Underwriting Agreement* 5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality.* 10.1 Amendment No. 2 to Employment Agreement between TMP Worldwide Inc. and James J. Treacy, effective as of October 1, 1999. 10.2 Content License and Interactive Marketing Agreement, dated as of December 1, 1999, between America Online, Inc. and TMP Interactive, Inc. d/b/a Monster.com.+ 23.1 (a) Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1). (b) Consent of BDO Seidman, LLP. (c) Consent of Pannell Kerr Forster. (d) Consent of Arthur Andersen LLP. 24 Power of Attorney (on signature page).
- ------------------------ * To be filed by amendment. + A request for confidential treatment was filed for portions of such document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 24b-2. EX-10.1 2 EXHIBIT 10.1 Exhibit 10.1 AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT TMP Worldwide Inc. ("TMPW") and James J. Treacy ("Treacy") are parties to an Employment Agreement, dated November 18, 1996, which employment agreement was previously amended pursuant to Amendment No. 1 to Employment Agreement, effective as of September 14, 1998 (the employment agreement, as heretofore amended, is referred to herein as the "Employment Agreement"), and by virtue of this Amendment No. 2 to Employment Agreement (the "Amendment Agreement"), are modifying certain terms of the Employment Agreement, which amendments are effective as of October 1, 1999. The parties hereby agree as follows: 1. The first sentence of Section 3 of the Agreement is hereby amended to read in its entirety as follows: "TMPW shall pay Treacy, as compensation for services performed, an annual salary at the rate of $475,000 and, in addition, commencing in calendar year 1999, Treacy shall be entitled to a bonus of a dollar amount equal to a percentage of Treacy's annual salary as follows:
Calendar Year Bonus ------------- ----- 1999 25.00% 2000 32.50% 2001 40.00% 2002 45.00% 2003 50.00%
The bonus will be payable if and only if Treacy and/or the Company attain such goals during the calendar year in question as determined by mutual agreement of Treacy and the Chief Executive Officer. Any such bonus shall be payable in a single lump sum not more than ninety (90) days after the end of the calendar year with respect to which the bonus is awarded. With respect to calendar year 2000 and calendar years thereafter during the term of employment hereunder, the Chief Executive Officer and Treacy shall endeavor to discuss and determine in good faith the goals on the basis of which the bonus would be payable prior to the commencement of the year to which they relate (or as soon as practicable after the commencement of such year). The bonus, if any, shall be prorated for period of less than a full calendar year." 2. Section 9(b) is amended by deleting the following "; and (iii) his minimum annual bonus for the twelve-month period following his death". 3. Section 9(c) is amended by deleting the following "his minimum annual bonus for the twelve-month period following the effective date of termination of his employment and (iv)". - 1 - 4. The last sentence of Section 9(c) is amended by changing the current reference to "items (ii), (iii) and (iv)" to read "items (ii) and (iii)". 5. Section 9(d) is amended by deleting all references to (i) "and minimum annual bonus" and (ii) "or minimum bonus". 6. New Sections 9(f), 9(g) and 9(h) are added immediately following Section 9(e), which new Sections 9(f), 9(g) and 9(h) shall read as follows: (f) In the event Treacy's employment is terminated by TMPW for "other reasons", all outstanding options theretofore granted to Treacy to purchase shares of TMPW Common Stock shall automatically and immediately become fully vested and exercisable for the balance of the ten year term provided by the applicable stock option agreement, subject to all other terms of any such agreement not inconsistent with this sentence. (g) In the event that Treacy's employment is terminated by him pursuant to a voluntary resignation within a period of twelve months following a Change in Control (as defined below), he shall be entitled to receive the consideration described in Section 9(c) of this agreement, payable in the manner described in that Section 9(c). (h) In the event Treacy's employment is terminated by reason of his death, all options theretofore granted to Treacy shall become fully vested and exercisable for the shorter of (i) one year or (ii) the balance of the ten year term provided by the applicable stock option agreement, subject to all other terms of such agreement not inconsistent with this sentence. 7. The following language is added at the end of Section 10 of the Employment Agreement immediately after the current last sentence thereof: "In the event of any "Change in Control" (as defined in the Option Agreement between Treacy and TMPW dated August 5, 1999) all outstanding options theretofore granted to Treacy to purchase shares of TMPW Common Stock shall automatically and immediately become fully vested and exercisable for the balance of the ten year term provided by the applicable stock option agreement, subject to all other terms of any such agreement not inconsistent with this sentence, subject, however, to the provisions set forth below: (c) Notwithstanding anything in this Section 10 or Section 9(g) to the contrary, Treacy shall in no event be entitled to any payment or acceleration of options that would cause any portion of the amount received by Treacy to constitute an "excess parachute payment" as defined under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). In furtherance of the provisions of this Section, the following provisions shall apply: - 2 - (1) Anything in this Agreement to the contrary notwithstanding, in the event that any payment or acceleration of options by TMPW to or for the benefit of Treacy (collectively, a "Payment") would be nondeductible by TMPW for federal income tax purposes because of Section 280G of the Code, then the aggregate present value of amounts payable or distributable to or for the benefit of Treacy pursuant to this Agreement shall be reduced to the Reduced Amount (as defined below). Any such reduction shall be accomplished first by reducing the number of options to acquire TMPW Common Stock which otherwise would have immediately vested in full, as determined in the reasonable discretion of the Board of Directors of TMPW (provided that any options so reduced shall continue to vest in accordance with the terms of such options irrespective of Treacy's continued employment or, if earlier, the date or dates on which such options can vest without being deemed nondeductible, as determined in the reasonable discretion of the Board of Directors of TMPW); and second, if necessary, by reducing cash payments constituting part of the payments or other consideration to which Treacy has become entitled (collectively, such cash payments, other consideration and the aggregate present value of the immediate vesting of options (calculated in accordance with Section 280G of the Code and any regulations promulgated thereunder) are referred to as the "Severance Amount"). (2) The "Reduced Amount" shall be the amount, expressed in present value, which maximizes the aggregate present value of the Severance Amount without causing any Payment to be nondeductible by TMPW because of Section 280G of the Code. For purposes of this clause (2), present value shall be determined in accordance with Section 280(d)(4) of the Code. (3) All determinations required to be made under this Section 10 shall be made by TMPW's independent public accountants (the "Accounting Firm") which shall provide detailed supporting calculations to TMPW and Treacy. Any such determination by the Accounting Firm shall be binding upon TMPW and Treacy. (4) It is possible that as a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm, a portion of the Severance Amount will have been made by TMPW which should not have been made ("Overpayment") or that an amount in addition to the Severance Payment which will not have been made could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. (x) OVERPAYMENT. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against Treacy which the Accounting Firm believes has a high probability - 3 - of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by TMPW to or for the benefit of Treacy shall be treated for all purposes as a loan ab initio (from the beginning) to Treacy which Treacy shall repay to TMPW together with interest at the applicable federal rate provided for in Section 1274(d) of the Code. (y) UNDERPAYMENT. If precedent or other substantial authority indicates that an Underpayment has occurred, any such Underpayment shall be promptly paid by TMPW to or for the benefit of Treacy together with interest at the applicable federal rate provided for in Section 1274(d) of the Code. 8. The Employment Agreement, as amended by this Amendment Agreement, is hereby ratified and confirmed and remains in full force and effect. The parties hereto have executed this Amendment Agreement on November 2, 1999. TMP WORLDWIDE INC. By: /s/ Andrew J. McKelvey --------------------------------- By: Andrew J. McKelvey Title: /s/ James J. Treacy ----------------------------------- James J. Treacy - 4 - EX-10.2 3 EX 10.2 Exhibit 10.2 EXECUTION COPY CONFIDENTIAL CONTENT LICENSE AND INTERACTIVE MARKETING AGREEMENT This Content License and Interactive Marketing Agreement (the "Agreement"), dated as of December 1, 1999 (the "Effective Date"), is between America Online, Inc. ("AOL"), a Delaware corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166, and TMP Interactive, Inc. d/b/a Monster.com ("Interactive Content Partner" or "ICP"), a Delaware corporation, with offices at 5 Clock Tower Place, Suite 500, Maynard, Massachusetts 01754. AOL and ICP may be referred to individually as a "Party" and collectively as the "Parties." RECITALS A. ICP is the leading provider of online career information, job search tools, resume building and resume search tools, and job listing and resume data. B. In certain areas of the AOL Properties, AOL currently offers online career-related content to AOL Users, including classified listings and career related information. C. AOL and ICP each desires that ICP be the exclusive provider of the products and services specified in Section 3.1 hereof, and that AOL promote and distribute several co-branded interactive sites collectively referred to (and further defined) herein as the Affiliated ICP Sites. D. This relationship is further described below and is subject to the terms and conditions set forth in this Agreement. E. Defined terms used but not defined in the body of the Agreement will be as defined on Exhibit B attached hereto. AGREEMENT 1. PROMOTION, DISTRIBUTION AND MARKETING. 1.1. AOL PROMOTION OF AFFILIATED ICP SITES. 1.1.1. Subject to the terms of this Agreement, AOL will provide ICP with the phased promotions for the Affiliated ICP Sites described on Exhibit A attached hereto. Subject to ICP's approval (not to be unreasonably withheld), AOL will have the right to fulfill its promotional commitments with respect to any of the foregoing by providing ICP comparable promotional placements in appropriate alternative areas of the AOL Properties. In addition, if AOL is unable to deliver any particular Promotion, AOL will work with ICP to provide ICP, as its sole remedy, a comparable promotional placement. AOL reserves the right to redesign or modify the organization, structure, "look and feel," navigation and other elements of the AOL Network at any time. In the event such modifications materially and adversely affect any specific Promotion, AOL will work with ICP to provide ICP, as its sole remedy, a comparable promotional placement. As used throughout this Agreement, the phrases "comparable promotional placements" or "comparable promotions" shall mean placements which are of comparable overall value, [*****], to be determined based on a variety of factors, including without limitation size, quality, type (e.g., integrated or banner), location (I.E., page or screen and the subject matter thereof) and /or demographically targeted relevance, audience reach (taking into CONFIDENTIAL EXECUTION COPY account the targeted nature of the placement) and the performance of the placement (i.e., response rate of AOL Users). 1.1.2. In the event the Parties cannot mutually agree as to a comparable promotional placement as addressed in Section 1.1.1, such matter shall be submitted to the Management Committee as provided in Section 6 of this Agreement. In the event that the Management Committee is unable to agree as to a comparable promotional placement within fifteen (15) days from commencement of good-faith negotiations, the Management Committee shall jointly select a mediator (or, if the Management Committee cannot agree on a mediator, a mediator designated by the American Arbitration Association). [*****] 1.2 INTEGRATION IMPRESSIONS COMMITMENT; BANNER IMPRESSIONS COMMITMENT. 1.2.1 INTEGRATION. During the Initial Term, AOL shall integrate the integrated Promotions set forth on Exhibit A hereto and designated as "Integrated Impressions" into the Career Areas so as to deliver to ICP [*****] Integrated Impressions as set forth on Exhibit A (collectively, the "Integrated Impressions Commitment"). With respect to the Integrated Impressions targets specified on Exhibit A, AOL will not be obligated to provide in excess of any Integrated Impressions target amounts in any Year. In the event of an excess in delivery of Integrated Impressions, ICP shall have no obligation to compensate AOL therefor and AOL shall have no right to deduct all or any portion of such overdelivery from the subsequent Year's Integrated Impressions target. Any shortfall in Integrated Impressions at the end of a Year will not be deemed a breach of the Agreement by AOL; instead any such shortfall greater than [*****] percent ([*****]%) of the annual Integrated Impressions target for such Year (as set forth on Exhibit A) will be added to the Integrated Impressions target for the subsequent Year (as set forth on Exhibit A). In the event there is (or will be in AOL's reasonable judgment) a shortfall in Integrated Impressions as of the end of the Initial Term greater than twenty five percent of the total Integrated Impressions Commitment for the Term as set forth on Exhibit A (an "Integrated Impressions Final Shortfall"), AOL will, within twelve (12) months of the end of the Initial Term, provide ICP, as its sole remedy, with Integrated Impressions equal in number to the Integrated Impressions Final Shortfall, which Integrated Impressions will point to the Principal ICP Interactive Site. 1.2.2. BANNER IMPRESSIONS. During the Initial Term, AOL shall deliver to ICP [*****] Banner Impressions (as designated on Exhibit A) in the areas of the AOL Properties set forth on Exhibit A hereto (the "Banner Impressions Commitment"). AOL shall use commercially reasonable efforts to deliver the Banner Impressions as evenly as possible over the course of the Initial Term. With respect to the Banner Impressions targets specified on Exhibit A, AOL will not be obligated to provide in excess of any Banner Impressions target amounts in any Year. In the event AOL provides an excess of any annual Banner Impressions target amounts in any Year, the Banner Impressions target for the subsequent Year will be reduced by the amount of such excess, up to a maximum of [*****] percent ([*****]%) of any such Banner Impressions Target. Any shortfall in Banner Impressions at the end of a Year will not be deemed a breach of the Agreement by AOL; instead the entire CONFIDENTIAL 2 EXECUTION COPY amount of such shortfall will be added to the Banner Impressions target for the subsequent Year. In the event there is (or will be in AOL's reasonable judgment) a shortfall in Banner Impressions as of the end of the Initial Term (a "Banner Impressions Final Shortfall"), AOL will, within twelve (12) months of the end of the Initial Term, provide ICP, as its sole remedy, with comparable Banner Impressions equal in number to the Banner Impressions Final Shortfall, which Banner Impressions will point to the Principal ICP Interactive Site. 1.3 CONTENT OF PROMOTIONS. The Promotions will link to the Affiliated ICP Sites and will promote only the ICP Products described on Exhibit D; provided, however, that prior to the launch of the Affiliated ICP Sites and during any Renewal Term, the Promotions will link to the Principal ICP Interactive Site. ICP agrees that it shall make no material change to the nature of or content offerings on the Principal ICP Interactive Site prior to the launch of the Affiliated ICP Sites. The specific ICP Content to be contained within the Promotions described in Exhibit A (the "Promo Content") will be determined by ICP, subject to AOL's technical limitations, the terms of this Agreement and AOL's then existing generally applicable policies relating to advertising and promotions (the "Ad Policies"), [*****]. ICP will submit in advance to AOL for its review a quarterly online marketing plan with respect to the Affiliated ICP Sites. The Parties will meet in person or by telephone at least monthly to (i) review operations and performance hereunder, including a review of the Promo Content to ensure that it is designed to maximize performance and (ii) review the specific format, placement, duration and nature of the Promotions relating to Banner Impressions which AOL has determined to use in its reasonable editorial discretion (consistent with the editorial composition of the applicable screens) upon consultation with ICP. In order to optimize the Promo Content, ICP will update such Promo Content no less than twice per month or at such other frequency as practicable, as the Parties shall mutually determine. Except to the extent expressly described herein, and subject to the terms of this Agreement, including, without limitation, AOL's right to redesign or modify the AOL Network, the specific format, placement, duration and nature of the Promotions relating to Integrated Impressions will be as set forth in the Programming Plan. 1.4 ICP PROMOTION OF AFFILIATED ICP SITES AND AOL. As set forth in fuller detail in Exhibit C, ICP will promote AOL's Interactive Service on the Principal ICP Interactive Site and will at its discretion promote the availability of the Affiliated ICP Sites through the AOL Properties. ICP agrees not to promote any other Interactive Service as its preferred Interactive Service during the Term and will consider, in ICP's sole discretion, promoting AOL as ICP's preferred Interactive Service when appropriate. In the event that ICP proposes to institute with another Interactive Service a promotion similar to the promotion set forth on Exhibit C, ICP will grant AOL the right to participate in the same or a similar promotion on the same terms offered to such other Interactive Service. 2 AFFILIATED ICP SITES. 2.1 CONTENT; LOCAL CONTENT. ICP will make available through the Affiliated ICP Sites (when constructed) the comprehensive offering of career-related Products and related Content described on Exhibit D to this Agreement to the same extent as provided on the Principal ICP Interactive Site. Except as mutually agreed in writing by the Parties, the Affiliated ICP Sites will contain only Content that is directly related to the ICP Products listed on Exhibit D, and the programming objectives listed in the Programming Plan. On the Affiliated ICP Sites ICP will not promote, sell, offer or otherwise distribute any products or services other than those CONFIDENTIAL 3 EXECUTION COPY related to jobs or careers or other than as set forth on Exhibit D. ICP may in its discretion utilize any sales format to distribute the Products on Exhibit D, [*****]. Additionally, ICP shall not direct AOL Users accessing the Affiliated ICP Sites to contact ICP through any non-online means (e.g., telephone) other than as a means of providing customer service or technical assistance. ICP will review, delete, edit, create, update and otherwise manage all Content available on or through the Affiliated ICP Sites in accordance with the terms of this Agreement. ICP will ensure that the Affiliated ICP Sites do not in any respect promote, advertise, market or distribute (a) the products, services or content of any other Interactive Service or (b) AOL Premier Partner Categories (except that (i) the foregoing restrictions shall not apply to job listings or Project Profiles posted by any Interactive Service or by the marketer of products or services within any AOL Premier Partner Category which ICP includes on the Affiliated ICP Sites in the ordinary course, and (ii) ICP shall not be responsible for enforcing these restrictions with respect to any advertisements on the Affiliated ICP Sites which are placed by AOL in accordance with Section 2.10.1). ICP shall ensure, to the extent feasible, that job listings represent opportunities which are available at the time of listing (e.g., no general ads for employment agencies) and any such listings shall be removed from the Affiliated ICP Sites as promptly as possible following notification to ICP (or knowledge of ICP) of the filling of such positions. In the event that ICP elects to include local Content or information on the Affiliated ICP Sites, ICP shall feature Digital City as the sole provider of local city information on such Site(s) and (ii) provide links from such Site(s) to specific Digital City resources to be mutually agreed upon by the Parties (e.g., maps, weather, dining guides, destination guides, etc.). In the event that ICP elects to include local content or information on the Principal ICP Interactive Site, ICP (i) shall include Digital CIty as a local content provider and (ii) shall not promote any other party as a premier or preferred provider of such local content; provided that the Digital City areas of the Principal ICP Interactive Site shall feature co-branding in accordance with ICP's reasonable co-branding requirements, which shall be similar in format to the co-branded AOL/Digital City Affiliated ICP Site. 2.2 EDITORIAL CONTENT. As further described in the Programming Plan, ICP shall provide AOL with certain content designed to supplement the Products specified on Exhibit D (e.g., articles, job search advice, etc.) (collectively, "Editorial Content") that will be accessed by AOL Users through the Career Areas. In the event that AOL reasonably desires to offer Editorial Content in a particular category not then offered by ICP, AOL shall notify ICP of its desire to offer such Editorial Content, and the Parties shall work together to jointly develop a strategy for obtaining Editorial Content for such particular category on or through the relevant AOL Property (to the reasonable satisfaction of AOL) within thirty (30) days following AOL's request. The Parties anticipate that ICP will be willing to develop and provide Editorial Content for any particular category as reasonably requested by AOL. The Parties acknowledge that AOL is permitted under this Agreement to procure Editorial Content from sources other than ICP. 2.3 COMPLEMENTARY PRODUCTS AND SERVICES. Subject to Section 4.8, in the event that ICP desires to offer any of the Complementary Products and Services on or through any Affiliated ICP Site, ICP shall notify AOL of such desire, and the Parties shall negotiate in good faith (subject to the terms of any then-existing agreements with respect to any such Complementary Products and Services to which AOL may then be a party) in an effort to incorporate such Complementary Products and Services into the Affiliated ICP Site(s). CONFIDENTIAL 4 EXECUTION COPY 2.4 PRODUCTION WORK. Except as agreed to in writing by the Parties pursuant to Section 10 of Exhibit F hereto and Section 2.10 hereof, ICP will be responsible for all production work associated with the Affiliated ICP Sites, including all related costs and expenses. 2.5 TECHNOLOGY. ICP will take all commercially reasonable steps necessary to conform its promotion and offering of the ICP Products through the Affiliated ICP Sites to the then-existing technologies identified by AOL which are optimized for the AOL Properties. AOL will be entitled to require reasonable changes to the technological aspects of the Content within any linked pages of any Affiliated ICP Site to the extent such technological aspects of the Content will, in AOL's good faith judgment, materially adversely affect any operational aspect of the AOL Network, PROVIDED that the incremental investment is reasonable relative to the AOL User traffic and is in accordance with accepted industry standards. AOL reserves the right to review and test the Affiliated ICP Sites from time to time to determine whether the sites are compatible with AOL's then-available client and host software and the AOL Network. AOL shall provide ICP without charge reasonable technical assistance and guidance necessary to help ICP comply with the requirements of this Section 2.5, provided, however, that ICP shall bear all its own internal costs related to its compliance hereunder. ICP acknowledges that ICQ may require changes to, and programming of, the ICQ-Monster Affiliated ICP Site that differs from the other Affiliated ICP Sites. ICP shall use commercially reasonable efforts to comply with ICQ's requirements hereunder. In the event that ICP's compliance with this Section 2.5 causes a material adverse effect on ICP's ability to perform under this Agreement, ICP may submit such matter to the Management Committee to devise an appropriate resolution to alleviate the effects of compliance. 2.6 PRODUCTS OFFERING. Subject to the limitations on Affiliated ICP Site Content contained in Section 2.1 above, ICP will ensure that each of the Affiliated ICP Sites includes all of the job listings, resume builder, resume database, and other Content (including, without limitation, any features, offers, contests, functionality or technology) that are then made available by or on behalf of ICP through the Principal ICP Interactive Site; PROVIDED, HOWEVER, that such inclusion will not be required where it is commercially or technically impractical to either Party (i.e., inclusion would cause either Party to incur substantial incremental costs or contravenes the terms of any agreement); and provided, further that to the extent AOL exercises any right it may have under this Agreement not to permit certain Content or Products to be included in the Affiliated ICP Sites, ICP's obligation under this Section 2.6 shall be excused. The Parties acknowledge and agree that the Affiliated ICP Sites will require password access by an AOL User to such AOL User's resume in the resume database and that an AOL User shall not be permitted to access any other user's resume through any Affiliated ICP Site. 2.7 PRICING AND TERMS. ICP will ensure that: (i) the prices (and any other required consideration), to the extent applicable, for Products in the Affiliated ICP Sites do not exceed the prices for the Products or substantially similar Products offered by or on behalf of ICP generally through the Principal ICP Interactive Site or other distribution channels, and (ii) the terms and conditions related to Products in the Affiliated ICP Sites are no less favorable in any material respect to the terms and conditions for the Products or substantially similar Products offered by or on behalf of ICP generally through the Principal ICP Interactive Site or other distribution channels. 2.8 EXCLUSIVE OFFERS/MEMBER BENEFITS. ICP will generally promote through the Affiliated ICP Sites any special or promotional offers made available by or on behalf of ICP through the Principal ICP Interactive Site. ICP shall not be required to comply with the foregoing if compliance therewith would cause a breach by ICP with any of its contractual obligations existing on the date hereof. In addition, ICP shall promote through the Affiliated ICP Sites (in no event less then once per quarter) special offers exclusively available to AOL Users (the "AOL Exclusive Offers"). The AOL Exclusive Offer made available by ICP shall provide a CONFIDENTIAL 5 EXECUTION COPY substantial member benefit to AOL Users. AOL Exclusive Offers to be made available by ICP may from time to time consist of the AOL Exclusive Offers listed on Exhibit D-1 attached hereto. ICP will provide AOL with reasonable prior notice of AOL Exclusive Offers so that AOL can market the availability of such AOL Exclusive Offers in the manner AOL deems appropriate in its editorial discretion. 2.9 OPERATING STANDARDS. ICP will ensure that the Affiliated ICP Sites comply in all material respects at all times with the standard set forth in Exhibit E. In the event ICP fails to comply with any material terms of Exhibit E, AOL shall upon notice to ICP have the right to suspend the Promotion immediately and if such non-compliance continues for more than [*****] days beyond AOL's written notice to ICP of such non-compliance, AOL will have the right (as its sole remedy other than in the event of termination for ICP's breach, which remedy shall not be affected hereby) to decrease the Impressions it provides to ICP hereunder on a proportional basis until such time as ICP corrects its non-compliance (and in such event, AOL will be relieved of the proportionate amount of any Impressions Commitment made to ICP by AOL hereunder corresponding to such decrease in promotion) and any revenue threshold(s) set forth in Section 4 (and Exhibits K and L hereto) will each be adjusted proportionately to correspond to such decrease in the Impressions Commitment. Once ICP has brought the Affiliated ICP Sites back into compliance with the material terms of Exhibit E, AOL shall promptly resume the Promotion. In the event that during the Initial Term the AOL Properties (or any significant portion thereof) are non-operational for a total of [*****] over any [*****] day period (provided that no day shall be counted in more than one [*****] day period), AOL shall provide ICP, as its sole remedy, for each such [*****] day period thereafter, with a number of Impressions equal to one forty-eighth (1/48) of the total Impressions to be provided during the Initial Term; provided, however, that if the AOL Properties (or any significant portion thereof) are non-operational for more than [*****] hours (but not including normally scheduled upgrades and maintenance activities) in any [*****] day period, ICP shall be entitled to terminate this Agreement for material breach. 2.10 ADVERTISING SALES. 2.10.1 AFFILIATED ICP SITES. AOL shall have the exclusive right and obligation to license or sell promotions, advertisements, links, pointers or similar services or rights ("Advertisements") on or through the Affiliated ICP Sites, in its reasonable discretion. The specific advertising inventory within the Affiliated ICP Sites will be as reasonably determined by AOL; PROVIDED, HOWEVER, that AOL shall not sell or license anywhere within the Career Areas any such Advertisements to any, nor shall any such Advertisements promote, (i) recruiting verticals (e.g., "journalismjobs.com"), (ii) newspaper classifieds (but Advertisements may promote single classified verticals (e.g., cars), so long as the user cannot navigate to other classified areas), (iii) ICP Competitors or (iv) other categories of advertisers of whom ICP notifies AOL in writing; provided, however, that (a) any new categories added pursuant to this Section 2.10.1(iv) shall not affect then existing AOL contractual commitments and (b) in the event that AOL reasonably believes that the addition of new categories has materially limited AOL's ability to meet its obligations under this Section 2.10.1, AOL may refer the issue to the Management Committee for resolution. 2.10.2 PRINCIPAL ICP INTERACTIVE SITE. As soon as reasonably practical following the Effective Date, the Parties will mutually agree upon an annual operating plan (the "Ad Program") whereby both AOL and ICP will, in coordination with each other, establish banner advertising inventory space within the Principal ICP Interactive CONFIDENTIAL 6 EXECUTION COPY Site, pricing guidelines and revenue projections for the sale of such inventory space, and objectives for the sale of such inventory space. The Parties acknowledge and agree that (unless otherwise agreed by the Parties), ICP shall be solely responsible for selling or licensing banner Advertisements to human resources personnel or HR-related entities, and, in its sole discretion, may reserve up to [*****] percent ([*****]%) of all other banner advertising inventory (to be used for ICP cross-promotions and makegoods, but not offered for sale by ICP to any third party). (AOL shall receive no revenue share from any Advertisement sold, licensed or used by ICP.) AOL shall be solely responsible for selling or licensing the balance of the banner advertising inventory to all other third parties. In the event that AOL shall fail to sell at least [*****] percent ([*****]%) of the advertising inventory in the Principal ICP Interactive Site during any nine-month period, the Parties shall discuss measures by which AOL shall be able to sell more advertising inventory (the "Advertising Enhancement Discussions"). If (i) the Parties are unable to agree, within thirty (30) days) as to measures by which AOL, can attempt to improve its advertising sales on the Principal ICP Interactive Site or (ii) AOL fails to sell at least [*****] percent ([*****]%) of the advertising inventory in the Principal ICP Interactive Site within sixty (60) days following such Advertising Enhancement Discussions, ICP shall have the right to sell all of (or, to the extent agreed upon by the Parties, a portion of) the advertising inventory formerly sold by AOL on such Site, AOL shall cease selling the relevant advertising inventory agreed upon by the Parties, and AOL shall receive a mutually agreed-upon revenue share for the advertising inventory (if any) which continues to be sold by AOL during the remainder of the Term. AOL shall not sell any placement for banner advertising extending beyond the term of this Agreement. 2.10.3 INCLUSION OF ICP SALES FORCE IN PITCHES. Where feasible and commercially reasonable, AOL and ICP shall work together to include members of the ICP sales force in advertising sales pitches to third parties. 2.10.4 ADVERTISING CONTENT. The content of the Advertisements sold by AOL pursuant to this Section 2.10, whether on or through the Affiliated ICP Sites or the Principal ICP Interactive Site, shall not include any unlawful or reasonably objectionable material (including without limitation any pornographic, defamatory, racist, sexist or salacious matter). 2.11 TRAFFIC FLOW; MEMBER ODD JOBS. ICP will use commercially reasonable efforts to ensure that AOL traffic is either kept within the Affiliated ICP Sites or channeled back into the AOL Properties (with the exception of advertising links sold and implemented pursuant to the Agreement and the Content implemented pursuant to Section 2.6). The Parties will work together on implementing mutually acceptable, prominent links from the Affiliated ICP Sites back to (i) AOL Workplace or the main screen of ClassifiedPlus of the appropriate AOL Property, below the toolbar on such main screen (or, in the event of any redesign of such area, in a comparable location) and/or (ii) the "Member Odd Jobs" area of the AOL Service. In the event that AOL points to any Affiliated ICP Site or any other ICP Interactive Site or otherwise delivers traffic to such site hereunder, ICP will ensure that navigation back to the AOL Properties from such site, whether through a particular pointer or link, the "back" button on an Internet browser, the closing of an active window, or any other return mechanism, shall not be interrupted by ICP through the use of any intermediate screen or other device not specifically requested by the user, including without limitation through the use of any html pop-up window or any other similar device. CONFIDENTIAL 7 EXECUTION COPY 2.12 PRODUCTION AND TECHNOLOGY. To the extent set forth in the Programming Plan, ICP shall use commercially reasonable efforts (i) to customize specific features for AOL Users and (ii) to integrate ICP job listings into the main screens of ClassifiedPlus. During the Term, the Parties shall mutually agree to a regular editorial calendar and shall consult each other regarding routine editorial issues. 2.13 CUSTOMIZATION OF AFFILIATED ICP SITES AND ICP RATINGS CREDIT. Each Affiliated ICP Site shall contain "headers" and "footers" (as further reflected in the Programming Plan) provided by AOL that will include co-branding for, and links back to, the appropriate AOL Property (e.g., in the event that the relevant AOL User comes to the relevant Affiliated ICP Site from the CompuServe Service, such Affiliated ICP Site shall contain CompuServe Service co-branding (in form and substance satisfactory to AOL) and shall provide navigational links back to the ClassifiedPlus area of the CompuServe Service or the Workplace Area of the AOL Service, as applicable). At ICP's election, each Affiliated ICP Site and [*****] on the AOL Properties shall be located on a URL provided by [*****] and/or the URL for the applicable AOL Property (e.g., www.monster.aol.com, www.monster.compuserve.com, www.aol.monster.com, www.compuserve.monster.com, etc.); provided, however, that upon Media Metrix's public announcement of the availability of a syndicated report, the Parties will reconsider in good-faith the selection of such URLs. The purpose of such reconsideration shall be to endeavor to obtain for both Parties credit for user traffic (but in no event shall such reconsideration result in ICP receiving less credit for traffic, page views, unique visits or reach). [*****] 2.14 ENTERPRISE AND COMMERCE SOLUTIONS/TOOLS. AOL and ICP shall explore in good faith the potential for AOL to supply back-end commerce solutions to ICP through AOL's alliance with Sun Microsystems and and/or Netscape Communications Corporation, provided that such solutions are determined by ICP to be superior to solutions used or contemplated to be used by ICP. 2.15 USE OF COMPONENT PRODUCTS. 2.15.1 AFFILIATED ICP SITES. In the event that ICP elects to use or integrate any tools or functionality (other than tools owned by ICP or existing solutions) similar to any AOL Component Products into any Affiliated ICP Site(s), ICP shall use or integrate into such Affiliated ICP Site(s) the relevant AOL Component Products to the extent that such products are comparable (in terms of cost and performance) to similar component products offered by any third parties and to the extent that the transition costs (but not the cost of the AOL Component Product) are minimal. AOL shall provide AOL Component Products at a price no less favorable than the price offered to its other Interactive Content Partners and Marketing Partners. 2.15.2 PRINCIPAL ICP INTERACTIVE SITE. In the event that after the Effective Date ICP elects to use or integrate any such tools or functionality (other than tools owned by ICP or existing solutions) into the Principal ICP Interactive Site, ICP shall use or integrate the relevant AOL Component Products to the extent that such products are comparable (in terms of cost and performance) to similar component products offered by any third parties and to the extent that the transition costs (but not the cost of the AOL Component Product) are minimal. AOL shall provide CONFIDENTIAL 8 EXECUTION COPY AOL Component Products at a price no less favorable than the price offered to its other Interactive Content Partners and Marketing Partners. 2.16 LAUNCH OF AFFILIATED ICP SITES. ICP shall launch the Affiliated ICP Site associated with the Workplace and ClassifiedPlus areas within the AOL Service within [*****] days of the Effective Date and other Affiliated ICP Sites within [*****] days after the Effective Date. AOL shall without charge provide ICP with reasonable assistance to aid in the launch of the Affiliated ICP Sites. To the extent that the launch of any Affiliated ICP Site is delayed due to AOL's actions or inaction, the aforesaid launch dates shall be extended by the period of such delay. 2.17 ClassifiedPlus; JOBS DATABASE. 2.17.1 LINKS. Any individual ICP classifieds listing on any Results Screen may link to a more detailed description of such listing. Any First Level Detail Screen may link to an even more detailed description (a "Second Level Detail Screen"). All Search Screens, Results Screens and First Level Detail Screens shall be within the AOL Properties, hosted and produced by AOL. Each Second Level Detail Screen shall be within the Affiliated ICP Site hosted and produced by ICP at ICP's expense, subject to the terms hereof. Each First Level Detail Screen for ICP classifieds listings may include three active links to any page within the Affiliated ICP Site reasonably designated by ICP and two static (i.e., images that are not links) graphic images (one picture, one logo). Creative materials for such links and graphic images shall be provided to AOL by ICP under the terms of this Agreement. 2.17.2 MODIFICATIONS. AOL reserves the right to redesign or modify the organization, structure, "look and feel," navigation and other elements of ClassifiedPlus, at any time, and will have full and ongoing final approval in its discretion of the design, layout, look and feel, content (but not Content provided by ICP hereunder), advertising inventory, commerce inventory, user interface, functionalities and all other aspects of ClassifiedPlus. Without limiting the foregoing, AOL in consultation with ICP: (i) shall have the right to make material alterations to ClassifiedPlus, (ii) may promote other areas of the AOL Properties in ClassifiedPlus, including via links and banners, and (iii) shall own and control all rights to third party advertising and sales relationships with commercial and individual listings sources to ClassifiedPlus, subject to the restrictions on advertising sales specified in Section 2.10.1. In the event any modifications to the AOL Properties materially and adversely affect any specific ICP promotion herein, AOL will provide ICP with comparable promotional placements as reasonably determined by the Parties. Notwithstanding the foregoing, AOL shall (i) have no right to influence over, or to request changes in, the structure of ICP's databases; and (ii) have no right, title or interest in all or any portion of ICP's databases. 2.17.3 JOBS DATABASE. ICP shall deliver the Jobs Database in an electronic format or formats as specified by AOL from time to time for the sole purpose of including such Jobs Database in ClassifiedPlus, and ICP shall update such Jobs Database daily. AOL may display the Database and/or individual ICP classified listings within the Database in ClassifiedPlus in AOL's discretion, provided that AOL shall not alter or delete specific job postings. Unless otherwise mutually agreed by the Parties, AOL shall not co-mingle ICP's Jobs Database with other classified listings of other parties or AOL. ICP shall provide all reasonable assistance to ensure that the integration of the Jobs Database into ClassifiedPlus is error-free. CONFIDENTIAL 9 EXECUTION COPY 2.17.4 OWNERSHIP OF ClassifiedPlus. Subject to Section 2.21 hereof, AOL owns and shall own, whether now or hereafter created or existing, all title and other rights to the ClassifiedPlus area, including without limitation the look and feel thereof, all search engines, user interfaces, any technology used therein, any brand names or other intellectual property relating thereto, any derivative works thereto, and all documentation related thereto created by AOL, but specifically excluding the Jobs Database (which shall remain the exclusive property of ICP). 2.18 CORPORATE HUMAN RESOURCES SERVICES. AOL shall have the right to receive ICP's corporate human resources services at a discount of at least fifty percent (50%) of ICP's standard rates for services exclusively provided by ICP. 2.19 LICENSE. During the Term, ICP hereby grants to AOL, solely for the purpose of, and only to the extent necessary for, AOL's performance under this Agreement, a non-exclusive, royalty-free, worldwide license to market, distribute, display, perform, transmit and promote the Content provided by ICP hereunder (collectively, the "Licensed Content") (or any portion thereof) through the AOL Properties and the ICP Affiliated Sites. In addition, users of the AOL Properties will have the right to access and use the Affiliated ICP Sites. 2.20 PERFORMANCE/QUALITY CRITERIA. The Parties mutually intend to create on the AOL Properties and the Affiliated ICP Sites a superior career resource for AOL Users. To ensure that the quality of the career resources provided by ICP will be maintained, ICP commits that it will be at all times during the Initial Term in the top [*****] of all online career search Interactive Sites (but the Career Areas shall not constitute an online career search Interactive Site separate and apart from ICP) as measured by a cross-section of third party reviewers who are recognized authorities in such industry as selected by the Management Committee. ICP's failure to bring the Affiliated ICP Sites into compliance with the quality standards set forth in this Section within [*****] days shall constitute a material breach of this Agreement; provided, however, that if ICP is unable to remedy such breach within the cure period set forth in Section 5.4 of the Agreement, AOL's sole remedy for such breach shall be termination of this Agreement. 2.21 OWNERSHIP OF ICP-SUPPLIED CONTENT. ICP exclusively owns and shall own, whether now or hereafter created or existing, all right, title and interest in and to Content supplied or offered hereunder by ICP (including without limitation job listings, resumes, profiles, databases, etc.) and all intellectual property rights therein (including without limitation copyrights and other rights of authorship, patents, trademarks and trade secrets) and AOL agrees that all such Content and rights owned by ICP shall remain the sole and exclusive property of ICP. 3. ICP EXCLUSIVE STATUS. 3.1. EXCLUSIVE STATUS. During the Initial Term, ICP shall be the exclusive provider on the AOL Properties and the Affiliated ICP Sites of (i) jobs listings, jobs posting, jobs databases and jobs searching (including job agent and job alert emails), but not of non-aggregated advertising for specific employers on Digital City, (ii) resume builder tools, resume postings and resume databases, (iii) executive search, selection and outplacement, (iv) independent contractor profiles, (v) Project Profiles, (vi) temporary employment services, and (vii) Talent Market (collectively, the "Exclusive Services"). AOL shall not promote on the AOL Properties services or products of any other party which are equivalent to the Exclusive Services. 3.2. EXCEPTIONS. No provision of this Agreement will limit AOL's ability to: CONFIDENTIAL 10 EXECUTION COPY (i) [*****] (ii) [*****] (iii) [*****] (iv) [*****] (v) [*****] (vi) [*****] (vii) [*****] (viii) [*****] CONFIDENTIAL 11 EXECUTION COPY 4. PAYMENTS. 4.1. PAYMENT. Subject to the terms of this Agreement, ICP will pay AOL a payment of One Hundred Four Million Dollars ($100,000,000), payable as follows: (i) [*****] (ii) [*****] (iii) [*****] 4.2. SHARING OF ADVERTISING REVENUES. The Parties will share Advertising Revenues as follows: (i) in connection with the sale or licensing of any Advertisement on any Affiliated ICP Site, AOL shall pay ICP [*****] percent ([*****]%) of the Advertising Revenues generated by any such sale or licensing and (ii) in connection with the sale or licensing of any banner Advertisement on or through the Principal ICP Interactive Site, the selling party shall pay the non-selling party the percentages of the Advertising Revenues generated by any such sale or licensing set forth on Exhibit K hereto. AOL, however, shall not be entitled to any revenue share for advertisements sold by ICP on the Principal ICP Interactive Site to the extent permitted under Section 2.10.2 of this Agreement. Each Party will pay the other Party all Advertising Revenues received and owed to such other Party as described herein on a quarterly basis within thirty (30) days following the end of the quarter in which such amounts were generated by such Party. 4.3. SHARING OF JOB LISTING REVENUES; BOUNTIES. AOL shall receive the share of Job Listing Revenues set forth on Exhibit L, as well as the Resume Acquisition Bounties, Personal Alert Profile Acquisition Bounties and Virtual Career Fair Fees (if any) specified in Exhibit L, all subject to the hurdles set forth (and as defined) therein. ICP will pay AOL its share of the Job Listing Revenues and the Bounties owed to AOL as described on Exhibit L on a quarterly basis within thirty (30) days following the end of the quarter in which such Job Listing Revenues and Bounties were generated. 4.4. LATE PAYMENTS; WIRED PAYMENTS. All amounts owed hereunder not paid when due and payable will bear interest from the date such amounts are due and payable at the prime rate in effect at such time. All payments required hereunder will be paid in immediately available, non-refundable U.S. funds wired to (i) in the case of payments to AOL, the "America Online" account, Account Number 323070752 at The Chase Manhattan Bank, 1 Chase Manhattan Plaza, New York, NY 10081 (ABA: 021000021), or (ii) in the case of payments to ICP, the "TMP Worldwide Inc." account, Account Number 99939084 at the Fifth Third Bank, Cincinnati, Ohio (ABA: 042000314). 4.5. AUDITING RIGHTS. Each Party will maintain complete, clear and accurate records of all revenues and fees in connection with the performance of this Agreement. For the sole purpose of ensuring compliance with this Agreement, each Party will have the right, CONFIDENTIAL 12 EXECUTION COPY exercisable not more than once every twelve (12) months, to appoint an independent certified public accountant to conduct a reasonable and necessary inspection of portions of the books and records of the other Party which are relevant to the payment of amounts payable pursuant to this Agreement. Any such audit may be conducted after twenty (20) business days prior written notice. The Party initiating the audit shall bear the expense of any audit conducted pursuant to this Section 4.5 unless such audit shows an error in the other Party's favor amounting to a deficiency in excess of five percent (5%) of the actual amounts paid and/or payable hereunder, in which event the Party being audited shall bear the reasonable expenses of the audit. The Party being audited shall pay the other Party the amount of any deficiency discovered by the audit within thirty (30) days after receipt of written notice thereof. 4.6. TAXES. ICP will collect and pay and indemnify and hold AOL harmless from any sales, use, excise or similar tax including any penalties and interest, as well as any costs associated with the collection or withholding thereof, including attorney's fees which arises out of (1) the sale by ICP of tangible personal property or any taxable service (including but not limited to advertising) to AOL, or (2) any transaction between ICP and customers other than AOL. AOL will collect and pay and indemnify and hold ICP harmless from any sales, use, excise, internet access, telecommunication or any other similar tax or fee solely to the extent arising out of AOL's performance hereunder including any penalties and interest, as well as any costs associated with the collection or withholding thereof, including attorney's fees which arises in connection with actions taken, or transactions engaged in, by AOL other than those taxes that directly relate to (1) the sale by ICP of tangible personal property or any taxable service to AOL, or (2) any transaction between ICP and its customers other than AOL. 4.7. REPORTS. 4.7.1. TRANSACTION REPORTS. ICP will provide AOL in an automated manner with a monthly report in an AOL-designated format detailing the following activity in such period (and any other information mutually agreed upon by the Parties or reasonably required for measuring revenue activity by ICP through the Affiliated ICP Sites): summary transaction information by day (e.g., revenues from customers and partners, number of job listings, number of resume listings, repeat usage percentages, etc.) (collectively, "Transaction Reports"). AOL shall without charge provide reasonable assistance to ICP in designing and implementing the Transaction Reports. AOL will be entitled to use the Transaction Reports in its business operations, subject to the terms of this Agreement. More generally, each payment to be made by ICP pursuant to this Section 4 will be accompanied by a report containing information which supports the payment, including information identifying (i) gross transaction revenues and (ii) any applicable Advertising Revenues. AOL acknowledges that such reports may contain ICP's Confidential Information as defined herein. 4.7.2. USAGE REPORTS. AOL shall provide ICP on a monthly basis with standard usage information related to the Promotions (e.g., a schedule of the Impressions delivered by AOL at such time, numbers of click throughs, etc.) which is similar in substance and form to the reports provided by AOL to other interactive marketing partners similar to ICP. ICP acknowledges that such information may be Confidential Information as defined herein. Subject to the terms of this Agreement, ICP shall be entitled to use such reports in its internal business operations, and if ICP believes that it has legitimate business reasons to disclose such information to a third party, AOL will consider any request for such third party disclosure in good faith and its consent shall not be unreasonably withheld. CONFIDENTIAL 13 EXECUTION COPY 4.7.3. FRAUDULENT TRANSACTIONS. To the extent permitted by applicable laws, ICP will provide AOL with a prompt report of any fraudulent order, including the date, screenname or email address and amount associated with such order, promptly following ICP obtaining knowledge that the order is, in fact, fraudulent. 4.8 ALTERNATIVE REVENUE STREAMS. In the event that ICP receives or desires to receive (directly or indirectly) any compensation in connection with any Affiliated ICP Sites other than with respect to (i) the Products set forth on Exhibit D hereof or (ii) Advertising Revenues (an "Alternative Revenue Stream"), ICP shall promptly inform AOL in writing and request AOL's approval, which approval shall not be unreasonably withheld, but may be conditioned upon the negotiation of an acceptable revenue sharing relationship (including appropriate hurdles) between the Parties. 5. TERM; RENEWAL; TERMINATION. 5.1. TERM. Unless earlier terminated as set forth herein, the initial term of this Agreement will be four (4) years from the Effective Date (the "Initial Term"). 5.2. RENEWAL. Upon conclusion of the Initial Term, AOL will have the right to renew the Agreement for two (2) successive one-year renewal terms (each a "Renewal Term" and together with the Initial Term, the "Term"). During any such Renewal Term: (i) ICP will not be required to pay any fixed payments specified in Section 4.1 or perform the cross-promotional obligations specified in Section 1; (ii) AOL will not be required to undertake any fixed exclusivity or promotional/placement obligations; and (iii) AOL shall have the right to receive the Bounties and revenue share payments referenced in Section 4.3 hereof, without regard to any performance hurdles set forth therein. A Renewal Term shall automatically commence following the expiration of the Initial Term (or prior Renewal Term, as the case may be), provided that AOL shall be entitled to terminate any such Renewal Term with ninety (90) days prior written notice to ICP. Notwithstanding the foregoing, ICP may terminate this Agreement on thirty (30) days prior written notice to AOL in the event that AOL acquires or forms or is acquired by an ICP Competitor during any Renewal Term. 5.3. CONTINUED LINKS; WIND-DOWN. 5.3.1. CONTINUED LINKS. Upon expiration of the Term, AOL may, in its discretion, continue to promote one or more "pointers" or links from the AOL Properties to the Principal ICP Interactive Site and continue to use ICP's trade names, trade marks and service marks in connection therewith (collectively, a "Continued Link"). With respect to only the first year after the expiration of the Term, and provided that AOL maintains a Continued Link during such period, (a) ICP shall pay AOL the share of Job Listing Revenues required pursuant to Section 4.3 hereof (but no other payments described in Section 4.3), without regard to any performance hurdles set forth therein, and (b) Sections 4.5, 4.6 and 4.7 shall continue to apply with respect to the Continued Link and any transactions arising therefrom. 5.3.2. WIND-DOWN. Upon expiration of the Term, AOL Users shall have the right to access any of the features of the Affiliated ICP Site which shall be transferred to the Principal ICP Interactive Site (including, without limitation, any resume builder product or any other employment-related services (e.g., auction services, temporary employment services, etc.)), and AOL Users shall have the right to access, update and/or remove their resumes from relevant ICP databases. Notwithstanding any provision of this Agreement to the contrary, ICP shall be entitled to maintain and use on an exclusive basis AOL Keywords: Monster and CONFIDENTIAL 14 EXECUTION COPY Monster.com for a two (2) year period following the expiration of the Term and such keyword shall link to such ICP Interactive Site as ICP shall designate. 5.4. TERMINATION FOR BREACH. Except as expressly provided elsewhere in this Agreement, either Party may terminate this Agreement including at any time in the event of a material breach of the Agreement by the other Party which remains uncured after thirty (30) days written notice thereof to the other Party (or such shorter period as may be specified elsewhere in this Agreement); provided that the cure period with respect to any scheduled payment will be fifteen (15) days from the date of notice of non-payment. Notwithstanding the foregoing, in the event of a material breach of a provision that expressly requires action to be completed within an express period shorter than 30 days, either Party may terminate this Agreement if the breach remains uncured for such shorter period after written notice thereof to the other Party. Notwithstanding the foregoing, the Parties agree that this Agreement shall not terminate during any period during which the Parties retain a third party mediator in accordance with Section 6.1. In the event that either Party shall terminate this Agreement during the Initial Term pursuant to this Section 5.4, ICP shall have no obligation to make further payments hereunder and AOL shall pay ICP a pro rata refund of the payments theretofore made by ICP pursuant to Section 4.1 calculated in accordance with the Pro Rata Refund Formula; provided, however, that AOL shall have no obligation to pay ICP a pro rata refund in the event that AOL terminates this Agreement as a result of ICP's failure to make payments due hereunder (an "ICP Nonpayment Termination").In the event that AOL is awarded damages against ICP in connection with an ICP Nonpayment Termination, ICP shall have the right to decrease the amount of such damages by the Offset Amount; provided, however, that ICP shall in no event be entitled to, or have any interest in the Offset Amount, except to satisfy (partially or in full, as the case may be) such damages awarded to AOL. For the purposes of this Agreement, the "Offset Amount" shall mean, upon an ICP Nonpayment Termination, the amount equal to the difference between (a) the total amount paid by ICP to AOL pursuant to Section 4.1 of this Agreement as of the date of such ICP Nonpayment Termination and (b) the product of $100,000,000 multiplied by a fraction the numerator of which shall be the total number of days elapsed in the Initial term and the denominator of which shall be 1461. 5.5. TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may terminate this Agreement immediately following written notice to the other Party if the other Party (i) ceases to do business in the normal course, (ii) becomes or is declared insolvent or bankrupt, (iii) is the subject of any proceeding related to its liquidation or insolvency (whether voluntary or involuntary) which is not dismissed within ninety (90) calendar days or (iv) makes an assignment for the benefit of creditors. 5.6. TERMINATION ON CHANGE OF CONTROL. In the event of (i) a Change of Control of ICP resulting in control of ICP by an Interactive Service, AOL may terminate this Agreement within thirty (30) days after such Change of Control; (ii) a Change of Control of AOL resulting in control of AOL by an ICP Competitor, ICP may terminate this Agreement; or (iii) a Change of Control of AOL, AOL or ICP may terminate this Agreement by providing forty five (45) days prior written notice of such intent to terminate, but such notice must be given within thirty (30) days after such Change of Control. In the event that AOL shall terminate this Agreement pursuant to this Section 5.6, ICP shall have no obligation to make further payments hereunder and AOL shall pay ICP a pro rata refund of the payments theretofore made pursuant to Section 4.1, calculated in accordance with the Pro Rata Refund Formula. 5.7. PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to the other Party, for its prior written approval, which will not be unreasonably withheld or delayed, any marketing, CONFIDENTIAL 15 EXECUTION COPY advertising, or other promotional materials, including Press Releases, related to the Affiliated ICP Sites and/or referencing the other Party and/or its trade names, trademarks, and service marks (the "Promotional Materials"); provided, however, that either Party's use of screen shots of any Affiliated ICP Site for promotional purposes will not require the approval of the other Party so long as America Online-Registered Trademark- is clearly identified as the source of such screen shots; and provided further, however, that, following the initial public announcement of the business relationship between the Parties in accordance with the approval and other requirements contained herein, either Party's subsequent factual reference to the existence of a business relationship between the Parties in Promotional Materials, will not require the approval of the other Party. Each Party will solicit and reasonably consider the views of the other Party in designing and implementing such Promotional Materials. Once approved, the Promotional Materials may be used by a Party and its affiliates for the purpose of promoting any such Affiliated ICP Site and the content contained therein and reused for such purpose until such approval is withdrawn with reasonable prior notice. In the event such approval is withdrawn, existing inventories of Promotional Materials may be depleted. In the event that either Party issues a press release or other promotional material in contravention of the requirements of this Section 5.7, at the demand of the other Party, such Party shall issue within forty eight (48) hours of demand therefor an equally prominent (as reasonably determined by the other Party) press release retracting the previous press release or other promotional material, as the case may be. 6. MANAGEMENT COMMITTEE; JURISDICTION. 6.1. MANAGEMENT COMMITTEE. The Parties will act in good faith and use commercially reasonable efforts to promptly resolve any claim, dispute, claim, controversy or disagreement (each a "Dispute") between the Parties or any of their respective subsidiaries, affiliates, successors and assigns under or related to this Agreement or any document executed pursuant to this Agreement or any of the transactions contemplated hereby. If the Parties cannot resolve the Dispute within such time frame, the Dispute will be submitted to the Management Committee for resolution. For ten (10) days following submission of the Dispute to the Management Committee, the Management Committee will have the exclusive right to resolve such Dispute; provided further that the Management Committee will have the final and exclusive right to resolve Disputes arising from any provision of the Agreement which expressly or implicitly provides for the Parties to reach mutual agreement as to certain terms. If the Management Committee is unable to amicably resolve the Dispute during the ten-day period, then the Management Committee will consider in good faith the possibility of retaining a third party mediator to facilitate resolution of the Dispute (except that mediation is mandatory if required pursuant to Section 1.1 of this Agreement). In the event the Management Committee elects not to retain a mediator, the dispute will be subject to resolution by litigation. "Management Committee" will mean a committee made up of a senior executive from each of the Parties for the purpose of resolving Disputes under this Section 6 and generally overseeing the relationship between the Parties contemplated by this Agreement. Neither Party will seek, nor will be entitled to seek, binding outside resolution of the Dispute unless and until the Parties have been unable amicably to resolve the Dispute as set forth in this Section 6. 6.2. CHOICE OF LAW; JURISDICTION. Any Dispute that is not finally resolved by the Management Committee (collectively, "Claims") will be resolved in a court of competent jurisdiction in either the State of Delaware. Each Party irrevocably consents to the exclusive jurisdiction of the courts of the State of Delaware and the federal courts situated in those CONFIDENTIAL 16 EXECUTION COPY states over any and all Claims and any and all actions to enforce such claims or to recover damages or other relief in connection with such Claims. Each Party will pay the fees of its own attorneys, expenses of witnesses and all other expenses and costs in connection with the presentation of such Party's case (collectively, "Attorneys' Fees"). 7. EFFECT ON NETCENTER SERVICES AGREEMENT. This Agreement supersedes in its entirety that certain Netcenter Services Agreement dated as of April 29,1998 by and between Netscape Communications Corporation and ICP (collectively, the "NSA"), and the NSA is hereby expressly terminated and shall be of no further force and effect. ICP shall receive a prorated credit hereunder for any amounts which have been paid but unaccrued under the NSA, which shall be credited against the payment to be made pursuant to Section 4.1(ii). 8. EFFECT ON ASSIGNMENT AGREEMENT. This Agreement supersedes in its entirety that certain Assignment Agreement dated as of June 1,1998 by and between AOL, ICP and i Village, Inc., a Delaware corporation (the "AA"), and the AA is hereby expressly terminated and shall be of no further force and effect. The Parties agree that no amounts shall be payable under the AA as of the date hereof or in the future. 9. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set forth on Exhibit F attached hereto and Standard Legal Terms & Conditions set forth on Exhibit G attached hereto are each hereby made a part of this Agreement. [REMAINDER OF PAGE INTENTIONALLY BLANK] CONFIDENTIAL 17 EXECUTION COPY IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date. AMERICA ONLINE, INC. TMP INTERACTIVE, INC. By: /s/ David M. Colburn By: /s/ Jeff Taylor -------------------------------- ---------------------------- Name Name: Title: President - Business Affairs Title: President CONFIDENTIAL 18 EXECUTION COPY EXHIBIT A PLACEMENT/PROMOTION I. CARRIAGE PLAN - SEE ATTACHED II. SEARCH TERMS A. During the Term, subject to the terms and conditions hereof, ICP shall have the exclusive right to use the following Keyword Search Terms: Monster.com and Monster (the "ICP Keywords"). The ICP Keywords shall point directly to a co-branded first screen on the Affiliated ICP Site. B. During the Term, the generic search terms job, jobs, employment, self-employment, career, careers, help wanted, executive search, free agent, free agents, resumes and independent professional (collectively, the Generic Keyword Search Terms") will point to career-related areas that contain ICP placements or Content within the AOL Properties, to be determined by AOL in its reasonable discretion upon consultation with ICP (the "Generic Search Term Right"), PROVIDED that the ICP placements or Content shall appear prominently on such page, subject to the Programming Plan. In the event that any AOL Property does not have a Career Area, the Generic Keyword Search Terms on such AOL Property shall point to the appropriate Affiliated ICP Site or, if none, to the Principal ICP Interactive Site. C. Notwithstanding the foregoing, the delivery of the Generic Search Terms and the ICP Keywords shall be subject to compliance by ICP with its material obligations set forth in this Agreement, including, without limitation, the obligations set forth on Exhibit C to this Agreement. In the event that any third party reasonably claims any proprietary right in any of the Generic Search Terms, AOL shall have the right to immediately terminate the Generic Search Term Right. CONFIDENTIAL 19 EXECUTION COPY CARRIAGE PLAN: INTEGRATED IMPRESSIONS AND PERMANENT PLACEMENTS
AOL SERVICE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Teen Career Decision Guide Special 12/10/99 12/9/03 Offer Button on Overview Pages (AOL [*****] [*****] [*****] [*****] [*****] Service only) (permanent) Permanent Contextual Promotion in "My 12/10/99 12/9/03 AOL" Interests Tab [*****] [*****] [*****] [*****] [*****] Careers Newsletter (1X per month) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Workplace Job Search Screen (permanent) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Workplace Job Search Results 12/10/99 12/9/03 (permanent) [*****] [*****] [*****] [*****] [*****] TBD Content Integration (permanent) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Workplace Professions (permanent) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Workplace Job Search & Job Alerts on 12/10/99 12/9/03 Main Screen (permanent) [*****] [*****] [*****] [*****] [*****] Workplace - Post a Resume (permanent) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
AOL.com START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Int. Branded Placements on Careers 12/10/99 12/9/03 Webcenter Main and Jobs Dept. (perm.) [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
DCI START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Jobs & Careers - City Main Page - 12/10/99 12/9/03 Monster Search, Post & Agent Promo [*****] [*****] [*****] [*****] [*****] Jobs & Careers - Jobs Postings - Non 12/10/99 12/9/03 clickable Logo [*****] [*****] [*****] [*****] [*****] Jobs & Careers - Jobs Listing Search 12/10/99 12/9/03 Agent - Rotating Text [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
NETSCAPE NETCENTER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Career Center Main Page - Career 12/10/99 12/9/03 Toolkit (permanent) [*****] [*****] [*****] [*****] [*****] Career Center Job Search Results 12/10/99 12/9/03 (permanent) [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL 20 EXECUTION COPY ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
ICQ START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Registration Center Listing - listing 12/10/99 12/9/03 of ICQ Jobs (powered by Monster) in - - - - - registration center Contact List Integration - enabling 12/10/99 12/9/03 inbound/outbound functionality for ICQ - - - - - Jobs (powered by Monster) Plugins - extending functionalities on 12/10/99 12/9/03 ICQ specific to ICQ Jobs (powered by - - - - - Monster) Viral Marketing/Propagation - enabling 12/10/99 12/9/03 ICQ users to send ICQ Jobs (powered by - - - - - Monster) to each other Scrolling News Ticker - content 12/10/99 12/9/03 programming of multiple channels by - - - - - Monster Content Integration - Monster content 12/10/99 12/9/03 integrated into ICQ Portal Jobs and - - - - - Careers Channel ==================================================================================================================================== 0 0 0 0 -
COMPUSERVE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Premiere Aggregator Placement in the 12/10/99 12/9/03 Career Center on CS and CS.com: [*****] [*****] [*****] [*****] [*****] Branded (permanent) Premiere Positioning on CS and CS.com 12/10/99 12/9/03 Web Centers in the Research and [*****] [*****] [*****] [*****] [*****] Education Center (permanent) ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
INTERNATIONAL START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- AOL Canada Workplace Mainscreen AOL.CA - Careers channel Netscape.CA Careers area ==================================================================================================================================== 0 0 0 0 -
CROSS BRAND PRODUCTS START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Classifieds Plus Employment Main 12/10/99 12/9/03 Screen (permanent) [*****] [*****] [*****] [*****] [*****] Classifieds Job Search Screen 12/10/99 12/9/03 (permanent) [*****] [*****] [*****] [*****] [*****] Classifieds Job Results Screen 12/10/99 12/9/03 (permanent) [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL 21 EXECUTION COPY Classifieds Post a Resume Screen 12/10/99 12/9/03 (permanent) [*****] [*****] [*****] [*****] [*****] Career Decision Guide Anchor Tenant on 12/10/99 12/9/03 Main and Results Pages (Across All [*****] [*****] [*****] [*****] [*****] Brands) (permanent) Career Decision Guide Special Offer 12/10/99 12/9/03 Button on Overview Pages (Across All [*****] [*****] [*****] [*****] [*****] Brands) (permanent) ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****] TOTALS [*****] [*****] [*****] [*****] [*****]
BANNER IMPRESSIONS
AOL SERVICE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Business News Feeds Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Personal Finance ROS Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] News ROS Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Teens ROS Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Email ROS 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
AOL.COM START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- My News - Run of Entertainment News 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] My News - Run of Sports 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] My News - Run of Top News 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Search 2000 - Terms TBD 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] AIM 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
DCI START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- DCI ROS Banners 12/10/99 234X60 [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL 22 EXECUTION COPY DCI ROS Text DCI ROS Text Text [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
NETSCAPE NETCENTER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Business Main Page Text Links 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Personal Finance Main Page Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Personal Finance Main Page Text Links 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Personal Finance ROS Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Personal Finance ROS Text Links 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] NSCP Homepage 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
ICQ START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Ads (banner, text promos, wingdings, 12/10/99 12/9/03 teasers, related links) in ICQ Portal [*****] [*****] [*****] [*****] [*****] Channels Targeted ICQ Search Results (Search 12/10/99 12/9/03 Terms TBD) [*****] [*****] [*****] [*****] [*****] Targeted co-Browsing Ads (URLs TBD) 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Targeted Web Directory Categories 12/10/99 12/9/03 (Areas/Topics TBD) [*****] [*****] [*****] [*****] [*****] Portal Channel "What's Related" Links 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Portal Channel Community Links 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Broad Reach 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
COMPUSERVE START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Communications Mindset Package Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Business and Professional Mindset 12/10/99 12/9/03 Package Banners [*****] [*****] [*****] [*****] [*****] Compuserve Main Menu Placements 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] TBD Mindset Package Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] Branded Positioning on CS.com Main 12/10/99 12/9/03 Menu Search Box (permanent) [*****] [*****] [*****] [*****] [*****] What's New! Scrolling Ticker 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****]
CONFIDENTIAL 23 EXECUTION COPY ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
INTERNATIONAL START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- AOL Canada ROS 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****]
PARTNER START END IMPS/Y1 IMPS/Y2 IMPS/Y3 IMPS/Y4 IMPS -------------------------------------------------------------------------------------------- Realtor.com ROS Banners 12/10/99 12/9/03 [*****] [*****] [*****] [*****] [*****] ==================================================================================================================================== [*****] [*****] [*****] [*****] [*****] TOTALS [*****] [*****] [*****] [*****] [*****] Grand Total [*****] [*****] [*****] [*****] [*****]
Key: Imps = Impressions Y1 = Year 1 Y2 = Year 2 Y3 = Year 3 Y4 = Year 4 CONFIDENTIAL 24 EXECUTION COPY EXHIBIT B DEFINITIONS The following definitions will apply to this Agreement: AA. "AA" shall have the meaning set forth in Section 8 of this Agreement. ACTION. "Action" shall have the meaning set forth in Section 9.4 of Exhibit G hereto. AD PROGRAM. "Ad Program" shall have the meaning set forth in Section 2.10.2 of this Agreement. ADVERTISEMENTS. "Advertisements" shall have the meaning set forth in Section 2.10.1 of this Agreement. ADVERTISING REVENUES. Aggregate amounts collected plus the fair market value of any other compensation received (such as barter advertising) by ICP, AOL or either Party's agents, as the case may be, arising from the license or sale of advertisements, promotions, links or sponsorships ("Advertisements") that appear within any pages of (i) any Affiliated ICP Site which may be exclusively available to AOL Users and/or (ii) the Principal ICP Interactive Site. AOL Advertising Revenues does not include amounts arising from Advertisements on any screens or forms preceding, framing or otherwise indirectly associated with any Affiliated ICP Site, which will be sold exclusively by AOL. AFFILIATED ICP SITES. The specific customized and co-branded areas or web sites residing on ICP's servers to be promoted and distributed by AOL hereunder through which ICP can market and complete transactions regarding its Products. ALTERNATIVE REVENUE STREAM. "Alternative Revenue Stream" shall have the meaning set forth in Section 4.9 of this Agreement. AOL CANADA. The standard AOL Canada brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), specifically excluding (a) AOL.com, Netcenter or any other AOL Interactive Site, (b) the America Online brand service and the international versions of an America Online service (other than the Canadian version thereof) (E.G., AOL Japan), (c) the CompuServe-Registered Trademark- brand service and any other CompuServe products or services (d) "ICQ-TM-," "AOL NetFind-TM-," "AOL Instant Messenger-TM-," "Digital City," "NetMail-TM-," "Real Fans", "Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any similar independent product, service or property which may be offered by, through or with the U.S. version of the America Online-Registered Trademark- brand service, (e) any programming or Content area offered by or through the U.S. version of the America Online-Registered Trademark- brand service over which AOL does not exercise substantially complete operational control (including, without limitation, Content areas controlled by other parties and member-created Content areas), (f) any yellow pages, white pages, classifieds or other search, directory or review services or Content offered by or through the AOL Canada brand service, (g) any property, feature, product or service which AOL or its affiliates may acquire subsequent to the Effective Date and (h) any other version of an America Online service which, by virtue of its branding, distribution, functionality, Content or services, including, without limitation, any co-branded version of the service or any version optimized for any broadband distribution platform or through any platform or device other than a desktop personal computer, is materially different from the standard AOL Canada brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform). AOL COMPONENT PRODUCTS. Chat, buddy list, and/or message board technology, calendars, review services, voice communications or homesteading products or services. AOL EXCLUSIVE OFFERS. "AOL Exclusive Offers" shall have the meaning set forth in Section 2.6 of this Agreement. CONFIDENTIAL 25 EXECUTION COPY AOL INTERACTIVE SITE. Any Interactive Site which is managed, maintained, owned or controlled by AOL or its agents. AOL LOOK AND FEEL. The elements of graphics, design, organization, presentation, layout, user interface, navigation and stylistic convention (including the digital implementations thereof) which are generally associated with Interactive Sites within the AOL Service or AOL.com. AOL MEMBER. Any authorized user of the AOL Service, including any sub-accounts using the AOL Service under an authorized master account. AOL NETWORK. (i) The AOL Service, (ii) AOL.com, (iii) CompuServe, (iv) Digital City, (v) Netscape Web Site, (vi) ICQ, and (vii) any other product or service owned, operated, distributed or authorized to be distributed by or through AOL or its affiliates worldwide (and including those properties excluded from the definitions of the AOL Service or AOL.com). The AOL Network does not include the Affiliated ICP Sites. AOL PREMIER PARTNER CATEGORIES. Books (but not career related books), long distance services, flowers, greeting cards, compact discs (but not career related compact disks), DVDs and Videos (but not career related DVDs or Videos), financial services (but not career related financial services) and auctions (but not including career related auctions such as Talent Market). AOL PROMOS. "AOL Promos" shall have the meaning set forth in Section A of Exhibit C hereto. AOL PROPERTIES. The AOL Service, AOL.com, the CompuServe Service, the Netscape Web Site, Digital City, ICQ and AOL Canada. Each of such properties may be individually referred to herein as an "AOL Property." The AOL Properties do not include the Affiliated ICP Sites. AOL SERVICE. The standard U.S. version of the America Online-Registered Trademark- brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), or its successor, specifically excluding (a) AOL.com, Netcenter or any other AOL Interactive Site, (b) the international versions of an America Online service (other than the Canadian version thereof, i.e., AOL Canada) (E.G., AOL Japan), (c) the CompuServe(R) brand service and any other CompuServe products or services (d) "ICQ-TM-," "AOL NetFind-TM-," "AOL Instant Messenger-TM-," "Digital City," "NetMail-TM-," "Real Fans", "Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any similar independent product, service or property which may be offered by, through or with the U.S. version of the America Online-Registered Trademark- brand service, (e) any programming or Content area offered by or through the U.S. version of the America Online-Registered Trademark- brand service over which AOL does not exercise substantially complete operational control (including, without limitation, Content areas controlled by other parties and member-created Content areas), (f) any yellow pages, white pages, classifieds or other search, directory or review services or Content offered by or through the U.S. version of the America Online-Registered Trademark- brand service, (g) any property, feature, product or service which AOL or its affiliates may acquire subsequent to the Effective Date and (h) any other version of an America Online service which, by virtue of its branding, distribution, functionality, Content or services, including, without limitation, any co-branded version of the service or any version optimized for any broadband distribution platform or through any platform or device other than a desktop personal computer, is materially different from the standard U.S. version of the America Online brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform). AOL USER. Any user of the AOL Service, AOL.com, CompuServe, Digital City, Netcenter, the AOL Network, or the AOL Properties. AOL.COM. AOL's primary Internet-based Interactive Site marketed under the "AOL.COM-TM-" brand, or any successor thereto specifically excluding (a) the AOL Service, (b) Netcenter, (c) any international versions of such site (other than the Canadian version thereof, if any), (d) "ICQ," "AOL NetFind-TM-," "AOL Instant CONFIDENTIAL 26 EXECUTION COPY Messenger-TM-," "NetMail-TM-," "AOL Hometown," "My News" or any similar independent product or service offered by or through such site or any other AOL Interactive Site, (e) any programming or Content area offered by or through such site over which AOL does not exercise substantial operational control (including, without limitation, Content areas controlled by other parties and member-created Content areas), (f) any programming or Content area offered by or through such site which was operated, maintained or controlled by the former AOL Studios division (e.g., Electra), (g) any yellow pages, white pages, classifieds or other search, directory or review services or Content offered by or through such site or any other AOL Interactive Site, (h) any property, feature, product or service which AOL or its affiliates may acquire subsequent to the Effective Date and (i) any other version of an America Online Interactive Site which, by virtue of its branding, distribution, functionality, Content or services, including, without limitation, any co-branded versions or any version distributed through any broadband distribution platform or through any platform or device other than a desktop personal computer, is materially different from AOL's primary Internet-based Interactive Site marketed under the "AOL.COM-TM-" brand. ATTORNEYS' FEES. "Attorneys' Fees" shall have the meaning set forth in Section 6.2 of this Agreement. BANNER IMPRESSIONS. Those Impressions so designated on Exhibit A. BANNER IMPRESSIONS COMMITMENT. "Banner Impressions Commitment" shall have the meaning set forth in Section 1.2.2 of this Agreement. BANNER IMPRESSIONS FINAL SHORTFALL. "Banner Impressions Final Shortfall" shall have the meaning set forth in Section 1.2.2 of this Agreement. BOUNTIES. "Bounties" shall have the meaning set forth in Section 4.3 of this Agreement. CAREER AREAS. The WorkPlace and ClassifiedPlus areas (or any similar or successor areas thereto) of each of the AOL Service, AOL.com, the CompuServe Service, the Netscape Web Site, ICQ, AOL Canada and Digital City, as well as the Affiliated ICP Sites. CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or consolidation or sale or other disposition of substantially all of the assets of a party or (b) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933, as amended) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than 50% of either (i) the then outstanding shares of common stock of such party; or (ii) the combined voting power of the then outstanding voting securities of such party entitled to vote generally in the election of directors. ClassifiedPlus. The ClassifiedPlus or similar area (or any successor area) which includes employment and other classified listings (e.g., real estate, employment, general merchandise) on the AOL Properties. COMPLEMENTARY PRODUCTS AND SERVICES. Any career related product or service other than those on Exhibit D, such as payroll processing applications. COMPUSERVE SERVICE. The standard U.S. version of the CompuServe brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), or its successor thereto specifically excluding (a) any international versions of such service (other than the Canadian version thereof, if any), (b) any web-based service including "compuserve.com", "cserve.com" and "cs.com", or any similar product or service offered by or through the U.S. version of the CompuServe brand service, (c) Content areas owned, maintained or controlled by CompuServe affiliates or any similar "sub-service," (d) any programming or Content area offered by or through the U.S. version of the CompuServe brand service over which CompuServe does not exercise substantially complete operational CONFIDENTIAL 27 EXECUTION COPY control (e.g., third-party Content areas), (e) any yellow pages, white pages, classifieds or other search, directory or review services or Content and (f) any co-branded or private label branded version of the U.S. version of the CompuServe brand service, (g) any version of the U.S. version of the CompuServe brand service which offers Content, distribution, services and/or functionality materially different from the Content, distribution, services and/or functionality associated with the standard U.S. version of the CompuServe brand service, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), including, without limitation, any version of such service distributed through any platform or device other than a desktop personal computer and (h) any property, feature, product or service which CompuServe or its affiliates may acquire subsequent to the Effective Date. CONFIDENTIAL INFORMATION. Any information relating to or disclosed in the course of the Agreement, which is or should be reasonably understood to be confidential or proprietary to the disclosing Party, including, but not limited to, the material terms of this Agreement, information about AOL Members, AOL Users, and ICP customers, technical processes and formulas, source codes, product designs, sales, cost and other unpublished financial information, product and business plans, projections, and marketing data. "Confidential Information" will not include information (a) lawfully known to or independently developed by the receiving Party, (b) disclosed in published materials, (c) generally known to the public, or (d) lawfully obtained from any third party. CONTENT. Text, images, video, audio (including, without limitation, music used in synchronism or timed relation with visual displays) and other data, Products, advertisements, promotions, URLs, links, pointers and software, including any modifications, upgrades, updates, enhancements and related documentation. CONTEST. "Contest" shall have the meaning set forth in Section 3 of Exhibit F hereto. CONTINUED LINK. "Continued Link" shall have the meaning set forth in Section 5.3.1 of this Agreement. CUSTOMERS. "Customers" shall have the meaning set forth in Section 9 of Exhibit F hereto. DIGITAL CITY. The standard, U.S. version of Digital City's local content offerings marketed under the Digital City-Registered Trademark- brand name, which is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), or its successors thereto, specifically excluding (a) the AOL Service, AOL.com, Netcenter, or any other AOL Interactive Site, (b) any international versions of such local content offerings (other than the Canadian version thereof, if any), (c) the CompuServe-Registered Trademark- brand service and any other CompuServe products or services (d) "ICQ-TM-," "AOL NetFind-TM-," "AOL Instant Messenger-TM-," "Digital City," "NetMail-TM-," "Electra", "Thrie", "Real Fans", "Love@AOL", "Entertainment Asylum," "AOL Hometown," "My News" or any similar independent product, service or property which may be offered by, through or with the standard narrow band version of Digital City's local content offerings, (e) any programming or Content area offered by or through such local content offerings over which AOL does not exercise substantial operational control (including, without limitation, Content areas controlled by other parties and member-created Content areas), (f) any yellow pages, white pages, classifieds or other search, directory or review services or Content offered by or through such local content offerings, (g) any property, feature, product or service which AOL or its affiliates may acquire subsequent to the Effective Date, (h) any other version of a Digital City local content offering which is materially different from the U.S. version of Digital City's local content offerings marketed under the Digital City-Registered Trademark- brand name, which, by virtue of its branding, distribution, functionality, Content or services, including, without limitation, any co-branded version of the offerings or any version distributed through any broadband distribution platform or through any platform or device other than a desktop personal computer, is optimized for narrow-band distribution (but may, but need not, be accessed through a broadband platform), and (i) Digital City-branded offerings in any local area where such offerings are not owned or operationally controlled by America Online, Inc. or DCI (e.g., Chicago, Orlando, South Florida, and Hampton Roads). CONFIDENTIAL 28 EXECUTION COPY DISCLAIMED DAMAGES. "Disclaimed Damages" shall have the meaning set forth in Section 9.1 of Exhibit G hereto. DISPUTE. "Dispute" shall have the meaning set forth in Section 6.1 of this Agreement. EDITORIAL CONTENT. "Editorial Content" shall have the meaning set forth in Section 2.2 of this Agreement. EXCLUSIVE SERVICES. "Exclusive Services" shall have the meaning set forth in Section 3.1 of this Agreement. FIRST LEVEL DETAIL SCREEN. The screen with respect to each ICP Classifieds Listing that is linked to from the Results Screen, resides on AOL's servers, and provides a textual description of a specific employment opportunity. ICP COMPETITORS. Any entity which has as a core business the provision of products or services equivilent to any of the Exclusive Services. ICP CREDITED PAGE. Any page within the AOL Properties created for the primary purpose of displaying ICP Content (e.g., a ClassifiedPlus results page showing ICP Content). ICP INTERACTIVE SITE. Any Interactive Site (other than the Affiliated ICP Sites) which is managed, maintained, owned or controlled by ICP or its agents. ICP NONPAYMENT TERMINATION. "ICP Nonpayment Termination" shall have the meaning set forth in Section 5.4 of the Agreement. ICP TECHNICAL PROBLEM. "ICP Technical Problem" shall have the meaning set forth in Section 5 of Exhibit E hereto. ICQ. The standard, English-language version of the instant messaging, chat and "buddy list" service of ICQ as made available by or through ICQ or any affiliate of ICQ and any successor services thereto, including any Updates to such service, but specifically excluding (a) "ICQ It!" or any other product, service, property, programming or Content area over which ICQ or any ICQ affiliate does not exercise substantial operational control, (b) any non-instant messaging, non-chat or non-buddy-list services (including, without limitation, e-mail or e-mail services), (c) ICQ Web hosting, unified messaging, search, co-browsing, shopping or ticker areas or services (including, without limitation, any related "push" products or services), (d) any clients unrelated to instant messaging and buddy lists (e) any property, feature, product or service which ICQ or any ICQ Affiliate acquires subsequent to the Effective Date, (f) any version of ICQ that is co-branded with an unaffiliated third party, and (g) any other version of an ICQ service which, by virtue of its features, functionality or distribution, is materially different from the platform on which the ICQ Service operates as of the Effective Date (e.g., an ICQ service designed primarily for distribution over a cable TV, satellite TV or comparable broadband network, or an ICQ service designed primarily for distribution to a hand-held, wireless personal digital assistant (e.g., a Palm VII PDA). IMPRESSION. A page view containing the applicable Promotion served to a user, as such page views may be reasonably determined and measured by AOL in accordance with its standard methodologies and protocols. INDEMNIFIED PARTY. "Indemnified Party" shall have the meaning set forth in Section 9.4 of Exhibit G hereto. INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning set forth in Section 9.4 of Exhibit G hereto. CONFIDENTIAL 29 EXECUTION COPY INITIAL TERM. "Initial Term" shall have the meaning set forth in Section 5.1 of this Agreement. INTEGRATED IMPRESSIONS. "Integrated Impressions" shall have the meaning set forth in Section 1.2.1 of this Agreement. INTEGRATED IMPRESSIONS COMMITMENT. "Integrated Impressions Commitment" shall have the meaning set forth in Section 1.2.1 of this Agreement. INTEGRATED IMPRESSIONS FINAL SHORTFALL. "Integrated Impressions Final Shortfall" shall have the meaning set forth in Section 1.2.1 of this Agreement. INTERACTIVE SERVICE. An entity offering one or more of the following: (i) online or Internet connectivity services (e.g., an Internet service provider); (ii) an interactive site or service featuring a broad selection of aggregated third party interactive content (or navigation thereto) (e.g., an online service or search and directory service) and/or marketing a broad selection of products and/or services across numerous interactive commerce categories (e.g., an online mall or other leading online commerce site); (iii) a persistent desktop client; and (iv) communications software capable of serving as the principal means through which a user creates, sends and receives electronic mail or real time online messages (whether by telephone, computer or other means). INTERACTIVE SITE. Any interactive site or area, including, by way of example and without limitation, (i) an ICP site on the World Wide Web portion of the Internet or (ii) a channel or area delivered through a "push" product such as the Pointcast Network or interactive environment such as Microsoft's Active Desktop. JOB LISTING REVENUES. Amounts owed to ICP by third parties solely in connection with the posting of employment opportunities on or through the Affiliated ICP Sites (but not on or through the Principal ICP Interactive Site or any other ICP Interactive Site), as further described in Section A of Exhibit L hereto. JOBS DATABASE. The integrated database of ICP's jobs listings to be supplied by ICP hereunder. KEYWORD SEARCH TERMS. (a) The Keyword-TM- online search terms made available on the AOL Service, combining AOL's Keyword-TM- online search modifier with a term or phrase specifically related to ICP (and determined in accordance with the terms of this Agreement), and (b) the Go Word online search terms made available on CompuServe, combining CompuServe's Go Word online search modifier with a term or phrase specifically related to ICP and determined in accordance with the terms of this Agreement). LAUNCH DATE. "Launch Date" shall have the meaning set forth in Section 17 of Exhibit G hereto. LIABILITIES. "Liabilities" shall have the meaning set forth in Section 9.3 of Exhibit G hereto. LICENSED CONTENT. All Content offered through any Affiliated ICP Site(s) pursuant to this Agreement or otherwise provided by ICP or its agents in connection herewith (e.g., offline or online promotional Content, Promotions, AOL "slideshows" , etc.), including in each case, any modifications, upgrades, updates, enhancements, and related documentation. MANAGEMENT COMMITTEE. "Management Committee" shall have the meaning set forth in Section 6.1 of this Agreement. MARKS. "Marks" shall have the meaning set forth in Section 3 of Exhibit G hereto. NETSCAPE WEB SITE. The collection of local language HTML documents targeted at end users in the territory programmed and freely accessible to the public via the Internet at the URL http://home.netscape.com (or any successor address designated from time to time by Netscape CONFIDENTIAL 30 EXECUTION COPY Communications Corporation, but specifically excluding (a) the AOL Service, (b) AOL.com, (c) any international versions (other than the Canadian version thereof, if any) of such site, (d) "ICQ," "AOL Netfind-TM-," "AOL Instant Messenger-TM-," "NetMail-TM-," "AOL Hometown," "My News," "Digital City-TM-," or any similar independent product or service offered by or through such site or any other AOL Interactive Site, (e) any programming or Content area offered by or through such site over which AOL does not exercise substantially complete operational control (including, without limitation, Content areas controlled by other parties and member-created Content areas), (f) any programming or Content area offered by or through the U.S. version of the America Online-Registered Trademark- brand service which was operated, maintained or controlled by the former AOL Studios division (e.g., Electra), (g) any yellow pages, white pages, classifieds or other search, directory or review services or Content offered by or through such site or any other AOL Interactive Site, (h) any property, feature, product or service which AOL or its affiliates may acquire subsequent to the Effective Date and (i) any other version of an AOL or Netscape Communications Corporation Interactive Site which is materially different from Netscape Communications Corporation's primary Internet-based Interactive Site marketed under the "Netscape Netcenter-TM-" brand, by virtue of its branding, distribution, functionality, Content or services, including, without limitation, any co-branded versions and any version distributed through any broadband distribution platform or through any platform or device other than a desktop personal computer (e.g. Custom NetCenters built specifically for third parties). NEW FUNCTIONALITY. "New Functionality" shall have the meaning set forth in Section 9.v of Exhibit E hereto. OFFSET AMOUNT. "Offset Amount" shall have the meaning set forth in Section 5.4 of the Agreement. PERSONAL ALERT PROFILE BOUNTIES. "Personal Alert Profile Bounties" shall mean the bounty fees set forth on Exhibit L hereto per AOL User Personal Alert Profile posted on or through any Affiliated ICP Site (but not on or through the Principal ICP Interactive Site or any other ICP Interactive Site). PRESS RELEASE. "Press Release" shall have the meaning set forth in Section 5.7 of this Agreement. PRINCIPAL ICP INTERACTIVE SITE. The principal ICP Interactive Site, currently located at the URL http://www.monster.com (or any successor Interactive Site thereto), but not including any co-branded Interactive Site. PRIOR BUSINESS RELATIONSHIP. "Prior Business Relationship" shall have the meaning set forth in Section 11 of Exhibit G hereto. PRO RATA REFUND FORMULA. [*****] PRODUCT. Any product, good or service which ICP offers, sells, provides, distributes or licenses to AOL Users directly or indirectly through (i) any Affiliated ICP Site (including through any ICP Interactive Site linked thereto), or (ii) any other electronic means directly targeted to AOL Users (e.g., e-mail offers). PRODUCTION PLAN. "Production Plan" shall have the meaning set forth in Section 10 of Exhibit F hereto. CONFIDENTIAL 31 EXECUTION COPY PROGRAMMING PLAN. The plan dated December 1, 1999 mutually agreed upon by the Parties relating to ICP's presence on the AOL Properties and the Affiliated ICP Sites. The Programming Plan shall have been acknowledged in writing by the Parties. PROJECT PROFILES. A description of a project seeking specific personnel to perform services in connection with such project. PROMO CONTENT. "Promo Content" shall have the meaning set forth in Section 1.3 of this Agreement. PROMOTIONAL MATERIALS. "Promotional Materials" shall have the meaning set forth in Section 1 of Exhibit G hereto. PROMOTIONS. The promotions described on Exhibit A, any comparable promotions delivered by AOL in accordance with Section 1.1 of this Agreement, and any additional promotions of any Affiliated ICP Site provided by AOL (including, without limitation, additional Keyword Search Terms and other navigational tools). PROMOTIONS REPORTS. "Promotions Reports" shall have the meaning set forth in Section 4.7.2 of this Agreement. QUALIFIED SUBSCRIBER. Any person or entity who registers for the AOL Service or the CompuServe Service (as the case may be) during the Term pursuant to the partner marketing arrangement described in Section C of Exhibit C hereto (i.e., using ICP's special promotion identifier) and who pays the then-standard fees required for membership to the Service for at least sixty (60) consecutive days (following the expiration of any free service promotional period). RENEWAL TERM. "Renewal Term" shall have the meaning set forth in Section 5.2 of this Agreement. RESULTS SCREEN. Any screen or page within the Classified Area displaying results of an AOL user Search of the Database displayed within the user interface designed by AOL pursuant to this Agreement. RESUME ACQUISITION BOUNTIES. The bounty fees set forth on Exhibit L hereto per AOL User resume posted on or through any Affiliated ICP Site (but not on or through the Principal ICP Interactive Site or any other ICP Interactive Sites, except during the period prior to the launch of the Affiliated ICP Sites as the result of links from the AOL Properties). SEARCH. A query made by an AOL user on any Search Screen which links to a Results Screen, consisting of results (or a statement that no matching results are available in the Database) when an AOL user clicks on a "search" or "go" or similar button after partially or fully completing a search form designed to query the Search. SEARCH SCREEN. Any screen or page within the Classified Area where an AOL user is prompted to manually type in a category and a location to form the basis of a query of the Search. TALENT MARKET. An online marketplace in which either (i) individual free agents, individual consultants and independent professionals market their skills to employers or (ii) employers market their job opportunities to job seekers, in an auction-style environment (but specifically excludes contract service businesses (e.g., accounting or legal services) and includes, but is not limited to, the ICP Product currently known as Talent Market. TERM. "Term" shall have the meaning set forth in Section 5.2 of this Agreement. TERMINATION DATE. The date on which this Agreement terminates. CONFIDENTIAL 32 EXECUTION COPY TRANSACTION REPORTS. "Transaction Reports" shall have the meaning set forth in Section 4.7.1 of this Agreement. USER INFORMATION. "User Information" shall have the meaning set forth in Section 13 of Exhibit G hereto. VIRTUAL CAREER FAIR FEES. The fees collected in connection with virtual career fairs conducted on or through any Affiliated ICP Site (but not on or through the Principal ICP Interactive Site or any other ICP Interactive Site). WORKPLACE. The Workplace area of the AOL Service (or any similar area on any of the AOL Properties or successor area thereto). YEAR. The time period between each of (i) the Effective Date and the first anniversary thereof; (ii) the day immediately following the first anniversary of the Effective Date and the second anniversary of the Effective Date; (iii) the day immediately following the second anniversary of the Effective Date and the third anniversary of the Effective Date; and (iv) the day immediately following the third anniversary of the Effective Date and the fourth anniversary of the Effective Date. YEAR 1. The first Year of this Agreement. YEAR 2. The second Year of this Agreement. YEAR 3. The third Year of this Agreement. YEAR 4. The fourth Year of this Agreement. CONFIDENTIAL 33 EXECUTION COPY EXHIBIT C ICP CROSS-PROMOTION A. Within the Principal ICP Interactive Site (specifically not including any co-branded sites), ICP shall include (above or below the fold, as ICP shall determine) the following (collectively, the "AOL Promos"): (i) a promotional banner or button (at least 90 x 30 pixels or 70 x 70 pixels in size) appearing on the first screen of the Principal ICP Interactive Site, to promote such AOL products or services as AOL may designate and are not competitive with ICP (for example, the America Online-Registered Trademark- brand service, the CompuServe-Registered Trademark-brand service, the AOL.com-Registered Trademark- site, any of the Digital City services or the AOL Instant Messenger-TM-service); or (ii) a "Try AOL" feature (at least 90 x 30 pixels or 70 x 70 pixels in size) through which users can obtain promotional information about AOL products or services designated by AOL and are not competitive with ICP and, at AOL's option, download or order the then-current version of client software for such AOL products or services; OR (iii) a button or link to enable users to download either AOL -- Instant Messenger or ICQ (to be determined by AOL in AOL's sole discretion). AOL will provide the creative content to be used in the AOL Promos (including designation of links from such content to other content pages). ICP shall post (or update, as the case may be) the creative content supplied by AOL within the spaces for the AOL Promos within five days of its receipt of such content from AOL. Without limiting any other reporting obligations of the Parties contained herein, ICP shall provide AOL with monthly written reports specifying the number of impressions to the pages containing the AOL Promos during the prior month. In the event that AOL elects to serve the AOL Promos to the Principal ICP Interactive Site from an ad server controlled by AOL or its agent, ICP shall take all reasonable operational steps necessary to facilitate such ad serving arrangement including, without limitation, inserting HTML code designated by AOL on the pages of the ICP Interactive Site on which the AOL Promos will appear. In addition, within the Principal ICP Interactive Site, ICP shall provide prominent promotion for the keywords granted to ICP hereunder. B. In ICP's print, radio, television and "out of home" (e.g., buses and billboards) advertisements and in any publications, programs, features or other forms of media over which ICP exercises complete or substantially complete editorial control, ICP will include specific references to or mentions of the "keyword" term "Monster". Accordingly, in the case of all print and out of home advertisements, ICP shall include a reference to "America Online Keyword: Monster" in a type size reasonably determined in ICP's discretion. In the case of all radio and television advertisements, ICP shall include a voice (but not print) reference to one of the following (the selection of which shall be at ICP's discretion): "America Online Keyword: Monster," "AOL Keyword: Monster," "Located at Keyword Monster on America Online," or "Located at Keyword Monster on AOL"; provided, however, that to the extent practicable ICP shall use "America Online" rather than "AOL". C. In addition to the foregoing, ICP shall provide AOL in advance with periodic media plans with respect to the ICP cross-promotional efforts set forth on this Exhibit C. D. ICP will work with AOL to carry out at AOL's cost and expense (i) partner marketing arrangements designed to distribute AOL Service and/or CompuServe Service CD-ROMS and (ii) other promotional offers through its online and offline distribution channels and events. ICP shall receive a standard bounty fee for any Qualified Subscriber acquired through any such arrangements or promotions. In addition, AOL and ICP shall discuss in good faith further joint marketing opportunities. CONFIDENTIAL 34 EXECUTION COPY EXECUTION COPY EXHIBIT D DESCRIPTION OF PRODUCTS To the extent permitted by (and subject to the terms and conditions of) this Agreement: 1. The Exclusive Services (as defined in Section 3.1) 2. Editorial Content related to the Exclusive Services CONFIDENTIAL 35 EXECUTION COPY EXHIBIT D-1 AOL EXCLUSIVE OFFERS AOL Exclusive Offers may include the following: 1. [*****] 2. [*****] CONFIDENTIAL 36 EXECUTION COPY EXHIBIT E OPERATIONS 1. [Intentionally Omitted]. 2. INFRASTRUCTURE OF AFFILIATED ICP SITES. ICP will be responsible for all communications, hosting and connectivity costs and expenses associated with the Affiliated ICP Sites. The Parties shall mutually agree as to the optimal means for connecting the Affiliated ICP Sites to the AOL Network. ICP will provide all hardware, software, telecommunications lines and other infrastructure necessary to meet traffic demands on the Affiliated ICP Sites from the AOL Network. ICP will design and implement the network between the AOL Service and Affiliated ICP Sites such that (i) no single component failure will have a materially adverse impact on AOL Members seeking to reach any Affiliated ICP Site from the AOL Network and (ii) no single line under material control by ICP will run at more than 70% average utilization for a 5-minute peak in a daily period (except that, provided that ICP can reasonably demonstrate that its network can accommodate anticipated traffic, ICP shall not be required to meet the threshold set forth in this Section 2(ii), (a) on the date of the Superbowl and the two days thereafter, or (b) on the commencement date of any major promotional activity, not to exceed four dates per calendar year, and the two days thereafter). In this regard, ICP will provide AOL, upon request, with a detailed network diagram regarding the architecture and network infrastructure supporting the Affiliated ICP Site. In the event that ICP elects to create a custom version of any Affiliated ICP Site in order to comply with the terms of this Agreement, ICP will bear responsibility for all aspects of the implementation, management and cost of such customized site. 3. OPTIMIZATION; SPEED. ICP will use commercially reasonable efforts to ensure that: (a) the functionality and features within each of the Affiliated ICP Sites and the Principal ICP Interactive Site are optimized for the client software then in use by AOL Members; and (b) the Affiliated ICP Sites are designed and populated in a manner that minimizes delays when AOL Members attempt to access such site. At a minimum, ICP will ensure that any Affiliated ICP Site's data transfers initiate within fewer than fifteen (15) seconds on average. Prior to commercial launch of any material promotions described herein, ICP will permit AOL to conduct performance testing of the Affiliated ICP Sites (in person or through remote communications), with such commercial launch not to commence until such time as AOL is reasonably satisfied with the results of any such testing. In the event that the Parties determine that a high-speed connection is necessary to maintain quick and reliable transport of information to any Affiliated ICP Site, ICP shall pay for all technology and/or production related expenses associated with establishing and maintaining such high-speed connection, provided, however, that (i) AOL shall lease any necessary DS-3 lines at the best discounted rates available to AOL and charge back the cost (without markup) to ICP, and (ii) AOL shall not charge ICP any transit or peering fees. 4. USER INTERFACE. ICP will maintain a graphical user interface within each Affiliated ICP Site that is competitive in all material respects with interfaces of other similar sites based on similar form technology. AOL reserves the right to review and approve the user interface and site design prior to launch of the Promotions and to conduct focus group testing to assess compliance with respect to such consultation and with respect to ICP's compliance with the preceding sentence, provided such activities are completed within ten (10) business days of the date on which ICP makes such user interface and site design available to AOL. 5. TECHNICAL PROBLEMS. ICP agrees to use commercially reasonable efforts to address material technical problems (over which ICP exercises control) affecting use by AOL Members of any Affiliated ICP Site (a "ICP Technical Problem," which term shall include any violation by ICP of the requirements of this Exhibit E) promptly following notice thereof. In the event that ICP is unable to resolve a ICP Technical Problem within a commercially reasonable period following notice thereof from AOL (including, without limitation, infrastructure deficiencies producing user delays), AOL will have the right to regulate the promotions it provides to ICP hereunder until such time as ICP corrects the ICP Technical Problem at issue. 6. MONITORING. ICP will ensure that the performance and availability of the Affiliated ICP Sites is monitored on a continuous basis. ICP will provide AOL with contact information (including e-mail, phone, pager and fax information, as applicable, for both during and after business hours) for ICP's principal business and technical representatives, for use in cases when issues or problems arise with respect to any Affiliated ICP Site. 7. TELECOMMUNICATIONS. Where applicable ICP will utilize encryption methodology to secure data communications between the Parties' data centers. The network between the Parties will be configured such that no single component failure will significantly impact AOL Users. 8. SECURITY. ICP will utilize Internet standard encryption technologies (e.g., Secure Socket Layer - SSL) to provide a secure environment for conducting transactions and/or transferring private member information (e.g. credit card numbers and banking/financial information) to and from any Affiliated ICP Site. Private member information shall not include any resume or job-related data. ICP will facilitate periodic reviews of the Affiliated ICP Sites by AOL in order to evaluate the security risks of such site. ICP will promptly remedy any security risks or breaches of security as may be identified by AOL's Operations Security team. 9. TECHNICAL PERFORMANCE. i. ICP will design the Affiliated ICP Sites to support the AOL-client embedded versions of the Microsoft Internet Explorer 3.XX and 4.XX browsers (Windows and Macintosh)and the Netscape Browser 4.XX and make commercially reasonable CONFIDENTIAL 37 EXECUTION COPY efforts to support all other AOL browsers listed at: "http://webmaster.info.aol.com." ii. To the extent ICP creates customized pages on the Affiliated ICP Site for AOL Members, ICP will develop and employ a methodology to detect AOL Members (e.g. examine the HTTP User-Agent field in order to identify the "AOL Member-Agents" listed at: "http://webmaster. info.aol.com)." iii. ICP will periodically review the technical information made available by AOL at http://webmaster.info.aol.com. iv. ICP will design its site to support HTTP 1.0 or later protocol as defined in RFC 1945 and to adhere to AOL's parameters for refreshing or preventing the caching of information in AOL's proxy system as outlined in the document provided at the following URL: http://webmaster.info.aol.com. ICP IS RESPONSIBLE FOR THE MANIPULATION OF THESE PARAMETERS IN WEB-BASED OBJECTS SO AS TO ALLOW THEM TO BE CACHED OR NOT CACHED AS OUTLINED IN RFC 1945. V. PRIOR TO RELEASING MATERIAL, NEW FUNCTIONALITY OR FEATURES THROUGH ANY AFFILIATED ICP SITE ("NEW FUNCTIONALITY"), ICP WILL USE COMMERCIALLY REASONABLE EFFORTS TO (I) TEST THE NEW FUNCTIONALITY TO CONFIRM ITS COMPATIBILITY WITH AOL SERVICE CLIENT SOFTWARE AND (II) PROVIDE AOL WITH WRITTEN NOTICE OF THE NEW FUNCTIONALITY SO THAT AOL CAN PERFORM TESTS OF THE NEW FUNCTIONALITY TO CONFIRM ITS COMPATIBILITY WITH THE AOL SERVICE CLIENT SOFTWARE, PROVIDED, HOWEVER, THAT SUCH TESTS SHALL BE COMPLETED WITHIN TEN (10) BUSINESS DAYS. SHOULD ANY NEW MATERIAL, NEW FUNCTIONALITY OR FEATURES THROUGH THE AFFILIATED ICP SITE BE RELEASED WITHOUT NOTIFICATION TO AOL, AOL WILL NOT BE RESPONSIBLE FOR ANY ADVERSE MEMBER EXPERIENCE UNTIL SUCH TIME THAT COMPATIBILITY TESTS CAN BE PERFORMED AND THE NEW MATERIAL, FUNCTIONALITY OR FEATURES QUALIFIED FOR THE AOL SERVICE 10. AOL INTERNET SERVICES ICP SUPPORT. AOL will provide ICP with access to the standard online resources, standards and guidelines documentation, technical phone support, monitoring and after-hours assistance that AOL makes generally available to similarly situated web-based partners. AOL support will not, in any case, be involved with content creation on behalf of ICP or support for any technologies, databases, software or other applications which are not supported by AOL or are related to any ICP area other than the Affiliated ICP Sites. Support to be provided by AOL is contingent on ICP providing to AOL demo account information (where applicable), a detailed description of each Affiliated ICP Site's software, hardware and network architecture and access to the Affiliated ICP Sites for purposes of such performance and load testing as AOL elects to conduct. CONFIDENTIAL 38 EXECUTION COPY EXHIBIT F STANDARD ONLINE COMMERCE TERMS & CONDITIONS 1. AOL NETWORK DISTRIBUTION. Except as provided in this Agreement, ICP will not authorize or permit any third party to distribute or promote the Products or any ICP Interactive Site through the AOL Network absent AOL's prior written approval. Except as provided in the Agreement, this Promotions and any other promotions or advertisements purchased from or provided by AOL will link only to the Affiliated ICP Site, will be used by ICP solely for its own benefit and will not be resold, traded, exchanged, bartered, brokered or otherwise offered to any third party. 2. PROVISION OF OTHER CONTENT. In the event that AOL notifies ICP that (i) as reasonably determined by AOL, any Content within the Affiliated ICP Site violates AOL's then-standard Terms of Service (as set forth on the America Online(R) brand service at Keyword term "TOS"), for the AOL Service or any other AOL property through which the Affiliated ICP Site is promoted, the terms of this Agreement or any other standard, written AOL policy or (ii) AOL reasonably objects to the inclusion of any Content within any Affiliated ICP Site (other than any specific items of Content which may be expressly identified in this Agreement), then ICP will take commercially reasonable steps to block access by AOL Users to such Content using ICP's then-available technology. In the event that ICP cannot, through its commercially reasonable efforts, block access by AOL Users to the Content in question, then ICP will provide AOL prompt written notice of such fact. AOL may then, at its option, restrict access from the AOL Network to the Content in question using technology available to AOL. ICP will cooperate with AOL's reasonable requests to the extent AOL elects to implement any such access restrictions. 3. CONTESTS. ICP will take all steps necessary to ensure that any contest, sweepstakes or similar promotion conducted or promoted through any Affiliated ICP Site (a "Contest") complies with all applicable federal, state and local laws and regulations. 4. NAVIGATION. [Intentionally blank] 5. DISCLAIMERS. Upon AOL's request, ICP agrees to include within each Affiliated ICP Site a product disclaimer (the specific form and substance to be mutually agreed upon by the Parties) indicating that transactions are solely between ICP and AOL Users purchasing Products from ICP. 6. AOL LOOK AND FEEL. ICP acknowledges and agrees that AOL will own all right, title and interest in and to the elements of graphics, design, organization, presentation, layout, user interface, navigation and stylistic convention (including the digital implementations thereof) which are generally associated with online areas contained within the AOL Network, subject to ICP's ownership rights in any ICP trademarks, ICP-supplied Content or the look and feel of ICP-supplied Content. 7. MANAGEMENT OF THE AFFILIATED ICP SITES. ICP will manage, review, delete, edit, create, update and otherwise manage all Content available on or through any Affiliated ICP Site, in a timely and professional manner and in accordance with the terms of this Agreement. ICP will ensure that each of the Affiliated ICP Sites is current, accurate and well-organized at all times. ICP warrants that the Products and other Licensed Content : (i) will not infringe on or violate any copyright, trademark, U.S. patent or any other third party right, including without limitation, any music performance or other music-related rights; (ii) will not violate AOL's generally applicable then existing Terms of Service (which shall be deemed not to include AOL's Privacy Policy) for the AOL Service and any other AOL Property through which any Affiliated ICP Site will be promoted or any other standard, written AOL policy and (iii) will not violate any applicable law or regulation, including those relating to contests, sweepstakes or similar promotions. Additionally, ICP represents and warrants that it owns or has a valid license to all rights to any Licensed Content used in AOL "slideshow" or other formats embodying elements such as graphics, animation and sound without violating the rights of any other person or entity. ICP also warrants that a reasonable basis exists for all Product performance or comparison claims appearing through any Affiliated ICP Site. AOL may require that any Affiliated ICP Site be a mirrored version of any ICP Interactive Site selling the products described on Exhibit D. 8. DUTY TO INFORM. ICP will promptly inform AOL of any information related to any Affiliated ICP Site which could reasonably lead to a claim, demand, or liability of or against AOL and/or its affiliates by any third party. 9. CUSTOMER SERVICE. It is the sole responsibility of ICP to provide customer service to persons or entities purchasing Products through the AOL Network ("Customers"). ICP will bear full responsibility for all customer service, including without limitation, order processing, billing, fulfillment, shipment, collection and other customer service associated with any Products offered, sold or licensed through any Affiliated ICP Site, and AOL will have no obligations whatsoever with respect thereto. ICP will receive all emails from Customers via a computer available to ICP's customer service staff and generally respond to such emails within one business day of receipt. ICP will also comply with the requirements of any federal, state or local consumer protection or disclosure law. Payment for Products will be collected by ICP directly from customers. ICP's order fulfillment operation will be subject to AOL's reasonable review. ICP shall use commercially reasonable efforts to provide a level of customer service consistent with the relevant accepted industry standards. 10. PRODUCTION WORK. Except as otherwise provided in this Agreement, in the event that ICP requests AOL's production assistance in connection with (i) ongoing programming and maintenance related to any Affiliated ICP Site, (ii) a redesign of or addition to any Affiliated ICP Site (e.g., a change to an existing screen format or construction of a new custom form), (iii) production to modify work performed by a third party provider or (iv) any other type of CONFIDENTIAL 39 EXECUTION COPY production work, ICP will work with AOL to develop a detailed production plan for the requested production assistance (the "Production Plan"). Following receipt of the final Production Plan, AOL will notify ICP of (i) AOL's availability to perform the requested production work, (ii) the proposed fee or fee structure for the requested production and maintenance work and (iii) the estimated development schedule for such work. To the extent the Parties reach agreement regarding implementation of the agreed-upon Production Plan, such agreement will be reflected in a separate work order signed by the Parties. To the extent ICP elects to retain a third party provider to perform any such production work, work produced by such third party provider must generally conform to AOL's standards & practices (as provided on the America Online brand service at Keyword term "styleguide"). The specific production resources which AOL allocates to any production work to be performed on behalf of ICP will be as determined by AOL in its sole discretion. With respect to any routine production, maintenance or related services which AOL reasonably determines are necessary for AOL to perform in order to support the proper functioning and integration of any Affiliated ICP Site ("Routine Services"), ICP will pay the then-standard fees charged by AOL for such Routine Services. 11. OVERHEAD ACCOUNTS. To the extent AOL has granted ICP any overhead accounts on the AOL Service, ICP will be responsible for the actions taken under or through its overhead accounts, which actions are subject to AOL's applicable Terms of Service and for any surcharges, including, without limitation, all premium charges, transaction charges, and any applicable communication surcharges incurred by any overhead Account issued to ICP, but ICP will not be liable for charges incurred by any overhead account relating to AOL's standard monthly usage fees and standard hourly charges, which charges AOL will bear. Upon the termination of this Agreement, all overhead accounts, related screen names and any associated usage credits or similar rights, will automatically terminate. AOL will have no liability for loss of any data or content related to the proper termination of any overhead account. 12. NAVIGATION TOOLS. Any Keyword Search Terms to be directed to any Affiliated ICP Site shall be (i) subject to availability for use by ICP and (ii) limited to the combination of the Keyword-TM- search modifier combined with a registered trademark of ICP (e.g. "AOL keyword: XYZ Company Name"). AOL reserves the right to revoke at any time ICP's use of any Keyword Search Terms which have been determined by a court or other governmental authority to violate the trademarks of a third party and, in the event that AOL receives notice from a third party that it believes that ICP's use of any Keyword Search Terms violates such third party's rights, AOL shall have the right to suspend ICP's use of such Keyword Search Term unless ICP provides AOL, within five (5) business days of written demand therefor, with (i) an indemnity for any liability resulting from ICP's continued use of such Keyword Search Term and (ii) an opinion of counsel, in a form reasonably acceptable to AOL, which concludes that ICP has meritorious defenses to any trademark infringement claim. ICP acknowledges that its utilization of a Keyword Search Term will not create in it, nor will it represent it has, any right, title or interest in or to such Keyword Search Term, other than the right, title and interest ICP holds in ICP's registered trademark independent of the Keyword Search Term. Without limiting the generality of the foregoing, ICP will not: (a) attempt to register or otherwise obtain trademark or copyright protection in the Keyword Search Term; or (b) use the Keyword Search Term, except for the purposes expressly required or permitted under this Agreement. To the extent AOL allows AOL Users to "bookmark" the URL or other locator for any such Affiliated ICP Site, such bookmarks will be subject to AOL's and ICP's control at all times. Upon the termination of this Agreement, except as otherwise provided for in this Agreement, ICP's rights to any Keyword Search Terms and bookmarking will terminate. 13. MERCHANT CERTIFICATION PROGRAM. ICP may participate in any generally applicable "Certified Merchant" program operated by AOL or its authorized agents or contractors. Such program may require merchant participants on an ongoing basis to meet certain reasonable, generally applicable standards relating to provision of electronic commerce through the AOL Network (including, as a minimum, use of 40-bit SSL encryption and if requested by AOL, 128-bit encryption) and may also require the payment of certain reasonable certification fees to the applicable entity operating the program. Each Certified Merchant in good standing will be entitled to place on its affiliated Interactive Site an AOL designed and approved button promoting the merchant's status as an AOL Certified Merchant. 14. REWARD PROGRAMS. On each Affiliated ICP Site, ICP shall not offer, provide, implement or otherwise make available any promotional programs or plans that are intended to provide customers with rewards or benefits in exchange for, or on account of, their past or continued loyalty to, or patronage or purchase of, the products or services of ICP or any third party (e.g., a promotional program similar to a "frequent flier" program), unless such promotional program or plan is provided exclusively through AOL's "AOL Rewards" program, accessible on the AOL Service at Keyword: "AOL Rewards." 15. SEARCH TERMS. To the extent this Agreement sets forth any mechanism by which the Affiliated ICP Sites will be promoted in connection with specified search terms Monster and Monster.com within any AOL product or service, ICP hereby represents and warrants that ICP has all consents, authorizations, approvals, licenses, permits or other rights necessary for ICP to use such specified search terms. Notwithstanding the foregoing, AOL shall have the right to suspend the use of any search term (other than Keyword Search Terms) if AOL has reason to believe continued use may subject AOL to liability or other adverse consequences. CONFIDENTIAL 40 EXECUTION COPY EXHIBIT G STANDARD LEGAL TERMS & CONDITIONS 1. [Intentionally Omitted] 2. TRADEMARK LICENSE. In designing and implementing the Materials and subject to the other provisions contained herein, ICP will be entitled to use the following trade names, trademarks, and service marks of AOL: the "America Online-Registered Trademark-" brand service, "AOL-TM-" service/software and AOL's triangle logo; and AOL and its affiliates will be entitled to use the trade names, trademarks, and service marks of ICP for which ICP holds all rights necessary for use in connection with this Agreement (collectively, together with the AOL marks listed above, the "Marks"); provided that each Party: (i) does not create a unitary composite mark involving a Mark of the other Party without the prior written approval of such other Party; and (ii) displays symbols and notices clearly and sufficiently indicating the trademark status and ownership of the other Party's Marks in accordance with applicable trademark law and practice. 3. OWNERSHIP OF TRADEMARKS. Each Party acknowledges the ownership right of the other Party in the Marks of the other Party and agrees that all use of the other Party's Marks will inure to the benefit, and be on behalf, of the other Party. Each Party acknowledges that its utilization of the other Party's Marks will not create in it, nor will it represent it has, any right, title, or interest in or to such Marks other than the licenses expressly granted herein. Each Party agrees not to do anything contesting or impairing the trademark rights of the other Party. 4. QUALITY STANDARDS. Each Party agrees that the nature and quality of its products and services supplied in connection with the other Party's Marks will conform to quality standards set by the other Party. Each Party agrees to supply the other Party, upon request, with a reasonable number of samples of any Materials publicly disseminated by such Party which utilize the other Party's Marks. Each Party will comply with all applicable laws, regulations, and customs and obtain any required government approvals pertaining to use of the other Party's marks. 5. INFRINGEMENT PROCEEDINGS. Each Party agrees to promptly notify the other Party of any unauthorized use of the other Party's Marks of which it has actual knowledge. Each Party will have the sole right and discretion to bring proceedings alleging infringement of its Marks or unfair competition related thereto; provided, however, that each Party agrees to provide the other Party with its reasonable cooperation and assistance with respect to any such infringement proceedings. 6. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to the other Party that: (i) such Party has the full corporate right, power and authority to enter into this Agreement and to perform the acts required of it hereunder; (ii) the execution of this Agreement by such Party, and the performance by such Party of its obligations and duties hereunder, do not and will not violate any agreement to which such Party is a party or by which it is otherwise bound; (iii) when executed and delivered by such Party, this Agreement will constitute the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms; and (iv) such Party acknowledges that the other Party makes no representations, warranties or agreements related to the subject matter hereof that are not expressly provided for in this Agreement. ICP hereby represents and warrants that it possesses all authorizations, approvals, consents, licenses, permits, certificates or other rights and permissions necessary to sell the Products. 7. CONFIDENTIALITY. Each Party acknowledges that Confidential Information may be disclosed to the other Party during the course of this Agreement. Each Party agrees that it will take reasonable steps, at least substantially equivalent to the steps it takes to protect its own proprietary information, during the term of this Agreement, and for a period of three years following expiration or termination of this Agreement, to prevent the duplication or disclosure of Confidential Information of the other Party, other than by or to its employees or agents who must have access to such Confidential Information to perform such Party's obligations hereunder, who will each agree to comply with this section. Notwithstanding the foregoing, either Party may issue a press release or other disclosure containing Confidential Information without the consent of the other Party, to the extent such disclosure is required by law, rule, regulation or government or court order. In such event, the disclosing Party will provide at least five (5) business days prior written notice of such proposed disclosure to the other Party. Further, in the event such disclosure is required of either Party under the laws, rules or regulations of the Securities and Exchange Commission or any other applicable governing body, such Party will (i) redact mutually agreed-upon portions of this Agreement to the fullest extent permitted under applicable laws, rules and regulations and (ii) submit a request to such governing body that such portions and other provisions of this Agreement receive confidential treatment under the laws, rules and regulations of the Securities and Exchange Commission or otherwise be held in the strictest confidence to the fullest extent permitted under the laws, rules or regulations of any other applicable governing body. Notwithstanding the foregoing, nothing herein shall preclude either Party's ability to modify or withdraw such request, if in such Party's reasonable judgment the Securities and Exchange Commission would not be able to timely grant confidential treatment. 8. [Intentionally Omitted] 9. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION. 9.1 LIABILITY. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE CONFIDENTIAL 41 EXECUTION COPY POSSIBILITY OF SUCH DAMAGES), ARISING FROM BREACH OF THE AGREEMENT, THE SALE OF PRODUCTS, THE USE OR INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE, AOL.COM OR THE AFFILIATED ICP SITES, OR ARISING FROM ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS (COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY WILL REMAIN LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE BOTH (I) CLAIMED BY A THIRD PARTY AND (II) ARE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 9.3. EXCEPT AS PROVIDED IN SECTION 9.3, (I) LIABILITY ARISING UNDER THIS AGREEMENT WILL BE LIMITED TO DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND (II) THE MAXIMUM LIABILITY OF ONE PARTY TO THE OTHER PARTY FOR ANY CLAIMS ARISING IN CONNECTION WITH THIS AGREEMENT WILL NOT EXCEED THE AGGREGATE AMOUNT OF FIXED PAYMENT OBLIGATIONS OWED BY ICP HEREUNDER IN THE YEAR IN WHICH THE EVENT GIVING RISE TO LIABILITY OCCURS; PROVIDED THAT EACH PARTY WILL REMAIN LIABLE FOR THE AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY PURSUANT TO THE AGREEMENT. 9.2 NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK, THE AOL SERVICE, AOL.COM OR THE AFFILIATED ICP SITES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AOL AND ICP SPECIFICALLY DISCLAIM ANY WARRANTY REGARDING THE PROFITABILITY OF THE AFFILIATED ICP SITES. 9.3 INDEMNITY. Either Party will defend, indemnify, save and hold harmless the other Party and the officers, directors, agents, affiliates, distributors, franchisees and employees of the other Party from any and all third party claims, demands, liabilities, costs or expenses, including reasonable attorneys' fees ("Liabilities"), resulting from the indemnifying Party's material breach of any duty, representation, or warranty of this Agreement. 9.4 CLAIMS. If a Party entitled to indemnification hereunder (the "Indemnified Party") becomes aware of any matter it believes is indemnifiable hereunder involving any claim, action, suit, investigation, arbitration or other proceeding against the Indemnified Party by any third party (each an "Action"), the Indemnified Party will give the other Party (the "Indemnifying Party") prompt written notice of such Action. Such notice will (i) provide the basis on which indemnification is being asserted and (ii) be accompanied by copies of all relevant pleadings, demands, and other papers related to the Action and in the possession of the Indemnified Party. The Indemnifying Party will have a period of ten (10) days after delivery of such notice to respond. If the Indemnifying Party elects to defend the Action or does not respond within the requisite ten (10) day period, the Indemnifying Party will be obligated to defend the Action, at its own expense, and by counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party will cooperate, at the expense of the Indemnifying Party, with the Indemnifying Party and its counsel in the defense and the Indemnified Party will have the right to participate fully, at its own expense, in the defense of such Action. If the Indemnifying Party responds within the required ten (10) day period and elects not to defend such Action, the Indemnified Party will be free, without prejudice to any of the Indemnified Party's rights hereunder, to compromise or defend (and control the defense of) such Action. In such case, the Indemnifying Party will cooperate, at its own expense, with the Indemnified Party and its counsel in the defense against such Action and the Indemnifying Party will have the right to participate fully, at its own expense, in the defense of such Action. Any compromise or settlement of an Action will require the prior written consent of both Parties hereunder, such consent not to be unreasonably withheld or delayed. 10. ACKNOWLEDGMENT. AOL and ICP each acknowledges that the provisions of this Agreement were negotiated to reflect an informed, voluntary allocation between them of all risks (both known and unknown) associated with the transactions contemplated hereunder. The limitations and disclaimers related to warranties and liability contained in this Agreement are intended to limit the circumstances and extent of liability. The provisions of this Section 10 will be enforceable independent of and severable from any other enforceable or unenforceable provision of this Agreement. 11. SOLICITATION OF AOL USERS. During the term of the Agreement and for a two year period thereafter, ICP will not use the AOL Network (including, without limitation, the e-mail network contained therein) to solicit AOL Users on behalf of another Interactive Service. More generally, ICP will not send unsolicited, commercial e-mail (i.e., "spam") or other online communications (e.g., instant messaging) through or into AOL's products or services, absent a Prior Business Relationship. For purposes of this Agreement, a "Prior Business Relationship" will mean that the AOL User to whom commercial e-mail or other online communication is being sent has voluntarily either (i) engaged in a transaction with ICP or (ii) provided information to ICP through a contest, registration, or other communication, which included clear notice to the AOL User that the information provided could result in commercial e-mail or other online communication being sent to that AOL User by ICP or its agents. Any commercial e-mail or other online communications to AOL Users which are otherwise permitted hereunder, will (a) include a prominent and easy means to "opt-out" of receiving any future commercial communications from ICP, and (b) shall also be subject to AOL's then-standard restrictions on distribution of bulk e-mail (e.g., related to the time and manner in which such e-mail can be distributed through or into the AOL product or service in question). CONFIDENTIAL 42 EXECUTION COPY 12. AOL USER COMMUNICATIONS. During the Term, to the extent that ICP is permitted to communicate with AOL Users pursuant to this Agreement, in any such communications targeted specifically to AOL Users (including, without limitation, e-mail solicitations), ICP will not encourage AOL Users to take any action inconsistent with the scope and purpose of this Agreement, including without limitation, the following actions: (i) using an Interactive Site other than the Affiliated ICP Sites for the purchase of Products, (ii) using Content other than the Licensed Content; (iii) bookmarking of Interactive Sites; or (iv) changing the default home page on the AOL browser. Additionally, with respect to such AOL User communications, in the event that ICP encourages an AOL User to purchase products through such communications, ICP shall ensure that (a) the AOL Properties are promoted as the primary means through which the AOL User can access the Affiliated ICP Sites and (b) any link to any Affiliated ICP Site will link to a page which indicates to the AOL User that such user is in a site which is affiliated with an AOL Property. 13. COLLECTION AND USE OF USER INFORMATION. ICP shall ensure that its collection, use and disclosure of information obtained from AOL Users under this Agreement ("User Information") complies with all applicable laws and regulations and ICP's standard privacy policies which ICP shall prominently publish on the site and provide adequate notice and disclosure regarding ICP's collection, use and disclosure of user information. ICP will not disclose User Information collected hereunder to any third party in a manner that identifies AOL Users as end users of an AOL product or service or use Member Information collected under this Agreement to market another Interactive Service 14. EXCUSE. Neither Party will be liable for, or be considered in breach of or default under this Agreement on account of, any delay or failure to perform as required by this Agreement as a result of any causes or conditions which are beyond such Party's reasonable control and which such Party is unable to overcome by the exercise of reasonable diligence. 15. INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent contractors. Neither Party is an agent, representative or employee of the other Party. Neither Party will have any right, power or authority to enter into any agreement for or on behalf of, or incur any obligation or liability of, or to otherwise bind, the other Party. This Agreement will not be interpreted or construed to create an association, agency, joint venture or partnership between the Parties or to impose any liability attributable to such a relationship upon either Party. 16. NOTICE. Any notice, approval, request, authorization, direction or other communication under this Agreement will be given in writing and will be deemed to have been delivered and given for all purposes (i) on the delivery date if delivered by confirmed facsimile (ii) on the delivery date if delivered personally to the Party to whom the same is directed (iii) one business day after deposit with a commercial overnight carrier, with written verification of receipt; or (iv) five business days after the mailing date, whether or not actually received, if sent by U.S. mail, return receipt requested, postage and charged prepaid, or any other means of rapid mail delivery for which a receipt is available. In the case of AOL, such notice will be provided to both the Senior Vice President for Business Affairs (fax no. 703-265-1206) and the Deputy General Counsel (fax no. 703-265-1105), each at the address of AOL set forth in the first paragraph of this Agreement. In the case of ICP, such notice will be provided to both the chief executive officer and the general counsel and, except as otherwise specified herein, the notice address will be the address for ICP set forth in the first paragraph of this Agreement, with the other relevant notice information, including the recipient for notice and, as applicable, such recipient's fax number or AOL e-mail address, to be as reasonably identified by AOL. 17. LAUNCH DATES. In the event that any terms contained herein relate to or depend on the commercial launch date of the Affiliated ICP Sites contemplated by this Agreement (the "Launch Date"), then it is the intention of the Parties to record such Launch Date in a written instrument signed by both Parties promptly following such Launch Date; provided that, in the absence of such a written instrument, the Launch Date will be as reasonably determined by AOL based on the information available to AOL. 18. NO WAIVER. The failure of either Party to insist upon or enforce strict performance by the other Party of any provision of this Agreement or to exercise any right under this Agreement will not be construed as a waiver or relinquishment to any extent of such Party's right to assert or rely upon any such provision or right in that or any other instance; rather, the same will be and remain in full force and effect. 19. RETURN OF INFORMATION. Upon the expiration or termination of this Agreement, each Party will, upon the written request of the other Party, return or destroy (at the option of the Party receiving the request) all confidential information, documents, manuals and other materials specified the other Party. 20. SURVIVAL. (a) Sections 2.21,5.3, 5.4, 5.6 and 6.2, as well as (i) the last sentence of each of Sections 1.2.1 and 1.2.2 and (ii) the third sentence of Section 1.3, of the body of the Agreement; (b) Sections 7 through 16, 18 through 22, and 25 through 30 of this Exhibit; and (c) any payment obligations accrued prior to termination or expiration of this Agreement; will survive the completion, expiration, termination or cancellation of this Agreement. 21. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and supersedes any and all prior agreements of the Parties with respect to the transactions set forth herein. Neither Party will be bound by, and each Party specifically objects to, any term, condition or other provision which is different from or in addition to the provisions of this Agreement (whether or not it would materially alter this Agreement) and which is proffered by the other Party in any correspondence or other document, unless the Party to be bound thereby specifically agrees to such provision in writing. 22. AMENDMENT. No change, amendment or modification of any provision of this Agreement will be valid unless set forth in a written instrument signed by the Party subject to enforcement of such amendment, and in the case of AOL, by an executive of at least the same standing to the executive who signed the Agreement. CONFIDENTIAL 43 EXECUTION COPY 23. FURTHER ASSURANCES. Each Party will take such action (including, but not limited to, the execution, acknowledgment and delivery of documents) as may reasonably be requested by any other Party for the implementation or continuing performance of this Agreement. 24. ASSIGNMENT. Neither Party shall assign this Agreement or any right, interest or benefit under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Subject to the foregoing, this Agreement will be fully binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective successors and assigns. 25. CONSTRUCTION; SEVERABILITY. In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed or if any such provision is held invalid by a court with jurisdiction over the Parties to this Agreement, (i) such provision will be deemed to be restated to reflect as nearly as possible the original intentions of the Parties in accordance with applicable law, and (ii) the remaining terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect. 26. REMEDIES. Except where otherwise specified, the rights and remedies granted to a Party under this Agreement are cumulative and in addition to, and not in lieu of, any other rights or remedies which the Party may possess at law or in equity provided that, in connection with any dispute hereunder, neither Party will be entitled to offset any amounts that it claims to be due and payable from the other Party against amounts otherwise payable to such other Party. 27. APPLICABLE LAW. Except as otherwise expressly provided herein, this Agreement will be interpreted, construed and enforced in all respects in accordance with the laws of the Commonwealth of Virginia except for its conflicts of laws principles. 28. EXPORT CONTROLS. Both Parties will adhere to all applicable laws, regulations and rules relating to the export of technical data and will not export or re-export any technical data, any products received from the other Party or the direct product of such technical data to any proscribed country listed in such applicable laws, regulations and rules unless properly authorized. 29. HEADINGS. The captions and headings used in this Agreement are inserted for convenience only and will not affect the meaning or interpretation of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which together will constitute one and the same document CONFIDENTIAL 44 EXECUTION COPY EXHIBIT H [INTENTIONALLY BLANK] CONFIDENTIAL 45 EXECUTION COPY EXHIBIT I [INTENTIONALLY BLANK] CONFIDENTIAL 46 EXECUTION COPY EXHIBIT J [INTENTIONALLY BLANK] CONFIDENTIAL 47 EXECUTION COPY EXHIBIT K ICP ADVERTISING REVENUE SHARE
----------------------------------- -------------------------------------- Amount of Advertising Revenues Percentage to be Paid to the Non- on the Principal ICP Interactive Selling Party Site ----------------------------------- -------------------------------------- Up to US$[*****] [*****]% ----------------------------------- -------------------------------------- US$[*****] - US$[*****] [*****]% ----------------------------------- -------------------------------------- Greater than US$[*****] [*****]% ----------------------------------- --------------------------------------
TARGETS SHALL RESTART DURING EACH YEAR OF THE AGREEMENT. CONFIDENTIAL 48 EXECUTION COPY EXHIBIT L REVENUE SHARING ARRANGEMENT A. HURDLE 1. AOL WILL RECEIVE [*****] PERCENT ([*****]%) OF JOB LISTING REVENUES EARNED IN A CONTRACT YEAR AFTER THE AMOUNT IN EXCESS OF THE FOLLOWING HURDLES (EACH, A "HURDLE") ACHIEVED IN THAT YEAR: US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 1 US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 2 US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 3 US$[*****] IN TOTAL REVENUE OR AFTER [*****] ORDERS TAKEN IN YEAR 4 B. HURDLE 2A. IF HURDLE 1 IS MET, THEN MONSTER WILL MAKE THE FOLLOWING PAYMENTS AFTER THE FOLLOWING HURDLES ARE MET: 1. RESUME ACQUISITION BOUNTIES YEAR 1: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 2: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 3: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 4: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES 2. PERSONAL ALERT PROFILE ACQUISITION BOUNTIES IN ANY YEAR: US$[*****] FOR THE FIRST [*****] UNIQUE USER PROFILES US$[*****] FOR EACH UNIQUE USER PROFILE BETWEEN [*****] AND [*****] US$[*****] FOR EACH UNIQUE USER PROFILE ABOVE [*****] 3. VIRTUAL CAREER FAIR FEES YEAR 1: [*****] PERCENT ([*****]%) OF ANY REVENUE OR FEES RECEIVED BY ICP FROM CAREER FAIRS ("FAIR FEES") AFTER FIRST [*****] CAREER FAIRS YEAR 2: [*****] PERCENT ([*****]%) OF ANY FAIR FEES AFTER FIRST [*****] CAREER FAIRS YEAR 3: [*****] PERCENT ([*****]%) OF ANY FAIR FEES AFTER FIRST [*****] CAREER FAIRS CONFIDENTIAL 49 EXECUTION COPY YEAR 4: [*****] PERCENT ([*****]%) OF ANY FAIR FEES FROM CAREER FAIRS AFTER FIRST [*****] CAREER FAIRS 4. TALENT MARKET. YEAR 1: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 2: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 3: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 4: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES 5. OTHER (E.G., OTHER CONSUMER SERVICES). AOL AND ICP WILL NEGOTIATE THE TERMS FOR ANY NEW REVENUE STREAM C. HURDLE 2B. IF HURDLE 1 IS NOT MET, BUT THE FOLLOWING HURDLES ARE MET, ICP WILL MAKE THE FOLLOWING PAYMENTS: 1. RESUME ACQUISITION BOUNTIES. YEAR 1: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 2: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 3: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES CONFIDENTIAL 50 EXECUTION COPY US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES YEAR 4: US$[*****] FOR THE FIRST [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME BETWEEN [*****] AND [*****] UNIQUE USER RESUMES US$[*****] FOR EACH UNIQUE USER RESUME ABOVE [*****] UNIQUE USER RESUMES 2. PERSONAL ALERT PROFILE ACQUISITION BOUNTIES IN ANY YEAR: US$[*****] FOR THE FIRST [*****] UNIQUE USER PROFILES US$[*****] FOR EACH UNIQUE USER PROFILE BETWEEN [*****] AND [*****] US$[*****] FOR EACH UNIQUE USER PROFILE AFTER [*****] 3. VIRTUAL CAREER FAIR FEES YEAR 1: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST [*****] CAREER FAIRS YEAR 2: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST [*****] CAREER FAIRS YEAR 3: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST [*****] CAREER FAIRS YEAR 4: [*****] PERCENT ([*****]%) OF ALL FAIR FEES AFTER FIRST [*****] CAREER FAIRS 4. TALENT MARKET. YEAR 1: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 2: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 3: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES YEAR 4: US$[*****] FOR THE FIRST [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE BETWEEN [*****] AND [*****] CANDIDATE PROFILES US$[*****] FOR EACH CANDIDATE PROFILE ABOVE [*****] CANDIDATE PROFILES CONFIDENTIAL 51 EXECUTION COPY 5. OTHER (E.G., OTHER CONSUMER SERVICES). AOL AND ICP WILL NEGOTIATE THE TERMS FOR ANY NEW REVENUE STREAM. AOL WILL DISCOUNT ITS REVENUE SHARE BY [*****] PERCENT ([*****]%) IN THE EVENT THAT HURDLE 1 IS NOT MET, BUT HURDLE 2 IS MET. 52 CONFIDENTIAL EX-23.1(B) 4 EXHIBIT 23.1(B) EXHIBIT 23.1(b) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TMP Worldwide Inc. New York, New York We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement on Form S-3 of our reports dated March 26, 1999, relating to the consolidated financial statements and schedule of TMP Worldwide Inc. and Subsidiaries appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 and our reports dated November 19, 1999, relating to the supplemental consolidated financial statements and schedule of TWP Worldwide Inc. and Subsidiaries appearing on the Company's Current Report on Form 8-K dated December 1, 1999. We also consent to the reference to us under the caption "Experts" in the Prospectus. /s/ BDO SEIDMAN, LLP BDO SEIDMAN, LLP New York, New York December 15, 1999 EX-23.1(C) 5 EXHIBIT 23.1(C) Exhibit 23.1(c) The Board of Directors Morgan & Banks Limited Level 11, Grosvenor Place 225 George Street SYDNEY NSW 2000 CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS We hereby consent to the use of our reports: a) dated 16 June 1998, except for Note 2 of Notes to and forming part of the Consolidated Financial Statements for which the date is 21 September 1998, relating to the consolidated balance sheets of Morgan & Banks Limited as at 31 March 1998 and 1997, and the consolidated profit statements and cash flow statements for each of the years in the three year period ended 31 March 1998 appearing in the Company's Current Report on Form 8-K dated 12 February 1999; and b) dated 15 April 1999, relating to the consolidated balance sheets of Morgan & Banks Limited as at 31 December 1998 and 31 March 1998, and the profit statements for the years ended 31 December 1998, 31 March 1998 and 31 March 1997, and the cash flow statements for the nine month period ended 31 December 1998 and the years ended 31 March 1998 and 31 March 1997 appearing in the Company's Current Report on Form 8-K dated December 1, 1999; which reports are incorporated by reference in the Prospectus constituting a part of this Registration Statement on Form S-3 of TMP Worldwide Inc. We also consent to the reference to us under the caption "Experts" in the Prospectus constituting a part of this Registration Statement. Sydney, Australia December 15, 1999 Pannell Kerr Foster /s/ PANNELL KERR FOSTER EX-23.1(D) 6 EXHIBIT 23.1(D) Exhibit 23.1(d) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS As independent certified public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated April 7, 1999, included in TMP Worldwide Inc.'s Registration Statement File No. 333-82531 and included in TMP Worldwide Inc.'s Form 8-K dated December 1, 1999, and to all references to our firm included in this registration statement. Arthur Andersen LLP Tampa, Florida December 15, 1999 -----END PRIVACY-ENHANCED MESSAGE-----